Shares of Targacept, Inc. TRGT crumbled approximately 10.9% after Catalyst Biosciences informed that Pfizer PFE will be terminating its research and license agreement with Catalyst Biosciences.
We note that Targacept and Catalyst Biosciences are set to merge to form a combined company.
In Jun 2009, Pfizer had inked the research and license agreement with Catalyst Biosciences for the development and commercialization of Catalyst's leading human Factor VIIa candidate, PF-05280602 (formerly CB 813d) for the treatment of hemophilia and surgical bleeding indications.
The license and certain rights under the agreement will be reverted back to Catalyst Biosciences following the termination of the agreement, which is expected by Jun 1, 2015. However, Pfizer is expected to provide all data, regulatory documentation and related technology as per the agreement with Catalyst Biosciences. This will enable the latter to carry on with the development of the candidate.
Our Take
Pfizer’s decision to terminate the 2009 agreement with Catalyst Biosciences was a big disappointment for Targacept.
This is not the first time that a large pharma company has terminated an agreement affecting Targacept. In Oct 2014, AstraZeneca AZN had announced its intention to terminate its collaborative research and license agreement with Targacept. All the remaining rights and licenses of the compounds under the agreement were reverted back to Targacept after the termination, which was completed in Jan 2015.
The agreements with Pfizer and AstraZeneca were crucial for Targacept. Targacept currently has no approved product. We expect the company to look for other collaboration deals in the future to advance its pipeline.
Targacept currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Affymetrix Inc. AFFX carrying a Zacks Rank #1 (Strong Buy).
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