It is a common practice of small pharma companies to enter into agreements with larger pharma companies for the development and commercialization of products. However, the deals are often terminated by the larger company if it fails to fit into its growth plans any longer.
Last week, Targacept, Inc. (TRGT) announced that AstraZeneca (AZN) has terminated their collaborative research and license agreement which was inked almost nine years back. All the remaining rights and licenses of the compounds under the agreement will be reverted back to Targacept after the termination is completed by the next 90 days.
As per the initial agreement, inked in Dec 2005, the companies collaborated to focus on cognitive disorders. The deal was then amended in Mar 2013, as per which AstraZeneca was granted rights to pursue the development and commercialization of compounds under the agreement in any therapeutic area.
As per the terms of the termination, the rights and license relating to AZD1446, a novel small molecule that modulates the activity of the 4ß2 NNR, will also be returned to Targacept. Targacept was expecting a contingent milestone payment related to AZD1446 in the first half of 2015.
The agreement with AstraZeneca was crucial for Targacept. Targacept currently has no approved product. It will therefore be on the lookout for a suitable partner to advance its pipeline. We believe that the company will look for another collaboration deal in the future.
Targacept currently carries a Zacks Rank #2 (Buy). Some other stocks in the health care sector that are worth considering include Medivation, Inc. (MDVN) and Ligand Pharmaceuticals Incorporated (LGND). Both hold a Zacks Rank #1 (Strong Buy).
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