AstraZeneca and partner BTG are halting development of an experimental drug for severe sepsis and/or septic shock, following its failure in a Phase IIb trial—adding another setback to AZ’s thinning drug pipeline.

“Treatment with AZD9773 did not show any significant improvements versus placebo in respect of the primary endpoint, ventilator-free days, or secondary endpoints including mortality,” BTG said earlier today.

AZ handed the antibody back to BTG, which added that it will take a charge of about £28 million ($43.8 million) in the current financial year, of which £25 million ($39.1 million) relates to a noncash impairment of intangible and tangible fixed assets, since no further development is planned for AZD9773, also known as CytoFab™.

Had CytoFab worked, it might have generated £1 billion ($1.6 billion) in annual sales, with BTG getting a royalty of around 25%, Deutsche Bank analyst Richard Parkes told Reuters. However, he had only given it a one in five chance of success. Nomura Code cut its recommendation on BTG to “sell” from “neutral.”

Following news of the failure, the value of BTG shares initially tumbled more than 10% before rallying to 339.70 pence, up 1.70 pence from yesterday, as of 1400 GMT (10:20 am EDT). AZ shares dipped 21 cents to $47 as of 10:20 a.m.

The failure of CytoFab is more bad news for AZ at a time when its drug pipeline is especially in need of new breakthrough successes, if not blockbusters.

AZ’s shrinking drug pipeline was a key factor in the sudden resignation in April of CEO David Brennan, amid news reports he was pushed out. AZ has seen several late-stage setbacks with experimental medicines the company had counted on to make up for sales revenues it is set to lose due to the “patent cliff” expiration of several brand-name drugs.

Last year, for example, AZ halted development of its investigational compound olaparib, for maintenance treatment of serous ovarian cancer, before it was set to enter Phase III trials. In addition, AZ disclosed that a second Phase III study of TC-5214 for patients with major depressive disorder did not meet its primary endpoint. The company took pre-tax impairment charges totaling $381.5 million to its fourth quarter 2011 R&D expense.

Soon after Brennan’s resignation, AZ’s president of R&D Martin Mackay told the Financial Times he was working on a flurry of deals that may include partnerships with other large drug companies, full acquisition of smaller public biotech companies, and licensing deals for specific drugs developed by others.

Last month, it entered into collaborations with Bristol-Myers Squibb for development and commercialization of Amylin Pharmaceuticals’ portfolio of products, in return for AZ paying BMS about $3.4 billion cash. The arrangement was part of BMS’ $7 billion acquisition of Amylin, a deal completed today.

In April, AZ inked a joint development and commercialization deal with Amgen for five monoclonal antibodies from Amgen’s clinical inflammation portfolio.

Sources:

BTG—http://www.btgplc.com/page/21061/media/press-releases/2012/btg-announces-data-from-phase-iib-study-of-azd9773

Reuters—http://www.reuters.com/article/2012/08/08/us-astrazeneca-btg-idUSBRE87707320120808

Financial Times—http://www.ft.com/intl/cms/s/0/b57f5f58-a111-11e1-aac1-00144feabdc0.html

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