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AstraZeneca Lowers Earnings View After Study Setbacks

AstraZeneca Lowers Earnings View After Study Setbacks
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AstraZeneca Plc. (AZN: Quote,AZN.L) Tuesday said its core earnings per share for 2011 are likely to be at the low end of its previously issued guidance range due to impairment charges stemming from two studies. The company will record pre-tax impairment charges of $381.5 million in the fourth quarter and the impairments are expected to have an impact of about $0.21 on core earnings per share for the quarter.

The drugmaker said its investigational compound olaparib would not progress into Phase III development for the maintenance treatment of serous ovarian cancer. The decision was made after review of an interim analysis of a Phase II study, which indicated that the previously reported progression free survival benefit is unlikely to translate into an overall survival benefit.

Additionally, attempts to identify a suitable tablet dose for use in Phase III studies were not successful. No new safety concerns were identified.

Further, the company's second RENAISSANCE Phase III study of TC-5214 for patients with major depressive disorder did not meet its primary end point. The target measure for the study was change in the Montgomery-Asberg Depression Rating Scale total score after eight weeks of treatment with TC-5214 as compared to placebo. TC-5214 was overall well tolerated.

The company is taking an impairment of $285 million pre-tax charge related to the olaparib study and a $96.5 million pre-tax charge on the lower probability of success for the remaining TC-5214 studies. The value of the remaining intangible assets held in relation to TC-5214 total $96.5 million.

AstraZeneca continues to expect full year core earnings per share in the range of $7.20 to $7.40, but sees core earnings per share in the lower half of this range when impairments are included.

The company announced recently that top-line results of the RENAISSANCE flexible dose trial study 3 did not meet its primary endpoint. AstraZeneca said today that it would continue with the development of the two remaining fixed dose Phase III RENAISSANCE efficacy and tolerability studies and one long-term safety study.

Regulatory filing targets will be reviewed following full results of the remaining studies that are expected in the first half of 2012. A potential New Drug Application filing in the US is planned for the second half of 2012 and an EU Marketing Authorisation Application is targeted for 2015.

AZN closed on Monday at $45.43, up $0.18 or 0.40 percent, on 1.01 million shares. On the London Stock exchange, AZN.L settled higher by 36 pence at 2,949 pence on a volume of 2.6 million shares.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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