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Rexahn Pharmaceuticals (RNN - Snapshot Report) recently announced that Teva Pharmaceutical Industries (TEVA - Analyst Report) has decided that it will not exercise its option to license Rexahn’s oncology candidate, RX-3117.

Teva and Rexahn had a Research and Exclusive License Option Agreement for RX-3117, a novel DNA and RNA synthesis inhibitor being evaluated for the treatment of solid cancer tumors.

Teva had filed an Investigational New Drug (IND) application to the U.S. Food and Drug Administration (FDA) for RX-3117 in Jul 2013. As per the terms of the agreement, Teva had to decide within 45 days of the filing of the IND whether it would exclusively license RX-3117.

Based on strategic reasons, Teva has decided not to go ahead with the licensing option. As a result, the agreement between the companies was terminated and all worldwide development and commercialization rights to RX-3117 have been retained by Rexahn. Rexahn intends to move RX-3117 into a phase I study in cancer patients within the next three months and plans to explore partnership opportunities.

Meanwhile, Teva has been working on streamlining its pipeline and expects to have about 10 new therapeutic entities (NTEs) in development over the next couple of years which should start generating sales from 2016.

The Rexahn deal is not the first collaboration to be terminated by Teva this year. Earlier this year, Teva terminated its collaboration with CureTech Ltd. for the development of CT-011. CT-011 was being developed for the treatment of hematological malignancies and solid tumors. Teva also announced its intention to terminate its biologics program with Lonza.

Teva currently carries a Zacks Rank #3 (Hold). The company is going through a tough transition period given fewer large generic opportunities, potential new competition for branded products (especially Copaxone) and a higher cost base.

However, we are encouraged by Teva’s plans to improve its position. Teva said that it intends to accelerate growth platforms, protect and expand core franchises, expand its global presence, pursue strategic deals and reduce the cost base. We expect investor focus to remain on the execution of the company’s new strategy.

At present, companies like Actavis, Inc. (ACT - Analyst Report) and Akorn, Inc. (AKRX - Snapshot Report) look well-positioned with both being Zacks Rank #2 (Buy) stocks.

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