AstraZeneca ( AZN - Analyst Report ) and its partner Rigel Pharmaceuticals ( RIGL - Snapshot Report ) recently announced top-line data from the phase IIb OSKIRA-4 study evaluating the use of oral fostamatinib for rheumatoid arthritis (RA).

The OSKIRA (Oral Syk Inhibition in Rheumatoid Arthritis)-4 study evaluated fostamatinib as a monotherapy in patients who had never been prescribed a disease-modifying anti-rheumatic drug (DMARD), or are intolerant or show insufficient response to DMARDs. The study enrolled 280 patients with primary objectives to establish superiority of fostamatinib against placebo at 6 weeks and non-inferiority in comparison to Abbott Laboratories’ ( ABT - Analyst Report ) Humira (adalimumab) at 24 weeks.

In the six-month study, fostamatinib was evaluated in three dose regimens (100mg twice daily for 4 weeks followed by 100mg twice daily, 150mg once daily and 100mg once daily for the rest of the period).

Fostamatinib demonstrated superiority over placebo at two regimens but failed to do so at 100mg twice daily followed by 100mg once daily. The candidate failed to show non-inferiority to Humira at all dose regimes.

With the candidate failing to show non-inferiority to Humira, investors have reacted negatively and the share price of AstraZeneca and Rigel Pharma plunged 2.9% and 34.6%, respectively.

The pivotal phase III OSKIRA program is ongoing, results from which are expected in the first half of 2013. AstraZeneca plans to submit marketing application in the second half of 2013.

We note that competition is tough in the RA market, with players like Johnson & Johnson ( JNJ - Analyst Report ) and Abbott Labs. Competition increased with the approval of an oral RA treatment, Pfizer’s ( PFE - Analyst Report ) Xeljanz in November 2012.

Neutral on AstraZeneca

We are encouraged by the company’s focus on high-potential emerging markets and are pleased with its effort to drive the bottom line through cost-cutting initiatives and share buybacks.

However, we remain concerned about the generic competition faced by the company’s key products. In 2011, the company lost revenues worth almost $2 billion to generic competition. The weak late-stage pipeline coupled with the slow Brilinta uptake also bothers us.

Currently, we have a Neutral stance on AstraZeneca in the long run. The stock carries a Zacks #3 Rank (Hold) in the short run.

Large-cap pharma stocks currently holding a Zacks #2 Rank include companies like Novo-Nordisk ( NVO - Analyst Report ) , Johnson & Johnson and Roche ( RHHBY ) .