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AstraZeneca (AZN - Analyst Report) recently signed a research collaboration agreement with Vanderbilt University for the identification of candidates for the treatment of psychosis and other neuropsychiatric symptoms associated with major brain diseases such as Alzheimer’s disease and schizophrenia.

The agreement provides exclusively licensed rights to AstraZeneca to compounds developed by the Vanderbilt Center for Neuroscience Drug Discovery (VCNDD) that act on the M4 muscarinic acetylcholine receptor.
Both AstraZeneca and Vanderbilt University plan to work together to identify additional M4 compounds and further develop the existing compounds. 
 
As per the agreement, Vanderbilt is entitled to get an upfront payment coupled with milestone payments and royalties on global sales of products which will be developed under the collaboration. AstraZeneca will also fund the required research for a couple of years for Vanderbilt. 
 
AstraZeneca’s expertise in drug development and translational science should complement VCNDD’s expertise in drug discovery. 
 
The company believes that there is a lot of scope for development in the areas of chronic pain, cognitive disorders and other serious central nervous system disorders. We are also encouraged by AstraZeneca’s focus on the high-potential emerging markets. We are pleased with the company’s efforts to expand its pipeline and portfolio through mergers and acquisitions.
 
However, we remain concerned about the generic competition faced by AstraZeneca’s key products. The weak late-stage pipeline at AstraZeneca coupled with slow Brilinta uptake also bothers us.
 
We currently have a Neutral recommendation on AstraZeneca which carries a Zacks Rank #3 (Hold). 
 
Pharma stocks which currently look attractive are Johnson & Johnson (JNJ - Analyst Report) and Sanofi (SNY - Analyst Report) which carry a Zacks Rank #2 (Buy). 

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