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AstraZeneca (AZN - Analyst Report) and partner Targacept, Inc. (TRGT - Snapshot Report) recently amended their existing agreement. As per the revised agreement, Targacept has the full rights to develop and commercialize alpha7 NNR modulators for any indication including cognitive disorders and schizophrenia. Before the amendment, AstraZeneca had an option to license any alpha7 NNR modulator targeting a cognitive disorder or schizophrenia.

AstraZeneca will also forgo its rights to TC-1734 (AZD3480, alpha4beta2 modulator).  TC-1734 is currently being evaluated in a phase IIb trial for the treatment of mild-to-moderate Alzheimer's disease.

Under the terms of the restructured agreement, AstraZeneca gains the development and commercialization rights to alpha4beta2 NNR modulators including AZD1446 for all indications. Before, AstraZeneca only had rights to alpha4beta2 NNR modulators for cognitive disorders and schizophrenia.

Recently, AstraZeneca was in the news when three patents protecting its cholesterol management drug, Crestor (rosuvastatin), were rendered invalid by the Federal Court of Australia.

Generic competition has adversely impacted AstraZeneca’s revenues over the past few quarters. This has put significant pressure on the company. Additionally, there is increasing uncertainty regarding Crestor due to the entry of generic versions of Pfizer’s (PFE - Analyst Report) Lipitor in Nov 2011.

The company’s much-hyped antiplatelet drug Brilinta’s performance has remained lukewarm. AstraZeneca is looking to combat the generic threat through deals and acquisitions and cost-cutting measures.

AstraZeneca carries a Zacks Rank #3 (Hold), while Targacept carries a Zacks Rank #5 (Strong Sell). Right now, Shire plc (SHPG - Analyst Report) looks more attractive in the pharma space with a Zacks Rank #2 (Buy).

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