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Teva Pharmaceutical Industries Ltd. (TEVA - Free Report) announced a partnership deal with Nuvelution Pharma, Inc. to accelerate development of Austedo (deutetrabenazine) tablets for the treatment of tics associated with Tourette syndrome (TS) in pediatric patients in the United States.

Per the agreement, Nuvelution will look into the funding and clinical development of Austedo that is expected to enter phase III by the end of 2017. Meanwhile, Teva will be responsible for the regulatory approval and commercialization of the candidate.

Once Austedo is approved in the United States, Teva will pay Nuvelution a pre-agreed return on its invested capital. Earlier, Austedo was approved in the United States for the treatment of chorea associated with Huntington disease (HD). Notably, Austedo’s label was expanded to include a second indication, tardive dyskinesia, a debilitating and often irreversible movement disorder in August, 2017.

Shares of Teva have underperformed the industry year to date. The stock has been down 52.6% compared with the industry's fall of 20.4% in the same time frame. This lackluster performance was due to a challenging environment in the company’s United States’ generics business and the continued deterioration in Venezuela.

Meanwhile, delay in the launch of some new generic drugs and fierce competition for some others has been hurting Generic segment sales.
Teva is also facing several other challenges in the form of generic competition for branded multiple sclerosis drug, Copaxone, its key revenue generator, new competition for branded products, a high cost base and debt load.

Furthermore, the company hired H. Lundbeck’s (HLUYY - Free Report) chief, Kåre Schultz, as its new CEO. The appointment ended Teva’s more than six-month long search for a permanent CEO after Erez Vigodman stepped down in February this year. Now, it remains to be seen if Schultz can use his 30 years of extensive global pharmaceutical experience to help the world’s largest generic drug maker regain lost ground.

Zacks Rank & Stocks to Consider

Teva carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks in health care sector include Alexion Pharmaceuticals, Inc. (ALXN - Free Report) and Regeneron Pharmaceuticals, Inc. (REGN - Free Report) sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alexion Pharmaceuticals’ earnings per share estimates have moved up from $5.32 to $5.60 for 2017 and from $6.56 to $7.05 for 2018 over the last 60 days. The company delivered positive earnings surprises in all the trailing four quarters, with an average beat of 11.12%. The share price of the company has increased 16.8% year to date.

Regeneron’s earnings per share estimates have increased from $12.84 to $14.99 for 2017 and from $15.32 to $16.64 for 2018 over the last 60 days. The company pulled off positive earnings surprises in two of the trailing four quarters, with an average beat of 10.11%. The share price of the company has increased 17.5% year to date.

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