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said their experimental pill TC-5214 failed the first of four late-stage clinical trials in patients with severe depression.

Shares of Targacept, are indicated down 50% to $9.50 in pre-market trading. Likewise, Astrazeneca, which licensed TC-5214 from Targacept in 2009, fell almost 3% in London trading.

Targacept and AstraZeneca are studying TC-5214 as an add-on therapy for patients no longer responding to currently marketed antidepressants. In the phase III trial reported Tuesday, however, patients treated with TC-5214 plus an antidepressant showed no improvement on the Montgomery-Asberg Depression Rating Scale (MADRS) compared to patients treated with a placebo plus an antidepressant, the companies said.

The MADRS scale measures depressive symptoms and is commonly used in clinical studies.

TC-5214 is Targacept's lead pipeline product so Tuesday's clinical trial failure is a major setback. Targacept and AstraZeneca provided few details in Tuesday's media announcement so its unclear what actually happened in the trial and what it means for the remaining three phase III studies still underway. Data from those studies are expected next year.

The companies are holding a conference call at 10 am ET to discuss the failed study.


main phase II study of TC-5214

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conducted in 2009 produced spectacular results. TC-5214's efficacy was so strong that some investors thought the data were too good to be true, especially because the study was conducted largely in India.

AstraZeneca believed in TC-5214 enough to

license the drug from Targacept in late 2009

for blockbuster terms.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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