AstraZeneca has signed a deal to licence Targacept’s late-stage investigational product for major depressive disorder.

The treatment in question is TC-5214, which recently completed a Phase IIb clinical trial and is a nicotinic channel blocker. The companies say it is thought to treat depression by modulating the activity of various neuronal nicotinic receptor (NNR) sub-types.

Cashwise, AstraZeneca will pay an initial $200 million “upon effectiveness” and up to $540 million in additional payments if specified development, regulatory and first commercial sale milestones are achieved. Targacept will also be eligible to receive up to $500 million if other revenue milestones are hit, as well as “significant stepped double-digit royalties”.

The firms will collaborate on a global Phase III clinical programme, set to start in mid-2010, with the goal of filing a New Drug Application with the US Food and Drug Administration in 2012. AstraZeneca’s chief executive David Brennan said “the opportunity to improve treatment in depression is a large one, both commercially and in terms of benefits for patients. It's an area both AstraZeneca and Targacept know well and I'm pleased to be adding another late-stage project to our pipeline”.

The two companies are long-time partners and signed a global collaboration focused on cognitive disorders in 2005. Three product candidates from that pact are currently in clinical development; AZD3480 for attention deficit hyperactivity disorder, AZD1446 for Alzheimer’s disease and TC-5619, for cognitive dysfunction in schizophrenia.