AstraZeneca Snuffs Out Galida

Another one has bitten the dust.

AstraZeneca (NYSE:AZN) announced this morning that it's decided to stop development of Galida, its phase 3 dual-PPAR (dual peroxisome proliferation activated receptor) agonist for type 2 diabetes. While it's not an enormous setback in and of itself (most in-the-know analysts and investors correctly had it marked as a long shot), it's another late-stage failure for a company that really needs to boost its late-stage pipeline.

Looking more broadly across the pharmaceutical sector, it's a pretty open question now as to whether any dual-PPARs are going to see the light of day. Though they were once hailed as a promising (and potentially multibillion-dollar) opportunity for diabetics, concerns about links to cancer and heart failure have burned a lot of that initial promise to ashes.

Merck (NYSE:MRK) bagged its own candidate some time ago, and Bristol-Myers' (NYSE:BMY) compound Pargluva (which Merck was going to co-market) is quite possibly finished as well. And while Eli Lilly (NYSE:LLY), GlaxoSmithKline (NYSE:GSK), and Sanofi-Aventis (NYSE:SNY) all still have compounds in development, you've got to imagine it's something of a long shot at this point.

By the same token, if one of these companies perseveres and is actually able to get approval, there could still be a big reward waiting at the end of the rainbow. That's also true for the smaller biotech companies working in the space, though I'm just sticking to the big-cap pharmas here today.

For AstraZeneca, I see this as another unwelcome disappointment, but not one that really changes my opinion of its present or near-term value. And for companies like Eli Lilly, Merck, and Novartis (NYSE:NVS), which have other irons in the fire, I suppose it's sort of backhanded good news -- it suggests there will be less competition for their new compounds like Galvus (Novartis) and Januvia (Merck).

Nevertheless, it's another good reminder for pharmaceutical and biotech investors that you shouldn't count your chickens until the FDA has let them hatch.

For more AstraZeneca Foolishness:

• AstraZeneca: Of Patents and Pipelines
• AstraZeneca's Heartening News
• Investors Get Starry-Eyed for AstraZeneca

Merck, Lilly, and GlaxoSmithKline are Motley Fool Income Investor recommendations.

Fool contributor Stephen Simpson owns shares of Sanofi-Aventis, but has no financial interest in any other stocks mentioned (that means he's neither long nor short the shares).