Friday, January 18, 2013

DOTW: Wall Street Hopes AstraZeneca is the Next Sanofi

Wall Street is hoping AstraZeneca will buy its way out of its current conundrum. The pharma jumped off the proverbial patent cliff last year and is expected to slide for the foreseeable future. Analysts' model for a turnaround of the beleaguered British pharma is Sanofi, with its aggressive acquisition strategy executed by CEO Chris Viehbacher starting in 2009.

This week, AZ's new CEO Pascal Soriot made his first major executive changes, letting go of R&D and commercial heads and replacing them with several new executives in reconfigured positions. Soriot started in October, and what’s missing thus far is insight into AstraZeneca’s business development strategy. An appointment of an EVP of Global Portfolio & Product Strategy is still pending.

It’s not that AstraZeneca hasn’t been active; it did at least 21 deals last year according to Elsevier's Strategic Transactions database. But many of those partnerships are either very early or regional deals for marketed products. And none of them have convinced Wall Street that AstraZeneca can turn around its disintegrating sales. Consensus estimates are that sales will decline 16.4% in 2012 on the loss of patent exclusivity for antipsychotic Seroquel IR (immediate-release quetiapine fumarate) in the U.S. and for at least four other drugs in Western Europe or Canada. That’s followed by expectations of low-single digit annual declines in sales through at least 2016.

The pharma’s track record on big deals isn’t great. It acquired vaccine play MedImmune in 2007 for $15.6 billion but, despite the high price tag, that deal hasn’t given AstraZeneca a top-selling product or promising late-stage candidates. The recently dismissed global commercial EVP, Tony Zook, was from MedImmune. Still, last week Soriot offered a vote of confidence in the business unit by selecting MedImmune’s Bahija Jallal to oversee discovery and early-stage development in biologics.

More recently, AstraZeneca did a pair of sizable acquisitions last year. The highest profile was for $3.5 billion in a 50/50 June acquisition of Amylin alongside its existing diabetes partner Bristol-Myers Squibb. It’s unclear yet whether this will aid AstraZeneca’s bottom line, but Amylin had been struggling for years to successfully commercialize its portfolio. Amylin’s Bydureon (long-acting exenatide) to treat type II diabetes is expected to have $1.5 billion in peak sales; the combined BMS/AstraZeneca sales forces started marketing it in the U.S. in early October and expect to roll out the drug elsewhere by mid-2013. The other billion-dollar 2012 acquisition for AstraZeneca was of Ardea Biosciences for $1.3 billion in April; that deal brought in the Phase III oral chronic gout candidate lesinurad.

Rumors of a mega acquisition by AstraZeneca started to fly when Soriot’s first action as CEO was to halt the pharma’s share buyback program. A total of $4.5 billion in share repurchases was slated for 2012, but only $2.3 billion was carried out. At the time, Soriot said the move allowed him to “maintain flexibility” going into a strategic review.

Soroit will undoubtedly continue to fill in the blanks on the year-end earnings call on Jan. 31, as well as at the annual meeting and first quarter call on April 25. But until then, we’ve got details below on a new early-stage AstraZeneca partnership, as well as a few other deals. It's always quiet the week immediately after the J.P. Morgan conference, but that won't stop us from bringing you yet another edition of....

AstraZeneca/Vanderbilt: In the latest tie-up between a pharma and Vanderbilt University Medical Center, AstraZeneca reached a deal giving it rights to existing and future research into a group of CNS compounds with implications in psychosis, Alzheimer’s disease and schizophrenia. In a partnership announced Jan. 14, AZ teamed with the Vanderbilt Center for Neuroscience Drug Discovery to research drugs acting on the M4 muscarinic acetylcholine receptor, specifically allosteric modulators that amplify neurotransmitter activity. Few deal terms were announced, but AZ will provide two years’ worth of research funding as part of the arrangement, along with an up-front installment and additional cash payments tied to milestones and royalties. AZ will receive rights to some in-process research funded by the National Institute of Mental Health as part of the National Cooperative Drug Discovery and Development Group, as well as new compounds discovered under the deal. Six-year-old VCNDD recently formed a similar alliance with Bristol-Myers Squibb in Parkinson’s disease, and had a 2008 deal with J&J’s Janssen subsidiary in schizophrenia as well. It’s also the latest academic deal for AstraZeneca, following last year’s so-called A5 alliance with multiple academics studying Alzheimer’s, and a now-expired 2010 deal with the University of Pennsylvania concerning the same disease. - Paul Bonanos

Medicago: The vaccine company got a $15 million loan from an undisclosed major pharmaceutical company with which it is negotiating a partnership. The deal would include co-promotion rights to Medicago vaccines in certain markets. If the deal goes through, the loan will be applied as part of an upfront payment. In that case, Medicago will not pay any interest on the loan. The biotech plans to start a Phase IIa trial of its quadrivalent seasonal flu vaccine with interim data expected in mid-2013. Medicago has an existing alliance with Mitsubishi Tanabe Pharma to develop a rotavirus vaccine and at least two additional vaccine candidates. - Stacy Lawrence

OcellO/Merus: The deal between the Dutch companies gives Merus access to OcellO’s 3D cell culture-based screening platform to profile Merus’ bispecific antibodies to treat cancer. Details of the deal remained undisclosed. Merus is a preclinical company; its lead candidate is partnered with Novartis. It’s been around since 2004 and has brought in more than $30 million in venture financing and corporate deals. OcellO was founded in 2011 and is based on 3D screening technology developed at Leiden University. - S.L.

"Big Fish Eat Little Fish" engraving courtesy of Wikimedia Commons.

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