Craving respiratory dominance, AstraZeneca inks $2.2B deal for Almirall's lung meds

AstraZeneca's headquarters in London--Courtesy of AstraZeneca

AstraZeneca ($AZN) is staring down the barrel at rivals for its blockbuster respiratory drug Symbicort, branded and generic. CEO Pascal Soriot has respiratory drugs on his list of growth drivers. He's also operating under the threat of another buyout bid from Pfizer ($PFE).

What to do? Buy in some more products--including a prospective combo drug for the LABA/LAMA market, which is expected to hit $14 billion in a few years.

AstraZeneca has agreed to pay $875 million up front--and up to $2.2 billion total, with milestones--for Almirall's respiratory portfolio. The deal brings a couple of marketed drugs, and a list of pipeline meds that includes a combo drug Almirall is developing with U.S.-based Forest Laboratories ($FRX).

With the latter nearing FDA approval--and Teva's ($TEVA) Symbicort knockoff, DuoResp, due to roll out in Europe--that would give AstraZeneca a real, near-term follow-up to the soon-to-decline Symbicort. Its other option, a candidate bought from Pearl Therapeutics last year, is farther away from the market.

Almirall's marketed products aren't exactly hauling in the cash. Eklira, which Forest markets in the U.S. as Tudorza Pressair, brought in €84 million last year; it's also half of the combo drug the two are developing together. Another of Almirall's lung drugs, Ebastel, accounted for €76 million. Plusvent--a copycat version of Symbicort's biggest rival, the GlaxoSmithKline ($GSK) lung drug Seretide--amounted to €43.7 million. Together, Almirall's entire respiratory portfolio accounted for €211 million in 2013 sales, or about $282 million.

Still, sales are sales, and AstraZeneca needs more. The company has been an active dealmaker, but few of its buys have included marketed products. Theoretically, the company's experienced respiratory salesforce could take Eklira and Ebastel and turn them into bigger earners, and make a big splash if and when the Eklira combo med wins approval.

AstraZeneca CEO Pascal Soriot

The deal "brings strategic and long-term value to AstraZeneca's strong respiratory franchise, one of our key growth platforms," Soriot said in a statement. "We will benefit from immediate and growing product revenues ... [and] by combining our innovative portfolios and leveraging AstraZeneca's global scientific and commercial capabilities, we will strengthen our ability to address the entire spectrum of care in asthma and COPD.

Also theoretically, AstraZeneca could develop Plusvent for sale outside Spain. It might even take advantage of new FDA guidance designed to encourage Advair copycatting, which so far has been notoriously unsuccessful, thanks to GSK's patent-protected inhaler, Diskus. But it might just as well leave Plusvent for Spain and focus on fighting Advair with Symbicort everywhere else.

Certainly, AstraZeneca will be pushing Almirall's Eklira combo drug toward approval. Forest has the rights to that combo in the U.S., but Almirall retains the rights everywhere else, except for a co-marketing deal in Canada. It's a combo LABA/LAMA inhaler, which would compete head-to-head with GSK's brand-new Anoro Ellipta, as well as Novartis' ($NVS) Ultibro and Boehringer's as-yet-unapproved combo.

AstraZeneca has been driving Symbicort market-share gains in countries outside Europe--including a 7-percentage-point gain in the U.S. last year--so growth elsewhere could counterbalance any siphoning-off by Teva's product in Europe. Stepped-up rebates and other discounts have helped Symbicort move in on Glaxo's Advair in the U.S., and the drug is also gaining ground in Japan and China.

This all helped the company reap some $3.5 billion in Symbicort sales last year. Meanwhile, Glaxo's experience with Advair copies could give AstraZeneca some hope for its older drug, at least for now. The knockoff versions, including Plusvent, are only now taking a significant bite out of Advair sales after years on the market.

What the Almirall deal won't do is help fend off Pfizer if the U.S.-based giant decides to come back for another buyout try. That's according to Mark Clark, a London-based Deutsche Bank analyst. "It's an OK deal, but it's not the one to cause people to fundamentally reassess Astra, particularly vis a vis their continuing independence" from Pfizer, Clark told Bloomberg.

- read the AstraZeneca release
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