AstraZeneca's latest Kondo-izing move: A $250M-plus deal for cancer med Zoladex

AstraZeneca's cancer drug Zoladex brought in more than $816 million worldwide last year, but only $69 million of that in the U.S.

AstraZeneca is offloading yet another set of drug rights to streamline its portfolio and raise some cash. The U.K.-based drugmaker has agreed to hand over its cancer drug Zoladex in the U.S. and Canada to TerSera Therapeutics in a $250 million-plus deal.

TerSera will hand over that $250 million up front, plus $70 million in sales-related milestones and a quarterly share of sales in the “mid-teen percentage” range. The smaller company will also pay AstraZeneca to manufacture and supply the drug.

The result for AstraZeneca is a nice cash injection up front, and a “source of ongoing income from Zoladex” as time goes on, the company said.

It’s just the latest cash-generating deal for AstraZeneca, which has been selling or out-licensing products for more than a year. The company has generated well over $2.5 billion by handing off older products, beefing up its bottom line in the process, and zeroing in on “what we do well,” as CEO Pascal Soriot said back in 2014.

In Zoladex’s case, that apparently means marketing the drug outside the U.S. and Canada, where it’s already bringing in plenty of sales. A hormone therapy for breast and prostate cancers, plus certain non-malignant gynecological tumors, Zoladex brought in $816 million for AstraZeneca worldwide last year, but only $69 million in the U.S.

So, selling off the U.S. and Canadian rights won’t make much of a dent in AstraZeneca’s top line, and the company might well be better served by handing it off to a company eager to market it—and with a big financial incentive to do so, given the up-front money TerSera is socking into the deal.

Plus, the manufacturing and supply deal will help AstraZeneca keep the payoff coming from the $300 million-plus it’s invested in its Macclesfield, England, manufacturing site since 2013. In addition to $113 million in packaging and warehouse capacity, the company shelled out $190 million to expand a Macclesfield facility specifically to produce Zoladex, and that plant went into full service just last year.

AstraZeneca started on its streamlining spree in 2014, when Soriot announced that he, like his Big Pharma peers, would begin shedding assets that no longer fit in with AstraZeneca’s ambitions. "What you are likely to see from us is a continued focus on what we do well,” Soriot told analysts at the time.

Since then, the company has hived off some drug rights completely while inking partnerships on others. It raised $500 million by selling its rights to an Alzheimer’s drug to Eli Lilly, snagged $215 million in a licensing deal with Tillotts Pharma on its gastrointestinal drug Entocort, and grabbed another $200 million from Daiichi Sankyo in a Japanese development deal on the opioid-induced constipation drug Movantik.

That’s just for starters. Last April, the company handed off its new gout drug Zurampic (lesinurad) to Ironwood Pharmaceuticals in a deal worth up to $265 million, and in 2015, it punted a would-be psoriasis treatment, brodalumab, to Valeant Pharmaceuticals for up to $445 million. Both drugs came with baggage: Zurampic’s launch could well be hampered by safety and efficacy questions, and brodalumab faced enough safety problems that development partner Amgen bailed on the drug entirely. The latter won its FDA approval for Valeant last week.

Meanwhile, AstraZeneca collected $520 million from Aspen Pharmacare for an ex-U.S. portfolio of anesthetics, plus up to $250 million in milestones through 2018. It offloaded a portfolio of antibiotics—including brand-new meds shared with Allergan, Zinforo and Zavicefta, and the $241 million product Merrem—to Pfizer in a deal worth up to $1.5 billion last August.

AstraZeneca is hardly alone in clearing out unwanted assets, though it has been the most aggressive about Kondo-izing its product closet. GlaxoSmithKline has sold off one group of products after another, including an anesthetics portfolio it handed off to Aspen Pharmacare last year for $370 million. Late last year, Novartis reportedly was weighing the sale of a group of central nervous system drugs for almost $500 million. And Sanofi has said it’s looking to gain some cash by hiving off its European generics business.

AstraZeneca isn't just shedding products, either. It was considering selling its U.S. campus in Wilmington last August, and late last year, said it would cut 700 jobs as part of its ongoing quest to shrink annual costs by $1.1 billion.