AstraZeneca weighs spinning out COVID-19 products into separate company: Bloomberg

AstraZeneca recently bundled its COVID-19 vaccine and antibody treatment into a separate division. But there’s a chance that the new unit might not stay with it for long.

The British drugmaker is considering the potential listing of the newly created vaccines and immune therapies division into a separate entity as part of a review of the best path forward, Bloomberg reported, citing people with knowledge of the discussions.

In a statement shared with Fierce Pharma, AstraZeneca said it has “no plans” to list the division.

Separating the business would be an answer to earlier concerns that tapping into COVID-19 might have been a distraction for the company. But senior executives are evaluating various possibilities with advisers and could eventually decide against a spinoff, the people said, according to the news service.

AZ unveiled the new division a month ago. To be led by Iskra Reic, AZ’s executive vice president of Europe and Canada, the new unit is basically a viral respiratory infectious disease franchise. It houses the company’s COVID-19 vaccine Vaxzevria and investigational COVID antibody cocktail AZD7442 plus nasal spray flu vaccine Flumist, ex-U.S. rights to respiratory syncytial virus (RSV) drug Synagis and an investigational RSV therapy called nirsevimab that’s partnered with Sanofi.

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During a conference call with reporters last month, AstraZeneca CEO Pascal Soriot suggested the move to migrate the portfolio into a new unit was “business as usual” and did not elaborate on whether he plans further investment to boost the department or to sell it off in the future.

Ruud Dobber, head of AZ’s biopharmaceuticals unit, said during the call that the decision to bring all those products—including their manufacturing, R&D and commercial capabilities—under one roof is “relatively straightforward” and “makes a lot of sense” from a business perspective.

Back in July, Dobber told Reuters that AZ was exploring options for the COVID shot. “If you ask me, is the vaccine business a sustainable business for AstraZeneca for the next five or 10 years, that big strategic question is under discussion,” he said at the time, as quoted by the news service.

AZ was struggling with several setbacks with Vaxzevria at the time, including a manufacturing delay for its supply to the EU and reports of rare blood clots in some people.

After months running on a promise to not make a profit from Vaxzevria, AZ unveiled last month that it would start making a profit from the vaccine, mainly for new orders it’s taking on for next year. In the third quarter, Vaxzevria boosted AZ’s earnings per share by 1 cent although the impact of the COVID vaccine on the company’s profit remained negative this year as of September.

In the first nine months, Vaxzevria brought AZ $2.22 billion in revenues, way below the levels by rival shots made by Moderna and Pfizer-BioNTech. AZ is still seeking a full approval for the vaccine with the FDA.

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Meanwhile, influenza vaccine Flumist generated $295 million in sales last year after a year-over-year increase of 153% at constant currencies thanks to expanded seasonal vaccination programs during the pandemic.

Swedish company Sobi holds the U.S. rights to Synagis. AZ reportedly just used its 8% stake in the Synagis licensee to block a $7.6 billion buyout deal that would take Sobi private. AZ withheld its support for the deal because it hoped to buy certain Sobi assets, Bloomberg reported, citing people close to the matter.

As for AZD7442, AZ recently filed the long-acting COVID antibody combination for an FDA emergency use authorization to prevent symptomatic COVID before an exposure. The intramuscular injection has also shown it could reduce the risk of progression to severe COVID or death in nonhospitalized patients with mild to moderate disease, a setting in which several other COVID antibodies have been authorized.

Coronavirus antibody drugs may still have a place in the continuing fight against COVID despite the success of oral antivirals, SVB Leerink analyst Geoffrey Porges wrote in a note in October. Antibodies will likely be used for prevention and long-term protection, which oral pills can’t match, he said.