Monday, February 16, 2015

AstraZeneca - What'd I Say?

An article by John Carroll appeared in FierceBiotech yesterday on AstraZeneca’s efforts to exit antibiotics R&D.  First, the article confirms what I have been saying for a long time now – Astra Zeneca is cutting a running. He notes, as have I (1, 2), that AZ has shopped their pipeline to almost everyone imaginable from banks to venture funds to other pharma companies.  But what the FierceBiotech article provides are details that have heretofore not been public and that may explain why it is taking AZ so long to close the deal.  AZ wants to retain significant control retaining possibly 50% of the value of the franchise. John notes that his sources complain that the assets were late to market and not competitive.  I take issue with that.  If they are planning to sell off all their assets – this would include meropenem, ceftaroline, ceftazidime-avibactam, aztreonam-avibactam and possibly ceftaroline-avibactam (if it is still being developed). All of the latter would exclude North America that belongs to Actavis.  While meropenem is generic, it still brings in $2-300 million but that can be expected to decline. Ceftaroline has not been much of a seller, but I think there is potential for improvement with better marketing.  And the avibactam-containing combinations are all innovative, will make a real difference for patients and physicians, and could be important products for anyone’s bottom line.  So I think that overall, the FierceBiotech sources are wrong on their value assessment.  Where they might be correct is the potential objection to AZ retaining so much control. AZ has not marketed an antibiotic since meropenem.  One could argue that their lack of recent experience is showing in their lackluster performance with what should be a good product – ceftaroline. The 50% stake for AZ also reduces any gains for the potential partner and will be dissuasive from that point of view.  A straight spin-off keeping a much lower stake might have had more success more quickly. In spite of all this, FierceBiotech says that a deal appears to be imminent – but where have we heard that before? 
The final fallacy lies in the fact that all these considerations rely on the world’s least reliable sorts of data – marketing surveys and their resulting market projections.  I can’t tell you how often these have been completely wrong in all directions.

Mr. Carroll has uncovered information suggesting that over a third of AZ’s antibiotic R&D team have already headed for the Waltham, MA exits.  He goes farther than I did in my blog on the subject. AZ shut down its Bangalore research site focused on discovery of antibiotics for the developing world a long time ago now.

FierceBiotech also mentions, as have I, that antibiotics are making a comeback.  AZ’s CEO, Pascal Soriot, remains determined to ignore the potential of an antibiotics franchise to contribute in an important way to his company’s bottom line.

No comments:

Post a Comment