Wednesday, August 24, 2016

Pfizer and Astrazeneca

What goes around comes around.

Today Astrazeneca and Pfizer announced that they had entered into an agreement where AZ would license their marketed antibiotics (Merem, Zinforo and Zavicefta) and those in development to Pfizer.  Pfizer will pay AZ $550 million upfront and $190 million in January (total $740 million). There are also a number of milestone payments envisioned that could bring the total cash payments close to $2 billion.  In addition, AZ will reap double-digit royalties on sales. Medimmune and Entasis were both excluded from the deal.

To put this deal in perspective, AZ paid $350 million upfront for Novexel and what is now Zavicefta (plus other assets none of which have yet made it to market). 

Back in 2013 Astrazeneca announced that it would focus on areas outside of infectious diseases. They stated that they wanted to “partner” their anti-infectives efforts going forward. Since then, the infectious diseases franchise at AZ has been up for sale to the highest bidder.  What’s been going on for the last three years? No one was bidding high enough for AZ (or at least that’s what I deduce based on my discussions with those trying to make a deal with AZ). There were apparently two problems.  First, we are talking about ex-North American rights. Second, AZ had a rather inflated idea of the value of their products (according to my contacts). During this time, AZ spun out their antibiotic discovery group to form Entasis. And they formed a fully-fledged business unit out of their antibiotic development group. 

In 2011, Pfizer abandoned antibiotic research entirely. They fired all (or almost all) of their anti-infectives researchers and developers.  They also downsized their entire research effort globally by almost 25%. This occurred in a company with a rich history in antibiotic discovery and development.  Pfizer was one of the first companies to join the antibiotic revolution with penicillin. Then came the first, good, oral tetracycline, doxycycline in the 1960s. Later came the beta-lactamase inhibitor, sulbactam. Diflucan or fluconazole was invented at Pfizer’s facility in Sandwich, UK in the 1990s. They acquired Zyvox through their purchase of Pharmacia. With their acquisition of Wyeth, they had piperacillin-tazobactam and tigecycline. How could a company with this history abandon antibiotics research in the way that it did?

What’s now left at Pfizer? Apparently there is still a small core of antibiotic developers there.   A few of the researchers involved in antibiotics moved over to Pfizer Vaccines (previously Wyeth Vaccines). Some moved to other therapeutic areas within Pfizer.  But the vast majority are long gone.  Many went to AZ and are now either working elsewhere or at Entasis or are unemployed. But – I understand that there will be a significant transition period where the AZ developers will be able to support Pfizer’s efforts and even provide experience and guidance going forward. They may even get a shot at a job in Pfizer. So this might work better than if, say, Pfizer were just to jump back in the way the Roche did.

On the one hand, I want to be excited that Pfizer is getting back into the antibiotics business. Companies that have lost their expertise in antibiotics can struggle for years to regain their footing. My contacts suggest that the transition from AZ to Pfizer is structured such that this will be a smooth process and will avoid this struggle. I take their word for it, but I’ll be watching.

In terms of big pharma companies still doing antibiotics R&D – the numbers haven’t changed.  We’ve just replaced AZ with Pfizer.  It’s a shell game.

I still find it depressing that those who worked so hard to bring exciting, new antibiotics like ceftazidime-avibactam to market at AZ, now, once again, face an uncertain future.

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