Thursday, April 24, 2014

Astrazeneca - Antibiotics Unit for Sale!

Or another title might be - Astrazeneca Sells Out!

It finally hit the news!  For the last nine months, Astrazeneca has been trying to spin off or sell their anti-infectives unit. It looks like the proposed deal would include meropenem, a carbapenem antibiotic used in hospitals that is suffering from generic intrusion, but that still has very reasonable sales globally. They also arguably have the strongest pipeline of new antibiotics active against resistant pathogens in the industry.  These include ceftazidime-avibactam that is completing phase III trials, ceftaroline-avibactam that has completed phase II trials and aztreonam-avibactam that is still in phase I trials. All of these assets are tied up with Forest-Actavis – and given that very recent merger, one has to account for a certain amount of, shall we say, uncertainty for these products.  While I commend AZ for trying this approach (spin off or sale) rather than simply abandoning their antibiotic effort altogether, I am not surprised that they have not been successful in their effort. Given the high price that AZ is expecting and the complications (Forest-Actavis) around their bejeweled pipeline, its no wonder that they have not been able to sell off the franchise.

Of course, all the talk this week has been about the potential sale of AZ to Pfizer.  Oh boy! One company that abandoned antibiotics just a few years ago about to buy another company trying to abandon antibiotics. 

If you step back for a moment, you can see how incredibly wasteful, thoughtless and simply callous the attitude of these companies has become.  We are in the midst of a rising epidemic of resistant Gram-negative superbugs for which AZ-Forest/Actavis have some important solutions.  And what is happening? These products are circling the drain of corporate incompetence and internecine warfare. Defenders of companies like AZ will say - well they are just trying to cut costs to survive generic intrusions on their biggest products.  They need to do something.  OK.  But why kill off some of your most valuable and least risky assets?

To top it off, this is all unnecessary in my view.  The AZ pipeline, once marketed, will provide real profits and more than justify the expense of development in my view.  If that does not occur, it will not be because the products are somehow not useful, but because AZ/Forest were unable to position them appropriately or to leverage their clear advantages compared to other antibiotics currently available. AZ’s hope is that their other products, in oncology and in respiratory medicine and other areas will be bigger in terms of return on investment.  But, of course, they are more risky.  They are more likely to fail during clinical trials or post-market than antibiotics.

So, what we need is a group of investors or a large pharmaceutical company or a combination of investors and a small company to buy AZ’s anti-infectives unit. Clearly, AZ should not be trusted with these assets. GSK – I’m talking to you!! Cubist plus KKR – I’m talking to you! BARDA – how about a hand here? Let’s get these products to market and to the patients and physicians who need them.


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