Authored by James Sheppard
AstraZeneca has an illustrious history in the prevention of stroke and heart attacks. Their blockbuster cholesterol lowering drug Crestor saw sales of $6.65bn in 2012 and is a cornerstone of the company’s revenue. AstraZeneca’s management is acutely aware though, of its need to replace its leading drug due to generic competition in 2016 when the drug goes off patent. This coupled with a number of other factors have led AstraZeneca CEO, Pascal Soriot, to embark on a spate of deals. Already in 2013, AstraZeneca has purchased US biotech AlphaCore and signed deals with Moderna Therapeutics and Horizon Discovery. Therefore, it has come as implied necessity, that AstraZeneca has added further to its pipeline with another acquisition.
On May 28th AstraZeneca announced its purchase of US biotech Omthera Pharmaceuticals for $323m. The price reflects an 88% increase on the closing share price on May 24th. In addition to the cash payment, AstraZeneca is providing development goals that could take the total deal value to $443m.
Omthera Pharmaceuticals are currently developing treatments for abnormal levels of fat in the bloodstream. Omthera’s lead asset is a drug called Epanova which a purified pharmaceutical grade fish oil. Epanova is indicated for patients with very high triglycerides (>500mg/dl). Last year, Omthera released encouraging data from two phase III trials conducted in the USA. The data will form the basis of an application to the FDA in mid-2013 and Europe after this. AstraZeneca will offer the drug as a single therapy or in combination with Crestor. The drug will compete with GSK’s Lovaza and Amarin Corp’s Vascepa both of which are used in patients with high triglyceride levels. Further to this, AstraZeneca have announced their intention to conduct large scale clinical trials to identify the effects of Epanova combined with statins.
AstraZeneca’s recent deal making has pleased many investors and the Omthera deal makes a great deal of strategic sense given AZ’s expertise in this therapeutic area. This appears to be a relatively low risk acquisition for AstraZeneca. The possibility for combining Epanova with other AstraZeneca drugs looks like a promising strategy for AstraZeneca going forward. The pharmaceutical grade fish oil market is one of intensifying interest for investors. Market leader Amarin is also the focus of significant acquisitions rumours.
Mr Soriot has now made a number of significant acquisitions and deals in 2013 in an attempt to replenish AstraZeneca’s ailing pipeline. The previous deals to this have been aimed at rebuilding AstraZeneca’s pipeline from the bottom up. This is the first deal that is bringing in an asset that is close to being marketed and investors will hope that the drug is marketed sooner rather than later.