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Astrazeneca is paying $875M up front for Almirall's respiratory disease business

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By Cormac Sheridan
Staff Writer

Shares in Almirall SA rose 9 percent Wednesday on news that Astrazeneca plc is paying $875 million up front to acquire its respiratory disease portfolio of partnered and pipeline assets. A further $1.22 billion in development, launch and performance-based milestones are attached to the deal.

The transaction, which is due to close before year-end, gives London-based Astrazeneca a much needed growth impetus to its already sizeable respiratory disease business. The big pharma firm has big ambitions in that area, having identified it as one of five key growth areas during its recent successful defense of a hostile takeover bid from New York-based Pfizer Inc. CEO Pascal Soriot has set himself the task of growing Astrazeneca's respiratory disease franchise to an $8 billion business by 2023, as part of a wider plan to double revenues to $45 billion over the next 10 years. (See BioWorld Today, May 7, 2014.)

The respiratory business delivered $4.35 billion in revenues in 2013, mainly through its maintenance therapy for asthma and chronic obstructive pulmonary disease (COPD), Symbicort (budesonide and formoterol), a combination of an inhaled corticosteroid (ICS) and a long-acting beta2-agonist (LABA), sales of which reached about $3.5 billion.

With Almirall, it is buying growth potential rather than a significant revenue stream. However, it is also moving into areas with entrenched competition, in the shape of Boehringer Ingelheim GmbH, of Ingelheim, Germany, London-based Glaxosmithkline plc and Basel, Switzerland-based Novartis AG.

The deal gives Astrazeneca Almirall's top-selling drug, Eklira (aclidinium bromide), a twice-daily long-acting muscarinic antagonist (LAMA), which is approved as maintenance therapy in COPD. It is delivered using a proprietary inhaler, sold as Genuair. Barcelona, Spain-based Almirall's sales of the product grew by 50 percent during the first half of this year to €58 million (US$77.6 million). Notwithstanding that rapid growth rate, Almirall's sales total is miniscule when set against that of a rival LAMA product, Boehringer Ingelheim's once-daily Spiriva (tiotropium bromide inhalation powder), which attained sales of €3.5 billion in 2013.

Rights to Eklira are currently split three ways, however, and there is no indication that Astrazeneca will be in a position to consolidate them. "That's obviously not something we would speculate on at this point in time," an Astrazeneca spokeswoman told BioWorld Today. Menarini Group, of Florence, Italy, holds rights in a number of European markets, while Forest Laboratories, now part of Dublin-based Actavis plc, holds U.S. rights to the product, which it markets as Tudorza Pressair. (It reported $25.3 million in sales for the drug during the first quarter of this year, the fourth quarter of its fiscal year.)

The deal also gives Astrazeneca a second shot at an emerging segment of the COPD market, comprising LABA/LAMA combination products, which improve patient-reported outcomes such as a use of rescue medication and dyspnea, as well as lung function.

Almirall's candidate, dubbed LAS40464, is under regulatory review in Europe following two successful phase III trials. A decision from the EMA's Committee on Human Medicinal Products is expected during the third quarter. The product candidate hit a setback in the U.S., however, as the FDA has sought an additional trial this week, according to an analyst note from Jefferies International.

Already approved in that segment are Anoro Ellipta (vilanterol/umeclidinium bromide), from GSK and Theravance Inc., of South San Francisco, and, in Europe and several other countries but not the U.S., Ultibro Breezhaler (indacaterol/glycopyrronium), from Novartis.

Astrazeneca already gained another investigational LABA/LAMA combo last year, through its purchase of Redwood City, Calif.-based Pearl Therapeutics Inc., for $560 million up front, plus another $450 million more in development and regulatory milestones associated with triple therapies, and another $140 million in sales-based milestones.

"The key thing about the [Almirall] LABA/LAMA combination is in the way it is delivered, using the Genuair dry powder inhaler," the Astrazeneca spokeswoman said. The Pearl product PT003, which comprises formoterol fumarate and glycopyrrolate, is delivered using a pressurized metered-dose inhaler. Different patient groups and different physicians favor one or the other two delivery methods, she said, so the two offerings will be complementary.

Also included in the deal are a once-daily LABA, LAS100977 (abediterol), which is in phase II trials, and an M3 antagonist beta2-agonist (MABA) platform, which combines LABA and LAMA activities in a single molecule.

The transaction removes one of Almirall's two key pillars – respiratory disease and dermatology both account for about 30 percent of sales at present – but it transforms the company's balance sheet. It reported €88.5 million in cash at the end of the second quarter, but it owed €319.5 million in debt. Almirall's revenues reached €825 million in 2013, which included about €693 million in product sales.

According to Jefferies International analyst Peter Welford, the deal represents good value for investors – Jefferies had valued the respiratory business at $1.65 billion. "Almirall now plans to accelerate its transition to focus on dermatology. We believe the deal justifies a circa 10 percent stock uptick," he wrote in an analyst note.

Almirall's shares (MADRID:ALM) closed Wednesday at €11.60, a gain of €0.85.