Astra gives as well as taking away

Since Pascal Soriot took the helm of AstraZeneca in October 2012 he has made his name as one of the industry’s most active asset buyers. But on his watch Astra has also done more than its share of divestments, though with somewhat less fanfare.

Yesterday’s sale of US Entocort rights to Perrigo was the latest in a string of transactions to rid Astra’s portfolio of assets that do not quite fit, and investment bankers should remember that there is significant business to be had here. Over the past three years Astra’s divestments have brought in more than $1bn of deals per annum (see table below).

And that total value – $3.2bn over three years – comprises only those deals whose financial terms have been disclosed. The list includes not only areas on which Astra has clearly given up but also projects in red-hot areas in which a niche exists where the UK group realises it cannot be a leader.

The best example is the anti-PD-L1 MAb durvalumab, which was licensed to Celgene for $450m up front – specifically for haematological malignancies. Durvalumab is one of Astra’s most important R&D prospects, but the group has been smart in realising that it cannot compete with Celgene’s lead in blood cancers, and could get a decent chunk of money in return.

Non-core

Yesterday’s US deal with Perrigo completed the unloading of Entocort, the Crohn’s disease drug that Astra had earlier sold ex-US to Tillotts Pharma, a unit of Zeria Pharmaceutical.

This closes the book on a non-core, off-patent drug for which Astra has received an immediate $595m combined – a sum not to be sniffed at, even in these days of cheap debt. Along the theme of ridding itself of non-core assets Astra sold OTC brands to Genomma and Myalept to Aegerion, though financials were not disclosed.

The sale of Caprelsa to Sanofi looks more like Astra being offered a price it could not turn down, oncology clearly not being non-core (Sanofi sees promise in Astra’s unwanted orphan Caprelsa, July 27, 2015).

Excluded from the list is last week’s swap deal with Sanofi over 200,000 compounds, which rather than being a divestment looks like a novel drug discovery tie-up. This seems similar to Astra’s 2013 alliance with Cancer Research UK to study AZD2098, a project originally designed for asthma, in renal cancer.

Mr Soriot’s list will interest those under the impression that Astra has just been boldly buying a pipeline through transactions like the mRNA deal with Moderna worth $240m up front – one of the first defining moves of Mr Soriot’s stewardship. Other prominent buys include Almirall’s respiratory business for an initial $875m, and Innate Pharma’s IPH2201, licensed in for $250m up front.

But obvious themes emerge among the divestments. One is what Astra considers non-core, such as the high-risk area of Alzheimer’s, as evidenced by transactions with Navidea on two beta-amlyoid imaging agents and with Lilly on a BACE inhibitor.

Any deal bankers pitching for business should take a good look at what else is in Astra’s portfolio; if the price is right the group will deal.

To contact the writers of this story email Jacob Plieth or Edwin Elmhirst in London at [email protected] or follow @JacobPlieth or @EPVantage on Twitter