Astra steps back on M&A path with Novexel deal


Amid the flurry of bolt-on acquisitions this year by European big pharma in an attempt to diversify and bolster ailing pipelines, AstraZeneca has been conspicuous by its absence so far from these deals. That is until yesterday when the UK group purchased private French anti-infectives specialist Novexel for $350m, its first company acquisition since paying over the odds for MedImmune two and a half years ago, a move that cost a whopping $15.6bn.

Alongside the acquisition Astra also struck a risk and cost sharing deal with Forest Laboratories over two of Novexel’s pipeline antibiotic combination products, a trademark strategic move for the UK pharma giant. As for Novexel EP Vantage previously highlighted the company as one to watch in 2009 and it seems Astra’s offer was simply too good to refuse, given its healthy cash reserves and stated intention of building a specialty pharma group (EP Vantage Interview - Novexel making a name in antibiotics, November 25, 2008).

Risk sharing

Astra has agreed to pay $350m upfront with an additional $75m payable if certain development milestones are reached, and will also return Novexel’s current cash reserve of around $80m to its shareholders.

However, once the deal completes in the first quarter of 2010, Astra will actually recoup 50% of the acquisition cost from Forest who will pay $210m for the North American rights to two antibiotic combination products based on Novexel’s beta-lactamase inhibitor NXL-104: ceftazidime/NXL-104 (CAZ104) and ceftaroline/NXL-104 (CEF104).

Forest had previously licensed NXL-104 from Novexel in January 2008 for use in combination with its own ceftaroline and also held an option to develop the ceftazidime/NXL-104 product. In August this year Forest licensed European rights to ceftaroline to Astra, somewhat surprisingly the financial details of the deal were never disclosed - could it have been because negotiations with Novexel were ongoing?

Responsibility for developing both combination products will be equally shared by Forest and Astra, not only splitting the significant costs of large scale clinical trials but crucially the inherent risks involved. This risk and cost sharing approach to drug development is now a core strategy for Astra, highlighted by its collaboration with Bristol-Myers Squibb in 2007 over diabetes drug Onglyza, recently reiterated by Shaun Grady, vice president of deal management for Astra (EP Vantage Interview - Astra mixing it up and keeping deals flowing, November 4, 2009).

Anti-infectives focus

The deals this year with Forest and Novexel confirm anti-infectives as an increasingly important therapy area for Astra as it faces major generic challenges to its biggest selling products over the next few years.

Sales of anti-infective products, including vaccines, were $1.92bn last year representing just 6% of the group’s total pharmaceutical revenues of $30.3bn. However, this is set to almost to double by 2014 to an 11% share of total sales, according to EvaluatePharmaforecasts. The successful development of these licensed and acquired products will no doubt increase this further in the years thereafter.

As well as the combination products based on NXL-104, phase III trials of ceftazidime/NXL-104 should start by the end of 2010. Another key Novexel drug is NXL103, an oral streptogramin antibiotic which reported positive phase II data earlier this year. Novexel had been seeking a partner for NXL103 before taking it into pivotal trials.

Meanwhile Astra’s expansion into the anti-infectives space and apparent appetite for further deals should be music to the ears of a number of small to medium sized private and public biotechs seeking an all important licensing deal or acquisition. Cubist Pharmaceuticals’ acquisition of Calixa Therapeutics last week further indicates the M&A potential within the field.

The likes of Optimer Pharmaceuticals and Cempra Pharmaceuticals may be hoping 2010 will be the year the big pharma spotlight falls upon them.

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