At this point perhaps the best that Astrazeneca can hope for from its deals for ZS Pharma and for Almirall’s respiratory portfolio is that it learns from them. The $2.7bn takeout of ZS in 2015 looks like a bad misstep now that ZS-9, the sole asset involved, has just received its second US complete response letter citing the same manufacturing problems as the first.
And paying $600m up front for Allergan’s respiratory franchise the same year also looks like an error given that it has now sold one of these drugs, the COPD therapy aclidinium, on to Circassia – a company with its own problems – initially for just $50m in stock.
The ZS acquisition was expensive from the start, even with 2020 sales forecasts for the hyperkalaemia candidate ZS-9 then hovering at near-blockbuster levels, according to EvaluatePharma’s sellside consensus (Astrazeneca pips Actelion to ZS Pharma, November 6, 2015).
Those days are long gone. Current EvaluatePharma forecasts for ZS-9 – dating from before yesterday’s CRL – put 2020 sales at $488m, reaching $715m in 2022. If expectations are again lowered the asset will drop from being the expected best-selling high-potassium treatment in 2022 to second place, after Galenica’s Veltassa.
|Current hyperkalaemia drug forecasts|
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|Kayexalate (Torii Pharmaceutical)||19||20||18||17||16||15||15||14|
Galenica is now free to capitalise on its advantages for a little longer: Veltassa was first approved in the US in late 2015, and a boxed warning was removed from its label last November. Galenica paid just $1.5bn for Veltassa’s originator, Relypsa, suggesting that its management are savvier dealmakers than Astra’s – though some might argue that this is faint praise.
But the embarrassing aspect of yesterday’s US knockback was that Astra insisted that it would not happen: the company said it had fixed the manufacturing issues identified in ZS-9’s first CRL back in May. Not so much, said the FDA, and now it is unlikely that ZS-9 will be approved in the US in 2017. At least Astra can look forward to getting ZS-9 on sale in Europe this year, after the CHMP’s positive opinion in February.
In and out
While the ongoing disaster of the ZS acquisition generated the most investor interest today, a separate deal, with Circassia, raised fresh questions about Astra’s earlier willingness to overpay in an asset-buying binge.
Circassia is acquiring US rights to the respiratory drug aclidinium for just $50m up front in equity. Astra had bought these in 2015 from Allergan in a deal worth $600m up front, though the portfolio also included the oral COPD drug Daliresp, which remains with the UK company.
The Circassia deal also includes possible further fees, comprising a near-guaranteed $100m within two years or if aclidinium’s combination with formoterol secures US approval (this milestone has effectively been passed on from the Allergan tie-up), and up to $80m if Circassia buys Astra out of an initial profit-sharing deal on aclidinium monotherapy. Nevertheless, even if all these fees come due Astra’s Allergan deal looks in hindsight to have been rich.
Aclidinium monotherapy, branded Tudorza, last year sold $80m in the US, while Astra’s US Daliresp revenues amounted to $134m. The aclidinium plus formoterol combo, known as Duaklir, is to be filed with the FDA in about a year; it sold $78m outside the US last year.
This is not the first time that Astra’s fixation with respiratory medicine has raised eyebrows; aclidinium has long been seen as a pedestrian drug, and the huge pricing pressures felt by Glaxosmithkline point to a market being commoditised by the expected entry of generic versions of Advair.
Astra’s first bite at aclidinium came in a deal with its originator, Almirall, and that at least seemed to have had a price that reflected its low potential (Astra’s bargain basement move sends competition a message, July 30, 2014).
For Circassia gaining rights to Tudorza and Duaklir continues a transformation into a respiratory player that had started with the twin purchases of Prosonix and Aerocrine in May 2015. This has allowed the company to draw a discreet veil over its earlier focus on allergy – a strategy that came seriously unstuck with last year’s blow-up of its lead cat-allergy vaccine project.
Circassia’s stock surged 20% this morning, but it is hard to believe that a small UK biotech can make a better fist of selling a failing respiratory drug in the US than a big pharma had done.