AstraZeneca hopes to take off heat with gout acquisition


There is no doubt that AstraZeneca’s management and in particular David Brennan, chief executive, has to do something to help the group reverse its dismal looking growth prospects and equally importantly silence the shareholder disquiet that had led to calls for change at the top (Pipeline setbacks hurt AstraZeneca, December 20, 2011).

Astra today announced that it would be buying Ardea BioSciences for $32 a share. However, whether spending $1.26bn on a company chiefly for a still risky phase III gout drug is part of the answer to the group’s disaster prone pipeline and stagnant stock price, is itself a big question.

Sizeable opportunity

Astra’s gamble on Ardea is hinged on the future prospects of lesinurad. The drug is a selective URAT1 inhibitor, which is being developed as an add-on treatment for generic gout drug allopurinol. In afternoon trading Astra shares were 2% lower at £28.14, amid broader market declines.

Given rising gout levels, linked to increases in obesity and diet changes, as well as declining responses to standard of care allopurinol, analysts believe the drug could be a blockbuster (Therapeutic focus - Gout pipeline looks thin but holds promise, May 26, 2011).

Current forecasts for 2018 sales of lesinurad stand at $1.1bn and according to EvaluatePharma’s NPV analyzer the drug is worth $1.78bn to Ardea. By paying $1.26bn and taking into account Ardea's $289m in cash, Astra would appear to be making a good buy.

This depends on lesinurad living up to those expectations - these figures assume lesinurad will get approved and there is still a lot of risk attached to the drug.

The once-daily pill targets URAT1, a transporter in the kidney that regulates uric acid excretion from the body. By boosting this process there are worries that there could ultimately be safety signals thrown up in the kidneys or liver.

Tough market

Even if lesinurad does avoid safety issues and gets approved it will launch into a market that is still dominated by generic allopurinol. Although the drug’s effectiveness has been questioned, it is generic and cheap and therefore doctors are almost certain to start new patients on it first, rather than any newer, more expensive alternatives.

For demand to exist for lesinurad, its benefits as an add-on to allopurinol need to outweigh the additional costs of the combination, and it has to prove safe. Having the might of Astra behind it and a large primary care sales force will certainly help.

Takeda’s gout drug Uloric, approved in the US in 2009, has not had the fastest of launches, acheiving $115m in sales in 2011. This product reveals the challenges in a market where, while there is a need for newer treatments, it can be hard for companies to make products successful.

Trial and no errors

Ardea appears to be trying to address some of these issues with its current crop of phase III trials, which include the drug combined with allopurinol, added to Uloric, and as a monotherapy in allopurinal intolerant patients.

If it succeeds as a combination product with both Uloric and allopurinol – previous trials of lesinurad and allopurinol against allopurinol alone have shown increased efficacy from 25% to 70% - then the drug could live up to its sales forecasts.

AstraZeneca’s move today also shows the growing interest in the gout market. Last week Takeda paid $800m for URL Pharmaceuticals to extend its gout franchise (Takeda beefs up gout franchise with URL acquisition, April 12, 2012). Indeed it is this growing interest in gout that makes Takeda one of the few companies that might spoil the party for AstraZeneca with a competing bid.

But for now Astra has made the first move and one that it hopes will not only ease the sting of patent losses from some of its biggest products, but also the disappointments served up by its existing pipeline.

With Astra ruling out mega-mergers more of these deals will be needed, if not the purchase of marketed products, and they will need to prove successful moves. If lesinurad does fail in phase III trials Astra will again be punished for its poor acquisition track record.

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