AstraZeneca how has confirmed that it intends to take a majority stage in privately held US/Dutch clinical stage biopharma Acerta Pharma in a deal valued at $4 billion.
The drugs giant said it will pay Acerta $2.5 billion upfront, plus an unconditional $1.5 billion either on receipt of the first regulatory approval for cancer drug acalabrutinib in the US, or the end of 2018, depending on which comes first.
The agreement also provides Acerta’s shareholders the opportunity to sell, and AZ to buy, the remaining 45% of the firm’s shares. These options can be exercised at various points in time, conditional on the first approval of acalabrutinib in both the US and Europe and when the extent of the commercial opportunity has been fully established, at a price of around $3 billion net of certain costs and payments incurred by AZ.
Acalabrutinib is being tested in a variety of leukaemia’s, lymphomas and other cancers, and alongside Merck & Co’s immunotherapy Keytruda (pembrolizumab). The drug is a BTK inhibitor with a mode of action similar to AbbVie/Johnson & Johnson’s blood cancer drug Imbruvica (ibrutinib), which is widely expected to rake in peak sales in excess of $5 billion.
Early clinical data looks promising; results from a Phase I/II study recently published in the New England Journal of Medicine showed a 95 percent response rate in patients with relapsed chronic lymphocytic leukaemia, the most prevalent form of adult leukaemia.
“Acalabrutinib provides us with a small molecule presence in blood cancers to complement our existing immunotherapy approach, in collaboration with Celgene in haematological malignancies,” said AZ’ chief executive Pascal Soriot. “Furthermore, we look forward to working closely with the Acerta team and benefiting from the considerable clinical expertise they bring in this complex area of medicine”.
The move falls in line with AZ’ strategy of focusing acquisitions to boost its long-term growth prospects. Just last month, the company announced plans to buy US biotech ZS Pharma for $2.7 billion, gaining access to its flagship cardiovascular compound, a potential best-in-class treatment for hyperkalaemia - a condition characterised by elevated levels of potassium in the blood linked with increased mortality in chronic kidney disease and coronary heart failure.
The transaction with Acerta is expected to complete by the end of the first quarter of 2016, subject to customary closing conditions, and be moderately dilutive to AZ’ core earnings in the near term.