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June 12, 2014 2:35 pm
AstraZeneca has struck a deal worth up to $232m with a UK biotech company to develop a new asthma drug, highlighting its efforts to reinvigorate its research pipeline after rebuffing a near-£70bn takeover offer from Pfizer.
The deal with Synairgen will give AstraZeneca rights to an experimental treatment for viral infections in severe asthmatics – potentially boosting its position among rivals including GlaxoSmithKline and Novartis in the market for respiratory drugs.
AstraZeneca is trying to refill its research and development pipeline after the loss of patent protection on several older medicines, which has caused revenues to fall by nearly a quarter in the past three years.
Pressure to revive growth has increased since the company rejected Pfizer’s approach last month, with Pascal Soriot, chief executive, eager to convince shareholders that his go-it-alone strategy will produce more value in the long run.
Analysts at Cenkos, a small-cap broker that has tracked Aim-listed Synairgen, said the company’s drug, known as SNG001, had “blockbuster potential” because of the high mortality risk and heavy hospital costs associated with viral infections in severe asthmatics.
AstraZeneca will pay an upfront fee of $7.25m with further potential payments of up to $225m subject to the drug meeting development, regulatory and commercial milestones. Synairgen would also receive royalties on an any eventual sales.
The drug has shown promise in mid-stage trials with AstraZeneca planning to launch a further study next year.
The deal highlights the increasing importance of licensing deals between large drugmakers and small biotech companies in the development of new medicines, as big pharma battles to increase R&D productivity.
“We view this as a landmark deal in the UK biotechnology sector, following a drought of deals in recent years, and emphasises . . . the attractiveness of the UK biotechnology market in terms of opportunity and untapped value,” said Cenkos.
AstraZeneca’s tie-up with Synairgen comes less than two weeks after GSK announced a partnership worth up to $350m with Adaptimmune, an Oxford-based biotech company, to develop cancer therapies.
Shares in Synairgen rose almost 40 per cent to 74p after the deal was announced on Thursday, but remain far below their £1.68 peak after the company floated in 2004. Shares in AstraZeneca were up just over 1 per cent at £44.47.
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