AstraZeneca has reached a deal to buy partner Bristol-Myers Squibb out of their diabetes venture and secure sole rights to key growth drugs such as Onglyza and Forxiga.
The deal includes $2.7bn upfront, with a little over $1.6bn in additional payments possible depending on regulatory milestones and earnings from the alliance products and royalties on sales back to 2025, said AZ in a statement.
Analysts at Panmure Gordon said the deal seemed “sensible”, particularly in light of the fact that AZ paid $3.5bn for its 50 per cent share in Amylin alongside BMS last year.
AZ now has full control of three Amylin-developed products, namely the GLP-1 agonists Byetta (exenatide), Bydureon (exenatide extended-release) and Symlin (pramlintide acetate), as well as metreleptin for lipodystrophy which has just been given a priority review in the US.
More importantly, given that the Amylin products have not yet lived up to sales expectations, it secures outright ownership of DPP-4 inhibitor Onglyza (saxagliptin) and SGLT-2 inhibitor Forxiga (dapagliflozin), drugs in two classes that are predicted to become dominant in type 2 diabetes in the coming years.
BMS’ appetite for the alliance may have been sapped by setbacks for both Onglyza and Forxiga. In the summer Onglyza failed to show any benefit over placebo in the large-scale SAVOR-TIMI-53 cardiovascular outcomes study, while Forxiga was rejected by the US FDA last year amid concerns about its risk-to-benefit profile.
Speculation that BMS would decide to exit the alliance had been bubbling away since it narrowed its R&D focus last month, with discovery research in diabetes one of the fields to be cut alongside hepatitis C and neuroscience. At the time the company said it wanted to focus on priority areas such as immuno-oncology.
AZ’s chief executive Pascal Soriot said that “consolidating ownership of the diabetes portfolio would benefit both companies and allow us to better serve the needs of diabetic patients”.
He added that the deal “reinforces AZ’s long-term commitment to diabetes, a core strategic area for us and an important platform for returning [the company] to growth”.
The deal should add a lot to AZ’s revenue line, but also hike costs as it will eventually absorb around 4,100 BMS and Amylin employees dedicated to the diabetes business. The agreement is expected to close in early 2014 subject to antitrust reviews, and AZ expects to fund it from cash and short-term credit.