AstraZeneca auctions off troubled psoriasis drug to Valeant in $445M deal

Three months after Amgen ($AMGN) washed its hands of the psoriasis drug brodalumab, its development partner AstraZeneca ($AZN) has found the exit door as well. The pharma giant auctioned off the Phase III-complete therapy to the wheeler dealers at Valeant ($VRX) in exchange for $100 million upfront, $170 million in prelaunch milestones and another $175 million in sales bonuses.

Once tapped as a future blockbuster and a key player in AstraZeneca's turnaround story, Amgen walked away from their collaboration after the big biotech concluded that the link investigators defined between the drug and suicidal thinking made it a nonstarter in a crowded field. 

AstraZeneca execs evidently felt much the same way, putting the asset up for sale as it voiced its decision to continue moving toward a regulatory decision. 

But AstraZeneca likes to sell what is no longer central to its core task: completing a turnaround after scraping a clear low a few years ago with one of the weakest pipelines in the industry. Since Pascal Soriot took over as CEO, the company has opted to license out what he no longer feels will help complete the deal on his schedule. That meant licensing out a once key Alzheimer's program to Eli Lilly ($LLY) and then spinning out an early-stage antibiotics effort, after no one would buy it.

Valeant CEO J. Michael Pearson

The fact that Valeant stepped in to the breach at AstraZeneca fits into its mold as a willing and eager gambler, ready to make hay as the industry leaders scramble to get out of the storm. 

"It's very Valeant-esque in many ways. Picking up an abandoned biopharma asset," says Evercore ISI analyst Umer Raffat, noting that this deal gives the company its first biologic. "Also signals Valeant's increased interest in launch-ready assets (and hence, continued "organic growth"). Recall recent deals like Salix (IBS-D launch), Sprout (Addyi launch), and now this IL-17 ahead of FDA filing."

The company specializes in scooping up a variety of drugs others might find daunting. Just recently Valeant bagged a controversial new female libido treatment in a $1 billion buyout, adding women's health to the company's list of portfolio plays. And now it will make psoriasis a priority as well, despite squaring off against some major league rivals with a drug that now has a very bad rep in the industry.

Novartis ($NVS) is already well in front with its IL-17 program for secukinumab, approved in January as Cosentyx. Eli Lilly has also been racking up positive late-stage studies for its IL-17-blocking ixekizumab, trailed by Merck's ($MRK) MK-3222 and Johnson & Johnson's ($JNJ) IL-23 inhibitor guselkumab.

Back when AstraZeneca set out to convince investors to give Pfizer's takeover bid the cold shoulder, the pharma giant said brodalumab could earn $500 million to $1.5 billion a year, part of its $45 billion future, and several analysts took the cue in coming up with their own projections. Those numbers were swiftly discounted, though, after Amgen pulled out.

"We are delighted we were able to reach a licensing agreement with AstraZeneca to commercialize brodalumab, which is potentially the most efficacious therapy yet for moderate-to-severe plaque psoriasis," says Valeant CEO J. Michael Pearson, who seems to stir up equal measures of love and hate in the investment community. "We remain fully committed to dermatology and will continue to advance our pipeline of internally developed and acquired products."

- here's the release

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