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Angry AstraZeneca investors may hold the only key to a Pfizer deal

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Now that AstraZeneca's ($AZN) board has nixed Pfizer's ($PFE) "final" offer, the proposed $119 billion megamerger would seem to be all but dead. Pfizer's already given up the option of going hostile, which is easier in the U.K. than it is in the U.S. And British M&A rules prevent Pfizer from topping a final bid, barring some unlikely last-minute gambits.

But signs of investor unrest have begun to surface at AstraZeneca. And the rebels may hold the only key to restarting controversial negotiations.

One of the Big 10 investors anonymously grumbled to The Financial Times that AstraZeneca had made "a gross miscalculation." Schroders, a top 20 investor which owns 2.1% of the pharma giant, joined Jupiter in going public with its displeasure, not the least bit happy that AstraZeneca's board sent Pfizer packing after its last £55-per-share offer.

"Schroders notes with disappointment the quick rejection by the AstraZeneca board of the latest offer from Pfizer and the decision of the Pfizer board to draw a premature end to these negotiations by calling their latest proposal final," Schroders said in a statement. And they want to see both parties sit down at the bargaining table to see if they can hash out a deal.

That's not what you want to hear after saying 'no' to $119 billion.

But the AstraZeneca board has its supporters among the ranks of big investors as well. Investor AB of Sweden, based in a country that was bracing for some more vicious R&D cuts at the hands of Pfizer, gave the rejection a thumb's up, according to The Financial Times, which has excelled at covering every aspect of this story in careful detail. M&G, another top investor, did as well.

AstraZeneca's biggest success, as noted in FiercePharma, was making Pfizer's takeover bid a story of a big bad corporate giant (Pfizer) out to mangle a successful comeback team that had demonstrated great promise in oncology and other segments of a much larger pipeline. Neil Woodford, the influential U.K. fund manager who recently struck out on his own, picked up on that theme with his own endorsement of the rejection.

"Two years ago AstraZeneca's Research & Development division was languishing, riven with risk aversion following a string of late stage pipeline disappointments. Risk committees and bureaucracy were suffocating the process of drug discovery," Woodford blogged. "Less than two years on, under the leadership of Pascal Soriot, the division has been liberated and the late stage portfolio has been transformed from one of the poorest in the industry to arguably the best. It now boasts 19 products that are either in or entering late stage trials by the end of 2015. Each of them has the potential to deliver significantly improved patient outcomes and billions of dollars in sales. In summary: same science, many of the same people, different leadership, different results."

Pipelines typically look a whole lot better when you're assessing the peak potential of experimental therapies, rather than tracking the actual sales results for those therapies that actually make it to an approval. But AstraZeneca has won some much-needed respect in recent days, and that's evidently worth a bigger premium than Pfizer--with its nasty rep for bungling big takeovers--can pay. -- John Carroll (email | Twitter)

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