AstraZeneca bets on respiratory growth with $2.1B Almirall deal

AstraZeneca ($AZN) has signed an agreement to pick up Almirall's respiratory business for up to $2.1 billion, hoping to shoulder its way to the front of a blockbuster market for COPD treatments.

Under the deal, AstraZeneca will hand over $875 million up front with the promise of $1.2 billion more tied to R&D and commercial milestones. In exchange, it gets Almirall's entire cadre of lung treatments and delivery devices, led by the on-the-market COPD drug Eklira.

Atop the Spanish company's respiratory pipeline is the late-stage LAS40464, a Forest Laboratories-partnered combination of the long-acting muscarinic antagonist (LAMA) Eklira with formoterol, a long-acting beta agonist (LABA); the Phase II LAS100977, a once-a-day LABA; three early-stage M3 antagonist beta2-agonist treatments; and a slew of preclinical programs, according to AstraZeneca.

Those assets dovetail with AstraZeneca's Symbicort and Pulmicort, which brought in a combined $4.4 billion last year, and the Phase III asthma treatment benralizumab, in-licensed from Japan's Kyowa Hakko Kirin.

AstraZeneca CEO Pascal Soriot

The deal follows AstraZeneca's $1.2 billion acquisition of Pearl Therapeutics last summer, a move that brought in a Phase III LABA/LAMA combo of its own, reflecting the company's confidence in the spacious respiratory market, CEO Pascal Soriot said.

"By combining our innovative portfolios and leveraging AstraZeneca's global scientific and commercial capabilities, we will strengthen our ability to address the entire spectrum of care in asthma and COPD," Soriot said in a statement.

AstraZeneca is setting its sights on global respiratory leaders GlaxoSmithKline ($GSK) and Novartis ($NVS), and the U.K. drugmaker has its work cut out for it. GSK and partner Theravance ($THRX) are already on the market with the U.S.'s first LABA/LAMA combination in Anoro Ellipta, and the two are moving into Phase III with a daily treatment that adds a corticosteroid to the mix. Meanwhile, Novartis has launched a COPD cocktail of its own in Europe, and Boehringer Ingelheim is nearing approval with the similar combination of tiotropium and olodaterol.

It's a crowded space, but AstraZeneca's repeated buyouts signal a belief that the respiratory market has room to grow and accommodate multiple blockbusters. COPD affects about 27 million people in the U.S. alone, and Citigroup estimates the market for treatments will jump from $10 billion in 2013 to $14 billion in 2018.

AstraZeneca expects the Almirall deal to wrap up by year's end, and the two said in a statement that "a significant number" of the latter company's employees will make the transition once it does.

- read the announcement