Leo strikes $1B deal for AstraZeneca’s late-phase atopic dermatitis drug

Leo Pharma

EuroBiotech logoLeo Pharma has agreed on a deal worth upward of $1 billion (€900 million) to buy the global rights to AstraZeneca’s ($AZN) atopic dermatitis drug tralokinumab in dermatology indications. The deal gives Leo a drug that has already cleared Phase IIb at a time when it is trying to build out its dermatology business.

Ballerup, Denmark-based Leo is handing over $115 million in return for the exclusive global rights to the injectable tralokinumab in dermatology indications. Leo has also committed to paying out more than $1 billion in commercial milestones and tiered royalties in the mid-teen range. In return, the Danish drugmaker is gaining an anti-IL-13 monoclonal antibody that delivered statistically significant improvements in Eczema Area and Severity Index (EASI) scores in patients with moderate-to-severe atopic dermatitis in a 12-week Phase IIb trial.

The deal, which allows AstraZeneca to keep the rights to tralokinumab in respiratory diseases, comes amid a period of intense interest in atopic dermatitis. In May, Pfizer ($PFE) inked a $5.2 billion deal to acquire Anacor Pharmaceuticals ($ANAC) and its drug for mild-to-moderate forms of the condition. And, at the more severe end of the disease spectrum, Regeneron ($RGEN) and Sanofi ($SNY) have made waves with data from a Phase III trial of their injectable dupilumab. Leo will need to deliver data on tralokinumab that allows it to carve out a niche in the busy space if the deal is to pay off.

In a separate agreement, Leo has also picked up the European rights to brodalumab, a psoriasis drug that has pinballed between drugmakers over the past 14 months. Amgen ($AMGN) was developing the drug with AstraZeneca until May 2015 when the Big Biotech decided to pull out of the alliance amid concerns over the commercial consequences of the suicidal thoughts reported by some clinical trial participants. In September, Valeant ($VRX) licensed the drug from AstraZeneca for $100 million upfront, $170 million in prelaunch milestones and $175 million in sales-related payouts.

Now, Valeant has amended the deal to return the European rights to brodalumab. AstraZeneca, in turn, has sold on the European rights to Leo in a deal described by the Big Pharma as having “similar terms” to those agreed with Valeant. The deal gives Leo access to a drug that is more advanced than tralokinumab--an approval decision in Europe is pencilled in for early next year--and has commanded near-blockbuster sales forecasts. However, events since Amgen’s action have taken some of the shine off a drug that AstraZeneca once used as a central pillar of its defense against Pfizer's M&A interest.

Responsibility for making a success of the drug in Europe will now fall on Leo, a 100-year-old firm that is in the middle of an unusually busy period of dealmaking. Earlier this year, Leo closed a €675 million takeover of Astellas’ dermatology division. By adding AstraZeneca’s assets to this new unit, Leo has expanded beyond topical dermatology products and into biologics.

- read Leo’s release
- and AstraZeneca’s statement

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