AstraZeneca ($AZN) agreed to buy ZS Pharma ($ZSPH) and its pending-approval kidney drug, one-upping rival bidder Actelion to get its hands on what it believes is a blockbuster in the making.
|ZS Pharma CEO Robert Alexander|
Under the deal, expected to close by year's end, AstraZeneca will trade $90 per share of ZS and absorb the company and its 200 employees, based in the U.S. The big get is ZS-9, a late-stage treatment for hyperkalemia, which is a disease in which dangerously high potassium levels threaten kidney and heart function. The drug met its goals in late-stage development and is awaiting a final FDA decision, which the agency has promised to hand down by May 26. AstraZeneca said global peak sales for ZS-9 could exceed $1 billion a year.
AstraZeneca's winning bid comes about two months after Actelion confirmed that it was in the midst of "preliminary" buyout discussions with ZS, negotiating a deal rumored to total about $2.5 billion. Little came of that news in the ensuing weeks, and AstraZeneca's success suggests either Actelion got outbid or lost interest.
But the landscape in hyperkalemia has changed since rumors began swirling around ZS. Last month, rival Relypsa ($RLYP) won FDA approval for its potassium-blocking Veltassa but ended up with an agency-mandated black-box warning, cautioning patients that taking it alongside other oral drugs could dampen their effect. The label came as a surprise to investors and marred Relypsa's share value despite the company's efforts to quell concerns.
And thus ZS-9's fate, and the perceived wisdom of AstraZeneca's buyout, will hinge on labeling. If ZS's drug is approved without the boxed warning and with more manageable dosing instructions, it will likely emerge as the dominant treatment in hyperkalemia.
For AstraZeneca, the buyout is part of an effort to fortify its work in cardiometabolic disease, one of the company's three pillars of R&D. ZS-9 joins the late-stage roxadustat, a FibroGen ($FGEN)-partnered anemia treatment, and early-stage therapies for diabetic kidney disease, diabetes and acute coronary syndrome.
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