AstraZeneca scouts new drug deals to silence a chorus of critics

The instant the news hit that Amylin had rebuffed a $3.5 billion buyout offer from Bristol-Myers Squibb ($BMY), analysts began to speculate that AstraZeneca might like to step in and make an offer the Amylin board couldn't refuse. The reasoning was simple: AstraZeneca ($AZN) CEO David Brennan needed to do something dramatic to demonstrate that he can strengthen a weak pipeline and add some significant revenue to the books. MedImmune, after all, hadn't performed to expectations. And Amylin's ($AMLN) Bydureon--for all the questions about its sales potential--could fit the bill. 

AstraZeneca's next step, probably being choreographed for some months, was to partner up with Amgen ($AMGN) on 5 antibody programs, paying a modest $50 million upfront. And now AstraZeneca R&D chief Martin Mackay insists that AstraZeneca is scouting the market for small acquisitions and more deals like the $1.2 billion rheumatoid arthritis package--$100 million upfront--it tied up with Rigel a couple of years ago. He also harkened back 5 years to a deal the company completed with BMS.

"I like the deals we've got with Bristol, with Rigel and with Amgen, and we're looking to do more of these kinds of deals," Mackay told Reuters' Ben Hirschler, who penned a story that included references to the litany of development woes at AstraZeneca. "It can involve smaller acquisitions ... but the notion of a mega-deal is not part of our strategy." Later in the story he added that he would be "disappointed" if the pharma giant hadn't struck more deals by the end of the year. The same message, no doubt, has been underscored with more vigor to the company's business development team.

The deal structure he was referring to looks a lot like the kind of pact that AstraZeneca struck with Targacept ($TRGT) for their depression drug program--a $1.24 billion deal structure. But no one wants to talk about that since the two companies recently dumped the therapy after it failed four out of four late-stage studies, highlighting how little late-stage success AZ has had in recent years. Given the lengthy timelines on early- and mid-phase drugs, though, a string of similar deals won't stop the criticism that AstraZeneca has faced from analysts. While Mackay insists that a mega deal solution is not on the table, he also wouldn't respond to Hirschler's query about any possible interest in either buying Amylin or stepping in to replace Eli Lilly's ($LLY) position in a marketing pact. 

That door might still be open.

- here's the story from Reuters