AstraZeneca ($AZN) and Amgen ($AMGN) struck a collaboration deal today designed to strengthen each company where it needed help the most. AstraZeneca partnered on a slate of 5 early- to mid-stage anti-inflammation antibody candidates, adding to the potential of a weak pipeline. And Amgen picked up a $50 million upfront payment and a deep-pocket partner able to cover some of the burn on R&D expenses.
In the deal, the two big developers agreed to set up joint governance groups for AMG 139, AMG 157, AMG 181, AMG 557 and brodalumab (AMG 827). AstraZeneca, though, will finance about two thirds of the R&D expenses for 2012 to 2014 with an even split envisioned from 2015 on. AstraZeneca takes the lead on 139, 157 and 181, while Amgen is primarily responsible for calling the shots on 557 and 827. They also agreed to a split of the profits for any treatments that move on to an approval.
The deal is driven by some stark realities at each big company. AstraZeneca has been faced with growing pressure to bolster a weak pipeline, especially after a partnered depression drug program with Targacept ($TRGT) failed a slate of late-stage trials. And Amgen was forced to restructure its R&D effort last fall after research expenses climbed past the 20% mark as late-stage programs ate a growing chunk of capital.
"For AstraZeneca investors, the deal is a non-dilutive way to replenish its pipeline and is clearly preferable to large-scale M&A," noted Savvas Neophytou at Panmure Gordon. "To boot, the assets under license are biologicals, which plugs a gap and provides a better balance to the pipeline. More deals of this nature are expected."
Analysts also noted that the deal gives AstraZeneca a chance to finally demonstrate some added value from its acquisition of MedImmune. But not everyone was cheering the news. "It's hard to see what AstraZeneca brings to the table other than cash and the ability for Amgen to maintain their share buybacks and dividends," Sanford Bernstein biotech analyst Geoffrey Porges told Reuters. "The fact that Amgen has to partner yet another one of their strategic initiatives isn't really going to fill investors with very much confidence."
The most advanced program in the lot is 827, brodalumab, which is on the threshold of Phase III for psoriasis and in mid-stage studies on psoriatic arthritis and asthma. The rest of the antibodies in the deal are in Phase Ia or Ib studies.
"We are delighted to join forces with Amgen in developing and commercializing these novel clinical-stage assets that add value to our pipeline and build on our expertise in biologics. This creative collaboration will make the most of both companies' respective capabilities, including AstraZeneca's extensive global reach, to help bring these potentially innovative treatment options for a variety of respiratory and inflammatory diseases to patients around the world," said AstraZeneca chief David Brennan.