November 25, 2004

AstraZeneca: Antibody Agreement Provides Welcome Respite

AstraZeneca has agreed to pay UK biotechnology company Cambridge Antibody Technology (CAT) $139 million for a 20% stake, as part of an alliance. Following AstraZeneca's 2003 alliance with US biotechnology company Abgenix to develop monoclonal antibody treatments for cancer, this new deal further underlines the company's intention to diversify into the antibody market. Antibody therapy is one of the fastest growing areas of the pharmaceutical market, expected to reach the $25 billion mark by 2010.

CAT, a world leader in antibody therapy, has co-developed the highly successful arthritis product Humira with Abbott Laboratories [ABT]. Humira is projected to be a blockbuster: it is forecast to achieve sales of $1.5 billion for Abbot in 2005. However, both companies are now legally disputing the structuring of the deal.

CAT and AstraZeneca are looking to develop drugs through an R&D alliance, principally in the area of inflammatory disorders, including respiratory disease. While CAT will be responsible for early stage research development, AstraZeneca will be responsible for the clinical trials, regulatory filings and commercialization of the therapy. However, as a part of the deal, CAT will be allowed to participate in the product commercialization. AstraZeneca will also receive rights to opt into existing and future discovery programs that CAT may undertake.

AstraZeneca will hope that the deal builds on its intention to pioneer new therapeutics for inflammatory and respiratory diseases. It is looking to boost its fairly immature pipeline, with only two products currently forecast to launch before 2010. The significance of the deal is heightened further as several of AstraZeneca's projected blockbusters are currently facing regulatory investigation over safety concerns, including the cancer drug Iressa and Crestor, a cardiovascular therapy.

The deal between CAT and AstraZeneca is a strong alliance between two leading companies. It should strengthen AstraZeneca's future prospects and growth considerably, both in the respiratory market, in which it already operates, and in other inflammatory disease areas. It may also mitigate any fallout from the ongoing safety concerns surrounding some of its other products.