Biotech Values

[DewDiligence]

Deals for $800M Boost AZN Pipeline

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070131:MTFH21913_2...

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By Ben Hirschler

LONDON, Jan 31 (Reuters) - AstraZeneca Plc <AZN> signed two deals together worth up to $800 million on Wednesday to boost its early-stage pipeline in respiratory medicine and win it a foothold in the fast-growing area of obesity research.

In both cases, however, the experimental products licensed in have yet to enter clinical trials and it will be many years before they reach the market.

Unlisted British biotech firm Argenta Discovery will get $21 million upfront and could earn as much as $500 million from its alliance on better bronchodilators to treat chronic obstructive pulmonary disease (COPD), or smoker's lung.

And U.S.-based Palatin Technologies Inc <PTN> stands to gain up to $300 million, after granting AstraZeneca access to its novel compounds for fighting obesity. Its upfront payment is $10 million.

Both biotech firms will also get royalties on any eventual sales.

The relatively high prices paid for rights to drugs which have yet to prove their worth in human testing highlights the scramble among big pharmaceutical companies for promising products to fill depleted in-house pipelines.

AstraZeneca will announce full-year results on Feb. 1, when its management is expected to be quizzed about pipeline strategy, following a series of recent high-profile setbacks.

Jan Lundberg, head of discovery, said the deal with Palatin -- whose shares jumped 18 percent in early U.S. dealings -- reflected a recent decision to re-focus AstraZeneca's disease research and make diabetes and obesity a priority area.

AstraZeneca earlier this month signed a deal to develop and sell two of Bristol-Myers Squibb Co's <BMY> experimental diabetes drugs in a deal that could bring Bristol-Myers more than $1 billion.

REGULATING ENERGY

Palatin is developing a new type of anti-obesity medicine targeting melanocortin receptors in the body, which are thought to play a key role in regulating energy equilibrium.

One of the first steps of the new collaboration will be to select a lead drug candidate for clinical evaluation, although AstraZeneca declined to say when clinical trials would start.

The Argenta project, meanwhile, dovetails with AstraZeneca's existing strength in respiratory medicine. Its asthma drug Symbicort had sales of $276 million in the third quarter of 2006 and is expected to be launched in the United States this year.

Symbicort competes with GlaxoSmithKline Plc's <GSK> top seller Advair.

Scientists from AstraZeneca and Argenta will work together to find new types of two kinds of respiratory drugs -- known as LAMA and MABA medicines -- that could be developed as once-daily therapies.

The first drug candidate from the collaboration is expected to enter human testing in 2008.

Argenta, which was founded in 2000 and employs around 125 people, aims to use funds from the AstraZeneca deal to advance its own respiratory anti-inflammatory programmes into the clinic.

Asked about possible plans for an eventual initial public offering for Argenta, a spokesman said: "All options are open."

Argenta has raised a total 17.4 million pounds ($34.2 million) in three funding rounds from venture capital backers including MVM, 3i Group, ABN AMRO Capital, TTP Ventures and SG Asset Management.
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