Thursday, July 27, 2017

[U] This Almost Looks... Coordinated. But There's Nothing Wrong With That. [And It's Anti-Pfizer "Shark Repellent".]

UPDATED: See my "shark repellent" comments -- at bottom. Now you know.

AstraZeneca has taken a few hits in the last few days. I won't belabor its latest oncology miss -- as it is still possible that the full read out of longer-term, "overall survival" -- in about a year and a half, will vindicate that combo study.

But I will note that the joint announcement -- of a very large (even by Kenilworth's generally-gargantuan standards) research collaboration -- with perhaps ultimately up to $6.1 billion being paid to AZ by Merck, and $1.6 billion in upfronts and $750 million in license fees. . . is a "God-send" to AZ, especially right now. There is nothing improper about the two companies coordinating the announcement -- if it was known that the above mentioned study was due out -- same time. So -- well-played, to both teams. [And we must smile at the "mud in your eye," aimed at Mr. Read.]

Here is the story, overnight, from London -- followed by one from Bloomberg [on the potential implications for AZ's independence, likely primarily from Pfizer (again!)] -- and a bit:

. . . .AstraZeneca and Merck. . . today announced that they have entered a global strategic oncology collaboration to co-develop and co-commercialize AstraZeneca’s LYNPARZA (olaparib) for multiple cancer types. LYNPARZA is an innovative, first-in-class oral poly ADP ribose polymerase (PARP) inhibitor currently approved for BRCA-mutated ovarian cancer in multiple lines of treatment.

LYNPARZA’s pipeline has grown significantly in the last few years, with 14 indications currently being developed across several tumor types, including breast, prostate and pancreatic cancers. The strategic collaboration is expected to further increase the number of treatment options available to patients. . . .

[And, Bloomberg:] AstraZeneca's disappointing trial data for its highest-profile drug leaves it vulnerable to a takeover.

Unfortunately for investors, the U.K. drugmaker's management lacks the credibility to mount a strong defense that would force any predator to pay a full price. The obstacles to a bid may be more political than financial. The Cambridge-based pharma group saw its shares fall as much as 17 percent, taking up to 11 billion pounds ($14.5 billion) from its market value, after it revealed poor results for lung cancer treatment Imfinzi. . . .

The trials continue but the market's previous optimism has already been dashed. Setbacks in the lab are part of drug discovery. . . . Any science company needs an appetite for risk, just as much as the willingness to pull projects that look unlikely to pay off. . . .

To be sure -- we were definitely rooting for AZ, in the $120 billion would be Pfizer "Inpfersion" debacle -- of about a year and a half ago, for a full half year. So we too want to see a strong, robustly independent AstraZeneca. AND. . . so, this "economic tie-up version" of a takeover defense -- looks smart for both parties. [It is a far more friendly version of what J&J did, to Schering-Plough, related to Remicade, about a decade ago.]

And some other day, I will outline the "cooperative competition" theories that might underlie Merck's support today. Suffice it to say (for now) that Merck is acting in its own enlightened self interest, here.

Actually -- let me say it first (before someone else does): this deal could (should?) also be seen as a very friendly, sleepy "takeover" -- by Merck -- of one of the key assets that Pfizer (lagging in immuno-oncology, at present) might wish to get its hands on, in any AZ/Pfizer likely hostile attempt. Now these assets are without a doubt subject to a Merck veto, should a suitor appear -- friendly or otherwise. In sum, this deal is "shark repellent," primarily against Ian Read. [I suppose I've now buried my lead, but I'll bold it just for. . . fun!]

Onward, on a busy (but flawless, weather-wise) office day. Now you really know. Smile.


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