AstraZeneca insisted today it is still on track to return to growth over the next two years, despite finishing the fourth quarter of last year with a 38% plunge in net income that swung the company’s results into the red.
The pharma giant also announced a pair of initiatives designed to bolster its product portfolio and its R&D effort. AstraZeneca will pay “an initial consideration” of $600 million for U.S. and Canadian rights to Actavis’ branded respiratory drug business in the U.S. and Canada. The company also won planning approvals for a new global R&D center and corporate headquarters in Cambridge, U.K.
AstraZeneca disclosed the initiatives on the day it reported a Q4 2014 net loss of $321 million, a 38 percent drop from last year's $1.5 billion net profit, on revenue that dipped 2% from the final three months of 2013, to $6.68 billion. The company fared better in full-year results, finishing all of 2014 with net profit of $5.396 billion, down 15% from Q4 a year ago.
The company blamed currency fluctuation—namely the strength of the U.S. dollar in recent months against European and Asian currencies—as well as a $113 million charge to reflect new regulations requiring pharmas to recognize the branded pharmaceutical fee imposed as part of the Affordable Care Act as accruing as each sale occurs.
AstraZeneca also cited rising costs in adjusted or “core” R&D, which jumped 17% to $1.36 billion to reflect accelerated development of pipeline compounds and costs of acquired products; and a 23% jump in core selling, general and administrative expense (SG&A) as a decline in G&A costs was more than made up by increased sales and marketing expenses due to acquiring the diabetes business once co-owned with onetime collaboration partner Bristol-Myers Squibb (BMS) for $3.3 billion plus possibly an additional $800 million, in February 2014.
AstraZeneca added that it incurred additional costs to support on-going launches, including Farxiga/Forxiga and Lynparza, as well as for pre-launch activities for Movantik/Moventig and late-stage pipeline drugs, including the oncology portfolio.
The company trumpeted 2014 accomplishments that included six approvals for new products, and growth across its therapeutic areas: Diabetes sales more than doubled (up 139%) over 2013, reflecting the purchase from BMS, while blood thinner Brilinta (ticagrelor) sales zoomed 70%.
“With the depth of our science and the momentum we have built across our organi[z]ation, we are on track to return to growth by 2017 and are well positioned to deliver our long-term goals,” AstraZeneca CEO Pascal Soriot said in a statement.
AstraZeneca moved to bolster its holdings in a key therapeutic area by snapping up U.S. and Canadian rights from Actavis to its branded respiratory treatments. In addition to the initial money, AstraZeneca agreed to pay Actavis an additional $100 million in return for amendments to the companies’ ongoing collaboration agreements.
AstraZeneca said that as a result of the deal with Actavis, it will own development and commercial rights in the US and Canada to TudorzaTM PressairTM (aclidinium bromide inhalation powder), a twice-daily long-acting muscarinic antagonist (LAMA) for chronic obstructive pulmonary disease (COPD), and Daliresp® (roflumilast), the only once-daily oral PDE4 inhibitor currently on the market for COPD.
The two products had combined annual sales in the U.S. of approximately $230 million in 2014. According to AstraZeneca, the acquisition of Tudorza Pressair and Daliresp will immediately add on-market revenues and complement its existing respiratory portfolio by broadening the choice of treatments and formulations it can offer to patients and physicians.
In addition, AstraZeneca will also own development rights in the U.S. and Canada for LAS40464, the combination of a fixed dose of aclidinium with formoterol long acting beta agonist (LAMA/LABA) in a dry powder inhaler, which is approved in the EU under the brand name Duaklir® Genuair®. The deal is designed to build on AstraZeneca’s acquisition of Almirall’s respiratory portfolio last year.
On the R&D front, AstraZeneca said it will base 2,000 employees at the new global R&D centre and corporate headquarters it plans to build within the Cambridge Biomedical Campus, plans for which it won approval from Cambridge, U.K., officials.
The Cambridge site will be designed to bring together AstraZeneca’s small molecule and biologics research and development activity, with the goal of furthering opportunities to exploit the promise of small and large molecule combinations to make innovative medicines. It will become the company’s largest center for oncology research, as well as housing scientists focused on cardiovascular and metabolic diseases, respiratory, inflammation and autoimmune diseases and conditions of the central nervous system.
The site will also be home to a joint research center, with U.K. Medical Research Council-supported researchers working side-by-side with AstraZeneca’s high throughput screening group. The new site will be operational at the end of 2016.
Already, more than 400 AstraZeneca staff have already relocated to interim facilities in Cambridge, at the Melbourn Science Park, Cambridge Science Park and Granta Park. The company’s MedImmune subsidiary has operations and about 500 staffers already at Granta Park.
“Work is underway to prepare the site on the Cambridge Biomedical Campus and we look forward to beginning construction in the spring,” Mene Pangalos, evp, Innovative Medicines & Early Development at AstraZeneca, said in a statement. “Our aim is to create an open, welcoming and vibrant centre that will inspire our teams and partners to push the boundaries of scientific innovation for the benefit of patients.”