AstraZeneca Explores Potential Deal With Acerta for Cancer Drug

Why Do Drug Prices Keep Going Up?
  • Acerta's drug shows promise in leukemia, auto-immune diseases
  • Credit Suisse predicts interest from `multiple other bidders'

AstraZeneca Plc said it’s exploring a deal with Acerta Pharma BV that would give the U.K. drugmaker a potential blockbuster medicine for blood cancers as well as diseases in which the body attacks itself.

Talks about “potential strategic options” with the closely held biotech company are ongoing but there’s no guarantee they will lead to a transaction, London-based AstraZeneca said in a statement.

AstraZeneca’s interest is tied to Acerta’s experimental drug acalabrutinib, a rival of Johnson & Johnson and AbbVie Inc.’s Imbruvica. The medicine shows promise against an incurable form of leukemia as well as auto-immune diseases such as lupus, and could spark a bidding war for Acerta, said Jo Walton, an analyst at Credit Suisse Group AG.

“We believe acalabrutinib complements AstraZeneca’s oncology portfolio and also offers the potential for use in autoimmune disorders,” Walton and colleagues wrote in a note to clients. “If Acerta is open to a transaction, we would expect significant interest from multiple other bidders.”

The Wall Street Journal first reported the talks on Friday, citing a deal value of more than $5 billion. A large part of that is likely to be performance-related payments and milestones, Bloomberg Intelligence’s Sam Fazeli said in a note on Monday.

Blockbuster Potential

AstraZeneca Chief Executive Officer Pascal Soriot is hunting for promising new medicines after turning down a deal with Pfizer Inc. last year. Just last month, it agreed to buy ZS Pharma for $2.7 billion in cash, scooping up a potential blockbuster for a deadly blood condition that had also attracted Swiss drugmaker Actelion Ltd.

The stock rose 0.3 percent to 4,342.50 pence at 12:47 p.m. in London on Monday.

Like Imbruvica, acalabrutinib belongs to a class of drugs called Burton’s tyrosine kinase inhibitors, which work by blocking the BTK enzyme from promoting proliferation and survival of malignant cells. It’s now in the most advanced phase of clinical tests. In an earlier trial, it worked on a deadly form of leukemia with milder side effects than Imbruvica. Other drugmakers developing BTK inhibitors are Eli Lilly & Co. together with Hanmi Pharmaceutical Co. Ltd. and Germany’s Merck KGaA.

Acerta’s chief executive is the former chief medical officer of Pharmacyclics Inc., which developed Imbruvica, and the company’s “established clinical excellence and management team” could be part of the attraction for AstraZeneca, according to the Credit Suisse note.

Imbruvica, a pill first approved by U.S. regulators in 2013, is projected to be a blockbuster with sales surpassing $1 billion for J&J as soon as next year. Annual revenue from that drug will reach $4.07 billion by 2020, according to analyst estimates compiled by Bloomberg.

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