AstraZeneca acquires Pearl Therapeutics to strengthen respiratory portfolio

Acquisition could be worth $1.15 billion, all told

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LONDON—In a move meant to bolster its footprint in therespiratory field, AstraZeneca PLC has entered into a definitive agreement toacquire privately held Pearl Therapeutics, a Redwood City, Calif.-based companyspecializing in the development of inhaled small-molecule therapeutics forrespiratory disease.
Per the terms of the agreement, AstraZeneca will acquire 100percent of Pearl's shares for an initial consideration of $560 million payableupon completion. Pearl is eligible for deferred consideration of up to $450million if certain development and regulatory milestones are achieved with regardto any triple combination therapies and selected future products thatAstraZeneca develops utilizing Pearl's technology platform. Pearl also standsto receive sales-related payments of up to $140 million if agreed-uponcumulative sales goals are exceeded. The transaction is subject to customaryregulatory approvals, and the closing is expected in the third quarter. Theacquisition does not impact AstraZeneca's financial guidance for 2013.
"Chronic obstructive pulmonary disease continues to increaseworldwide, and there is a growing need for the next generation of inhaledcombination products," Pascal Soriot, CEO of AstraZeneca, said in a pressrelease. "Pearl's novel formulation technology, together with its developmentproducts and specialist expertise, are a great complement to AstraZeneca'slong-established capabilities in respiratory disease, one of our core therapyareas. Combined with our on-market portfolio, including Symbicort, and ourstrong pipeline, the agreement will enable us to offer further distinctivetreatment options across the full spectrum of COPD and asthma to patients,physicians and payers."
"As we were thinking about an ideal partner for our program,we were looking for someone that had not only terrific commercial experience,but also terrific personnel on their side that would complement our own in theresearch and development and regulatory groups," says Lyn Baranowski, head ofbusiness development at Pearl. "We certainly think that AstraZeneca meets thatvery high standard that we had for ourselves."
Baranowski says Pearl will move forward as an AstraZenecacompany, "maintaining our presence in our various facilities and … maintainingour team." The transaction, she adds, "has positioned us so far very well onthe market to move forward aggressively with our lead assets."
Pearl's lead product candidate, PT003, is a fixed-dosecombination of formoterol fumarate, a long-acting beta-2-agonist (LABA) andglycopyrrolate, a long-acting muscarinic antagonist (LAMA). PT003 is deliveredvia a pressurized metered dose inhaler, using Pearl's novel co-suspensionformulation technology, which is also the basis for Pearl's work into PT010, atriple fixed-dose combination of LABA/LAMA and an inhaled corticosteroid.
Baranowski says AstraZeneca has expressed "a lot ofinterest" in the triple combination, which she describes as taking PT003 anduniting it with the inhaled corticosteroid used in Symbicort.
"There are many patients right now already that are takingmultiple medications, and so by combining multiple medications in one, itreally makes the burden of disease and the burden of treatment for thesepatients significantly easier," Baranowski explains. "That triple therapy hasbeen the Holy Grail in respiratory medicine for many years now, and AstraZenecahas been very supportive of really trying to move that forward into clinicaldevelopment, so we'll be working on that with them in probably the next fewmonths. It's very exciting for all of us."
COPD is a progressive lung disease, one seen most often insmokers or those who face air pollution or occupational exposure. The diseasecauses obstruction of airflow in the lungs as a result of airways and air sacslosing elasticity, inflammation or the overproduction of mucus. An estimated210 million people suffer from COPD worldwide, and it is predicted to be thethird leading cause of death by 2020.
Both AstraZeneca and Pearl see the COPD market as being ripefor growth. Despite the presence of effective treatments in this indication,Baranowski says the COPD market still has a large amount of unmet medical need.A spokesman for AstraZeneca notes that Decision Resources estimates the COPDmarkets totaled close to $9 billion in 2001. The market is expected to seeannual growth of 4 percent between 2011 and 2021, in which sales are forecastto reach nearly $13.4 billion. AstraZeneca's spokesman adds that in the UnitedStates, they expect LAMA/LABA products will be prescribed for "at least one infive treated moderate to severe COPD patients."

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