The path of least resistance

LONDON—Aimed at killing drug-resistant superbugs andstrengthening its antibiotic pipeline, global drugmaker AstraZeneca is poisedto purchase infection research company Novexel of France, while striking aseparate deal with Forest Laboratories for the developmental rights toNovexel's potential antibiotic booster targeted toward fightingantibiotic-resistant infections. This includes methicillin-resistant Staphylococcus aureus (MRSA) and otherinfections patients contract during their hospital stays.

Under the terms of the agreement, announced Dec. 23,AstraZeneca will reeive 100 percent of Novexel's shares for $350 million incash, payable at acquisition completion in the first quarter of 2010, and payup to an additional $75 million to Novexel shareholders if specifieddevelopment milestones are reached. AstraZeneca will also transfer to Novexelshareholders an amount equivalent to the cash balance of Novexel at closing,approximately $80 million.

"Under a separate agreement, AZ and Forest have agreed thatfollowing the acquisition, Forest will pay Novexel, then an AZ group company, asum equal to half of the acquisition costs of Novexel and half of any suchspecified development milestone payments in return for rights to CAZ104 inNorth America and the buy down of payment obligations in relation to CEF104 toNovexel from previous existing license arrangements," according to company.

AstraZeneca's deal with New York-based Forest calls for thecompanies to collaborate on development of a drug called NXL 104, aimed atenhancing the effectiveness of certain antibiotics while counteractingbacterial resistance.

The deal centers on Novexel's two most advanced drugprograms, CAZ104 and CEF104, which are in development to treat bugs that havegained resistance to existing antibiotics, a trend that is spurring researchinto new anti-infective medicines.

CAZ104 is a combination of a compound developed by Novexelcalled NXL-104 and ceftazidime, an antibiotic facing resistance from strains ofbacteria. The addition of NXL-104 helps to overcome that resistance. The drugis being developed to treat serious infections in the abdomen and urinarytract, as well as pneumonia, and is scheduled to enter Phase III clinicaltrials later this year.

CEF104 is a combination of NXL-104 and ceftaroline, a novelantibiotic from Forest Laboratories that AstraZeneca bought the European rightsto in August 2009.

"Both deals … serve to expand our anti-infective pipeline,"says Christopher Sampson, AZ company spokesman. "Signing the simultaneousagreement with Forest … draws on our respective skills and capabilities indevelopment, registration and commercialization in different geographies."

Forest had previously signed an agreement in 2008 withNovexel granting Forest the rights to use Novexel's beta lactamase inhibitor(BLI), NXL-104, with Forest's ceftaroline.

"So for AstraZeneca, the Novexel deal was a way to add twonew late-stage anti-infectives to its pipeline," Sampson says. "For Forest, itwas a way to gain additional rights to the combination of ceftazidime and NXL104, and to gain full worldwide rights to the ceftaroline/NXL 104 combination,while simultaneously licensing rights outside the United States, Canada andJapan to AstraZeneca. The agreement with Forest offers us access to a nextgeneration cephalosporin, ceftaroline, at a time when demand for new,effective, antibiotic agents is high. Many bacterial infections have fewsatisfactory treatment options currently, and there is strong demand for noveldifferentiated agents for both resistant gram-positive (such as MRSA) andgram-negative infections. From apipeline perspective, ceftaroline represents a Phase III opportunity withlaunch anticipated from 2011 to 2012 in the EU."

Worldwide demand "for new effective and differentiatedantibiotic agents is high because many bacterial infections currently have fewsatisfactory treatment options," he says.

"This unmet medical need is high in both established andemerging markets. In fact, rates of bacteria known as pseudomonas, and thoseexpressing Extended Spectrum Beta Lactamases (ESBL) are often higher inemerging markets—and these are cases where the combinations with Novexel'scompounds may be useful."

AZ's main competition in the R&D battle is not anotherdrug company.

"In the area of infection, the battle is with the bugs,"Sampson said. "We are trying to develop new treatments faster than the bacteriacan develop resistance. Pharmaceutical companies are increasingly reluctant toinvest in antibacterial discovery and development and several companies haveabandoned this field of research."

Frank J. Murdolo, vice president of investor relations atForest Laboratories, declined to comment.

Novexel CEO Iain Buchanan says the agreement "highlights thesignificant progress that Novexel has made since it was spun out of AventisPharma S.A. in December 2004, and demonstrates the added value of placingpromising assets in an entrepreneurial structure in France.

"Over the last five years we have made the appropriatedecisions to advance the pipeline," Buchanan said. "I am confident that theacquired assets will receive continued investment from both AstraZeneca andForest, and will have the possibility to play an important therapeutic role tocombat resistant organisms in the hospital."

AstraZeneca acquiresBiovitrium's obesity program

STOCKHOLM, Sweden—In late December, AstraZeneca alsoannounced its acquisition of Biovitrum's rights to its leptin modulator programaimed at treating obesity.

AstraZeneca will give Biovitrum an upfront payment of $8.6million and milestone payments contingent on development progress and sales, aswell as single-digit percentage royalties. If a product is approved, theagreement allows up to $267.6 million in upfront and milestone payments toBiovitrum. The leptin modulator program is currently in the preclinical phase.

"AstraZeneca is committed to working towards finding newsolutions to health problems that stem from diabetes and obesity, two riskfactors for cardiovascular disease," says Björn Wallmark, vice president ofcardiovascular and gastrointestinal research at AstraZeneca. "We are pleasedthat we have obtained this discovery program. It increases the strength of ourportfolio of compounds that can potentially lead to medicines that meet theneeds of patients."

"We are very happy that this exciting and completely novelapproach to treat obese patients will continue to be developed throughAstraZeneca, a company with a long heritage and strong presence in thecardiovascular disease area," says Peter Edman, CSO of Biovitrum. "We are surethat AstraZeneca will continue to develop the opportunity in a capable way andpotentially add new treatment options for obese patients."