License To Fill: Pipeline Top AstraZeneca Priority Under Brennan

AstraZeneca's plans to bolster its product pipeline include further efforts to tap external technology sources, according to CEO David Brennan.

"We will continue to aggressively pursue external opportunities, but also be assured that we will do so with scientific and analytical rigor and good financial discipline," Brennan stated during a June 7-8 AstraZeneca business review.

"This is not just a short-term stop-gap to backfill the pipeline - it represents an important change in mindset," Brennan maintained, emphasizing "the pipeline is the priority."

In line with those efforts, the firm has created a "new licensing, strategic planning and business development organization reporting directly to [CFO] Jon Symonds," Brennan said.

The unit will "continue to strengthen our licensing and business development capabilities," the exec noted.

The company announced in February that John Goddard, a former VP-Finance and CFO for the U.S. business, would head the Strategic Planning & Business Development group.

The unit is a "globally integrated, cross-business strategic planning and development organization with leading-edge capability for M&A and licensing," AstraZeneca said.

In establishing a separate organization to focus on licensing, AstraZeneca joins the ranks of other large drug makers seeking to build up a portfolio of licensed products.

Schering-Plough CEO Fred Hassan has said that companies should look to in-licensing to fill gaps in late-stage pipelines (¹ (Also see "Schering Seeks Salvation In External Deals; Hassan Outlines Licensing Plan" - Pink Sheet, 7 Nov, 2005.), p. 18.)

GlaxoSmithKline has created a new division devoted solely to the establishment of external alliances, the Center of Excellence for External Drug Discovery (² (Also see "Big Pharma Gets Flexible As Licensing Activity Heats Up" - Pink Sheet, 3 Apr, 2006.), p. 10).

Merck has also stepped up its licensing efforts, signing eight such deals since January 2005 and three in the month of March alone.

For its part, AstraZeneca has "made tangible progress" in pursuing licensing and acquisition agreements in recent months, Brennan said.

The firm inked licensing deals in late 2005 with Protherics for severe sepsis therapy CytoFab and with AtheroGenics for atherosclerosis treatment AGI-1067. Phase III studies are underway for 1067 and CytoFab will move into Phase III next year.

On the acquisition side, the company purchased KuDOS Pharmaceuticals in December, gaining a DNA platform with compounds in both clinical and preclinical stages.

In addition, in May, the firm announced plans to acquire biotech company Cambridge Antibody Technology, which will enhance AstraZenenca's efforts to develop its biologicals portfolio.

Establishing a presence in biologics is another "lynchpin" in AstraZeneca's pipeline strategy, Brennan said.

"We need to strengthen our capacity to attack new disease targets with small molecules and biologicals in an integrated fashion across all of our therapy areas. With our offer for CAT as a start, our aim is to establish AstraZeneca as a major international presence in the research and development of biological therapeutics."

The firm anticipates 25% of its late-stage pipeline will be biologics from 2010 on, Brennan said, reiterating a goal outlined in AstraZeneca's announcement of the CAT deal.

Brennan, who previously served as U.S. president, took over the chief executive position from Tom McKillop Jan. 1 (³ (Also see "AstraZeneca’s Gut Instinct: CEO-Designate Is Nexium Brand Builder Brennan" - Pink Sheet, 1 Aug, 2005.), p. 11). Discussing his plans for the company, Brennan said "the basic strategic direction for AstraZeneca is unchanged."

"Fundamentally, my strategy is to take every action necessary to make sure that there is no gap" in the company's pipeline, he stated.

To that end, the third tenet of Brennan's pipeline strategy is to "improve the productivity of our own in-house discovery and development efforts," he said.

"In 2005, our discovery organization again increased its output with 25 candidate drugs selected for development. But we must become even more productive."

AstraZeneca has seen a number of high profile development disappointments over the last year, including the anticoagulant Exanta (ximelagatran), the diabetes therapy Galida (tesaglitazar) and the oncologic Iressa (gefitinib) (⁴ (Also see "AstraZeneca Expands Pipeline With “Reduced Risk” Phase III Program" - Pink Sheet, 6 Feb, 2006.), p. 19).

Brennan said AstraZeneca has "rigorously examined all facets of our development processes, informed by thorough benchmarking against best-in-class industry norms. We will reinforce those practices where we're already top tier, and we have action plans and accountabilities to address those where we fall short."

In addition, "we're enforcing high standards for quality in the molecules themselves, in program design, in risk management decision-making and speed of execution."

AstraZeneca's pipeline includes 103 projects in development - 79 new molecular entities and 24 life-cycle management initiatives for marketed products (see ⁵ (Also see "AstraZeneca Expects Exanta Experience To Benefit Future Anticoagulant R&D" - Pink Sheet, 19 Jun, 2006.)).

Brennan's experience in marketing will likely bolster the company's plans to grow marketed products like the cholesterol agent Crestor (rosuvastatin), the antipsychotic Seroquel (quetiapine) and the asthma therapy Symbicort (formoterol/budesonide) through life-cycle management.

Those programs "underpin our ambitions to build on the track record from the last five years while we continue to grow sales, expand margins, increase earnings and generate strong cash returns for the next five," Brennan said.

"While new products will play a role, many of the ingredients for continuing our momentum in the short term can be found in our current product range."

The firm's life-cycle management initiatives for Crestor include Phase III studies in atherosclerosis, renal disease and congestive heart failure.

Following the presentation of positive data from the ASTEROID atherosclerosis trial during the American College of Cardiology meeting in March, there was a 2.3% increase in the statin's dynamic share in the U.S. from March to May, the firm said.

The headline finding of the trial was that advanced coronary disease patients receiving Crestor 40 mg/day exhibited a significant regression of atherosclerosis, as measured by arterial imaging (⁶ (Also see "Crestor, Zocor Comparison May Be More Useful Than ASTEROID – Editorial" - Pink Sheet, 20 Mar, 2006.), p. 17)

The ASTEROID results are not yet included in Crestor labeling. VP-Primary Care, Crestor Global Marketing Elaine Campbell emphasized that "there was no direct promotion of those findings by any of the sales forces and share of voice change was not behind that nice share uptick you saw."

"Cardiologists [are] viewing the data on their own and making a decision that there really is something special about Crestor, translating the better LDL lowering that they've been seeing into a real change in atherosclerotic progression and starting to translate that to higher utilization in their own practices," she explained.

As general practicioners "see more of those patients come back, more of them on Crestor, they start to transfer that to their own activity," she added.

However, Campbell acknowledged the forthcoming launch of generics of Merck's Zocor (simvastatin) has created "quite a bit of volatility" in the market.

"Healthcare systems that are able to have, since the beginning of the year, tried to increase the utilization of Zocor...in their formularies in preparing for the switch to simvastatin generics later this year," she said.

Campbell noted that the entry of generic versions of Bristol-Myers Squibb's statin Pravachol (pravastatin) had "very little impact on wholesale conversion of pravastatin."

"Simvastatin will be a little bit different," she said. "We do expect as we're seeing now people jockeying to maintain as high share of Zocor as they can in anticipation of future savings."

With regard to Seroquel, AstraZeneca plans to file an NDA for a sustained-release formulation of quetiapine for schizophrenia in July. The company expects to submit a Seroquel SR sNDA in 2007 for bipolar depression and generalized anxiety disorder, with major depressive disorder and bipolar mania submissions slated for 2008.

Symbicort, which is approved in the E.U., has a July user fee date for an asthma claim in the U.S. The firm also plans to submit an application for chronic obstructive pulmonary disorder in 2008.