If it has strong intentions to develop the IL-23 agent brazikumab for commercialization, AstraZeneca did not show its hand when it acknowledged receipt of the agent from Allergan last week.
Despite the hoopla surrounding the return of brazikumab, an IL-23 inhibitor in development for treatment of Crohn disease (CD) and ulcerative colitis (UC), AstraZeneca provided only a brief statement this week that did not address concerns about whether it would play its role, as hoped by the Federal Trade Commission (FTC), in upholding a competitive marketplace for such agents.
Rather, the subtle emphasis was on the value of the deal to shareholders. Brazikumab was spun off by FTC order as part of the recent $63 billion AbbVie-Allergan merger because both of those companies were developing IL-23 inhibitors in the CD and UC space, and the FTC didn’t trust that a sufficiently competitive environment for these products would result unless brazikumab were released from their possession.
AstraZeneca explained in its statement that its financial obligation under this exchange was very limited. The company will be paid by AbbVie to develop the product and bring it to market, and AstraZeneca’s only financial duty will be to pay one of the original rights holders, Amgen, “a high single-digit to low double-digit royalty on sales of brazikumab if approved and launched.”
All Rights and Benefits
“Other than this, AstraZeneca will own all rights and benefits arising from the medicine with no other payments due,” the company said. What makes the deal better for AstraZeneca is that it originally sold brazikumab to Allergan for $250 million and a promise of up to $1.27 billion if sales and development goals were met. That exchange occurred in 2016.
The reigning IL-23 inhibitor on the market for CD and UC is Johnson & Johnson’s ustekinumab (Stelara). Brazikumab was among products in late stage development considered to have a good chance of providing competition and bringing down the cost for consumers. Biosimilar candidates for ustekinumab cannot enter the US market before 2023, owing to product exclusivity protection.
In a dissenting opinion on the FTC’s 3-to-2 approval of the AbbVie-Allergan merger, Commissioner Rohit Chopra said it was unclear that, having paid nothing for brazikumab, AstraZeneca would be aggressive about completing development of the product and launching it on the market. “This is a windfall for AstraZeneca, who will pay nothing for a valuable drug development project and is free to re-license the business to another company. It is unclear where this project falls in AstraZeneca’s development priorities and whether the company is committed to the project over the long-term,” he wrote.
Commissioner Chopra's Stand
Chopra’s stand on the issue was contrary to that expressed by the FTC panel majority, who contended that this and other “divestitures fully remedy any potential loss of competition.”
In its statement last week, AstraZeneca did not address the concern on the board, nor did it discuss the strength of its intentions to complete development of brazikumab. The company also did not respond to a request from The Center for Biosimilars® for comment on this issue. Further, there was scant mention of brazikumab in the company’s first quarter 2020 earnings statement or related conference call with media and investors.
However, in a year-end 2019 conference call with media and investors, the company did anticipate the return of the candidate product to its portfolio, but only in the context of the funding that would be received from AbbVie for development of the drug. “We will receive basically complete funding for this development, but we have to book it somewhere, and we will book it as other income,” Marc Dunoyer, executive director and chief financial officer for AstraZeneca, was quoted as saying.