Business & Finance
AstraZeneca signs agreement to divest US rights of Synagis to Sobi for USD1.5bn
14 November 2018 -

AstraZeneca Plc (LSE:AZN), a global, science-led biopharmaceutical company, announced on Tuesday an agreement to sell US rights to Synagis (palivizumab), used for the prevention of serious lower respiratory tract infection (LRTI) caused by respiratory syncytial virus (RSV), to Swedish Orphan Biovitrum AB (Sobi) (STO:SOBI).

Under this agreement, Sobi will commercialise Synagis in the US and around 130 AstraZeneca employees will transfer to Sobi as part of the transaction. AstraZeneca will receive an upfront consideration of USD1.5bn, consisting of USD1.0bn in cash and USD500m in ordinary shares of Sobi upon completion. This would equate to an ownership interest of 8%, based on the current Sobi share price.

AstraZeneca has undertaken not to sell the shares received as consideration for a period of 12 months following the closing date of the transaction.

Reportedly, the cash proceeds from the transaction will be used by AstraZeneca for general corporate purposes.

In addition, AstraZeneca will also receive up to USD470m in sales-related payments for Synagis,a USD175m milestone following the submission of the Biologics License Application for MEDI8897; potential net payments of approximately USD110m on achievement of other MEDI8897 profit and development-related milestones and a total of USD60m in non-contingent payments for MEDI8897 during 2019-2021.

Also, Sobi will have the right to participate in AstraZeneca's share of US profits and losses related to potential new medicine MEDI8897. AstraZeneca will continue to develop MEDI8897 in collaboration with Sanofi Pasteur, the vaccines division of Sanofi S.A.

According to the company, it continues to streamline its portfolio, allowing it to allocate resources more effectively. The successful development and commercialisation of MEDI8897 remains important for AstraZeneca.

This agreement, which is subject to customary closing conditions, is currently expected to complete very early 2019. AstraZeneca added that it will provide additional information if closing conditions are achieved earlier and the agreement can complete late 2018.

Upon completion of the transaction, net income attributable to the arrangements will be recorded in the company's financial statements as 'Other Operating Income'.

As a part of the agreement, AstraZeneca will de-recognise on a proportionate basis a significant intangible asset related to Synagis. This transaction does not impact the company's financial guidance for 2018, AstraZeneca clarified.

Synagis (palivizumab) is indicated for the prevention of serious lower respiratory tract infection (LRTI) caused by respiratory syncytial virus (RSV) in infants and young children at high risk of RSV disease.

AstraZeneca has an agreement with AbbVie Inc for the distribution of Synagis outside the US, which will not be impacted by the proposed transaction with Sobi.

MEDI8897 is a single dose extended half-life anti-RSV F mAb being developed for the prevention of LRTI caused by RSV in all infants entering their first RSV season and children with chronic lung disease or congenital heart disease entering their first and second RSV season.

The current development plan includes initiation of a phase III trial in healthy full-term and late pre-term infants. MEDI8897 has received Fast Track Designation from the US FDA in March 2015.

In March 2017, AstraZeneca and Sanofi Pasteur had announced an agreement to develop and commercialise MEDI8897. Under the agreement, AstraZeneca is responsible for all development activity through initial approvals, as well as manufacturing of MEDI8897, while Sanofi Pasteur leads commercialisation activities. The two companies share all costs and profits equally.

AstraZeneca is focussed on the discovery, development and commercialisation of prescription medicines, primarily for the treatment of diseases in the three therapy areas of Oncology, Cardiovascular, Renal & Metabolism and Respiratory.