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AZN/BIND Therapeutics Ink Deal

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AstraZeneca (AZN) recently announced that it has entered into an agreement with BIND Therapeutics for the development and commercialization of Accurin (a cancer nanomedicine).

As per the terms of the agreement, the companies will work together to complete studies to support the investigational new drug (IND) filing of Accurin. Post IND-filing, AstraZeneca will enjoy exclusive rights (development and commercialization) to the drug. In the development phase, BIND Therapeutics will undertake manufacturing responsibilities.

AstraZeneca will make upfront and pre-approval milestone payments totaling $69 million. Moreover, it has to shell out more than $130 million in regulatory and sales milestones and other payments apart from royalties (tiered single to double digit) on net sales of Accurin.

We note that AstraZeneca is looking to combat generic erosion faced by many of its key drugs by signing deals, making acquisitions and developing new products.  The recent acquisition of biotech company AlphaCore Pharma is a move by AstraZeneca in that direction.

Generic competition has adversely impacted AstraZeneca’s revenues over the past few quarters. This has put significant pressure on the company. AstraZeneca is looking towards cost-cutting initiatives to drive the bottom line in the face of genericization.

AstraZeneca initiated a major overhaul of its R&D and selling, general and administrative (SG&A) segments last month. As per the proposed plans, the company’s R&D activities will be primarily centered in three facilities including UK (Cambridge), US (Gaithersburg) and Sweden (Mölndal).

The proposed initiative will result in relocation and termination of approximately 2,500 and 1,600 roles, respectively, in the 2013-2016 timeframe and cost approximately $1.4 billion. The SG&A segment will also be optimized with the help of restructuring activities, which will result in the termination of approximately 2,300 employees.

AstraZeneca, a biopharmaceutical company, carries a Zacks Rank #3 (Hold). Biopharma stocks like UCB (UCBJF), XOMA Corporation (XOMA) and Athersys Inc. (ATHX) appear to be more attractive. All three stocks carry a Zacks Rank #1 (Strong Buy).

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