Abraxis BioScience, AstraZeneca to co-promote Abraxane in the United States in $200 million deal

By E. Janene Geiss

Philadelphia, April 27 - Abraxis BioScience, Inc. said Wednesday the company and AstraZeneca have agreed to co-promote Abraxis' proprietary drug Abraxane in the United States for five and a half years.

Abraxis also announced an agreement that will significantly bolster its injectable business by acquiring AstraZeneca's U.S. branded anesthetic and analgesic injectable portfolios, according to a company news release.

These products encompass more than 100 dosage forms and include the leading branded anesthetic agent, Diprivan (propofol) and a proprietary Naropin (ropivacaine), as well as a comprehensive suite of local anesthetics including EMLA (Eutectic Mixture of Lidocaine and Prilocaine), Xylocaine (lidocaine), Polocaine (mepivacaine), Nesacaine (chloroprocaine Hcl Injection, USP), Sensorcaine (bupivacaine) and Astramorph (morphine sulfate injection), officials said.

Under the co-promotion agreement, AstraZeneca said it will pay Abraxis an up-front fee of $200 million and equally share in the costs associated with advertising, promotions in the United States and certain clinical trials that are part of the overall clinical development program.

Further milestone payments will be made to Abraxis upon the achievement of new indication approvals within pre-specified timelines.

The co-promotion agreement, beginning July 1, will run for five and a half years. AstraZeneca will receive a 22% commission on net sales of Abraxane during the term of the agreement, with a trailing commission of 10% for the first year and 5% for the second year following the five-year term.

Abraxis said it will retain all responsibility for clinical and regulatory development, manufacture and distribution of the product.

In addition to the sales force already established at Abraxis, AstraZeneca said it will add an experienced sales force which will now solely co-promote Abraxane in the U.S. market.

Accelerated market penetration eyed

This commercial collaboration will provide significantly greater reach and is expected to accelerate the market penetration of Abraxane in the United States.

Abraxis BioScience will grant AstraZeneca a right of first offer to license or co-promote Abraxane outside the United States, other then selected countries, should a partner be sought, officials said.

Through this transaction, Abraxis said it is able to double the sales force and promotional investment in Abraxane, as well as share the cost of certain clinical trials that are part of the overall clinical development program, without incurring additional costs.

Abraxis said it also will expand its injectables business by acquiring a profitable portfolio of branded products, which generated 2005 sales for AstraZeneca of $217 million.

Under terms of the acquisition, Abraxis said it will pay to AstraZeneca $275 million at closing and $75 million on the first anniversary of closing consideration of the sale of AstraZeneca's U.S. branded anesthetics and analgesic business.

AstraZeneca and Abraxis have entered into an exclusive supply agreement providing for AstraZeneca to supply these products to Abraxis for an initial term of five years, officials said.

AstraZeneca said it will grant Abraxis BioScience the right of first offer to purchase or license its branded anesthetics and analgesics portfolio outside of the United States should AstraZeneca decide to divest these assets.

In addition, AstraZeneca said it has agreed that Abraxis will be its preferred partner for consideration of certain proprietary injectable products when patents on these products expire.

The sale of AstraZeneca's U.S. branded anesthetics and analgesic business is subject to Hart-Scott-Rodino clearance and other customary conditions to closing, officials said.

Accretive to earnings

These combined transactions are immediately accretive to earnings, officials said.

Abraxane, the first commercially approved product based on the nab technology platform, received approval by the Food and Drug Administration in January 2005 for the treatment of breast cancer.

Abraxane sales totaled $134 million in 2005 in its first 11 months on the market. It is in various stages of development for the treatment of the following cancers: first-line metastatic breast and non-small cell lung, adjuvant breast, neo-adjuvant breast, malignant melanoma, ovarian, prostate, pancreatic, gastric and head and neck.

Abraxis BioScience is a Schaumburg, Ill., biopharmaceutical company dedicated to meeting the needs of critically ill patients.

AstraZeneca is a London-based health care business engaged in the research, development, manufacture and marketing of prescription pharmaceuticals and the supply of health care services.

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