AstraZeneca: Expecting A Rich Harvest

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AstraZeneca continues to rely on its growth platforms to bring the company back on track, weathering patent expirations as it cultivates the pipeline with many promising products.             

 

astrazeneca-logo

 

AstraZeneca PLC

2 Kingdom Street
Paddington
London
W2 6BD
Telephone: +44 (0)20 7604 8000
Website: astrazeneca.com

 

 

 

Best-Selling Products

Product 2015 Sales 2014 Sales
Crestor

$5,017

$5,512

Symbicort $3,394 $3,801
Nexium

$2,496

$3,655

Seroquel XR

$1,025

$1,224

Pulmicort $1,014 $946
Zoladex $816 $924
Onglyza

$786

$820

Toprol-XL/Seloken

$710

 $758

Synagis

$662

$900

Brilinta/Brilique   

$619   

$476

Bydureon   

$580   

$440

Iressa   

$543  

 $623

All sales are in millions of dollars.

 

 

Financial Performance

  2015 2014
Revenue

$23,641

$26,095

Net income

$2,826

$1,235

Diluted EPS

$2.23

$0.98

R&D expense

$5,997

$5,579

  1H16 1H15
Revenue

$11,718

$12,364

Net income $643

$1,247

Diluted EPS

$0.51

$0.99

R&D expense

$2,945

$2,822

In millions of dollars, except EPS

 

 

 

As AstraZeneca absorbs the impact of patent expirations that continued to affect revenue in the first half of 2016, the company’s leaders believe that they are setting the company on a true growth track .

According to CEO Pascal Soriot, “2015 was an exceptional year for AstraZeneca as we made significant progress in meeting both our near and longer-term strategic goals. Building on the solid foundations of the previous two years, our success during 2015 was based on a strong commitment to our values. It was this focus that made the year a great one for science and patients.”

pascalsoriot

In a presentation at the J.P. Morgan Conference in January, executives characterized 2015 to 2017 as “Delivering on return to growth.” AstraZeneca intends to have revenue of more than $45 billion by 2023, executives say.

The company continues to focus on its five growth platforms: Respiratory, Diabetes, the blood thinner Brilinta/Brilique, Emerging Markets, and Japan. A sixth growth platform, New Oncology, was instituted.

“The first stage of our strategic journey involved strengthening our product pipeline and building our growth platforms,” Soriot says. “We are now well into the second stage of that journey, as we manage a transitional period of patent expiries, and are on track to continue driving our growth platforms and launch our new products.”

Soriot remarked that for the first half of 2016, AstraZeneca’s growth platforms accounted for 60 percent of all the company’s revenue. These growth platforms composed 57 percent of revenue in 2015.

Returning to growth is one of three strategic priorities launched in 2013. The other two are “Achieve scientific leadership” and “Be a great place to work.”

In achieving scientific leadership, executives say they believe AstraZeneca’s pipeline volume is well ahead of plan. During November 2015, the company launched Tagrisso, the first treatment approved for patients with a very specific form of non-small cell lung cancer who present with a genetic mutation in the epidermal growth factor receptor but also have a secondary mutation, T790M. “Its story is remarkable and, as shown over, it demonstrates our ability to successfully deliver our pipeline and, even more, importantly, offer patients a new treatment option in a disease where very few solutions exist,” Soriot says.

Sales of new oncology products in the first half of 2016 were $251 million, driven by the successful launch of Tagrisso, executives say.

Another oncology move the company made in 2015 was taking a stake in Acerta Pharma, a company focused on hematology. Executives say the acquisition provides AstraZeneca with access to acalabrutinib (ACP-196), a potential best-in-class small molecule oral BTK inhibitor for B-cell malignancies, the most common forms of blood cancers. The drug also has potential in solid tumors and autoimmune diseases. The acquisition of Acerta also reinforces AstraZeneca’s growing position in hematology and builds on an agreement with Celgene to develop durvalumab across a range of blood cancers.

In the area of cardiovascular and metabolic diseases, AstraZeneca completed the acquisition of ZS Pharma. The transaction provides access to the potassium-binding compound ZS-9, a potential best-in-class treatment for hyperkalemia (high potassium levels in the bloodstream).

Also in December 2015, AstraZeneca agreed to acquire Takeda’s core respiratory business. The transaction, completed in May 2016, gives AstraZeneca full rights to roflumilast (Daliresp/Daxas), the only approved oral PDE4 inhibitor for the treatment of COPD.

In improving the company as a place people want to work at, executives presenting at the J.P. Morgan Conference noted that employee engagement is “in line with best-performing companies.” Some of the statistics shared were 85 percent employee engagement, up 8 percent from the previous year; 86 percent of employees believe in the company’s strategy, up 18 percent; and 88 percent of employees support the company’s scientific and patient orientation, a 12 percent increase.

 

Financial & Product Performance

AstraZeneca’s growth platforms increased by 11 percent in 2015, contributing 57 percent of the company’s total revenue of $23.64 billion. This is 9.4 percent less than the previous year’s restated revenue of $26.1 billion.

The company’s net income in 2015 was $2.83 billion, compared with $1.24 billion in 2014. Earnings per share came in at $2.23 versus 98 cents in the previous year. R&D costs went up to about $6 billion, 7.5 percent more than in 2014.

In the first half of 2016, sales were $11.72 billion, 5.2 percent less than in the same period of 2015. Net income was $643 million compared with $1.25 billion in first-half 2015. Earnings per share were 51 cents, compared with 99 cents in the previous period. The company spent about $2.95 billion on R&D in the first half of 2016, up about 6 percent year-over-year.

“Our performance in the first half was in line with expectations, reflecting the anticipated near-term patent expiry challenges and the phasing of Externalization Revenue in 2016,” Soriot says. “Our growth platforms continued to advance and made up over 60 percent of total revenue. Importantly, our transformed pipeline is advancing quickly and delivering a rich flow of differentiated medicines, boding well for our return to growth.”

The company’s top-selling products in 2015, each with sales of more than $500 million, were Crestor, Symbicort, Nexium, Seroquel XR, Pulmicort, Zoladex, Onglyza, Toprol-XL/Seloken, Faslodex, Synagis, Brilinta/Brilique, Bydureon, and Iressa.

U.S. product sales in 2015 were down 6 percent to $9.47 billion. Europe declined 6 percent to $5.32 billion. Established Markets were flat at $3.02 billion and Emerging Markets were up 12 percent to $5.82 billion, mainly driven by growth in China of 15 percent to $2.53 billion.

The cholesterol reducer Crestor was AstraZeneca’s leading sales producer in 2015 at $5.02 billion, about 9 percent less than in 2014.

crestor-bottle-images1

During the first six months of 2016, Crestor worldwide sales were $2.08 billion, 16 percent less than in the same period last year. In the United States, Crestor sales declined by 27 percent to $1 billion as the first Crestor generic competitor entered the market in May 2016; sales will continue to decline as multiple generic Crestor medicines entered the market in July 2016. In Europe, sales declined by 4 percent to $438 million, reflecting the increasing prevalence of generic-medicine competition. However, Crestor consolidated its position as the leading statin in Japan, with sales growth in the first half of 5 percent to $250 million. Sales in China grew by 16 percent to $156 million.

The asthma medicine Symbicort in 2015 was again the company’s second best-selling product at $3.39 billion, 10.7 percent less than in 2014.

symbicortinhalerwithcap_06_cmyk

During the first half of 2016, Symbicort sales were $1.55 billion, about 8 percent less than in first-half 2015. Executives say the decline was driven primarily by continuing price erosion, partially offset by volume growth. In the United States, sales of $681 million represented a decline of 5 percent, reflecting the impact of competitive intensity in the half that was partly offset by “encouraging” volume growth and market-share gains. In Europe, sales declined by 18 percent to $466 million, a result of declining market demand in the class, as well as increased competition from analog medicines. In contrast, Emerging Markets sales grew by 25 percent to $209 million and China sales grew by 33 percent to $80 million.

The proton-pump inhibitor Nexium was again the third-best-selling product for the company in 2015, with sales of $2.5 billion, 31.7 percent less than in 2014. Generic erosion accounted for the decrease.

For the first half of 2016, Nexium sales were $1.03 billion, 18 percent lower than in the same period last year. Sales in the United States declined by 39 percent to $294 million following the loss of exclusivity in 2015 and changes in managed-care contracts. Sales in Europe declined by 10 percent to $127 million, with Emerging Markets sales increasing by 1 percent to $367 million. Japan sales decreased by 11 percent to $184 million, reflecting the competitive environment.

Seroquel XR was AstraZeneca’s No. 4 seller in 2015 with sales of $1.03 billion, falling 12 percent versus its 2014 total on account of generic competition. The global sales decline continued in first-half 2016, falling 17 percent to $427 million.

The fifth best-selling drug in 2015 was the asthma drug Pulmicort, at $1.01 billion, 7.2 percent more than in 2014. The performance of Pulmicort Respules in Emerging Markets helped drive a 7 percent increase in Respiratory sales, executives say. In the first half of 2016, Pulmicort sales were $549 million, an increase of 10 percent. Growth reflected the performance of Pulmicort Respules in Emerging Markets, where Pulmicort sales grew 23 percent to $349 million. China sales increased by 26 percent to $288 million, partly reflecting the increasing prevalence of acute chronic obstructive pulmonary disease and pediatric asthma, management says.

The prostate and breast cancer drug Zoladex produced 2015 sales of $816 million, 11.7 percent less than in 2014. Sales for first-half 2016 declined by 3 percent to $382 million, primarily driven by a decline in Europe sales of 3 percent to $80 million and an Emerging Market sales decline of 5 percent to $153 million. China sales grew by 5 percent to $60 million. U.S. sales increased by 36 percent to $19 million, reflecting higher volume demand and a higher net price.

The next highest-selling product, the diabetes drug Onglyza, declined in sales by 4.1 percent to $786 million. The drop was partly due to lower U.S. sales of $420 million, which was primarily driven by lower average net price. In the first half of 2016, sales increased by 6 percent to $402 million as DPP-4 class volumes continued to grow. Sales in the United States were stable at $212 million. Sales in Europe increased by 4 percent to $73 million, a comparable rate to the overall DPP-4 class. Emerging Markets sales increased by 16 percent to $80 million, with a strong performance in Brazil (up by 67 percent to $8 million) and Latin America – excluding Brazil – up by 27 percent to $11 million.

In 2015, Toprol-XL/Seloken sales were $710 million, 6.3 percent less than in 2014. First-half 2016 sales were $374 million, 7 percent more than in the same 2015 period. AstraZeneca has been involved in litigation over the drug. In March 2015, AstraZeneca was served with a state court complaint filed by the Louisiana state Attorney General alleging that, in connection with enforcement of its patents for Toprol-XL, the company had engaged in unlawful monopolization and unfair trade practices, causing the state government to pay increased prices for Toprol-XL. In February 2016, the Louisiana state court granted AstraZeneca’s motion to dismiss the complaint with prejudice and judgment in AstraZeneca’s favor. Louisiana has appealed this decision.

The breast cancer drug Faslodex generated $704 million in 2015, 2.2 percent less than in 2014. First-half 2016 Faslodex sales were $401 million, 20 percent less than in first-half 2015. U.S. sales grew by 28 percent to $211 million, driven by higher levels of demand following an expanded label for second-line treatment for advanced or metastatic breast cancer. Europe sales increased by 13 percent to $113 million. Emerging Markets sales were up in the half by 36 percent to $47 million, with China sales growth of 125 percent to $9 million.

The RSV drug Synagis produced 2015 sales of $662 million, 26.4 percent less than in 2014. In the first half of 2016, sales remained stable at $271 million, and U.S. sales increased by 2 percent to $163 million. This was driven primarily by higher net pricing, which was partly mitigated by lower demand as a consequence of the more-restrictive guidelines from the American Academy of Pediatrics Committee on Infectious Disease. These have reduced the number of patients eligible for preventative therapy with Synagis.

Brilinta/Brilique sales in 2015 grew to $619 million compared with $476 million during 2014. Sales in the first half of 2016 increased by 48 percent to $395 million. U.S. sales of Brilinta were $159 million, an increase of 57 percent, propelled by updated preferred guidelines regarding acute coronary syndrome treatment from the American College of Cardiology and the American Heart Association in March 2016. With a new-to-brand prescription market share of 12 percent, Brilinta became the U.S. branded oral anti-platelet market leader in the 2016 first half.

First-half 2016 sales of Brilique in Europe grew by 17 percent to $125 million, reflecting indication leadership across a number of markets. In the second quarter, the German Institute for Quality and Efficiency in Healthcare gave its assessment of the additional benefit from Brilique at the 60mg dose. This assessment referred to the new indication (high-risk, postmyocardial infarction) which emanated from the PEGASUS trial.

For the diabetes drug Bydureon, 2015 sales amounted to $580 million, 32 percent more than in 2014. In first-half 2016, combined sales for Bydureon and Byetta were $429 million with Bydureon sales up by 11 percent, representing around 68 percent of total Bydureon/Byetta sales. With AstraZeneca’s focus on Bydureon, Byetta sales declined by 19 percent to $138 million. In the United States, Bydureon sales were $234 million, up 5 percent, despite increased competition from new market entrants. Sales in Europe increased by 43 percent to $50 million, reflecting the company’s ongoing effort to expand its diabetes presence, execs say.

The lung cancer drug Iressa generated 2015 sales of $543 million, a 12.8 percent decrease. Sales of Iressa during the first six months of 2016 increased by 2 percent to $270 million, with U.S. sales of $10 million due to AstraZeneca’s prioritizing the launch of Tagrisso in that country, executives say. In Europe, sales declined by 8 percent to $61 million, reflected in falling market-volume share in France and Italy. Emerging Markets sales increased by 3 percent to $134 million. The growth was limited by a decline in China sales of 3 percent to $71 million, reflecting the competitive environment. In June 2016, however, Iressa received national reimbursement listing in China.

 

Pipeline Progress

AstraZeneca executives are confident in the company’s pipeline.

“Importantly, our transformed pipeline is advancing quickly and delivering a rich flow of differentiated medicines, boding well for our return to growth,” Soriot says. “Alongside positive results for our first potential Respiratory biologic medicine, benralizumab, and for Tagrisso in second-line lung cancer, we are encouraged by the rapid patient recruitment in our Immuno-Oncology durva/treme combination programs. This strong scientific momentum is set to continue, in particular where we anticipate key Immuno-Oncology data.”

AstraZeneca has concentrated its pipeline development in three main therapy areas: Respiratory, Cardiovascular/Metabolic diseases, and Oncology; and has projects in “opportunity-driven” areas such as Infection, Neuroscience, and Gastrointestinal.

The company’s Respiratory portfolio includes a range of differentiated potential medicines such as novel combinations, biologics, and devices for the treatment of asthma and COPD.

The pipeline also includes a number of potential medicines designed to treat autoimmune diseases, with a lead program in systemic lupus erythematosus.

In May, the company announced positive top-line results from the benralizumab Phase III program, which executives called “an encouraging milestone for AstraZeneca and for millions of patients suffering from severe asthma.” AstraZeneca says two pivotal Phase III trials, SIROCCO and CALIMA, achieved statistical significance in reducing exacerbations among patients with severe uncontrolled asthma with eosinophilic inflammation. These trials evaluated treatment with benralizumab versus placebo added to high-dose inhaled corticosteroid (ICS) plus long-acting beta agonist (LABA) for the prevention of asthma exacerbations in patients with uncontrolled severe asthma.

Benralizumab is an eosinophil-depleting monoclonal antibody and AstraZeneca’s first respiratory biologic medicine. If approved, benralizumab will potentially be used in addition to inhaled combination medicines.

In July, the FDA’s Dermatologic and Ophthalmic Drugs Advisory Committee voted unanimously to recommend approval for brodalumab for adult patients with moderate-to-severe plaque psoriasis. Fourteen of the panelists voted for approval with conditions related to product labelling and post-marketing obligations based on observations related to suicidal ideation and behavior. AstraZeneca is developing the drug in conjunction with Valeant Pharmaceuticals International Inc., which is the biologics license application holder for brodalumab and is responsible for all development and commercialization activities in the United States. FDA has assigned a Prescription Drug User Fee Act (PDUFA) date of November 16 for the BLA.

According to executives, AstraZeneca’s Cardiovascular & Metabolic diseases area includes a broad type-2 diabetes portfolio, differentiated devices, and unique small and large molecule programs to reduce morbidity, mortality, and organ damage across cardiovascular disease, diabetes, and chronic kidney disease (CKD) indications.

In May 2016, the Brilinta THEMIS trial completed its recruitment, with more than 19,000 patients now randomized within the trial. Executives say THEMIS is part of PARTHENON, AstraZeneca’s largest clinical-trial program, evaluating Brilinta in more than 80,000 high-risk CV patients. THEMIS is an event-driven, randomized, double-blind, placebo controlled trial, designed to evaluate the effect of Brilinta versus placebo for prevention of major CV events in patients with established coronary artery disease and type-2 diabetes, but without a previous myocardial infarction (MI) or stroke. Results are expected in 2018.

The Ministry of Health, Labour and Welfare Drug Committee assessment of Brilinta’s application for approval is ongoing in Japan and a regulatory decision is now anticipated in the second half of 2016. There were three new treatment guidelines updated in China in the first half of the year. The ACS Emergency Room Rapid Guideline, Chinese PCI Guideline, and the Coronary Artery Bypass Graft Consensus (2016) guideline. These recommended Brilinta as ‘“first-choice treatment’ over any other platelet inhibitor.”

AstraZeneca announced in July that the European Commission had approved Qtern tablets for the treatment of type-2 diabetes in the European Union (EU) plus Iceland, Liechtenstein, and Norway. The fixed-dose combination of saxagliptin and dapagliflozin was the first DPP-4/SGLT2 combination medicine to be approved. After receiving a complete response letter from the U.S. FDA in October 2015, the company submitted a regulatory filing for Qtern with new clinical data, which was accepted by the FDA. The submission was based on discussions with regulators and was a first step towards regulatory approval in the United States. The PDUFA date is scheduled for the first quarter of 2017.

Also in the Diabetes area, AstraZeneca has multiple outcomes trials producing data, as the company continues to assess the SGLT2 and GLP-1 classes for potential long-term benefits. Two significant type-2 diabetes outcomes trials are under way and are fully recruited. Executives say the final analysis of the EXSCEL trial for Bydureon is expected in 2018. The trial’s primary endpoint is time to first occurrence of CV death, non-fatal MI, or non-fatal stroke.

An interim analysis is expected in 2017 for the DECLARE trial, which is evaluating the SGLT2 inhibitor Farxiga. As with Bydureon, the primary endpoint is time to first occurrence of CV death, non-fatal MI, or stroke. Final analysis is expected in 2019.

Also in May, AstraZeneca announced that FDA had issued a complete response letter regarding the new drug application for ZS-9 (sodium zirconium cyclosilicate), the potential new medicine being developed for the treatment of hyperkalemia – a high potassium level in the blood serum – by ZS Pharma, a wholly owned subsidiary of AstraZeneca. The complete response letter referred to observations arising from a pre-approval manufacturing inspection. The FDA also acknowledged receipt of recently submitted data which it had yet to review. The complete response letter did not require the generation of new clinical data. The company hopes to be able to resubmit the new drug application in the second half of the year. In the EU, the EMA has accepted a request to extend the submission timeline in order for the AstraZeneca to provide a comprehensive and complete package. Executives anticipate EU approval in the first half of 2017.

During the first six months of 2016, AstraZeneca approved Phase III investment for roxadustat in an additional type of anemia, myelodysplastic syndrome, with the company’s partner, Fibrogen Inc. Myelodysplastic syndrome (MDS) is a condition in which the bone marrow produces insufficient levels of healthy blood cells and there are abnormal (blast) cells in the blood and/or bone marrow. Anemia is observed in approximately 60-80 percent of MDS patients, often requiring transfusions. Transfused patients with MDS experience higher rates of cardiac events, diabetes, infections, and transformation to acute myeloid leukemia and have a decreased overall survival rate when compared with nontransfused patients.

The Phase III trial will seek to demonstrate the efficacy and safety of roxadustat, which acts on both the production of red blood cells and management of iron, in achieving transfusion independence in patients with lower-risk MDS and a low transfusion burden.

Roxadustat is already in late Phase III development against anemia arising from CKD, with a rolling regulatory submission expected to initiate in China before the end of the year. The first Phase III data from an AstraZeneca-sponsored registrational trial are expected to be available during the second half of 2017, with a potential U.S. regulatory submission anticipated in 2018.

In the Oncology area, the company plans on launching at least six new medicines between 2014 and 2020 and has a broad pipeline of small molecules and biologics in development.

According to its leadership, the company is committed to advancing “New Oncology” as one of AstraZeneca’s six Growth Platforms focused on lung, ovarian, breast, and blood cancers. AstraZeneca highlighted its pipeline of Oncology medicines at the American Society of Clinical Oncology meeting in June, presenting both pipeline programs and lifecycle management trials in Immuno-Oncology (IO), DNA Damage Response (DDR), tumor drivers & resistance, and hematology. The company presented 73 abstracts and oral presentations, including updates on the Lynparza Study 19, Tagrisso in leptomeningeal disease, and durvalumab in second-line, PDL1-positive urothelial bladder cancer.

In May 2016, AstraZeneca announced that Faslodex had met its primary endpoint in the FALCON trial. According to executives, top-line data showed that first-line treatment with Faslodex extends progression-free survival (PFS) in postmenopausal women with locally advanced or metastatic hormone receptor-positive breast cancer, compared to the current standard of care. Full evaluation of the data is ongoing and results were expected to be presented at a forthcoming medical meeting.

The Phase III SOLO-2 trial for Lynparza was granted fast-track designation by the FDA in first-half 2016. SOLO-2 is designed to evaluate Lynparza as a potential maintenance treatment for platinum-sensitive, relapsed germline BRCA-mutated, ovarian-cancer patients who are in complete or partial response following platinum-based chemotherapy. SOLO-2 high-level results are expected to be available later this year.

Also in May, the top-line results from the Phase III Lynparza GOLD trial in advanced gastric-cancer patients were announced. Lynparza, in combination with paclitaxel chemotherapy and compared with paclitaxel chemotherapy alone, did not meet the primary endpoint of overall survival in either the overall population or patients whose tumor tested negative for ataxia-telangectasia mutated (ATM) protein. While there was a numerical survival trend in the Lynparza plus paclitaxel arm, it did not meet statistical significance. The particular regimen in the GOLD trial, at a low dose and in combination with chemotherapy, differed from other Phase III trials in the Lynparza program. The Lynparza GOLD data will be analyzed and submitted for presentation at a forthcoming medical meeting.

AstraZeneca in July announced that Tagrisso’s confirmatory Phase III AURA3 trial had met its primary endpoint, demonstrating superior PFS data compared to standard platinum-based doublet chemotherapy in second-line patients with EGFR T790M mutation-positive, locally-advanced or metastatic non-small cell lung cancer (NSCLC) whose disease had progressed following first-line EGFR tyrosine kinase inhibitor therapy. Tagrisso also demonstrated a safety profile consistent with previous trials and, in addition to PFS, the objective response rate, disease control rate ,and duration of response also achieved clinically meaningful improvements versus chemotherapy.

In May, selumetinib was granted orphan drug designation by the FDA for the treatment of patients with differentiated thyroid cancer (DTC). DTC, diagnosed in approximately 60,000 patients in the United States each year, is usually treated with surgery. High-risk patients, however, need additional radioactive iodine (RAI) to kill cancer cells. Up to one in seven patients do not respond to RAI because they lack a key substance, sodium/iodine importer, that is needed to move RAI into cancer cells.

Selumetinib is a MEK 1/2 inhibitor that has already demonstrated clinically meaningful increases in iodine uptake and retention in patients with thyroid cancer who did not previously respond to RAI. A MEK inhibitor inhibits the mitogen-activated protein kinase enzymes (MEK1 and/or MEK2).

 

Deals & Collaborations

AstraZeneca continues to expand its R&D efforts and product portfolio with deals and collaborations. In July, the company announced that it had entered into an agreement with LEO Pharma A/S a specialist in dermatological care, for the global licence to tralokinumab in skin diseases.

Tralokinumab is a potential new IL-13 monoclonal antibody that has completed a Phase IIb trial for the treatment of patients with atopic dermatitis. Under the terms of the agreement, LEO Pharma will make an upfront payment to AstraZeneca of $115 million, up to $1 billion in commercially related milestones and up to mid-teen tiered percentage royalties on product sales.

AstraZeneca will manufacture and supply tralokinumab to LEO Pharma. AstraZeneca will retain all rights to tralokinumab in respiratory disease and any other indications outside of dermatology. The company anticipated completion of the deal in the third quarter.

On the same date, AstraZeneca and an affiliate of Valeant agreed to terminate the licence for Valeant’s right to develop and commercialize brodalumab in Europe. Simultaneously, AstraZeneca entered into an agreement with LEO Pharma for the exclusive licence to brodalumab in Europe.

In June, AstraZeneca announced that it had entered into a commercialization agreement with Aspen Global Incorporated (AGI), part of Aspen Pharmacare Holdings Limited, for rights to its global anesthetics portfolio outside the United States. Under the terms of the agreement, AGI acquired the commercialization rights for an upfront consideration of $520 million. Additionally, AGI will pay AstraZeneca up to $250 million in a product sales-related payment, as well as double-digit percentage trademark royalties on product sales. AstraZeneca will manufacture and supply the medicines on a cost-plus basis to AGI for an initial period of 10 years. Upon completion, anticipated in the third quarter of 2016, AGI will assume responsibility for all activities relating to the sale of the portfolio in all relevant markets.

AstraZeneca will retain a significant ongoing interest in the anesthetics portfolio, including a long-term manufacturing and supply agreement and participation in commercial strategy. The upfront and milestone payments, as well as royalty receipts, which are open-ended, will therefore be reported as Externalization Revenue in the Company’s financial statements.

Also in June AstraZeneca announced that it had entered into a licensing deal with Grünenthal GmbH for the exclusive rights to Zurampic (lesinurad) in Europe and Latin America. Zurampic was approved by the European Medicines Agency in February 2016, in combination with a xanthine oxidase inhibitor, for the adjunctive treatment of hyperuricemia in adult patients with uncontrolled gout.

Under the terms of the agreement, Grünenthal will submit a fixed-dose combination program for regulatory review and will pay AstraZeneca up to $230 million in sales and other related milestones over the lifetime of the contract. Grünenthal will also pay tiered, low double-digit percentage royalties on annual product sales.