OR WAIT null SECS
AstraZeneca purchases CAT, taps into growing biologics market
AstraZeneca plans to purchase biotech company Cambridge Antibody Technology (CAT) to bolster its long-term pipeline and tap into the growing field of biologics.
"To fully meet the needs of patients, we need access to both biological therapeutics and small molecules," said John Patterson, AstraZeneca's executive director of development. "CAT will provide AstraZeneca with biologics critical mass."
Patterson noted that AstraZeneca has been making parallel in-house investments in biologics, particularly in the area of inflammatory disease.
The deal, which is valued at more than $1.3 billion, grew out of a 2004 agreement that gave AstraZeneca a 19.2 percent stake in CAT. The biotech is best known for its collaboration with Abbott Laboratories on blockbuster rheumatoid arthritis drug Humira (adalimumab).
Analysts describe the deal as a strategic move for AstraZeneca, which has been struggling to build all stages of its pipeline. Just this month, the company discontinued studies of its diabetes drug Galida (tesaglitazar), which was already in Phase III trials.
"AstraZeneca will need a good angle to remain competitive," said Melissa Elder, pharmaceutical market analyst for Kalorama Information. "The company has some [looming] patent expirations -- and continues to face generic competitors for current products. They need some big products in the pipeline."
CAT's current pipeline includes drugs in the early phases of testing for multiple sclerosis, Crohn's disease, psoriasis, and several types of cancer.
"Biologics, five or six years ago, were clearly only a promise," said Jason Napodano, senior biotechnology analyst at Zacks Investment Research. "They're starting to deliver now. It's a very hot area."
A report from market research firm The Freedonia Group found that the demand for biologics is expected to grow about 10.8 percent per year, and is projected to reach $74.5 billion in 2009. Monoclonal antibodies are the fastest growing segment of the market with 15.5 percent annual growth, and could reach $18.9 billion in 2009, according to the report.
Since most pharma companies haven't invested in R&D for biologics, many are now playing catch-up through acquisitions and other collaborations. Johnson & Johnson became one of the first pharma companies to invest in this space in 1999, when it purchased Centocor, the biologics company that developed Remicade (infliximab). Merck this year acquired biotech shops GlycoFi and Abmaxis.
Even biotech companies are boosting their biologics investments: Amgen this year finalized its acquisition of Abgenix.
Jason McKinnie, research analyst for Frost & Sullivan's pharmaceutical and biotechnology group, noted that biologics offer the advantage of being a more targeted therapy. "Biologic drugs are the wave of the future," he said.
He added that cancer drugs are a particularly fast-growing segment of the biologics market, and have driven most of the current interest.
Patent issues, with which many pharma companies struggle, further the rationale for investing in biologics. Napodano noted that biologics offer the possibility of a revenue stream from royalties, since their patents cover an entire process, not just a single molecule.
The Freedonia report suggests that generic biologics might begin to enter the market between 2007 and 2012, once an approval process is created and bioequivalence issues are resolved.