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July 23, 2009
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We are disappointed once again by AstraZeneca's (AZN) termination of the license agreement with MAP Pharmaceuticals (MAPP) for the development of the pediatric asthma drug, unit dose budesonide (UDB). This drug, undergoing phase III clinical trial did not meet its goals in February 2009. The drug failed to show any improvement in controlling asthma in children. With the termination of this agreement, AZN will have to shell out $44 million (upfront payment by AZN was $40 million) as impairment charges, which will dent the bottomline of the company in the second quarter.
AZN needed the asthma drug in order to compete with GlaxoSmithkline’s (GSK) Advair, which is approved for the treatment of children as young as 4 years. According to the American Lung Association, asthma is a chronic disorder for children affecting 6.8 million children aged under 18.
In June 2008, AZN made an attempt to get Symbicort (asthma drug for 12 years and older patients) approved for the treatment of asthma in children aged 6-11 years. But the FDA responded in April 2009 with a Complete Response letter asking for sufficient data to establish the appropriate dose of the individual components of Symbicort. The company is yet to respond to the letter.
The failure of UDB along with the uncertainty surrounding the label expansion for Symbicort have cast a shadow on AstraZeneca’s plans for the launch of pediatric asthma drug. The UDB debacle is not the first time AZN has faced failure in developing a pediatric asthma drug. Earlier, the company had terminated its collaboration with Verus Pharmaceuticals ($30 million upfront payment received by Verus), related to the development of a pediatric asthma drug. On May 2009, Verus sued AZN for $1.28 billion for terminating the collaboration.
Going forward, we hope AZN succeeds in providing the FDA with satisfactory information on Symbicort thereby paving the way for label expansion. We have a Hold recommendation on AZN.
Read the full analyst report on "AZN"
Read the full analyst report on "GSK"
Read the full analyst report on "MAPP"
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