Zacks_Analysts' Blog : AstraZeneca Drug Cleared in EU - Analyst Blog

AstraZeneca (AZN) and its partner Bristol-Myers Squibb (BMY) announced recently that Komboglyze has been approved by the European Commission (EC) in European Union (EU). Komboglyze is a combination of Onglyza (saxagliptin), a DPP-4 inhibitor and metformin, a generic drug for type II diabetes. AstraZeneca has co-developed Onglyza with Bristol-Myers.

The EC cleared Komboglyze as an adjunct to diet and exercise to improve glycemic control in adults suffering from type II diabetes. Komboglyze is indicated for patients who show inadequate response to the maximum tolerated dose of metformin alone or those already being treated with the combination of Onglyza and metformin as separate tablets.

Komboglyze is expected to provide single pill dosing convenience to patients currently taking Onglyza and metformin seperately.

We remind investors that Komboglyze was approved by the US Food and Drug Administration (FDA) in November last year and is marketed there as Kombiglyze. It is to be noted that the US version of the drug combines the extended release formulation of metformin with Onglyza, while the EU version uses an immediate release formulation of metformin.

In January 2007, AstraZeneca and Bristol-Myers entered into an agreement to develop and commercialize investigation candidates for type II diabetes.

We anticipate the Komboglyze approval will boost the company’s top line significantly. Diabetes is expected to affect approximately 53 million in 2011. The number of patients is expected to exceed 64 million by 2030, representing a growing market trend. Type II diabetes accounts for approximately 90% - 95% of all diabetic cases diagnosed in adults.

Our Recommendation

We currently have a Neutral recommendation on AstraZeneca. The stock carries a Zacks #3 Rank (hold rating) in the short run. Even though we are encouraged by the strong cardiovascular franchise at AstraZeneca and the company’s focus on the high-potential emerging markets, we remain concerned about the generic competition faced by AstraZeneca’s key products. The company is looking to lessen the impact of genericization by reducing its cost structure. Meanwhile, the weak late-stage pipeline at AstraZeneca also bothers us.