Biotech Day In Review: AstraZeneca Enters Two Partnerships Worth $800 Million

|
 |  Includes: AVNR, AZN, CRIS, PHRM, PTN, RHHBY, SEPR
by: Centient Biotech Investor
AstraZeneca (NYSE:AZN) signed two drug development deals, both of which start small, but have the potential to become significant. The first was with a privately held British biotech called Argenta Discovery, which could be worth up to $500 million.

The two companies will collaborate to develop better bronchodilators that treat chronic obstructive pulmonary disease, also called smoker’s lung. AstraZeneca will make a $21 million upfront payment to Argenta and underwrite research, which is currently in the pre-clinical stage, into LAMA and MABA drugs that could be once-daily therapies. Human trials are at least a year off. AstraZeneca rose 40 cents to $55.95.

AstraZeneca will also collaborate with Palatin Technologies (NYSEMKT:PTN) on small molecule compounds that target melanocortin receptors to treat obesity. Palatin has already built a library of prospective drug candidates, from which the collaboration will select a lead drug. Palatin will receive just $10 million upfront, while another $300 million awaits milestones. $180 million of that is for regulatory/development milestones, the rest for achieving sales levels. AstraZeneca will pay all costs for the venture. Palatin climbed 28 cents to $2.33, a 14% jump.

Curis (NASDAQ:CRIS) reported that Genentech (Private:DNA) began a Phase I test of a small-molecule Hedgehog antagonist for cancer. The drug will be administered in a dose-escalating study to patients with advanced cancers for whom no standard therapies exist. The molecule is a product of a collaboration between Curis and Genentech that began in 2003. In October 2006, when Genentech filed an IND for the drug candidate, it paid a $3 million milestone to Curis. Curis moved 10 cents higher to $7.58.

Pharmion (PHRM) reported the FDA accepted the Investigational New Drug application for an oral formulation of azacitidine. Pharmion already markets an injected version of the drug for myelodyspastic syndromes. Pharmion hopes that the oral version will faciliate continuing use of the drug, a DNA demethylation therapy, for improved results. Pharmion traded up 23 cents to $31.85.

Avanir Pharma (NASDAQ:AVNR) received an approvable letter for an orally disintegrating form of FazaClo, or clozapine, for use in severely ill schizophrenic patients. The orally disintegration tablets dissolve in the mouth, making it more difficult for non-compliant patients to avoid taking the drug. Before it will make final approval of the drug, the FDA has asked for information on the new formulation’s stability and disintegration specifications. Avanir climbed 10 cents to $2.52.

Sepracor (SEPR) handily beat estimates for both revenue and profits in the fourth quarter, sending its stock higher initially. But in a conference call, the company warned revenues would slip in the first half of 2007. Although Sepracor said the second half of the year would make up for the shortfall, analysts were not pleased with the negative surprise and sold the stock off heavily. Sepracor ended the day with a $3.15 loss at $57.06, a drop of 5%.

Biotech took advantage of a late surge in optimism, closing with a gain. The Centient Biotech 200™ rose 8 points to 4042, an increase of .20%. The S&P 500 traded .66% higher and Nasdaq was up .62%.

Disclosure: Centient management holds a position in Genentech shares and does consulting work for Genentech.