Biotech Day in Review: AstraZeneca Buys Arrow Therapeutics

AstraZeneca (AZN) continues to be in the spotlight. After announcing two drug development deals potentially worth up to $800 million on Wednesday, the company said it paid $150 million to buy a privately held British biotech called Arrow Therapeutics.

Arrow concentrates on anti-viral therapeutics, with drug candidates in the works for hepatitis C and respiratory syncytial virus [RSV]. The RSV drug is in Phase II trials, and it is partnered with Novartis (NVS).

AstraZeneca also said it would cut 3,000 jobs, about 4.6% of its workforce. Most of the reductions will come from manufacturing personnel as AstraZeneca prepares for generic competition. AstraZeneca traded $1.45 higher to $57.40.

In other M&A action, Pfizer (PFE) will buy BioRexis Pharma to acquire its diabetes drug candidates and protein drug discovery platform. Pfizer did not disclose financial details of the transaction. Pfizer was 38 cents higher at $26.62.

Affymax (AFFY), a late-2006 IPO, received a $10 million payment from its partner Takeda Pharma. Affymax and Takeda are collaborating on the development of Hematide, an anemia drug, and the milestone was for completing the Japanese Phase I clinical trial of Hematide. Affymax and Takeda will co-market the drug in the US, while Takeda owns the ex-US rights. Affymax made its IPO at $25 per share in December 2006. Affymax climbed 39 cents to $37.21.

Ligand (LGND) slashed its employee headcount by 67%, reducing the total number of employees by 267 to end with 85. Some of the layoffs had been announced previously, and 62 people will move to King Pharma (KG) once the sale of Avinza, a pain drug, is finalized. Ligand will take a $10-$12 million charge to pay for severance costs. The move will save the company at least $20 million annually.

Under pressure from a hedge fund, Third Point, Ligand sold its marketed drugs for $470 million and turned itself, once again, into a development-stage company. Even with the drugs on the market, Ligand was losing money every year. Ligand slipped 31 cents lower to $12.68.

Aastrom Biosciences (ASTM) received Orphan Drug designation for use of its Tissue Repair Cells for dilated cardiomyopathy, or chronic heart disease. Tissue Repair Cells are stem and progenitor cells harvested from the patient’s bone marrow. Aastrom is using TRC for bone and vascular regeneration. So far, the technology has been tested in 230 patients. Aastrom added on 5 cents to $1.37.

Metabasis (MBRX) said enrollment was completed in a Phase IIb trial of a type 2 diabetes drug candidate. CS-917 is being developed by Daiichi Sankyo under a license between the two companies. The proof-of-concept trial will use safety, tolerability and efficacy as endpoints in the three-month study. Metabasis was 5 cents higher at $6.66.

GenVec (GNVC) signed a three-year contract with the Department of Homeland Security to develop an adenovector vaccine for foot and mouth disease. GenVec will receive $6 million in research funding in the first year, and can receive up to $15 million over three years, if the DHS chooses to renew the contract each year. GenVec fell 7 cents to $3.07.

Hollis-Eden (HEPH) reported the HHS has put off its decision to buy Neumune for the BioShield stockpile for another month, until March 7, 2007. Neumune treats acute radiation syndrome. Hollis-Eden shook off the news and moved up 12 cents to $5.47.

Gilead (GILD) climbed 11% after reporting a very strong fourth quarter after the bell yesterday. The company beat estimates with $900 million of revenue and a profit of $370 million, for a 41% profit margin, after expensing the stock options. Gilead recorded a $2 billion one-time charge for its purchase of Myogen, which took the reported numbers negative, but investors focused on the on-going business, which seems very strong. Gilead forecasts revenue growth of 31%-35% in 2007. Gilead rose $7.21 to $71.53.

Sepracor (SEPR), meanwhile, sank another 4% after losing 5% yesterday, as investors registered their uneasiness over a forecast that revenue would drop in the first half of 2007. Sepracor dropped $2.31 to $54.75.

Biotech had a very strong session, outpacing the broad market. The Centient Biotech 200™ shot 40 points higher to 4082, an increase of .99%. The S&P 500 gained .54% and Nasdaq was up .18%.

Disclosure: none