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Analyst Blog

Generic competition has been adversely impacting AstraZeneca’s (AZN - Analyst Report) revenues over the past few quarters. This has put significant pressure on the company.

In a bid to add late-stage candidates to its pipeline, AstraZeneca entered into a number of acquisition deals (Pearl Therapeutics and Omthera Pharmaceuticals) in the last few months and agreements with companies such as FibroGen, Inc.

Meanwhile, AstraZeneca’s global biologics research and development arm, MedImmune, acquired privately-held U.S. based company, Amplimmune in Oct 2013. This deal is in line with AstraZeneca’s strategy of boosting its pipeline by acquiring candidates.

As per the terms of the deal, AstraZeneca made an upfront payment of $225 million to Amplimmune. Amplimmune will also be eligible to receive development-based milestone payments of up to $275 million from AstraZeneca.

With this acquisition, AstraZeneca is looking to strengthen its oncology pipeline. The erstwhile Amplimmune was focused on developing treatments related to cancer immunology. The Amplimmune acquisition has added oncology candidates AMP-224 (phase Ib) and AMP-514 (late-stage pre-clinical trial with an investigational new drug filing planned by year end) to AstraZeneca’s pipeline.

We believe the acquisition of Amplimmune makes strategic sense. AstraZeneca already has a number of immune-mediated cancer candidates including tremelimumab and MEDI-4736. Amplimmune’s technology and pipeline will boost AstraZeneca’s pipeline.

AstraZeneca, a large-cap pharma company, presently carries a Zacks Rank #3 (Hold). Other large-cap pharma stocks such as Roche (RHHBY - Analyst Report), Bayer (BAYRY - Analyst Report) and Allergan Inc. (AGN - Analyst Report) currently appear more attractive.  While Roche carries a Zacks Rank #1(Strong Buy), Bayer and Allergan carry a Zacks Rank #2 (Buy).

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