Back to top

Analyst Blog

AstraZeneca (AZN - Analyst Report) recently entered into a collaboration with Cambridge-based, privately-held Moderna Therapeutics for the discovery, development and commercialization of messenger RNA therapeutics. The companies will develop messenger RNA therapeutics for the treatment of serious cardiovascular, metabolic and renal diseases and cancer.

As per the terms of the agreement, Moderna is entitled to receive an upfront payment of $240 million from AstraZeneca. Additionally, Moderna will receive potential technical milestone payments of $180 million.

In exchange, for up to five years, AstraZeneca has the exclusive right to choose any cardiometabolic disease target and selected oncology targets for the development of messenger RNA.

The company possesses an option to select up to 40 candidates under the agreement and will be responsible for their development (preclinical and clinical) and commercialization.

Moderna Therapeutics will design and manufacture the messenger RNA against targets selected by AstraZeneca. AstraZeneca will be obligated to pay milestone payments on the achievement of development and commercialization targets. The company will also make royalty payments (high single digits to low double digits) on net sales of the products developed under the collaboration.

Meanwhile, AstraZeneca recently announced its plans to create an integrated translational research centre in collaboration with Sweden-based medical university Karolinska Institutet. The research center will be located at Karolinska Institutet’s site in Stockholm, Sweden and is expected to be functional by mid-2013.

The research center will conduct preclinical and clinical trials for candidates targeting cardiovascular and metabolic diseases. The center will work on the evaluation of candidates for AstraZeneca’s biotech units (AstraZeneca Innovative Medicines and Early Development and MedImmune).

We note that AstraZeneca is overhauling its research and development operations. Just a few days back, it announced its plans to initiate strategic reforms in its research and development (R&D) segment.

We believe that the collaborations along with the restructuring initiative reflect AstraZeneca’s efforts to cut down on cost while maintaining its focus on R&D. AstraZeneca, through these initiatives, is looking to combat the generic competition faced by the company. Generic competition has adversely impacted AstraZeneca’s revenues over the past few quarters. Moreover, the company is slated to face generic erosion for products including Nexium and Crestor in next few years.

AstraZeneca carries a Zacks Rank #3 (Hold). However, other large cap pharma stocks such as Novo Nordisk (NVO - Analyst Report) and Eli Lilly and Company (LLY - Analyst Report) currently look more attractive with a Zacks Rank #2 (Buy). Another pharma stock that looks attractive is Qlt Inc. (QLTI - Analyst Report). Qlt Inc. is a Zacks Rank #1 (Strong Buy) stock.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 27.00 +10.25%
CANADIAN SO… CSIQ 38.34 +8.18%
CENTURY ALU… CENX 26.97 +7.97%
WILLDAN GRO… WLDN 11.38 +5.86%
AROTECH COR… ARTX 3.78 +5.59%