AstraZeneca has agreed to sell the rights to its cholesterol drug Crestor and associated medicines in over 30 countries in Europe to German privately-owned pharmaceutical company Grünenthal GmbH, for a total consideration of up to $350 million.
The deal does not include the rights to Crestor in the UK and Spain. Under the terms of the agreement, Grünenthal will make an upfront, non-contingent payment to AstraZeneca (AZN) of $320 million, in addition to future milestone payments of up to $30 million. The divestment is expected to close in the first quarter of 2021, subject to customary closing conditions and regulatory clearances. Total Crestor sales in the countries where rights were sold amounted to $136 million in 2019.
Crestor is a statin approved for the treatment of blood lipid disorders and to prevent cardiovascular events, such as heart attacks and strokes. It blocks an enzyme in the liver, causing the liver to make less cholesterol, and it increases the uptake and breakdown by the liver of cholesterol already in the blood.
AstraZeneca stated that the sale will not impact its financial guidance for 2020. The income generated from the upfront and future payments will be reported in its financial statements as part of other operating income & expenses.
“This agreement supports the management of our mature medicines to enable reinvestment into the pipeline and bringing new, innovative treatments to patients,” AstraZeneca’s Ruud Dobber said. “Grünenthal previously acquired the rights to several established AstraZeneca medicines and is well placed to ensure continued access to Crestor for patients across Europe.”
AstraZeneca will manufacture and supply Crestor to Grünenthal during a transition period. Following the deal, the UK drugmaker will continue to sell the medicine in other regions, including North America, Japan, China and other emerging markets.
AZN shares are up 4.6% over the past month, taking this year’s advance to 6.2%. The stock scores a Strong Buy consensus from the Street backed by 5 Buys vs. only 1 Hold. That’s with an average analyst price target of $65.25, which puts the upside potential at about 23% in the coming 12 months.
In a bullish note, Cowen analyst Steve Scala this week reiterated a Buy rating on the stock with a $66 price target, calling the stock a “Best Pharma Idea for 2021.”
“AZN has more important news events in 2021 than most other pharma stocks. This includes: Enhertu Ph III data in HER2-low BC, Farxiga Ph III data in HFpEF, Lynparza Ph III data in adjuvant BC, anifrolumab, roxadustat and COVID-19 vaccine approvals/rollouts, tezepelumab full Ph III data/filings in severe asthma, and Tagrisso approval in adjuvant NSCLC, among others,” Scala commented in a note to investors. (See AstraZeneca stock analysis on TipRanks)
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