AstraZeneca on Friday announced that it would sell the commercial rights to two hypertension medicines, Atacand and Atacand Plus, to German pharmaceutical company Cheplapharm Arzneimittel GmbH, for $400 million.
The deal comes as AstraZeneca (AZN) is seeking to focus on newer medicines in main therapy areas, the UK drugmaker said. Under the terms of the agreement, Cheplapharm will pay AstraZeneca a total of $400 million in a non-contingent consideration, of which the present value will be recognised as other operating income upon completion of the transaction, which is anticipated during the fourth quarter of 2020. Of the $400 million consideration, $250 million will be paid on deal completion and the remainder in the first half of 2021. AstraZeneca does not expect the divestment to impact its 2020 financial guidance.
Atacand is a prescription medicine approved for the treatment of heart failure (HF) and hypertension. Atacand Plus is approved for the treatment of hypertension. Following the deal, Cheplapharm will be allowed to sell the two drugs in about 70 countries.
“This agreement forms part of our strategy to carefully manage the mature medicines, enabling reinvestment in our main therapy areas to bring innovative new medicines to patients,” AstraZeneca’s Ruud Dobber said. “Cheplapharm previously acquired the rights to Atacand in Europe and will now ensure continued patient access to this important established medicine in additional countries across the globe.”
AstraZeneca will continue to manufacture and supply Atacand and Atacand Plus and commercialise the medicines during a three-year transition period, the drugmaker said.
In 2019, Atacand and Atacand Plus generated sales of $148m and profit before tax of $89m in the countries covered by the agreement.
AZN shares have lost almost 8% over the past month after global clinical trials of AstraZeneca/Oxford’s Covid-19 vaccine candidate had been halted following an adverse event as a UK participant became seriously ill. On Oct. 25, AstraZeneca said that late-stage clinical trials have now resumed globally as regulators in the US, UK, Brazil, South Africa and Japan confirmed that it was safe to do so. (See AstraZeneca stock analysis on TipRanks)
CFRA analyst Wan Nurhayati recently reiterated a Buy rating on the stock with a $61 price target (22% upside potential) as she believes that the company’s other new medicines will help grow revenue in the high single-digit percentage range in 2020.
Nurhayati doesn’t expect the Covid-19 vaccine to be a major profit driver, as AstraZeneca is prioritizing affordable distribution.
Overall, AZN scores a Strong Buy consensus from the analyst community with 3 unanimous Buy ratings. Looking ahead, the $63 average analyst price target puts the upside potential at a promising 26% in the coming 12 months. That’s with shares up less than 1% on a year-to-date basis.
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