The board of Abraxis BioScience Inc. is expected in January to approve ending, more than three years early, a co-promotion agreement with a larger drug company that helped the L.A. biotech launch its first commercial product.
Abraxis last week announced it had come to an agreement with the U.S. unit of Swedish drug maker AstraZeneca PLC to end the pact, in which AstraZeneca leveraged its sizable U.S. marketing and sales network to build sales for the breast cancer drug Abraxane.
In exchange, AstraZeneca received a 20 percent commission on U.S. sales, which worked out to $62 million last year. The drug initially had slow sales after its early 2006 launch but they have picked up and totaled nearly $325 million in 2007.
Officials at both companies describe the change as mutually beneficial but would not say which first sought the breakup.
“We have gained much in our collaboration with AstraZeneca and they have done a commendable job in building market share,” said Abraxis Chief Executive Patrick Soon-Shiong, who noted that his company now had the resources to build its own global marketing and sales team.
Abraxane is approved for use in several countries and Abraxis is working on regulatory approval to sell it as a treatment for additional types of cancer. In addition, the company is in clinical trials on drugs for other diseases that use the same technology as Abraxane. At least nine late-stage clinical trials have received regulatory approval to proceed.
Abraxane takes an existing chemotherapy drug called taxane and employs a nanotechnology delivery system using tiny particles that more effectively administer the drug to cancer cells. Abraxane competes with Bristol-Myers Squibb’s Taxol and Sanofi-Aventis’ Taxotere, but has been gaining market share.
Soon-Shiong, who controls roughly 80 percent of the company’s shares, said he’s confident the board will approve the deal, which obligates Abraxis to pay AstraZeneca a $268 million termination fee. Were the board to vote to continue the partnership instead, the commission to AstraZeneca would jump to 50 percent of U.S. sales.
Back in 2006, AstraZeneca paid Abraxis an up-front fee of $200 million to get a cut of Abraxane’s action. In a related deal, Abraxis paid AstraZeneca $350 million to obtain U.S. rights to AstraZeneca’s branded anesthetics and analgesic business. Those drugs became part of Abraxis’ APP generic business, which was spun off a year ago and acquired in July by Fresenius SE.
An AstraZeneca spokeswoman said that ending the pact frees resources at her company to grow its own oncology franchise. AstraZeneca in the U.S. now sells a drug for advanced breast cancer called Faslodex and a related drug called Arimidex, which reduces the chance that breast cancer will return after treatment. It also has several experimental cancer drugs in its pipeline.
“This is a good time for us to regain full control of our selling resources,” Kirsten Evraire said. “Given the current environment and our business priorities, we want to concentrate our current portfolio and future opportunities.”