AZ sells rights to three older drugs to Covis for $350m

AstraZeneca has agreed to sell rights to three older drugs for asthma and rhinitis to Covis Pharma for at least $350 million.

The Anglo-Swedish company has been selling off its older drugs to boost its sales while it waits for a new generation of drugs to begin bringing in substantial revenues.

AZ has seen several blockbuster drugs go off-patent over the last few years, such as the cholesterol drug Crestor (rosuvastatin).

Switzerland-based Covis is a specialty pharma company that has been buying up products since it was founded by investment firm Cerberus Capital Management in 2011.

Under the deal Covis will gain rights to persistent asthma drug Alvesco (ciclesonide), and Omnaris and Zetonna (ciclesonide), used for treatment of nasal symptoms associated with rhinitis.

The rights cover markets outside the US and the US royalties for the medicines. Covis Pharma currently markets Alvesco, Omnaris and Zetonna in the US and will become the owner of the medicines upon closing. The transaction does not include the transfer of any AstraZeneca employees or facilities.

Covis Pharma will pay AstraZeneca $350 million upon closing, in addition to conditional sales-related payments of up to $21 million over four years from 2019.

The agreement is subject to customary closing conditions and is expected to complete by the end of 2018.

AZ will not maintain a significant ongoing interest in the drug and payments will be recognised as other operating income in the company’s financial statements.

Combined 2017 product sales of Alvesco, Omnaris and Zetonna, recorded by AstraZeneca, were $106 million. The agreement does not affect the company’s financial guidance for 2018.

The active ingredient in all three medicines is ciclesonide, a synthetic corticosteroid that helps relieve inflammation.

Mark Mallon, executive vice president, global product and portfolio strategy, said: “One of our strategic objectives is to divest parts of our portfolio, allowing us to allocate resources to develop innovative new medicines to address unmet patient needs. Covis Pharma has strong capabilities in marketing medicines around the world, and our agreement with them means patients will continue to benefit from Alvesco, Omnaris and Zetonna.”