Pfizer to buy AstraZeneca antibiotics for up to $1.5bn

AstraZeneca has agreed to sell its small molecule antibiotics business to Pfizer, in a deal potentially worth more thean $1.5 billion.

This is the second major deal this week for Pfizer, which on Monday agreed to buy cancer drug firm Medivation for $14 billion.

Expected to close in Q4, the deal covers the approved antibiotics Merrem (meropenem),  Zinforo (ceftaroline fosamil) and Zavicefta (ceftazidime+avibactam), and two drugs in clinical development.

The two developmental drugs are aztreonam and avibactam (ATM-AVI), which has the potential to replace or be an alternative to existing agents including colistin, and CXL, an injectable combination of ceftaroline fosamil and avibactam.

AZ holds global rights to commercialise the drugs, except in North America, where Allergan holds the rights.

Under the leadership of CEO Pascal Soriot, AstraZeneca (AZ) has been selling off already approved products in order to raise funds for R&D, as part of a drive to reach a revenue target of $45 billion by 2023.

AZ is also using this “externalisation” revenue to boost income at a time when sales of its big-selling Crestor (rosuvastatin) are falling because of generic competition in the US.

Pfizer will pay $550 million up front, and a further $175 million in 2019 for the commercialisation and development rights to the late-stage antibiotics business in all markets where AstraZeneca holds the rights.

Pfizer will pay up to $250 million if commercial, manufacturing and regulatory milestones are achieved, and up to $600 million in sales-related payments.

The agreement does not include AZ's Medimmune unit's portfolio of biologics, on-market products such as FluMist/Fluenz and Synagis, and AstraZeneca’s stake in Entasis Therapeutics, spun-off from AstraZeneca in 2015 and now operating as a stand-alone company focused on the development of innovative small-molecule anti-infectives.

The agreement does not affect AZ's financial guidance for 2016.