(AZN) AstraZeneca Inks Biomarker Discovery Deal

AstraZeneca (AZN) recently announced that it has entered into an agreement with UK-based company, Oxford Cancer Biomarkers Ltd. As per the terms of the agreement, Oxford Cancer Biomarkers Ltd. will work on an AstraZeneca oncology candidate to find biomarkers with potential to identify responders and non-responders to the candidate. However, the companies did not disclose the name of the candidate.

AstraZeneca has an option to license any biomarkers discovered under the program.

We note that AstraZeneca is looking to combat the generic erosion faced by many of its key drugs by signing deals, making acquisitions and developing new products.  The recent acquisition of biotech company AlphaCore Pharma is a move by AstraZeneca in that direction.

Generic competition has adversely impacted AstraZeneca’s revenues over the past few quarters. This has put significant pressure on the company. AstraZeneca is looking towards cost-cutting initiatives to drive the bottom line in the face of genericization.

Last month AstraZeneca initiated a major overhaul of its R&D and selling, general and administrative (SG&A) segments. As per the proposed plans, the company’s R&D activities will be primarily centered in three facilities including UK (Cambridge), US (Gaithersburg) and Sweden (Mölndal).

The proposed initiative will result in relocation and termination of approximately 2,500 and 1,600 roles, respectively, in the 2013-2016 timeframe and cost approximately $1.4 billion. The SG&A segment will also be optimized with the help of restructuring activities, which will result in the termination of approximately 2,300 employees.

AstraZeneca, a biopharmaceutical company, carries a Zacks Rank #3 (Hold). Biopharma stocks like UCB (UCBJF), XOMA Corporation (XOMA) and Athersys Inc. (ATHX) appear to be more attractive. All three stocks carry a Zacks Rank #1 (Strong Buy).
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