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Gout was historically associated with overindulged dandies who were past their prime. So it is apt that AstraZeneca, a one-time investor’s darling, is buying Ardea, developer of a treatment for the disease, as a part-palliative to its own afflictions.
Half of AstraZeneca’s revenues are set to evaporate through patent expiries by 2016. Chief executive David Brennan therefore stands accused of failing to replenish the drug development pipeline.
At a cost of $1bn net of cash, the purchase of the US biotech group, which is also developing a cancer treatment under licence from Bayer, would increase the flow modestly, at best.
AstraZeneca is paying a chunky 50 per cent premium for the shares of Ardea, whose gout drug would supplement established medicines and is a late stage of development.
The deal does, however, give AstraZeneca rare bragging rights over slicker rival GlaxoSmithKline, whose shares trade at a steep premium.
An attempt by GSK to buy a US biotech of similar relative scale was rebuffed last week. The contrast may stay some protest votes at the annual meeting on Thursday, coinciding with first-quarter results forecast to include a 5 per cent fall in sales according to Deutsche Bank.
Here, disgruntled investors are likely to focus on a steep increase in Mr Brennan’s take-home remuneration in 2011, when the share price languished.
It would be surprising if Mr Brennan suffers a vote against his re-election sufficient to force him out. But he needs to deliver more than bolt-on acquisitions such as Ardea to hang on to his job.
A slew of new treatments need to work and to win regulatory approval – diabetes medicine Forxiga is a recent example – in recompense for a raft of drugs that have done neither.
Otherwise, like a Regency buck in a Bath chair who has outstayed his welcome, Mr Brennan may be discreetly wheeled away by an attendant, in the form of incoming chairman Leif Johansson.