AstraZeneca to acquire Pearl Therapeutics

Joe Goldman |

AstraZeneca (AZN) announced on Monday that it has reached a definitive agreement to acquire respiratory drug specialist Pearl Therapeutics. The deal could be worth up to $1.15 billion and is meant to reload AstraZeneca’s dwindling pipeline.

The privately held, Redwood City, California-based Pearl is best known for asthma and chronic obstructive pulmonary disease (COPD) treatments. Under the terms of the deal, Pearl will receive an initial payment of $560 million, an additional $440 million if it reaches certain development and regulatory milestones, and an extra $140 million if it hits undisclosed sales numbers. The deal is expected to close in the third quarter of 2013.

AstraZeneca has recently faced steep competition from many generic drug manufactures and seems to be having some pipeline issues. Many of its key products have lost patent protection, prompting sales and earnings to fall.

AstraZeneca may be struggling with organic growth, but the company seems confident that it can bolster its pipeline and long-term earnings through acquisitions. This marks AstraZeneca’s second acquisition in two weeks, following its purchase of Omthera Pharmaceuticals for $443 million. It remains unclear if AstraZeneca’s buying spree is over.

However, AstraZeneca must find a way to restore organic growth to appease investors. While shares are up 25 percent over the last 12 months, AstraZeneca has traded flat over the last two years and are well below 2006 highs.

Investors were indifferent to the acquisition news on Monday, as shares were unchanged during afternoon trading at $51.49.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AZN Astrazeneca PLC 27.16 0.89 3.39 8,677,307
UVV Universal Corporation 60.90 0.40 0.66 228,694

Comments

Emerging Growth

Winston Gold Mining Corp.

Winston Gold Mining Corp is a mineral exploration and development company. The Company is engaged in acquiring, exploring, developing, and operating mining properties.

Private Markets

Cross Campus

With over 500 members and operating 80,000 square feet by summer 2016, Cross Campus is one of the country’s top ten shared, collaborative office or "coworking" operators in the US.…

Wealthfront

Wealthfront is an automated investment service that serves as an alternative to traditional financial advisory services. The company manages a diversified, continually rebalanced portfolio of index funds on their clients’…