Funding research and development through spin-outs
In a bid to cut costs AstraZeneca is spinning out its efforts to find new drugs for gastrointestinal (GI) disorders to a new company called Albireo. Part of the decision reflects AztraZeneca's recent problems with its drug, Nexium, an ulcer treatment, which has been declining in profit and its decision to direct its energies on respiratory, cancer and infectious diseases.
Based in Gothenburg, Sweden, Albireo is inheriting one clinical and a number of pre-clinical GI programmes and key researchers in the field from AstraZeneca. The company is to be funded by a syndicate of growth capital firms, led by Nomura Phase4 Ventures, together with TVM Capital and Scottish Widows Investment Partnerships. So far Albireo has raised $27 million.
The creation of a spin out by a large pharmaceutical company is not new. In 2000 Roche established the biotechnology company Basilea Pharmaceutical to develop drugs for infectious diseases and dermatology, an area Roche had developed for the previous 15 years. One of the reasons for spinning out Basilea was to allow Roche to focus its efforts on its core areas of research and development. Basilea inherited Roche's know-how, intellectual property and compound library in antibiotics, antifungals and dermatology.
Spinouts can be an attractive means of cutting down on costs while creating a new avenue for partnerships and filling dwindling drug pipelines. Both Roche and AstraZeneca retain minority equity interests in their spin out companies and have the option of licensing their products. This could be an important source of revenue and drugs in the future. Today Basilea has two drug candidates in the pre-registration phase, one in clinical phase III and a number of promising early-stage programmes. Two of Basilea's drugs have received fast track designations from the U.S. Food and Drug Administration.
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