AstraZeneca (AZN) Divests Migraine Drug Rights Beyond Japan

AstraZeneca PLC (NYSE:AZN) has inked a deal to sell the global rights of migraine treatment drug Zomig (zolmitriptan) outside Japan to Grünenthal, a German pharmaceutical company.

Previously, AstraZeneca had licensed the commercial rights of Zomig in the U.S. to Impax Laboratories, Inc. (NASDAQ:IPXL) . Impax will now continue to market Zomig in the U.S. along with Grünenthal. Zomig is also indicated for treatment of acute migraine and cluster headache in the EU.

Under the licensing deal, AstraZeneca will receive $200 million upon its completion. The company will also be entitled to receive up to $102 million in future milestone payments. The agreement is expected to be closed in the second quarter of 2017.

AstraZeneca’s shares have outperformed the Zacks classified Large Cap Pharma industry so far this year. The company’s shares have gained 27.7% compared with the industry’s gain of 10.1%.



Significantly in 2016, revenues from Zomig outside Japan were $96 million. The company said, the agreement does not impact the financial guidance for 2017.

Investors must remember that AstraZeneca continues to divest medicines that are outside the main therapy areas in order to redirect investment and resources into the thrust areas of focus. With this objective, the company executed ten transactions that contribute to externalization revenue and completed nine such divestments in 2016.

Per the company’s press release, more than 75 million people worldwide are suffering from migraine. Given that not many drugs have yet been able to offer a solution for migraine, there exists an unmet need for new therapies in this field.

Zacks Rank & Key Picks

AstraZeneca currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in healthcare sector include VIVUS, Inc. (NASDAQ:VVUS) and Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) . While VIVUS sports a Zacks Rank #1 (Strong Buy), Regeneron carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

VIVUS’s loss per share estimates narrowed down from 50 cents to 39 cents for 2017 in last 60 days. The company posted positive earnings surprises in all four trailing quarters with average beat of 233.69%.

Regeneron’s earnings per share estimates increased from $10.16-$10.52 for 2017 and from $10.90-$12.10, over the last 60 days. The company posted positive earnings surprises in two of the four trailing quarters with average beat of 0.45%.

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