AstraZeneca, a global, innovation-driven biopharmaceutical business, has entered into a definitive agreement to acquire ZS Pharma, a biopharmaceutical company based in San Mateo, California. ZS Pharma uses its proprietary ion-trap technology to develop novel treatments for hyperkalaemia (high potassium levels), a serious condition of elevated potassium in the bloodstream, typically associated with chronic kidney disease (CKD) and chronic heart failure (CHF).
The transaction will give AstraZeneca access to the potassium-binding compound ZS-9, a potential best-in-class treatment for hyperkalaemia, a condition associated with increased mortality in CKD and CHF. ZS-9 is under regulatory review by the US Food and Drug Administration with a Prescription Drug User Fee Act goal date of May 26, 2016. A submission for European Marketing Application Authorisation is planned by the end of 2015. Current estimates for global peak year sales of ZS-9 exceed $1 billion.
The acquisition continues AstraZeneca’s track record of targeted business development with a focus on three main therapy areas. ZS Pharma represents a strong fit with AstraZeneca’s pipeline and portfolio in cardiovascular & metabolic disease, one of the company’s three main therapy areas. AstraZeneca’s strategy focuses on reducing morbidity, mortality and organ damage by addressing multiple risk factors across cardiovascular disease, diabetes and chronic kidney disease. ZS-9 complements the company’s increasing focus on CKD and CHF, including the investigational medicine roxadustat, which is currently in Phase III development for patients with anaemia associated with CKD, as well as its leading diabetes portfolio.
Pascal Soriot, chief executive officer of AstraZeneca, said, “Hyperkalaemia can be a life-threatening condition for patients with chronic kidney disease and chronic heart failure, however the risk is underappreciated and prevalence is increasing. This acquisition complements our strategic focus on cardiovascular and metabolic disease by adding a potential best-in-class treatment to our portfolio of innovative medicines. We look forward to welcoming the ZS Pharma team to AstraZeneca.”
Under the terms of the agreement, AstraZeneca will acquire all of the outstanding capital stock of ZS Pharma for $90 per share in an all-cash transaction, or approximately $2.7 billion in aggregate transaction value.
Upon completion, ZS Pharma, which has around 200 employees across three sites in California, Texas and Colorado, will become a wholly owned subsidiary of AstraZeneca. The transaction does not impact AstraZeneca’s financial guidance for 2015. It is expected to generate Product Sales from 2016, with minimal earnings dilution over 2016 and 2017, becoming accretive to AstraZeneca’s core earnings from 2018.
Robert Alexander, chief executive officer, ZS Pharma, said, “This agreement will allow us to maximise the potential of ZS-9, drawing on AstraZeneca’s long-standing expertise in developing and commercialising medicines for cardiovascular and metabolic diseases. We look forward to joining AstraZeneca and to working together to bring this important treatment for hyperkalaemia to the global market, helping to meet an important unmet medical need for patients.”
The acquisition is structured as an all-cash tender offer for all outstanding shares of ZS Pharma common stock at a price of $90 per share, followed by a merger in which each remaining untendered share of ZS Pharma common stock would be converted into the same $90 cash per share consideration as in the tender offer.
Under the terms of the merger agreement, AstraZeneca will commence a tender offer to acquire all outstanding shares of ZS Pharma’s common stock. The Board of Directors of ZS Pharma has unanimously approved the terms of the agreement.
Subject to customary conditions, including the tender of a majority of the outstanding ZS Pharma shares and the expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the transaction is expected to close by the end of 2015. The transaction is not subject to a financing condition.
Hyperkalaemia, or high potassium levels, occurs in 23-47 per cent of patients with chronic kidney disease and/or chronic heart failure, and can lead to cardiac arrest and death (mortality up to 20 per cent). Treatment with common heart medicines can also be responsible for increases in hyperkalaemia. Current therapeutic options are limited, leaving high unmet medical need, in particular for treatments with rapid onset of action and no significant drug-drug interaction risk.
ZS-9 is a proprietary zirconium silicate compound and is manufactured as odourless, tasteless crystals. It acts as a highly selective potassium trap, is administered orally in 5 to 15g doses mixed with three tablespoons of water, is not systemically absorbed and is excreted in faeces. Clinical studies indicate that ZS-9 is stable at room temperature and has a rapid onset of action. Current estimates for global peak year sales of ZS-9 exceed $1 billion. Pending and granted patents, some under license, have expiries out to 2032 and beyond.