AstraZeneca has entered a strategic collaboration with Circassia Pharmaceuticals plc, a respiratory biopharmaceutical company, for the development and commercialisation of Tudorza and Duaklir in the US. Tudorza and Duaklir are inhaled respiratory medicines for the treatment of chronic obstructive pulmonary disease (COPD). Tudorza was approved and launched in the US in 2012. Duaklir is expected to be submitted for US regulatory review in 2018.

Under the terms of the collaboration, Circassia will lead the promotion of Tudorza in the US and has been granted an option to gain the full commercial rights in the future. Circassia has also been granted the rights to Duaklir in the US. AstraZeneca will receive a minority equity stake in Circassia. AstraZeneca will complete ongoing development activities and continue to manufacture and supply both medicines.

This collaboration reinforces AstraZeneca's commitment to maximise patient access and value across the portfolio in all geographic regions, in particular as the pipeline is delivering numerous new medicines and technologies, driven by increased R&D productivity. Circassia has ambitious plans to strengthen its respiratory presence in the US, which provides the potential to expand the collaboration in the future.

Mark Mallon, executive vice president, global product & portfolio strategy at AstraZeneca, said: “Tudorza and Duaklir are important components of AstraZeneca’s respiratory franchise globally and this collaboration will support their commercialisation in the US for the benefit of the millions of COPD patients. It also further sharpens our focus on Symbicort, Bevespi Aerosphere, benralizumab and other respiratory development programmes. Circassia will be an important strategic partner for AstraZeneca in the US and we look forward to working closely together.”

Steve Harris, chief executive of Circassia, said “This proposed transaction is an ideal fit with Circassia’s strategy and respiratory focus. It represents a transformational opportunity for the company. As part of the long-term strategic collaboration with AstraZeneca, we will immediately double our US sales force to promote Tudorza as our priority, as well as our existing NIOX products, transforming Circassia into a world-class respiratory business.”

The agreement is expected to complete in the second quarter of 2017, subject to approval by shareholders of Circassia and customary closing conditions.

Under the terms of the agreement, AstraZeneca will receive $50 million in Ordinary Shares in Circassia, calculated by reference to the lower of the weighted average share price of Circassia over the period 20 days (i) prior to signing or (ii) prior to closing (subject to a maximum number of shares). Circassia will also pay $100 million at the earlier of approval of Duaklir in the US or 30 June 2019. Should Circassia decide to exercise the option to sub-license the commercial rights to Tudorza in the US, Circassia will pay up to a further $80 million.

The two companies will share US profits from Tudorza equally. AstraZeneca will continue to book US Product Sales of Tudorza until Circassia’s potential exercise of the option. Circassia will pay AstraZeneca tiered percentage royalties on potential future US sales of Duaklir. In addition, Circassia will contribute up to $62.5 million towards the development activities for the medicines.

As AstraZeneca will retain a significant, ongoing interest in the medicines, income will be reported as Externalisation Revenue. This includes an expected $60 million at closing, as well as any potential future royalties, deferred income and any future payment for the option to gain the US commercial rights to Tudorza. Any potential future supply of the medicines to Circassia will be reported as Product Sales.