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AstraZeneca (AZN) Inks Deal to Develop COVID-19 Antibodies

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AstraZeneca (AZN - Free Report) announced that it has inked a licensing deal with London-based RQ Biotechnology (RQ Bio) for the latter’s portfolio of early-stage monoclonal antibodies (mAbs), which target the SARS-CoV-2, the virus responsible for causing COVID-19 infection.

Per the terms of the agreement, AstraZeneca will acquire a global exclusive license from RQ Bio’s portfolio to develop, manufacture and commercialize mAbs against the SARS-CoV-2 virus. In exchange for these rights, RQ Bio will receive upfront and milestone payments of up to $157 million. In addition, RQ Bio will be eligible to receive single-digit royalties on the future sales of mAbs.

Shares of AstraZeneca have risen 9.5% this year so far compared with the industry’s 4.2% increase.

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Currently, AstraZeneca markets its own mAb Evusheld, a combination of two long-acting antibodies, namely tixagevimab and cilgavimab, for treating COVID-19 infections. Evusheld is authorized for use in the United States and Europe as pre-exposure prophylaxis (prevention) for COVID-19.

In the present scenario, we note that the fate of antibody treatments in the United States is quite uncertain. Ever since the year began, a number of antibodies that were earlier granted authorization for emergency use by the FDA, later got their status revoked. The FDA reiterated that these antibody treatments lack efficacy against the predominant Omicron variant.

The antibodies with a repealed status by the FDA include GalxoSmithKline (GSK - Free Report) /Vir Biotechnology’s (VIR - Free Report) mAb sotrovimab and two separate antibody cocktails developed by Eli Lilly (LLY - Free Report) and Regeneron Pharmaceuticals.

Last month, Vir Biotechnology and partner Glaxo faced a major setback when the FDA determined that sotrovimab is no longer authorized to treat COVID-19, given its lack of efficacy against the Omicron variant. The news was a big blow to both Vir Biotechnology and Glaxo as the revision will affect the sales of the antibody treatment. In first-quarter 2022, Vir Biotechnology reported collaboration revenues of $1.2 billion from the sale of sotrovimab, per its 2020 partnership agreement with Glaxo.

Both Eli Lilly and Regeneron also faced a similar obstacle in January this year when the FDA revised the EUA granted to their respective antibody cocktails. The regulatory agency cited that the antibody cocktails of Eli Lilly and Regeneron are unlikely to be effective against the Omicron variant, the then dominating variant in the country.

In February this year, the FDA had granted an EUA to Eli Lilly’s bebtelovimab, another antibody that demonstrated neutralization against the Omicron variant. The antibody treatment is currently authorized by the FDA for treating mild-to-moderate COVID-19 patients at a high risk of disease progression.

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AstraZeneca currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

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