AstraZeneca's Path to Avoid Pain

Pharmaceutical giant AstraZeneca (NYSE: AZN) and drug developer Pozen (Nasdaq: POZN) announced their agreement yesterday to codevelop a medication for chronic pain.

Pozen shareholders felt an immediate jolt of satisfaction, as their shares jumped over 39%. AstraZeneca's shareholders, still smarting from the day's other not-unexpected news -- that the FDA had approved a generic version of the company's heart drug Toprol XL from a division of Novartis (NYSE: NVS) -- felt a touch of malaise, as their shares slipped 0.36%.

The new product aims to treat arthritic pain while reducing common side effects such as ulcers. The pill will combine Pozen's non-steroidal anti-inflammatory drug with the active ingredient in AstraZeneca's heartburn medication, Nexium.

The deal requires a $40 million upfront payment to Pozen, as well as potential payments of $160 million for meeting developmental markers, up to $175 million for attaining certain sales targets, and additional royalties on net sales. Pozen will take charge of FDA filings, with a targeted submission date of late 2008, while AstraZeneca will market and sell the drug.

Arthritis pain is chronic, but this deal highlights AstraZeneca's aggressive strategy to limit its own aches. The company is correctly trying to replenish its pipeline, which saw trials of several candidates halted earlier this year amid safety concerns. The company also said yesterday that it is still in the process of appealing its defeat in a patent case over ToprolXL.

Take heart, AstraZeneca shareholders! No queasy stomachs are expected in your future. Your company's strong financial health should ably aid management's proactive long-term approach to lessen any stings -- expected or otherwise.

For related Foolishness:

• AstraZeneca Needs a Rest
• AstraZeneca: Of Patents and Pipelines
• AstraZeneca's Essential Investment

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Fool contributor S.J. Caplan does not own shares of any companies mentioned in this article. The Fool has a disclosure policy.