EUROPEAN COMMISSION DG Competition

Only the English text is available and authentic.

REGULATION (EC) No 139/2004 MERGER PROCEDURE

Article 6(1)(b) NON-OPPOSITION Date: 05/07/2021

In electronic form on the EUR-Lex website under document number 32021M10165

Brussels, 5.7.2021 C(2021) 5107 final

PUBLIC VERSION

In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004 concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus […]. Where possible the information omitted has been replaced by ranges of figures or a general description.

AstraZeneca plc 1 Francis Crick Avenue Cambridge Biomedical Campus Cambridge CB2 0AA UK

Subject: Case M.10165 – ASTRAZENECA/ALEXION PHARMACEUTICALS Commission decision pursuant to Article 6(1)(b) of Council Regulation 1 2No 139/2004and Article 57 of the Agreement on the European Economic Area

Dear Sir or Madam,

(1) On 31 May 2021, the Commission received notification of a proposed concentration pursuant to Article 4 of the Merger Regulation by which AstraZeneca plc (“AstraZeneca”, UK) acquires sole control of Alexion Pharmaceuticals Inc. (“Alexion”, US), (the 3 “Transaction”).AstraZeneca is referred to as the “Notifying Party” and, together with Alexion, the “Parties”.

1 OJ L 24, 29.1.2004, p. 1 (the “Merger Regulation”). With effect from 1 December 2009, the Treaty on the Functioning of the European Union (“TFEU”) has introduced certain changes, such as the replacement of “Community” by “Union” and “common market” by “internal market”. The terminology of the TFEU will be used throughout this decision. 2 OJ L 1, 3.1.1994, p. 3 (the “EEA Agreement”). 3 Publication in the Official Journal of the European Union No C 215, 07.06.2021, p. 10.

Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË

Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.

1. THE PARTIES AND THE OPERATION

(2) AstraZeneca is a UK-based global pharmaceutical company. It focuses on developing and marketing treatments for common diseases with large addressable patient populations, with three core therapy areas: (i) oncology; (ii) cardiovascular, renal, and metabolism; and (iii) respiratory and immunology.

(3) Alexion is a US-based biopharmaceutical company focusing on rare and ultra-rare diseases for which there is high unmet medical need. Alexion currently markets only five drugs, including Soliris, a blockbuster drug for the treatment of several rare diseases ([…]).

(4) On 12 December 2020, the Parties entered into a definitive merger agreement pursuant to which AstraZeneca agreed to acquire all of the shares of Alexion. Following completion of the Transaction, AstraZeneca will thus acquire sole control of Alexion. Therefore, the Transaction constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

2. UNION DIMENSION

(5) The undertakings concerned have a combined aggregate worldwide turnover of more than 4 EUR 5 000 million (AstraZeneca: EUR 23 338 million; Alexion: EUR 5 322 million).Each of them has a Union-wide turnover in excess of EUR 250 million (AstraZeneca: EUR […] million; Alexion: EUR […] million), but they do not achieve more than two-thirds of their aggregate Union-wide turnover within one and the same Member State. The notified operation therefore has a Union dimension pursuant to Article 1(2) of the Merger Regulation.

3. GENERAL CONSIDERATIONS

3.1. Overview of the Parties’ overlapping activities

(6) AstraZeneca and Alexion are both active in the development and commercialisation of pharmaceutical products. Their activities are highly complementary: AstraZeneca focuses on prescription drugs for common diseases while Alexion is only active in the rare and ultra-rare 5 disease space.Consequently, the Transaction only gives rise to a limited number of pipeline-to-pipeline overlaps with respect to three indications, namely (i) lupus nephritis (“LN”); follicular lymphoma (“FL”); and (iii) peripheral T-cell lymphoma (“PTCL”).

(7) Moreover, AstraZeneca manufactures inebilizumab for its former subsidiary Viela Bio, Inc. (“Viela”), controlled by Horizon Therapeutics PLC (“Horizon”) since March 2021. This creates a vertical relationship with Alexion’s activities in the treatment of neuromyelitis optica spectrum disorder (“NMOSD”) and generalized myasthenia gravis (“gMG”), where Viela and Alexion are competitors.

3.2. General considerations on market definition

(8) When defining relevant product markets in past decisions dealing with pharmaceutical 6 products in development (also called pipeline products),the Commission has generally

4 Turnover calculated in accordance with Article 5 of the Merger Regulation. 5 The European Commission defines a rare disease as one that affects less than 5/10 000 people – see https://ec.europa.eu/info/research-and-innovation/research-area/health-research-and-innovation/rare-diseases en. 6 In the pharmaceutical industry, pipeline drugs go through several development stages, starting with preclinical trials in laboratories and on animals, and later moving on to clinical trials in humans (so called “Phase I”, “Phase II” and

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envisaged market definitions based on the indication, the mode of action (“MoA”) and, 7 where relevant, the line of treatment (“LoT”),but ultimately left open the exact delineation 8 of the market definition.The Commission added that when research and development (“R&D”) activities are assessed in terms of importance for future markets, the product market definition can be less clearly defined than for marketed products, reflecting the 9 intrinsic uncertainty in analysing products that do not exist yet.In terms of geographic scope, the Commission has consistently considered that the markets for pipeline drugs are at 10least EEA-wide.

(9) The Commission will analyse in Sections 4 and 5 below the relevance of these precedents for the relevant product and geographic market definitions in the present case.

3.3. General approach to competitive assessment

(10) Article 2 of the Merger Regulation requires the Commission to examine whether notified concentrations are compatible with the internal market, by assessing whether they would significantly impede effective competition in the internal market or in a substantial part of it.

(11) The Commission Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings (the “Horizontal Merger 11 Guidelines”)specify that concentrations between actual or potential competitors may significantly impede effective competition as a result of the creation or strengthening of a 12 dominant position or the removal of a significant competitive constraint.The Horizontal Merger Guidelines also indicate that mergers involving a potential competitor may restrict effective competition by ways of horizontal anti-competitive effects, either coordinated or 13non-coordinated.

(12) In this framework, “competition” is understood to mean product and price competition 14 (actual or potential), but also innovation competition.In this respect, the Commission assesses innovation competition in relation to (i) the parties’ ongoing pipeline products, assessing the risk of significant loss of innovation competition resulting from the discontinuation, delay or redirection of the overlapping pipelines (including early stage

“Phase III” clinical trials), which are strictly regulated to ensure the protection of trial subjects and the reliability of the results. The phases of clinical development for pipeline products can be described as follows. Phase I starts with the initial administration of a new drug to humans, with trials carried out on a small number of people (e.g. in oncology, the sample size is usually in the low tens). The focus of Phase I trials is to confirm that the drug is safe to use in humans and identify the appropriate dosage and exposure-response relationship. Phase II usually starts with the initiation of studies to explore therapeutic efficacy in patients. Studies in Phase II are typically conducted on a small group of patients (generally around 20 to 50 up to some hundreds per cohort or treatment arm) that are selected based on stricter criteria for indications. Phase III trials aim to demonstrate or confirm therapeutic benefit in a larger group of patients (Phase III trials will typically have hundreds of patients and may have over a thousand, for example for autoimmune diseases). Studies in Phase III are designed to confirm the preliminary evidence accumulated in Phase II that a drug is safe and effective for use in the intended indication and recipient population. Usually, Phase III trials will involve a comparison of the investigational agent with a placebo or the standard of care therapy. These studies are also intended to provide an adequate basis for marketing approval. Phase IV begins after drug approval to monitor possible adverse reactions and/or new side effects over time. 7 Line of treatment refers to the setting for which a specific drug is indicated. For example, a drug indicated for second-line of treatment should be used only after another therapy (the first-line of treatment) has proven ineffective or if this other therapy cannot be prescribed to a specific patient. 8 See case M.9294 – BMS/Celgene, para. 14. 9 See cases M.9294 – BMS/Celgene, para. 16; and M.7275 - Novartis/GSK Oncology, para. 26. 10 See most recently, case M.9461 – AbbVie/Allergan, para. 13. 11 OJ C31, of 5 February 2004, p. 5. 12 Horizontal Merger Guidelines, paras. 24-25. 13 Horizontal Merger Guidelines, paras. 22 and 58-59. Section 4 (Horizontal analysis) focuses on horizontal non- coordinated effects as the Transaction does not give rise to horizontal coordinated effects. 14 See case M.8084 - Bayer/Monsanto, para. 48.

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pipelines); and (ii) the capability to innovate in certain innovation spaces, assessing the risk of a significant loss of innovation competition resulting from a structural reduction of the 15overall level of innovation.

(13) The Commission Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings (the “Non-Horizontal 16 Merger Guidelines”)distinguish between two main ways in which vertical mergers may significantly impede effective competition, namely input foreclosure and customer 17foreclosure.

(14) For a Transaction to raise input foreclosure competition concerns, the merged entity must 18 have a significant amount of market power upstream.In assessing the likelihood of an anticompetitive input foreclosure strategy, the Commission has to examine whether (i) the merged entity would have the ability to substantially foreclose access to inputs, (ii) whether it would have the incentive to do so, and (iii) whether a foreclosure strategy would have a 19significant detrimental effect on competition downstream.

(15) The Commission will analyse the horizontal overlaps and vertical links arising from the Transaction against this framework in Sections 4 and 5 below.

4. HORIZONTAL ANALYSIS

4.1. Lupus nephritis (“LN”)

4.1.1. Introduction

(16) LN is a severe and rare renal complication of systemic lupus erythematosus (“SLE”), in which deposits of immune complexes accumulate in the kidney and lead to renal injury. LN is developed by around 30% of the SLE patients. LN is characterised by a high unmet medical need, a large number of LN patients being refractory to treatments and progressing to end-stage renal disease (“ESRD”, i.e. a stage where the kidneys cease to function on a permanent basis) requiring dialysis and kidney transplant. LN severity can be classified based on the classification of the International Society of Nephrology (ISN): Class I & II (mild disease); Class III & IV (severe and proliferative focal and diffuse disease); Class V (membranous disease, slower progression); Class VI (ESRD – no treatment available).

(17) In the EEA, the current treatment algorithm for LN (Class III-V) consists of (i) a combination of steroids (glucocorticoids) with immunosuppressants (e.g. mycophenolate

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mofetil (“MMF”) or cyclophosphamide (“CYC”)) as frontline treatments; and (ii) a combination of steroids with rituximab or calcineurin inhibitors for refractory LN.

4.1.2. Market Definition

(A) Product market definition

(18) In the absence of Commission precedents for LN treatments, the Notifying Party considers that all marketed and pipeline treatments for LN compete against each other and that the market should not be further segmented. In any event, the Notifying Party submits that this question 21can be left open as no competition concerns arise under any plausible market definitions.

(19) The market investigation was not conclusive as to whether the treatments for LN should be sub-segmented notably because many of the LN drugs are still at the development stage and there is an intrinsic level of uncertainty in assessing their future characteristics and market positioning. In particular, based on the results of the market investigation, it is not clear whether the following potential segmentations are warranted:

i.Segmentation based on the MoA: LN drugs with different MoAs target different pathways and, thus, may translate into distinct efficacy and safety profiles, which are 22 key factors for physicians when prescribing drugs.However, at this stage, given the limited available data, the exact efficacy and safety profile of the various LN pipeline drugs remains uncertain. Moreover, all the competitors expect LN pipeline drugs based on different MoAs to compete with one another and generally consider that the MoA is 23not an important criterion for physicians;

ii.Segmentation based on the LoT: albeit some of the Parties’ internal documents distinguish LN drugs depending on their LoT and suggest limited competition between 24 drugs belonging to different LoTs,the results of the market investigation were not as clear. In particular, KOLs stressed that the “place of LN pipeline drugs in the treatment 25 algorithm is unclear”and the feedback received from competitors regarding the 26competition between LN drugs belonging to different LoTs was rather mixed.

(20) In any event, for the purposes of this decision, the Commission concludes that the exact scope of the market for treatments of LN can be left open since the Transaction does not give rise to serious doubts as to its compatibility with the internal market and the functioning of the EEA Agreement under any plausible market definitions (i.e. segmentations by MoA and by LoT).

(B) Geographic Market Definition

(21) As regards the geographic market definition, the Commission has consistently considered 27 the markets for pipeline drugs to be at least EEA-wide in scope.The Notifying Party does

20 Responses to question 4 of questionnaire Q1 to competitors and Non-confidential minutes of a call with a LN Key Opinion Leader (“KOL”) dated 21.04.2021 (1). 21 Form CO, paras. 206 and ff. 22 Responses to question 6 of questionnaire Q1 to competitors. 23 Responses to questions 6 and 12 of questionnaire Q1 to competitors. 24 See e.g. the Parties’ reply to RFI 1, Annex 17, p. 4: “[…]” (emphasis added). 25 Non-confidential minutes of a call with a LN KOL dated 21.04.2021 (12:15 pm CET). 26 Responses to question 5 of questionnaire Q1 to competitors. For instance, a competitor stated that although “by definition of refractory LN, patients would need to fail the frontline treatment […] [i]n the case of relapse, either frontline treatment or novel drug could be used”. 27 See Section 3.2 above.

(31) Finally, none of the KOLs and competitors expressed concerns about the impact of the Transaction on the market for LN treatments in the EEA and the potential discontinuation, 40re-orientation and delay of the Parties’ pipeline drugs.

4.1.5. Conclusion

(32) In view of the above considerations, the Commission concludes that the Transaction does not give rise to serious doubts as to its compatibility with the internal market and the functioning of the EEA Agreement as regards its impact on competition in the market for the treatments of LN (and its plausible sub-segmentations).

4.2. Follicular Lymphoma (“FL”)

4.2.1. Introduction

(33) FL is a rare and indolent subtype of Non-Hodgkin lymphoma (blood cancer), which leads to abnormal B-cells building up in the lymph nodes or other body parts. FL affects mainly older patients (the median age at diagnosis is above 60 years old) and progresses slowly (the median time from diagnosis to death in FL is over 20 years). Ultimately, 30-40% of the FL cases transform into diffuse large B-cell lymphoma, a more aggressive type of lymphoma. There are different degrees of gravity ranging from stage I to IV: Stage I (the disease is located in a single region, e.g. a lymph node); Stage II (the disease is located in two separate regions confined to one side of the diaphragm); Stage III (the disease involves both sides of the diaphragm) and Stage IV (diffuse disease).

(34) In the EEA, the current treatment algorithm for FL (stage III-IV) consists of (i) a 41 combination of chemotherapy (e.g. CHOP)with immunotherapy (typically CD20 inhibitors, such as rituximab) as first-line treatments for young/fit patients (no chemotherapy for old/unfit patients, e.g. rituximab monotherapy); (ii) a combination of chemotherapy with immunotherapy as second-line treatments (either repetition of the first-line combined treatment or another combination); and (iii) PI3K inhibitors (e.g. Idelalisib) or novel agents 42(i.e. enrolment in clinical trials) for third-line treatments.

4.2.2. Market definition

(A) Product market definition

(35) In the absence of Commission precedents for FL treatments, the Notifying Party submits that all marketed and pipeline treatments for FL belong to the same product market and should not be further segmented. In any event, according to the Notifying Party , this question can be 43left open as no competition concerns arise under any plausible market definitions.

(36) The market investigation was not conclusive as to whether the treatments for FL should be sub-segmented, notably because many of the FL drugs are still at the development stage and there is an intrinsic level of uncertainty in assessing their future characteristics and market positioning. In particular, based on the results of the market investigation, it is not clear whether the following potential segmentations are warranted:

40 Responses to questions 17 and 18 of questionnaire Q1 to competitors. See also Non-confidential minutes of calls with LN KOLs, dated 21.04.2021 (12:15 pm CET and 3:30 pm CET). 41 Chemotherapy combination of cyclophosphamide, hydrodaunorubicin, oncovin and prednisone. 42 Responses to question 20 of questionnaire Q1 to competitors and Non-confidential minutes of a call with FL KOL, dated 21 April 2021. 43 Form CO, paras. 329 and ff.

(40) AstraZeneca is developing capivasertib, an AKT inhibitor, which is targeting patients that […] and only recently started Phase II trials for FL (in May 2021). If the trials are successful, capivasertib is expected to reach the EEA market at the earliest in […].

(41) Alexion is developing cerdulatinib, a dual SYK/JAK inhibitor currently undergoing Phase I/IIa trials for Non-Hodgkin Lymphoma, including FL (and PTCL), […]. Cerdulatinib was acquired by Alexion […] in July 2020 in the context of a broader transaction (i.e. Alexion’s acquisition of Portola Pharmaceuticals) […]. Since then, [Alexion’s plans for 52cerdulatinib].

(42) Therefore, in the market for FL treatments (including in the potential segment for […]), the Transaction gives rise to a pipeline-to-pipeline overlap between AstraZeneca’s capivasertib and Alexion’s cerdulatinib. No overlap arises if the market is segmented by MoA.

4.2.4. Competitive assessment

(43) The Notifying Party argues that no competition concerns arise in FL under any plausible market delineations given notably (i) the early development stage and the uncertain development status of the Parties’ pipeline products, (ii) their different MoAs, (iii) 53[Alexion’s plans for cerdulatinib], and (iv) the existence of many competing drugs.

(44) The market investigation generally confirms the Notifying Party’s claims and, for the reasons set out below, allows the Commission to exclude serious doubts as to the compatibility of the Transaction with the internal market and the functioning of the EEA Agreement resulting from the overlap between the Parties’ activities in FL.

(45) First, the Parties’ FL pipeline drugs are not seen by KOLs as being particularly promising 54 and the Parties are not perceived as major players in FL.In particular, a KOL stressed that 55 “the first preliminary data for the Parties’ pipeline drugs is not very promising”.The market participants also generally note that the exact profiles and prospects of these drugs 56remain uncertain due to their early stage of development and the limited available data.

(46) Second, AstraZeneca’s and Alexion’s pipeline products have different MoAs and, thus, are 57developed, they are not expected to closely compete (should they both reach the market).

58 (47) Third, as illustrated in Table 4 below, and irrespective of the exact scope of the market,the Parties face a large number of competing (marketed and pipeline) drugs. In this respect, market participants generally consider that the FL pipeline is very competitive, including 59 drugs that are more advanced and more promising than the Parties’.For instance, a

52 Form CO, paras. 326-328. 53 Form CO, paras. 357 and ff. 54 See notably Responses to question 29 of questionnaire Q1 to competitors. 55 Non-confidential minutes of a call with a FL KOL, dated 21.04.2021. 56 Responses to question 29 of questionnaire Q1 to competitors. See also non-confidential minutes of a call with a FL KOL, dated 21.04.2021. 57 Responses to question 31 of questionnaire Q1 to competitors. 58 As explained in Section 4.2.2(A), the novel agents currently in the FL pipeline are expected to be mainly prescribed after the failure of frontline treatments (similarly to the Parties’ drugs). 59 Responses to questions 26, 27 and 29 of questionnaire Q1 to competitors. See also Non-confidential minutes of a call with a FL KOL, dated 21.04.2021 identifying bispecific antibodies CD20 and CD3 (such as Regeneron’s pipeline drug) and CAR T cell therapies (currently under development by Novartis and BMS) as the most promising pipeline drugs based on the currently available data.

4.3. Peripheral T-Cell Lymphoma (“PTCL”)

4.3.1. Introduction

(51) PTCL is another rare type of Non-Hodgkin lymphoma (blood cancer), which leads to abnormal T-cells building up in the lymph nodes or other body parts. PTCL is an aggressive disease (the median time from diagnosis to death in PTCL is around three years), which mainly affects older patients (the median age of diagnosis is 60 years old). It is also an heterogeneous disease, with many subtypes, including notably Angio-Immunoblastic T-cell lymphoma (“AITL”), anaplastic large cell lymphoma (“ALCL”), PTCL - not otherwise specified (“PTCL - NOS”). PTCL is characterised by a high unmet medical need, with low overall response rates to the few existing therapies and high mortality rates.

(52) In the EEA, the current treatment algorithm for PTCL consists of (i) chemotherapies (such 67as CHOP or CHOEP), or a combination of CHOP with the anti-CD30 brentuximab vedotin Adcetris (for ALCL only), as frontline treatments, followed by an autologous stem cell transplant for young/fit patients responding to the chemotherapy (consolidation treatment); (ii) no real standard of care for relapse and refractory (“r/r”) PTCL, except for ALCL patients who can be treated with Adcetris (monotherapy).

4.3.2. Market definition

(A) Product market definition

(53) In the absence of Commission precedents for PTCL treatments, the Notifying Party considers that all marketed and potential pipeline treatments for PTCL are part of the same product market and should not be further segmented. In any event, the Notifying Party submits that this question can be left open as no competition concerns arise under any 69plausible market definitions.

(54) The results of the market investigation are not conclusive as to whether the treatments for PTCL should be sub-segmented, notably because many of the PTCL drugs are still at the development stage and there is an intrinsic level of uncertainty in assessing their future characteristics and market positioning. In particular, based on the results of the market investigation, it is not clear whether the following potential segmentations are warranted:

i.Segmentation based on the MoA: similarly to the other overlapping indications, the Commission found that PTCL treatments with the same MoA are “more likely to be seen 70 as close alternatives”,with similar efficacy and safety profiles. That being said, at this stage, given the limited available data, the exact profile of the various PTCL pipeline 71 drugs remains highly speculativeand the feedback received from the market regarding 72 the relevance of a segmentation of the PTCL market by MoA was not conclusive.In any event, as illustrated in Tables 5 and 6 below, it appears that “[PTCL] drugs having 73the exact same MoA is fairly rare”;

67 CHOP chemotherapy combination (see fn. 41) with the addition of etoposide. 68 Responses to question 36 of questionnaire Q1 to competitors and Non-confidential minutes of a call with a PTCL KOL, dated 19.04.2021. 69 Form CO, paras. 499 and ff. 70 Non-confidential minutes of a call with a PTCL KOL, dated 29.04.2021. 71 Non-confidential minutes of a call with a PTCL KOL, dated 22.04.2021. 72 Responses to question 45 of questionnaire Q1 to competitors. 73 Non-confidential minutes of a call with a PTCL KOL, dated 05.05.2021.

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[confidential summary of why Dizal’s product is attributed to AstraZeneca for purposes of EU merger control assessment]. DZD4205 is a selective JAK1 and JAK3 inhibitor currently undergoing Phase I/II trials. At this stage, none of AstraZeneca’s pipeline drugs targets a specific PTCL subtype. All AstraZeneca’s pipeline drugs for the treatment of PTCL target relapse and refractory patients.

(59)Alexion is developing cerdulatinib, a dual SYK/JAK inhibitor, targeting both the JAK and SYK pathways (as opposed to AstraZeneca’s DZD4205, which is a more selective JAK inhibitor, targeting only the JAK pathway). Cerdulatinib is currently undergoing Phase I/IIa trials and does not target a specific PTCL subtype. It also targets relapse and refractory 79patients. Moreover, as explained in Section 4.2.2(A), [Alexion’s plans for cerdulatinib].

(60)Therefore, in the market for PTCL treatments (including if the market is segmented by LoT), the Transaction gives rise to pipeline-to-pipeline overlaps for the treatment of PTCL between (i) AstraZeneca’s AZD4573 and Alexion’s cerdulatinib; and (ii) Astrazeneca’s DZD4205 and Alexion’s cedulatinib. No overlaps arise if the market is segmented by MoA and by subtypes of PTCL (since none of the Parties’ pipeline products is developed for a specific PTCL subtype).

4.3.4. Competitive assessment

(61)The Notifying Party argues that no competition concerns arise in PTCL under any plausible market delineations given notably the fact that the Parties’ pipeline products (i) are still at an early stage of development, (ii) have differentiated MoAs and (iii) face strong competition from a number of drugs. The Notifying Party also submits that (iv) [Alexion’s plans for cerdulatinib] and (v) Dizal (i.e. the Chinese company controlled by AstraZeneca developing a PTCL pipeline) is subject to an ongoing Initial Public Offering (i.e. a public offering in which shares of a company are sold to investors; “IPO”).

(62)The market investigation generally confirms the Notifying Party’s claims and, for the reasons set out below, allows the Commission to exclude serious doubts as to the compatibility of the Transaction with the internal market and the functioning of the EEA Agreement resulting from the overlaps between the Parties’ activities in PTCLtreatments.

(63)First, the Parties’ PTCL pipeline drugs are not seen by KOLs and market participants as 81 being particularly promising.For instance, a KOL noted that the “interest in SYK inhibition within the context of T-Cell Lymphomas […] has recently declined” and stated that he was “pessimistic about the likelihood of the Parties getting licenses for treatments in 82 PTCL”.Another KOL explained that the limited preliminary data available for cerdulatinib in PTCL did not suggest a significant improvement compared to the current 83 standard of care.The respondents also generally stressed that the Parties’ products are 84early stage pipeline drugs, with highly uncertain prospects.

(64)Second, the Commission received rather mixed feedback from the market about the differentiation between the Parties’ pipelines, in particular between AstraZeneca’s DZD4205 and Alexion’s cerdulatinib. On the one hand, some KOLs explained that these two drugs have the potential to closely compete with each other because of their similar MoAs (JAK inhibitor vs. SYK/JAK inhibitor), which “overlap to some extent as they both target the JAK 85 pathway”.On the other hand, other KOLs stressed that a pure JAK inhibitor is more selective than a combined SYK/JAK inhibitor, with potentially less side effects: “although the mechanisms of action of DZD4205 (JAK inhibitor) and cerdulatinib (SYK/JAK inhibitor) overlap to some extent […], the two drugs do not target the exact same pathways and DZD4205 is more selective than cerdulatinib […] at this stage, it is not obvious that these 86 pipeline drugs will have similar efficacy and safety profiles”.Consequently, some respondents consider the new entity “may have incentives to pursue in parallel the development of the Parties’ respective PTCL pipeline drugs (notably because these drugs may 87 in fine be used in different settings)”.That said, respondents generally emphasize the fact that, given the limited available data, it is too early to assess the closeness of competition 88between these drugs without speculating.

(65)Third, as illustrated in Table 6, and irrespective of whether the market is segmented by 89 LoT,the Parties face several drugs specifically approved or developed for PTCL, 90 including one marketed drug recently approved (Adcetris)and many competing pipelines currently in Phase II (i.e. a stage of development similar to or more advanced than the Parties’). In this respect, the evidence in the file suggests that the PTCL pipeline is increasingly competitive (e.g. a KOL stressed the “rising number pipeline treatments 91 targeting PTCL”)and includes drugs that are seen as being more promising than the Parties’, such as Affimed’s AFM13 (anti-CD30/CD16A) and SecuraBio’s Copiktra (anti- 92PI3K).

5.2. The Parties’ activities and products

(72)AstraZeneca manufactures inebilizumab for its former subsidiary Viela Bio, Inc. (“Viela”, controlled by Horizon since March 2021). This creates a vertical relationship with Alexion’s activities in the treatment of NMOSD and gMG, where Viela and Alexion are competitors.

(73)Viela (a spin-off of AstraZeneca acquired by Horizon in 2021) markets in the USUplizna (inebilizumab), a drug used for the treatment of NMOSD. Uplizna is also undergoing Phase III clinical trials for the treatment of gMG. Viela sources manufacturing services related to Uplizna from AstraZeneca. Uplizna directly competes with some of Alexion’s marketed drugs and pipeline projects. In particular, (i) Alexion’s product Soliris (eculizumab) is marketed, among others, for the treatment of NMOSD and gMG in the EEA; and (ii) Alexion’s pipeline product Ultomiris (ravulizumab) is in Phase III clinical trials for the 98treatment of NMOSD and gMG.

5.3. Competitive assessment

(74)As previously indicated, the Transaction gives rise to a potential vertical relationship between the manufacture (upstream) and the sales (downstream) of drugs for the treatment of NMOSD and gMG.

(75)[…], competition concerns have been raised in relation to the above vertical link on the ground that the new entity would have the ability and the incentive to implement an input foreclosure strategy by discontinuing or degrading the manufacture of Uplizna so as to favour Alexion’s products for the treatment of NMOSD and gMG. Consequently, […], the supply agreement between AstraZeneca and Horizon concerning Uplizna has been 99 100amendedto prevent the above risk.

(76)In this respect, the Commission notes that the amended supply agreement includes provisions (i) to avoid the risk of supply disruption […] and (ii) to facilitate the transfer of the technology and the manufacture of Uplizna […]. Moreover, Horizon expressly confirmed to the Commission that it is satisfied with the amendments and that as revised, the supply agreement provides sufficient safeguards to secure the manufacture of Uplizna.

5.4. Conclusion

(77)In view of the above considerations, the Commission concludes that the vertical link arising in relation to NMOSD and gMG does not give rise to serious doubts as to the compatibility of the Transaction with the internal market and the functioning of the EEA Agreement.

6. CONCLUSION

(78)For the above reasons, the Commission has decided not to oppose the notified operation and to declare it compatible with the internal market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger Regulation and Article 57 of the EEA Agreement.

For the Commission

(Signed) Margrethe VESTAGER Executive Vice-President

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