Pfizer highlights rare organic candidate amid M&A driven growth strategy

Pfizer is the pharma name more associated with mega-mergers than any other, so it is unsurprising that a significant proportion of the company’s product portfolio – marketed and in development - are compounds discovered outside its own research labs (see tables below).

A notable exception is the company’s biggest pipeline hope, oral rheumatoid arthritis therapy tasocitinib (CP-690550), which reported very encouraging results earlier this month. This is a relatively rare home grown drug for the pharma giant; axitinib, another potentially valuable late-stage candidate that also just yielded positive data that came to Pfizer via Warner Lambert, bought a decade ago. With only three of the company’s current top ten drugs originating internally – Norvasc, Viagra and Geodon – tasocitinib would be a welcome success story.

Dominating RA

Encouraging preliminary phase III data for tasocitinib were reported earlier this month, demonstrating comparable efficacy with injected anti-TNF therapies that dominate the RA market. With fewer side effects and a favourable oral formulation, hopes are building for the drug and the class overall (Therapeutic focus - Pfizer data highlights potential of JAKs in arthritis, November 11, 2010)

Pfizer plans to file for approval in late 2011; more important pivotal data is due early next year. As such, analysts’ sales forecasts will still be risk-adjusted and have the potential to move higher if all goes well. Consensus has 2016 sales already topping $1bn, which would make tasocitinib the eighth biggest branded RA drug that year and one of Pfizer’s biggest growth drivers: an important drug for both the company and the RA space.

The table below shows that tasocitinib is worth $2.6bn to Pfizer, according to EvaluatePharma’s NPV Analyzer. This is equal to 2% of the company’s market value, by far its most valuable pipeline candidate.

Oral blood thinner apixaban and cancer drug axitinib take the number two and three spots; the latter comes from Warner Lambert while the former is a Bristol-Myers Squibb product, which will be sold under a joint venture.

Apixaban has already been filed in its first indication, to prevent blood clots after surgery, in Europe and a decision is expected early next year. Axitinib is a bit further behind, with Pfizer saying last week it would discuss a filing in the near future. The group also reported positive pivotal results from the oral VEGF inhibitor in metastatic renal cell carcinoma patients that had failed on Bayer’s Nexavar.

The next pure Pfizer compound is PF-2341066 (crizotinib), which has shown encouraging results in a subset of lung cancer patients (Asco – Pfizer basks in glow of crizotinib applause, June 8, 2010).

Selected Pfizer products in late-stage development
Product Pharmacological Class Indication Summary Originator Deal Type Today's NPV NPV as % of Share Price 2016 Sales ($m)
Filed Apixaban Factor Xa inhibitor Thrombosis, deep vein (DVT) [Filed] DuPont Pharmaceuticals In-licensed (WW profit share)  1,756  1%  *740
Xiaflex Collagenase Dupuytren's contracture [Filed]; Peyronie's disease [Phase III] BioSpecifics Technologies In-licensed (EU rights only)  111  0%  84
Phase III CP-690550 Janus kinase-3 (JAK-3) inhibitor Arthritis, rheumatoid [Phase III]; Psoriasis [Phase III] Pfizer Organic  2,689  2%  1,016
Axitinib VEGF tyrosine kinase inhibitor Renal cell carcinoma (RCC) [Phase III] Agouron Pharmaceuticals Acquisition  1,573  1%  494
PF-2341066 c-Met tyrosine kinase & ALK inhibitor Non-small cell lung cancer (NSCLC) [Phase III] Pfizer Organic  1,273  1%  389
PF-5208763 Src & BCR-ABL kinase inhibitor Leukaemia, chronic myeloid (CML) [Phase III] Wyeth Acquisition  573  0%  190
Neratinib pan-HER inhibitor Breast cancer [Phase III] Wyeth Acquisition  524  0%  156
Dimebon Acetylcholinesterase inhibitor & NMDA receptor antagonist Huntington's disease [Phase III]; Alzheimer's disease [Phase III] Selena Pharmaceuticals In-licensed (ex-US rights only)   489  0%  273
Bapineuzumab Anti-beta amyloid MAb Alzheimer's disease [Phase III] Elan Acquisition  302  0%  230
Aprela Oestrogen agonist & selective oestrogen receptor modulator (SERM) Menopause [Phase III]; Osteoporosis [Phase III]; Vaginitis, atrophic [Phase III] Ligand Pharmaceuticals/Wyeth-Ayerst Acquisition  71  0%  128
PF-5208773 Anti-CD22 MAb-calicheamicin conjugate Non-Hodgkin's lymphoma (NHL) [Phase III] Celltech/Wyeth Acquisition  68  0%  17
PF-00299804 Pan-erbB tyrosine kinase inhibitor Non-small cell lung cancer (NSCLC) [Phase III] Pfizer Organic  53  0%  12
Total  9,480  2,988
*Alliance revenue

Of the total 29 projects in phase III or filed for approval that Pfizer is involved with, only four are home grown.

This is not surprising considering the company’s penchant for huge mega-mergers, as well as the occasional bolt-on. Last month, Pfizer acquired King Pharmaceuticals for $3.6bn, and similar smaller acquisitions are expected to follow (Pfizer is not paying a ransom for King, October 12, 2010).

The analysis below, setting out the source of Pfizer’s actual and projected product revenues, reveals how this aggressive M&A strategy has and will play out. While revenues from organically developed compounds are set to wane, products bought in will remain hugely important – and another big deal can never be ruled out.

The recent mega-merger and in-licensing spree that big pharma has embarked upon means this picture is no doubt reflected, to varying degrees, among the world’s biggest drug makers. On top of this, efforts to cut costs, which has seen many companies trim research budgets, means the trend is likely to continue.

M&A activity has been, famously or infamously, a driving force of Pfizer’s strategy, and is certainly a driving force for revenue growth. Yet for once, Pfizer could see significant value from a home grown compound, giving investors a little confidence boost as it approaches one of the industry’s biggest patent cliffs – the loss of Lipitor.

Pfizer - Pharma Rx Sales by Strategy (as a %)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Organic  25%  26%  25%  22%  21%  20%  15%  15%  14%  13%  13%  13%  13%
In-licensed  8%  9%  6%  6%  3%  2%  2%  2%  2%  2%  3%  3%  3%
Company acquisition  57%  52%  55%  58%  61%  62%  69%  68%  65%  65%  64%  63%  62%
Product acquisition  1%  2%  2%  2%  1%  1%  0%  0%  0%  0%  0%  0%  0%

All data sourced to EvaluatePharma.

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