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.
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|
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 %)|
All data sourced to EvaluatePharma.