Bull And Bear Takeaways From Pfizer's $5.2 Billion Deal
Pfizer Inc. (NYSE: PFE) has agreed to acquire Anacor Pharmaceuticals Inc (NASDAQ: ANAC) in a $5.2 billion deal, which adds an eczema gel to its portfolio. The news comes a month after the U.S. pharma major shelved plans to buy Allergan plc Ordinary Shares (NYSE: AGN).
Morgan Stanley’s David Risinger maintained an Equal-Weight rating for Pfizer, with a price target of $36, commenting that Anacor is a good match for Pfizer's business development agenda, which is focused on late-stage, near-term new drug opportunities.
Anacor’s Crisaborole is a novel, non-steroidal topical product, which offers an alternative to topical steroids and topical calcineurin inhibitors, for the treatment of eczema. Pfizer has no upcoming product launches in 2016-2017, and crisaborole is expected to be launched in early 2017, provided it receives FDA approval, Risinger mentioned.
Transaction Bull Points
Risinger enumerated the positives for the deal as:
- Crisaborole is potentially safer than long-term uses of existing treatment options. It has the potential of becoming a significant drug, given the large size of the eczema market of 18-25 million people in the US alone.
- Pfizer can leverage its existing Inflammation and Immunology teams to drive commercial success.
- Pfizer is likely to pursue more M&A for its Innovative business unit before the end of 2016
Transaction Bear Points
The analyst enumerated the negatives for the deal as:
- Pfizer's estimate of crisaborole peak sales potential of $2 billion+ appears highly aggressive, given the existence of generic topical steroid/TCI alternatives
- Crisaborole has not been studied in markets outside the US. Thus, Pfizer would need to run additional trials to globalize the product
- Efficacy in psoriasis, and thus Pfizer's ability to develop this potential indication, is unclear
Latest Ratings for PFE
|Dec 2016||Guggenheim||Initiates Coverage On||Neutral|
|Nov 2016||BMO Capital||Downgrades||Outperform||Market Perform|
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