Pfizer Inc. PFE entered into an agreement with GlaxoSmithKline GSK under which it will acquire the latter’s quadrivalent meningitis ACWY vaccines, Nimenrix and Mencevax, in a deal valued at about $130 million (€115 million).
Nimenrix is approved for the active immunization of individuals from the age of 12 months and above against invasive meningococcal diseases caused by Neisseria meningitidis group A, C, W-135 and Y. Mencevax is indicated for the active immunization of children older than two years, adolescents and adults against invasive meningococcal disease caused by meningococci of groups A, C, W135 and Y.
Why is Glaxo Divesting?
Glaxo agreed to sell these vaccines in order to satisfy regulatory conditions as mandated by the European Commission and other regulatory bodies in the context of the three-part inter-conditional transaction related to its Consumer Healthcare, Vaccines and Oncology businesses with Novartis NVS completed earlier this year.
Under the deal, Glaxo acquired Novartis’ Vaccines business (excluding influenza vaccines), including meningitis vaccines Menveo and Bexsero, for $5.25 billion in cash plus up to $1.8 billion in milestone payments along with royalties.
We remind investors that earlier in the month, Glaxo also had to divest the over-the-counter brands of its Consumer Healthcare division to satisfy regulatory clearances.
How does Pfizer Gain?
The addition of the two vaccines will strengthen Pfizer’s meningococcal disease portfolio, which currently consists of Trumenba (protection against serogroup B meningococcal disease in individuals 10 through 25 years of age) and NeisVac-C (active immunization of children from 2 months of age, adolescents and adults, for the prevention of invasive disease caused by Neisseria meningitidis serogroup C). Both Nimenrix and Mencevax, which are sold outside the U.S., recorded combined global sales of £34 million last year.
The deal, which is slated to close in the second half of 2015, is not expected to have a significant impact on Pfizer’s 2015 financial performance.
We note that Pfizer is working to boost its vaccines portfolio. Earlier this year, Pfizer acquired a controlling interest in Redvax Gmbh, a spin-off from Swiss biopharma company Redbiotec AG. With this acquisition, Pfizer added a preclinical human cytomegalovirus vaccine candidate and also gained access to an intellectual property and a technology platform related to a second, undisclosed vaccine program.
While Pfizer is a Zacks Rank #3 (Hold) stock, Glaxo carries a Zacks Rank #5 (Strong Sell). Gilead Sciences Inc. GILD is a better-ranked stock in the health care sector carrying a Zacks Rank #1 (Strong Buy).
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