Pfizer Inc. (PFE) recently entered into a development and commercialization agreement with biopharma company Clovis Oncology, Inc. for Pfizer’s oral and IV Poly (ADP-ribose) polymerase (PARP) inhibitor, PF-01367338.
Terms of the Agreement
Per the terms of the agreement, Clovis Oncology will be responsible for the global development and commercialization of the candidate. In return, Pfizer will be entitled to receive an upfront license fee in the form of equity in Clovis Oncology and additional payments of up to $255 million on the achievement of development, regulatory and sales milestones.
Pfizer is also entitled to receive royalties from Clovis Oncology on any product sales under the agreement. Meanwhile, Pfizer Venture Investments, Pfizer’s venture capital arm, will make a separate equity investment in Clovis Oncology.
The Candidate
PF-01367338 is currently in phase I/II development for solid tumors. A phase I study examining the maximum tolerated dose of oral PF-01367338 that can be used in combination with intravenous platinum chemotherapy for the treatment of solid tumors is ongoing.
Two more studies are being conducted using the IV formulation – while one is a phase I/II study evaluating PF-01367338 in gBRCA breast and ovarian cancer, the other is a phase II study evaluating the candidate as an adjuvant treatment for triple negative breast cancer.
Once Clovis Oncology takes over the development process, it intends to continue these studies with the oral instead of the IV formulation. Clovis Oncology intends to study PF-01367338 both as a monotherapy and in combination with chemotherapeutic agents for the treatment of certain cancer patients.
The inhibition of PARP could provide significant benefit to patients with different tumor types.
Pfizer Also Signs Deal to Expand Presence in China
In addition to the Clovis Oncology deal, Pfizer entered into another agreement, this time with Chinese company Zhejiang Hisun Pharmaceuticals. Pfizer and Zhejiang have signed a memorandum of understanding (MOU) for the establishment of a joint venture.
The joint venture will focus on providing more patients with high-quality and low-cost medicines in the branded generics segment. Off-patent medicines, including branded generics, are one of the fastest growing segments in the global pharma market, especially emerging markets.
Several pharma companies have been working on expanding their presence in emerging markets especially China. China is slated to become the second largest pharma market in the world by 2015. Recent deals include Merck KGaA’s (MKGAF) acquisition of Beijing Skywing Technology Co., Ltd. and Novartis’ (NVS) acquisition of a majority stake in Chinese vaccines company Zhejiang Tianyuan Bio-Pharmaceutical Co., Ltd.
Neutral on Pfizer
We currently have a Neutral recommendation on Pfizer, which carries a Zacks #3 Rank (short-term Hold rating). While near-term earnings growth will come in the form of cost cutting and share repurchases, longer-term growth will be dependent on successful drug development. 2011 should be a catalyst-filled year for the company, which is expecting to present phase III data on several candidates including tofacitinib, Prevnar/Prevenar 13 and Eliquis.
Pfizer will face additional challenges later this year with the loss of US exclusivity on Lipitor in November.
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