Pfizer Inc. (PFE) is continuing its buying spree, announcing late Monday that it has acquired a minority equity interest in Dutch biopharma AM-Pharma Holding BV in an attempt to add its acute kidney injury technology, recombinant human Alkaline Phosphatase (recAP), to its ever-growing specialty pipeline.

It also snapped up an exclusive option to acquire the remaining equity in the company, if it completes a Phase II trial of recAP in the treatment of Acute Kidney Injury (AKI) related to sepsis.

Under the terms of the deal, Pfizer will pay an upfront payment of $87.5 million for the minority equity interest and exclusive option, with additional potential payments of up to $512.5 million.

Ropes & Gray and De Brauw Blackstone Westbroek N.V. acted as legal advisors to Pfizer, and Dechert and Clifford Chance acted as legal advisors to AM-Pharma.

Pfizer is committed to advancing the science to address the high unmet medical need in Acute Kidney Injury” said Mikael Dolsten, president of Worldwide Research and Development at Pfizer. “Clinical data for recAP show the potential to uniquely address Acute Kidney Injury in the setting of sepsis, and we look forward to working with our partners at AM-Pharma as we aim to accelerate the development of recAP into a potential first-in-class treatment for patients.”

The deal didn’t come as a huge surprise to Wall Street that has been expecting Pfizer to do a large deal soon. Almost a year after its $119 billion offer for AstraZeneca PLC (AZN) fell apart in the face of massive opposition from regulators and internal dissent, global drugmaker Pfizer Inc. (PFE) is once again being floated as a potential buyer of another marquee-name British pharmaceutical company: GlaxoSmithKline (GSK).

A column in The Telegraph last month posited that while some market watchers might consider such an audacious bid “bonkers,” there are plenty of reasons deal-hungry Pfizer might want to merge with Glaxo.

First, Pfizer is still desperate to do a big deal. The company has tens of billions of pounds sitting dormant in overseas subsidiaries, cash that it cannot repatriate to America without being hit by a colossal tax bill,” wrote columnist Ben Markow. “In addition, it needs access to a bigger pipeline of new medicines. Patents on many of its top-selling drugs are expiring, including Viagra — leaving the products open to competition from generic rivals.”

Markow said that secondly, that Glaxo, despite its market cap, “looks vulnerable to a bid.”

“Although, at £75 billion, it is safely out of the reach of most in the pharma industry, it is less than half the size of Pfizer, Roche (RHHBY) and Novartis AG (NVS). Although a stretch, such beasts could still conceivably swallow Glaxo,” he wrote.

“One consequence of Pfizer’s bid for Astra, and a string of other bumper takeovers both before and since, is that suddenly almost any deal looks plausible.”

Recent history bolsters Markow’s theory. Pressure from internal decision makers at Pfizer Inc. (PFE) pushed Chief Executive Officer Ian Read to approach Israeli drug company Teva Pharmaceutical Industries Ltd. (TEVA) at the end of 2014 about a possible merger, people familiar with the matter told Bloomberg News at the end of January, but that bid was immediately rejected.

Neither Teva or Pfizer would comment on the story Monday, but Read has said in the past that he is dedicated to building out the company’s businesses via “bolt-on” acquisitions or even wholesale takeovers.

“Certainly I feel a sense of urgency on utilizing our balance sheet and our capital to do deals that are incremental, add incremental value and certainly add revenue growth in the innovative space,” said Read on a conference call with analysts in October. “We are aggressively looking at all alternatives.”

That aggressive pursuit led Pfizer to take an unsuccessful run at acquiring British drugmaker AstraZeneca PLC (AZN) for $119 billion—but that bid, too, fell apart, leaving Pfizer with a stack of cash and frustrated aspirations.

With a current market cap of $50 billion, Teva’s heavy generic drugs pipeline could have been a significant boom to Pfizer, which has a stable of legacy drugs but is likely to be pressured soon by a competitive market for biosimilars. Teva’s portfolio includes a generic drug line estimated to be worth more than $9 billion, including a knock-off of Pfizer’s own blockbuster Lipitor.

Teva also makes generics for perennial antibiotic favorite amoxicillin and well-known blood pressure drug Diovan. Its generics business is so strong that analysts have speculated Pfizer could be looking to spin out its own off-patent medicine company, a consideration it will keep at the forefront while shopping for new deals.

“While they do a lot of share repurchases, there’s still a lot left for them to make acquisitions,” Damien Conover, an analyst from Morningstar Inc, told Bloomberg. “They’re really motivated to get some growth through some external collaborations.”

But Pfizer needs to be careful not to go overboard with the acquisitions, said some analysts, because its internal strengths are still significant and it still has a long list of strategic goals to meet.

“I think operationally there are a lot of positives that are overlooked,” David Heupel, senior health-care analyst at Thrivent Financial, told Bloomberg. “I’d rather them execute on that kind of strategy than go out and really stretch to do a big deal.”


May 12, 2015
By Riley McDermid, Breaking News Sr. Editor