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Pfizer, Vicuron in $1.9 billion merger

16-Jun-2005

Pfizer has struck a deal to buy Vicuron Pharmaceuticals, for $1.9 billion (€1.6 billion) in cash, in a move that places the drug company further into the realms of anti-infective R&D - an area thought to be falling out of favour in the pharmaceutical industry.

Under the terms of the agreement, Pfizer will acquire two of Vicuron's products currently under New Drug Application (NDA) review at the US Food and Drug Administration (FDA): anidulafungin for fungal infections and dalbavancin for Gram-positive infections.

Anidulafungin, which recently completed phase III testing, proved to be superior when compared to fluconazole in invasive candidiasis/candidemia. Pfizer have especially shown interest in the drug's broad-spectrum activity against aspergillus and other candidal fungal infections.

Dalbavancin has also shown positive results in Phase III studies in complicated skin and soft tissue infections and in a Phase II study in catheter-related bloodstream infections.

This is not the first time the two companies have crossed paths. Pfizer already has an existing collaboration with Vicuron in which the collaboration into potential next-generation oxazolidinones has yielded compounds earmarked for further clinical development. Oxazolidinones are the first new class of antibiotics in more than 30 years.

The deal could be indicative of an anti-infectives market that is getting back on track after a disappointing 2004 in which growth declined nearly 4 per cent. Analysts expect the market to pass the $24 billion mark in 2005.

However, traditional antibiotic classes, such as the mature macrolide class, will continue to decline in market value as the segment becomes highly genericised.

Pfizer's decision to enter the market for newer classes of these drugs, which include the oxazolidinones and additionally carbapenems, will likely show excellent growth as antibiotic resistance continues to be a growing problem for older agents.

Pfizer currently sells Zithromax, the largest selling antibiotic in the world and Zyvox, a oxazolidinone targeted at more serious Gram-positive infections. Dalbavancin, a next generation glycopeptide, offers an important new option for patients.

Pfizer is looking for new products to replace the Zithromax antibiotic, which faces cheaper generic competition this year after bringing in $1.85 billion in sales in 2004. Patents on Pfizer's top three sellers, including cholesterol-lowering Lipitor, the world's best-selling drug, expire by 2010.

"By acquiring Vicuron, we can help bring two very important new medicines to patients around the world," said Hank McKinnell, chairman and chief executive officer of Pfizer .

"This transaction builds on Pfizer's extensive experience in anti-infectives and demonstrates our commitment to strengthen and broaden our pharmaceutical business through strategic product acquisitions," added McKinnell.

Financial details of the transaction include the agreement that Pfizer will acquire all outstanding shares of Vicuron common stock at a price of $29.10 per share in cash, for an aggregate equity purchase price of approximately $1.9 billion.

This price represents a 74 per cent premium over Vicuron's 90-day average closing share price and a 21 percent premium over Vicuron's highest historical closing price of $24.10 on January 16, 2004. Pfizer said the transaction should be completed in the third quarter of 2005.

Vicuron , a biopharmaceutical company focused on the development of novel anti-infectives for both hospital-based and community-acquired infections, had announced its original Pfizer collaboration had been extended for another year in March 2005.

The market for anti-infection treatments is $26 billion, according to Deutsche Bank analysts. Almost 2 million patients in the US get an infection while in hospital each year, with about 90,000 die each year as a result, according to the US Centres for Disease Control. More than 70 per cent of the bacteria are resistant to at least one of the common treatments.

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