Pfizer Inks Deal

Recently, pharmaceutical giant Pfizer Inc. (PFE - Analyst Report) inked a deal to buy FoldRx Pharmaceuticals Inc. for an undisclosed amount. Through this acquisition, Pfizer aims to expand its pipeline of drugs for orphan and rare diseases. The deal will see Pfizer pay an upfront fee and future milestone payments to FoldRx.

The acquisition, which is expected to close later in the year, will give Pfizer access to candidates that are being developed by FoldRx to treat patients suffering from diseases caused by protein misfolding. Protein misfolding is often the primary reason behind many chronic degenerative diseases.

The lead candidate at the privately-held FoldRx is tafamidis meglumine. The candidate is being developed to treat TTR amyloid polyneuropathy (ATTR-PN). Currently, liver transplant is the only option available for combating this progressively fatal genetic neurodegenerative disease.

We note that a marketing authorization application (MAA) has already been filed for tafamidis by FoldRx with the European Medicines Agency. The company is currently holding discussions with the US Food and Drug Administration (FDA) to chalk out a clear path for seeking FDA approval.  The candidate enjoys orphan drug status both in the US and European Union (EU) apart from being granted Fast Track status by the FDA for treating patients suffering from ATTR-PN.

We believe that the deal, if it goes through, will further boost the pipeline at Pfizer and will broaden the treatment options for patients suffering from the diseases for which treatments are being developed by FoldRx.

Neutral on Pfizer

We currently have a Neutral recommendation on Pfizer, which is supported by a Zacks #3 Rank (short-term Hold rating). We expect near-term earnings growth at Pfizer to come in the form of cost-cutting and share repurchases.

While the merger with Wyeth provides Pfizer with an attractive biologics platform and some complementary products and businesses, we do not believe they are enough to sustain long-term top-line growth. Longer-term growth will be dependent on the success of drug development. The patent expiration of cholesterol therapy Lipitor in 2011 remains a big concern.

Read the full analyst report on PFE