Zacks_Analysts' Blog : Pfizer Inks Deal With Theraclone - Analyst Blog

Pfizer, Inc. (PFE) recently entered into a research and development agreement with Theraclone Sciences, Inc. for the discovery of monoclonal antibodies in the areas of infectious diseases and oncology.

Under the multi-year collaboration, Pfizer will use Theraclone’s I-STAR technology for the discovery of antibodies against up to two infectious disease targets and two oncology targets.

Terms of the Deal

Per the terms of the deal, Pfizer will receive an exclusive worldwide license to the antibodies discovered under this collaboration. Meanwhile, Theraclone could receive up to $632 million in the form of research funding and milestone payments in addition to receiving royalties on product sales.

The I-STAR technology, which has already been used to identify targets in HIV and influenza, has the potential to be used for the development of treatments for several diseases.

Pfizer has been pretty active on the deal-making front with the company looking to drive growth through licensing deals and collaborative agreements. The collaboration with Theraclone is the latest in a series of deals entered into by Pfizer.

Important deals signed by the company include its agreement with GlaxoSmithKline (GSK) for the setting up of a new company (ViiV Healthcare Ltd.) that will focus entirely on the development and commercialization of HIV medicines.

Other agreements include Pfizer’s deal with Bausch & Lomb for the co-promotion of ophthalmic treatments in the US, the development and commercialization of Auxilium Pharma’s (AUXL) Xiaflex in the EU, the marketing agreement with Protalix (PLX) for Gaucher treatment Uplyso (FDA action date: February 25, 2011), the development and commercialization of apixaban with Bristol-Myers Squibb (BMY), and the deal with Strides Arcolab which will help expand Pfizer’s presence in the injectable market.

Neutral on Pfizer

We currently have a Neutral recommendation on Pfizer, which is supported by a Zacks #3 Rank (short-term Hold recommendation). While the Wyeth acquisition brought with it an attractive biologics platform and some complementary products and businesses, we do not believe they are enough to sustain Pfizer’s long-term top-line growth.

The Lipitor patent expiration in 2011 remains a big concern. Lipitor contributed almost 23% to the top-line in 2009 with sales coming in at $11.4 billion. The entry of generic versions of the product will have a significant impact on the company’s financials. The loss of patent exclusivity over the coming years will make it challenging for the company to propel top-line growth.