Bull And Bear Takeaways From Pfizer's $5.2 Billion Deal

Pfizer Inc. PFE has agree to acquire Anacor Pharmaceuticals Inc ANAC in a $5.2 billion deal, which adds an eczema gel to its portfolio. The news comes a month after the US pharma major shelved plans to buy Allergan plc Ordinary Shares AGN.

Morgan Stanley’s David Risinger maintained an Equal-Weight rating for Pfizer, with a price target of $36, commenting that Anacor is a good match for Pfizer's business development agenda, which is focused on late-stage, near-term new drug opportunities.

Anacor’s Crisaborole is a novel, non-steroidal topical product, which offers an alternative to topical steroids and topical calcineurin inhibitors, for the treatment of eczema. Pfizer has no upcoming product launches in 2016-2017, and crisaborole is expected to be launched in early 2017, provided it receives FDA approval, analyst David Risinger mentioned.

Transaction Bull Points

Risinger enumerated the positives for the deal as:

1. Crisaborole is potentially safer than long-term uses of existing treatment options. It has the potential of becoming a significant drug, given the large size of the eczema market of 18-25 million people in the US alone.
2. Pfizer can leverage its existing Inflammation and Immunology teams to drive commercial success.
3. Pfizer is likely to pursue more M&A for its Innovative business unit before the end of 2016

Transaction Bear Points

The analyst enumerated the negatives for the deal as:

1. Pfizer's estimate of crisaborole peak sales potential of $2B+ appears highly aggressive, given the existence of generic topical steroid/TCI alternatives
2. Crisaborole has not been studied in markets outside the US. Thus, Pfizer would need to run additional trials to globalize the product
3. Efficacy in psoriasis, and thus Pfizer's ability to develop this potential indication, is unclear