Pfizer Expands Santaris Agreement - Analyst Blog

Pfizer Inc. (PFE) recently expanded its collaboration agreement with Santaris Pharma A/S for the development and commercialization of ribonucleic acid (RNA) -targeted medicines which have been identified using Santaris' Locked Nucleic Acid (LNA) Drug Platform.

Santaris is a clinical-stage biopharmaceutical company which focuses on the research and development of mRNA and microRNA targeted therapies.

Santaris initially had a collaboration agreement with Wyeth, which was acquired by Pfizer. Under the original agreement, Santaris received an upfront payment of $7 million. Moreover, Wyeth made a $10 million equity investment in Santaris.

Expanded Deal Terms

Per the terms of the expanded agreement, Santaris will get $14 million from Pfizer. Besides this, the company could stand to receive up to $600 million on the achievement of milestones. Santaris is also eligible to receive royalties on product sales.

RNA-targeted drugs represent a new class of therapeutics targeting a wide range of diseases. Besides Pfizer, Santaris has agreements with other companies like Shire (SHPGY), GlaxoSmithKline (GSK), and Enzon Pharmaceuticals (ENZN).

Neutral on Pfizer

We currently have a Neutral recommendation on Pfizer, which is supported by a Zacks #3 Rank (short-term Hold recommendation). Pfizer has been looking towards deals and acquisitions to help expand its pipeline. In late 2010, the company announced its intention to acquire King Pharmaceuticals (KG). With this acquisition, which is scheduled to close in early 2011, Pfizer is looking to strengthen its presence in the pain management market.

Meanwhile, 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 drive top-line growth.

 
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