Pfizer’s CEO Makes Large Strategic Play in Oncology

Albert Bourla, who became CEO of Pfizer in January, has made his first large-scale deal as CEO: a pending $11.4-billion acquisition of Array BioPharma, which specializes in small-molecule cancer drugs. How does the move fit into the company’s strategy, and what may be on the horizon?

Inside Pfizer: oncology

In making a $11.4-billion move to acquire Array BioPharma, Albert Bourla, who took over as Chief Executive Officer (CEO) of Pfizer this past January (2019), continues a strategic emphasis for Pfizer in oncology and for Bourla. Prior to becoming CEO this past January (2019) and earlier Chief Operating Officer of Pfizer in January 2018, Bourla led Pfizer’s Innovative Health business segment and beginning in January 2014 was Pfizer’s Group President of the Vaccines, Oncology and Consumer Healthcare business unit. Under his tenure in that role, the company’s oncology business tripled in size.  

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Albert Bourla
Source: Pfizer

Pfizer’s oncology-drug portfolio includes biologics, small molecules and immunotherapies across a wide range of cancers. Its lead product and one of 10 blockbusters (defined as drugs with sales of $1 billion or more) for Pfizer in 2018 and one of two oncology blockbusters is Ibrance (palbociclib), a drug to treat HR-positive and HER2-negative breast cancer, which had 2018 revenues of $4.12 billion. Sutent, its other blockbuster oncology drug, had 2018 sales of $1.05 billion and faces US generic-drug exposure beginning in 2021. The drug is approved for treating multiple cancers, including kidney cancer, gastrointestinal stromal tumors, and pancreatic neuroendocrine tumors.

Overall, Pfizer’s oncology-drug franchise posted 2018 sales of $7.20 billion, making it the second single therapeutic sector in Pfizer’s commercial drug portfolio behind internal medicine, which accounted for 2018 revenues of $9.996 billion. Other key oncology drugs include Xtandi (enzalutamide), a prostate-cancer drug that Pfizer gained from its $14-billion acquisition of Medivation in 2016. The drug, which was jointly developed and commercialized with Astellas Pharma, posted 2018 alliance revenues for Pfizer of $699 million. Xalkori (crizotinib) for treating non-small-cell lung cancer had 2018 sales of $524 million, and Inlyta (axitinib) for treating renal cell carcinoma (i.e., kidney cancer) had 2018 sales of $298 million.

Pfizer is also partnered with Merck KGaA for Bavencio (avelumab), an immunotherapy and a fully human anti-PD-L1 IgG1 monoclonal antibody, which was first approved by the US Food and Drug Administration in 2017 for treating metastatic Merkel-cell carcinoma, a rare form of skin cancer. It has been subsequently approved by the FDA for treating urothelial carcinoma (i.e., bladder cancer) and renal cell carcinoma.

Avelumab is part of the immunotherapy alliance that Pfizer and Merck KGaA formed in November 2014 under which the companies will collaborate on up to 20 high priority immuno-oncology clinical development programs, including combination trials. The clinical development program for avelumab involves the study of more than 15 tumor types, including breast cancer, gastric/gastroesophageal cancer, head and neck cancer, Merkel cell carcinoma, mesothelioma, melanoma, non-small cell lung cancer, ovarian cancer, renal cell carcinoma, and urothelial (e.g. bladder) cancer.

Pfizer will gain certain key assets from its pending acquisition of Array BioPharma, which includes two commerical products: Braftovi (encorafenib) and Mektovi (binimetinib), which are approved as a combination therapy for the treatment of BRAF-mutant unresectable or metastatic melanoma. The combination therapy is currently being investigated in over 30 clinical trials across several solid tumor indications, including a Phase III trial in BRAF-mutant metastatic colorectal cancer.

Array’s pipeline includes several additional programs being advanced by Array or current license-holders, including the following programs currently in registration trials: selumetinib (partnered with AstraZeneca), LOXO-292 (partnered with Eli Lilly and Company), ipatasertib (partnered with Roche’s Genentech), tucatinib (partnered with Seattle Genetics), and ARRY-797. Array is also partnered with Bayer for Vitrakvi (larotrectinib), which is approved in the US for treating certain tumors and with Roche for Ganovo (danoprevir), which is approved in China, for treating viral hepatitis C.

Pfizer also picked up key pipeline assets with its acquisition of Medivation: talazoparib, a drug in late-stage development for treating BRCA-mutated breast cancer, and pidilizumab, an immuno-oncology asset being developed for treating diffuse large B-cell lymphoma and other hematologic malignancies and which has the potential to be combined with other mmuno-oncology therapies in Pfizer’s portfolio.

Pfizer’s new CEO: a measured approach to deal-making thus far

Only six months in his new role as Pfizer CEO, Bourla has signaled that Pfizer will take a more directed, targeted approach to mergers and acquisitions (M&A), a strategy distinct from Bourla’s predecessor, Ian Read, formerly CEO and now Executive Chairman of Pfizer. Read, who became CEO of Pfizer in 2010, unsuccessfully pursued two mega-mergers: a proposed $160-billion merger with Allergan, which was called off in 2016, and a non-binding $118-billion proposal to acquire AstraZeneca in 2014. Part of the strategic rationale for both deals was to gain a more favorable tax advantage through corporate inversion, a practice by which a US-based multinational company restructures so that the US parent is replaced by a foreign corporation as a means to achieve a lower tax rate, a possibility in merging with the Cambridge, UK-headquartered AstraZeneca and the Dublin, Ireland-based Allergan. Facing uncertainty, however, with US Treasury rules limiting the practice of corporate inversion and company resistance in the case of AstraZeneca, Pfizer called off both deals. Since then, the lowering of the US corporate tax rate to 21% has made the practice of corporate inversion to achieve a better tax position less pressing.

In addition to the Array BioPharma deal, Bourla has made two other deals thus far in 2018, both in rare diseases, a therapeutic sector in which Pfizer posted 2018 revenues of $2.21 billion. In May (2019), Pfizer agreed to acquire Therachon Holding AG, a Basel, Switzerland-based clinical-stage biotechnology company focused on rare diseases, in a deal worth up to $810 million ($340 million upfront and $470 million in milestone payments). Therachon’s lead product is TA-46 for the treatment of achondroplasia, a genetic condition and the most common form of short-limbed dwarfism. In March (2019), Pfizer took a 15% equity stake with an option to acquire Vivet Therapeutics, a Paris-based gene-therapy company developing treatments for inherited liver disorders in a deal worth up to $687 million (EUR 45 million ($51 million) upfront and EUR 560 million ($635.8 million) in milestone payments). Vivet’s lead product is VTX-801, a proprietary treatment for Wilson disease, a rare, chronic, and potentially life-threatening liver disorder of impaired copper transport that causes serious copper poisoning.

Blockbusters and looking ahead

Bourla’s steps to build Pfizer’s pipeline comes as the company faces generic-drug competition for one of its top-selling drugs, Lyrica (pregabalin), a drug to treat nerve pain, which will lose US patent exclusivity in 2019 (pediatric exclusivity extended US patent expiry to June 2019). Lyrica was Pfizer’s second top-selling drugs in 2018 with global sales of $4.62 billion only behind Prevnar 13/Prevenar 13, a pneumococcal vaccine, which had 2018 sales of $5.80 billion. In all, Pfizer had 10 blockbuster drugs in 2018 (see Table I), eight in its Innovative Health segment, which includes its prescription, innovator drugs and vaccines, and two in its Essential Health segment, which includes products nearing or having lost market exclusivity. In addition to Lyrica with loss of US patent expiry in 2019 and Sutent in 2021, the company’s blockbuster drug, Chantix/Champix (varenicline), a smoking cessation product, faces US patent expiry in 2020 and European patent expiry in 2021. Bourla’s challenge will be to navigate revenue loss from these key products in the near term as the company continues to strengthen its pipeline. As of January 29, 2019 , Pfizer had 100 products in its pipeline: 11 in registration/regulatory review; 26 in Phase III development; 28 in Phase II; and 35 in Phase I.

Table I: Pfizer’s Blockbuster Drugs in 2018 (Defined as drugs with revenues of $1 Billion (Bn) or more)
Drug Indication 2018 Sales (In US$ Billions)
Prevnar 13/Prevenar 13 (pneumococcal 13-valent conjugate vaccine Vaccine for prevention of pneumococcal disease $5.80 Bn
Lyrica (pregabalin) Epilepsy, post-herpetic neuralgia and diabetic peripheral neuropathy, fibromyalgia, neuropathic pain due to spinal cord injury $4.62 Bn
Ibrance (palbociclib) HR-positive and HER2-negative breast cancer $4.12 Bn
Eliquis (apixaban) Atrial fibrillation, deep vein thrombosis, pulmonary embolismt $3.43 Bn
Enbrel (etanercept) (Outside the US and Canada) Rheumatoid, juvenile rheumatoid and psoriatic arthritis, plaque psoriasis and ankylosing spondylitis $2.11 Bn
Lipitor (atorvastatin) Reduction of LDL cholesterol $2.06 Bn
Xeljanz (tofacitinib) Rheumatoid arthritis, psoriatic arthritis, and ulcerative colitis $1.77 Bn
Chantix/Champix (varenicline) Smoking cessation $1.09 Bn
Sutent (sunitinib) Advanced and/or metastatic renal cell carcinoma and refractory gastrointestinal stromal tumors and advanced pancreatic neuroendocrine tumor $1.05 Bn
Norvasc (amlodipine) Hypertension $1.02 Bn

 Eliquis’s sales includes alliance revenues and direct sales.

Source: Pfizer company information

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