Pfizer Buys Anacor With Blockbuster Ambitions For Crisaborole

Pfizer Inc. has made its first M&A move since the planned mega-deal with Allergan PLC collapsed. The big pharma announced May 16 that it will buy Anacor Pharmaceuticals Inc. for $99.25 per share in cash, or approximately $5.2bn.

The deal is a bolt-on acquisition by Pfizer’s standards, nothing like the $160bn merger Pfizer had been planning with Allergan that was thwarted in April by the US treasury. (Also see "Pfizer-Allergan Merger: The End Is Nigh " - Scrip, 6 Apr, 2016.) But it is in line with the way management has been guiding investors to think about Pfizer’s M&A strategy, mainly that the company is interested in on-market or late-stage assets that will help drive growth in the innovative side of the business.

Crisaborole has an FDA action date of Jan. 7, 2017, and Pfizer said it believes the drug has the potential to achieve peak sales of more than $2bn.

Anacor owns a non-steroidal topical phosphodiesterase-4 (PDE-4 inhibitor), crisaborole, that is currently under review by FDA for the treatment of mild-to-moderate atopic dermatitis, commonly known as eczema. The drug could become an important first-line treatment in a therapeutic area where there are few safe topical options, according to Pfizer. There have been no new molecular entities approved for atopic dermatitis in 15 years, the company noted.

Crisaborole fits neatly in Pfizer’s inflammation and immunology portfolio, which includes the JAK inhibitor Xeljanz (tofacitinib), approved for rheumatoid arthritis, and prior experience marketing Enbrel (etanercept).

“We believe we are well positioned to maximize crisaborole’s commercial potential through our strong relationships with pediatricians and primary care physicians,” Albert Bourla, group president of Pfizer’s Global Innovative Pharma and Global Vaccines, Oncology and Consumer Healthcare Businesses, said in a statement.

A Safer Alternative To Corticosteroids

Two pivotal Phase III studies testing crisaborole versus placebo met the primary endpoint: the percent of patients who achieved success in the Investigator’s Static Global Assessment (ISGA), defined as a score of 0 (clear) or 1 (almost clear) with a minimum 2-grade improvement at day 29. In the first trial 32.8% of crisaborole-treated patients met the primary endpoint versus 25.4% of placebo patients, while in the second study 31.4% of crisaborole patients met the endpoint, versus 18% of those not treated with crisaborole.

Anacor also conducted a long-term, open-label safety study evaluating the safety of the drug in children as young as two years. The results, reported in October, showed crisaborole was safe and well tolerated, with no treatment-related serious adverse events reported, when used intermittently for up to 12 months.

Topical corticosteroids are the current standard of care for treating atopic dermatitis, but their use is limited to two to four weeks because of adverse effects like skin atrophy, according to Datamonitor Healthcare. For that reason, crisaborole could be a good option for mild to moderate patients, particularly children, who want to avoid corticosteroids.

“The extent of crisaborole’s uptake will be primarily determined by its cost, as it will be in direct competition with well-established and low-cost corticosteroids,” Datamonitor Healthcare analyst Christina Vasiliou said.

Crisaborole could be on the market in early 2017. It has an FDA action date of Jan. 7, 2017, and Pfizer said it believes crisaborole has the potential to achieve peak sales of more than $2bn.

Pfizer will need to drive blockbuster sales of the drug to get a return on its investment, Deutsche Bank analyst Gregg Gilbert said in a same-day note.

“Achieving accretion to non-GAAP EPS in 2018 should not be difficult (as per Pfizer’s press release), but achieving a good financial return on the deal would likely require very significant peak sales,” Gilbert said.

“We would expect Pfizer to remain active on the business development front and believe it has plenty of flexibility to do so while returning cash to shareholders,” he added. Pfizer has reportedly thrown itself into the bidding process to buy cancer company Medivation Inc. as it looks to strengthen its budding oncology business. (Also see "Brandicourt Not Ready To Raise Medivation Bid Just Yet" - Scrip, 5 May, 2016.) Like Pfizer, Allergan is also shopping for deals with a focus on tuck-in acquisitions rather than transformational deals. (Also see "Allergan's Fishing For Deals, But Don't Expect A Big Catch" - Scrip, 11 May, 2016.)

Anacor also holds rights to Kerydin, a topical treatment for onychomycosis, a toenail fungus, that is commercialized in the US by Novartis AG’s Sandoz unit and competes with Valeant Pharmaceuticals International Inc.’s Jublia (efinaconazole).

Anacor recognized $60.5m in revenue from its profit sharing arrangement with Sandoz in 2015, including a $25m payment from Sandoz related to the product launch. The company reported a net loss of $60.5m in 2015. The firm had cash and equivalents of $137.9m as of March 31.

Pfizer’s $99.25 per share cash offer represents a 55% premium over the stock’s closing price May 13.