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What Investors Should Know about the Pfizer-Anacor Deal

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Increased M&A activity in the biotechnology space

According to Bloomberg, on August 25, 2016, there were 345 M&A (mergers and acquisitions) deals in the biotechnology space year-to-date. It’s important to note that 261 of the deals had a “completed” status on August 25.

On August 22, 2016, Pfizer (PFE) acquired Medivation (MDVN). We’ll discuss this in detail in Part 2. On June 24, 2016, Pfizer acquired Anacor Pharmaceuticals for a total enterprise value of ~$5.2 billion. Pfizer seemed to be interested in Anacor’s two major assets—Kerydin and pipeline candidate Crisaborole. Anacor has out-licensed the other three investigational molecules.

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Kerydin’s peers

Anacor’s commercialized portfolio includes Kerydin. It’s a topical treatment for onychomycosis—a fungal toenail infection. The drug competes with Valeant Pharmaceuticals’ (VRX) Jublia and Sanofi’s (SNY) Penlac. Jublia received FDA approval in June 2014, while Kerydin was approved in July 2014. For more information on the onychomycosis market, read Jublia: Valeant’s Major Drug in Its Dermatology Portfolio.

What’s the peak sale potential for Crisaborole?

Anacor’s flagship pipeline asset includes Crisaborole 2%, a topical ointment, which is under FDA review for the indication of mild-to-moderate atopic dermatitis in children and adults. Anacor estimated that ~18 million–25 million people suffer from the condition in the US. As noted by Pfizer, the drug could obtain peak annual sales of $2 billion or more. The Prescription Drug User Fee Act date for the FDA’s review on Crisaborole is January 7, 2017. Anacor became part of Pfizer’s Innovative Pharmaceuticals business—it complements its inflammation and immunology portfolio. To learn more, read Pfizer-Anacor Deal Completed in June 2016.

Investors interested in Pfizer can consider the Health Care Select Sector SPDR Fund (XLV). It has 7.6% weight in Pfizer.

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