- Transaction assumes conversion of Anacor’s convertible bonds
- Deal to add to Pfizer’s earnings per share starting in 2018
Pfizer Inc. agreed to buy Anacor Pharmaceuticals Inc. for $5.2 billion, gaining control of an experimental treatment for the skin condition known as eczema in its first deal since walking away from a $160 billion takeover of Allergan Plc.
Pfizer will pay $99.25 in cash for each Anacor share, the companies said in a statement on Monday, about 55 percent higher than Friday’s closing price. Anacor’s crisaborole drug, which the U.S. Federal and Drug Administration is scheduled to make a decision on by Jan. 7 for the treatment of mild-to-moderate eczema, could reach annual sales of $2 billion, Pfizer projected, helping bolster its inflammation and immunology group.
Chief Executive Officer Ian Read said this month that Pfizer was looking to acquire products that are close to hitting the market, while considering a split of the business in the wake of its failed attempt to buy Allergan. The Anacor transaction may be a step closer toward ultimately breaking up the drugmaker, according to John Boris, a SunTrust Robinson Humphrey Inc. analyst.
“It’s the first of many transactions that Ian will do,” said Boris, who rates the shares neutral. “Watching this company, I’m thoroughly convinced they can’t break it up, because it’s too weak to survive on its innovation core, so he has to buy assets to do that.”
Pfizer’s shares were up less than 1 percent to $33.24 at 11:42 a.m. in New York. Anacor jumped 55 percent to $99.43. Through Friday, Anacor was down 58 percent from its all-time peak of $152.25 in August 2015.
About 18 million to 25 million people in the U.S. suffer from eczema, or atopic dermatitis, whose main symptom is a chronic rash that can last two weeks or more. Anacor also holds the rights to Kerydin, a treatment for toenail fungus that is commercialized by Novartis AG’s Sandoz in the U.S. and competes with Valeant Pharmaceuticals International Inc.’s Jublia. But crisaborole is its flagship asset.
“It is a strategically well-positioned drug in atopic dermatitis, which is an increasingly competitive market,” said Morningstar analyst Damien Conover, who has a buy rating on Pfizer. “This is going to be used in mild-to-moderate patients, so that could give them a niche of the segment of atopic dermatitis where there might be less competition.”
Pfizer has said it will decide by the end of the year whether to break up, which could offer tax benefits, and could have the transaction done by the end of 2017. The drugmaker dropped its mega-merger with Allergan in April after the U.S. Treasury announced rules that would have reduced the tax benefits of that deal.
The Anacor deal is scheduled to be completed in the third quarter and may start adding to Pfizer’s earnings in 2018. Pfizer’s financial advisers were Centerview Partners and Guggenheim Securities. Citigroup Inc. served as Anacor’s financial adviser.