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As Lipitor nears the cliff, Pfizer does deals

by Jonathan Marino  |  Published November 22, 2011 at 4:12 PM
pfizer_227x128.jpgWith Lipitor's patent expiration fast approaching, Pfizer Inc. has again gone small to add to its pipeline.

The New York pharma titan agreed on Tuesday, Nov. 22 -- eight days before Lipitor is to lose patent exclusivity -- to acquire privately-held, San Diego-based Excaliard Pharmaceuticals Inc. Pfizer didn't disclose the price of the deal, but said it will make an upfront payment and contingent payments if certain milestones are reached. That doesn't include a payment of at least $14 million going to Excaliard equity holder Isis Pharmaceuticals Inc., consisting of $4.4 million upfront and $9.6 million in contingent payouts.

Excaliard develops drugs that treat skin fibrosis, commonly known as skin scarring. Its lead product is EXC001, a compound designed to halt fibrosis that is currently in Phase 2 trials. Pfizer said there are currently no Food and Drug Administration-approved products on the market to reduce scar severity. Isis granted Excaliard an exclusive worldwide license for the development and commercialization of certain compounds, including EXC001, in 2007.

Excaliard started up just four years ago with the help of $15.5 million in Series A financing co-led by AltaPartners, ProQuest Investments LLC and RiverVest Venture Partners. Isis and Excaliard co-discovered EXC001.

Pfizer, meanwhile, struck the deal just eight days before cholesterol pill Lipitor, the world's best-selling drug, comes off patent. Pfizer has been arming itself for the revenue loss through a variety of channels, including low-level M&A (it bought out painkiller maker Icagen Inc., for example, in September). On a large scale, it is moving toward a massive restructuring by either selling or spinning off its animal health and nutrition businesses, each multi-billion dollar enterprises. And it is looking to wring out dollars from Lipitor by cutting several deals to help ease the revenue loss. Watson Pharmaceuticals Inc., for example, will begin selling a generic version of Lipitor on Nov. 30, but will split the revenue with Pfizer under a deal between the two companies. Ranbaxy Laboratories Ltd. will also have the right to sell a generic Lipitor on that date, though an issue with the FDA over two of its manufacturing plants in India may affect its plans. Pfizer has also made deals with pharmacy benefit managers such as Medco Health Solutions Inc. to sell Lipitor at generic prices during the 180-day period given to Watson and Ranbaxy to exclusively market a Lipitor copy in the U.S. following the patent's expiration.

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Tags: Excaliard Pharmaceuticals Inc. | Lipitor' | M&A | Pfizer Inc. | pharmaceuticals

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