Pfizer PLC Nudges Out Novartis AG to Become the New Behemoth in the Drug World
In breaking news released today, Pfizer and Allergan announced that they are executing a reverse merger worth $160 billion. Yes, billion with a “B.” This is a massive deal and will position the newly combined company as the largest pharmaceutical company in the world, bumping out current leader, Switzerland’s Novartis AG, for 1st place.
To secure a lower tax rate, Allergan is technically buying Pfizer, although the numbers do not indicate that to be true. Allergan stock holders will get 11.3 shares of the combined company for each of their shares, while Pfizer stockholders will only get a one-to-one exchange for their shares (one existing share of Pfizer stock for one new shared of the combined company).
In a classic move to allow brand continuity for the more dominant brand name, Pfizer and Allergan will be renamed as “Pfizer PLC.”
The deal is being structured as a reverse merger, also termed a “tax inversion.” It is a tax-saving strategy that will allow New York-based Pfizer to reorganize within a country with a notably lower corporate tax rate. Allergan is headquartered in Dublin, Ireland.
What Does Pfizer Have to do with the World of Stem Cells?
Most people would not call Pfizer a stem cell company, much less a cell therapy company, a regenerative medicine company, or even a biotech company. Pfizer is viewed as a “classic and traditional” pharmaceutical company, best known for its blockbuster sales of drugs, such as Lipitor and Viagra. While Pfizer is largely a drug company, the company has expressed periodic interest in the stem cell sector.
In November 2008, Pfizer announced the launch of an independent research unit, called Pfizer Regenerative Medicine, based out of two well-known biotech hubs, Cambridge, Massachusetts, and Cambridge, UK. The purpose of this new research unit was to allow Pfizer scientists to focus on stem cell applications and the regenerative capacity of these cells to treat disability, disease, and injury. Earmarking more than $100 million to fund the project, Pfizer management stated, “The ultimate goal will be to deliver new medicinal products that can pave the way for the use of cells as therapeutics.”
In December 2009, Pfizer then partnered with the cell therapy company Athersys, identifying the goal to “develop and commercialize MultiStem(R) for the treatment of Inflammatory Bowel Disease (“IBD”).” MultiStem is an investigational stem cell therapy that Athersys initially developed to treat acute myocardial infarction and ischemic stroke. Under the terms of this agreement, Pfizer agreed to pay Athersys an up-front cash payment of $6 million, with pending milestones of $105 million to be delivered upon the successful completion of developmental, regulatory, and sales-based milestones. Unfortunately, Pfizer has since terminated its relationship with Athersys and its investment in the MultiStem product.
Nonetheless, Pfizer has since continued its interest in the area of stem cells. In one notable example, the UCL Institute of Ophthalmology and Pfizer recently requested permission to validate a potential treatment for age-related macular degeneration that would involve the use of human embryonic stem cells (hESCs) derived retinal patches. Specifically, the companies proposed that they use a slit in the retina to introduce a new patch of retinal cells produced from hESCs to the damaged macula.
Future of Stem Cells for Pfizer?
What is the future of stem cells for Pfizer? It is hard to say, as the company has only dabbled in this area until now. However, the company has expressed periodic interest in this area and the new merger will help the company with cash flow, branding, and lower tax rates. The face of medicine is changing, because we are not made of drugs, we are made of cells.