Pfizer to Get Full Inhaled Insulin Rights
Friday January 13, 8:32 am ET
By Theresa Agovino, AP Business Writer
Pfizer to Pay Sanofi-Aventis $1.3B for Rights to Inhaled Insulin; Shares Up in Premarket
NEW YORK (AP) -- Pfizer Inc. will pay $1.3 billion to Sanofi-Aventis Group to obtain full worldwide rights to the inhaled insulin the companies developed jointly and were planning to co-market. U.S. regulators are expected to rule upon the drug later this month.
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Pfizer, the world's biggest drug company with blockbusters such as the cholesterol drug Lipitor, made the announcement late Thursday. Its shares were up 9 cents to $24.67 in premarket trading.
Last September, a U.S. Food and Drug Administration panel voted to recommend inhaled insulin for approval but in October the agency said it wanted to extend its review of the medication, called Exhubera, by three months.
While there is a diabetes epidemic spreading across the country, some analysts had said doctors may be wary of prescribing Exhubera since the long-term effects of inhaling insulin won't be known for several years. Moreover, Merck & Co.'s withdrawal of its pain reliever Vioxx has caused doctors to become cautious of prescribing new drugs.
Pfizer has pledged to continue studying the drug's safety after its approval.
The $1.3 billion also gives Pfizer total ownership of a production plant in Germany the two companies jointly held.
"I think it (Exhubera) will be a billion dollar drug but it will take some time," said Jason Napodano, an analyst at Zacks
Napodano said that Pfizer will have to market the drug extensively to overcome doctor's initial trepidation. Plus, he said patients may be turned off by the inhaler's size. Pfizer said the device is about the size of a hard-shelled eyeglass case.
Napodano expects Exhubera will be approved, although he thinks the FDA may require some additional information or label changes before Pfizer can market it. He doesn't expect Exhubera sales to contribute much to 2006 or 2007 earnings and doesn't think the drug will hit $1 billion in sales until at least 2009.
Still, Napodano said the deal is good news for Pfizer because it needs all the revenue it can muster as several of its drugs will lose patent protection in the next few years.
The agreement ends legal action Pfizer started against Sanofi-Aventis in 2004 after the company was created by a merger. Pfizer had originally been working with Aventis on the drug and said in a lawsuit that the merger constituted a change of control that violated the contract. A U.S. and a German court agreed with Pfizer last year and the two companies have been working on a resolution, Pfizer said.
Pfizer will still pay an undisclosed royalty to Nektar Therapeutics, which makes the inhaling device and will also supply insulin.
