New York-based Pfizer Inc. (NYSE: PFE) agreed to acquire Palo Alto-based biopharmaceutical company Anacor Pharmaceuticals Inc. (NASDAQ: ANAC) for $99.25 per Anacor share, in cash, representing a total value of $5.2 billion, net of cash. The price assumes the conversion of Anacor’s outstanding convertible notes.

Anacor’s flagship asset, crisaborole, a differentiated non-steroidal topical PDE4 inhibitor with anti-inflammatory properties, is currently under review by the U.S. FDA for the treatment of eczema, a mild-to-moderate atopic dermatitis.

The deal comes just over a month after Pfizer abandoned plans to acquire Ireland-based Allergan Plc (NYSE: AGN) in a $160 billion deal, which was effectively blocked by the U.S. government’s proposed regulations to curb corporate tax inversions.

“We believe the acquisition of Anacor represents an attractive opportunity to address a significant unmet medical need for a large patient population with mild-to-moderate atopic dermatitis, which currently has few safe topical treatments available,” said Albert Bourla, group president of Pfizer’s Global Innovative Pharma and Global Vaccines, Oncology and Consumer Healthcare Businesses. “Crisaborole is a differentiated asset with compelling clinical data that, if approved, has the potential to be an important first-line treatment option for these patients and the physicians who treat them.”

In both of its Phase 3 pivotal studies, crisaborole achieved statistically significant results on all primary and secondary endpoints and in March 2016, the FDA accepted for review Anacor’s new drug application seeking approval of crisaborole for the potential treatment of mild-to-moderate atopic dermatitis in children and adults. The Prescription Drug User Fee Act (PDUFA) goal date for the completion of the FDA’s review is January 7, 2017. If approved, Pfizer believes peak year sales for crisaborole have the potential to reach or exceed $2.0 billion.

“Today marks the beginning of an exciting new chapter for Anacor, which we believe will deliver significant value to our shareholders,” said Paul L. Berns, Anacor’s chairman and CEO. “We have a deep respect for Pfizer, and it is clear that they share our commitment to addressing the significant unmet medical needs in inflammatory disease. We are proud of the innovative company that our team has built and are confident that Pfizer will help accelerate Anacor’s important mission given the strength of its global platform and resources.”

Atopic dermatitis is a common, relapsing, chronic, inflammatory skin disorder, with patients displaying a chronic rash characterized by inflammation and itching, often occurring in folds of the skin with symptoms lasting up to 14 days or more. Approximately 18 to 25 million people in the United States suffer from this condition, including between 8 and 18% of infants and children. Atopic dermatitis has been considerably underdiagnosed due to the lack of approved effective systemic agents, and limitations of current topical agents. There have been no new molecular entities for atopic dermatitis in the last 15 years.

Anacor also holds the rights to Kerydin, a topical treatment for onychomycosis (toenail fungus) that is distributed and commercialized by Sandoz Inc. in the U.S.

Pfizer anticipates financing the transaction through existing cash, and does not expect the transaction to impact its current 2016 financial guidance.

The boards of directors of both companies have unanimously approved the transaction. The closing is subject to customary closing conditions, including U.S. antitrust clearance and the tender of a majority of the outstanding shares of Anacor common stock. Pfizer expects to complete the acquisition in the third-quarter 2016.

Pfizer’s financial advisors for the transaction were Centerview Partners and Guggenheim Securities, and Wachtell, Lipton, Rosen & Katz acted as its legal advisor. Citi served as Anacor’s financial advisor, and Davis Polk & Wardwell, LLP served as its legal advisor.

Anacor is a biopharmaceutical company focused on discovering, developing and commercializing novel small-molecule therapeutics derived from its boron chemistry platform. Anacor’s first approved product, KERYDIN® (tavaborole) topical solution, 5%, is an oxaborole antifungal approved by the U.S. Food and Drug Administration in July 2014 for the topical treatment of onychomycosis of the toenails. In July 2014, Anacor entered into an exclusive agreement with Sandoz Inc., a Novartis company, pursuant to which PharmaDerm, the branded dermatology division of Sandoz, distributes and commercializes KERYDIN in the United States.

In September 2014, PharmaDerm launched KERYDIN. Anacor’s lead product development candidate is crisaborole topical ointment, 2%, a novel non-steroidal topical anti-inflammatory PDE-4 inhibitor in development for the potential treatment of mild-to-moderate atopic dermatitis and psoriasis. Beyond KERYDIN and crisaborole, Anacor has discovered three investigational compounds that it has out-licensed for further development. Anacor also has a pipeline of other internally discovered topical and systemic boron-based compounds in early stages of research and development.

Pfizer Inc. is one of the world’s largest biopharmaceutical companies. Pfizer operates through three business segments: Global Innovative Pharmaceutical (GIP); Global Vaccines, Oncology and Consumer Healthcare (VOC); and Global Established Pharmaceutical (GEP). The company serves wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, and individual provider offices, as well as centers for disease control and prevention.

Pfizer has strategic collaboration with KineMed Inc.; collaborations with BIND Therapeutics, Inc., Merck KGaA, and Syndax Pharmaceuticals, Inc.; research collaboration with Schrödinger, Inc.; license and collaboration agreement with Servier; strategic drug discovery agreement with Heptares; and collaboration agreement with Portola Pharmaceuticals Inc. Pfizer was founded in 1849 and is headquartered in New York, New York, with its research headquarters in Groton, Connecticut.

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