Could a Pfizer buyout of Bristol-Myers Squibb or AstraZeneca make sense? Sure, one analyst says—but he doesn’t think the New York drugmaker is interested.
The way Bernstein’s Tim Anderson sees it, Pfizer has “proven itself to be a very transparent company.” And so when the company says it’s committed to its Merck KGaA immuno-oncology partnership—which has already produced approved therapy Bavencio—Anderson thinks Pfizer means it.
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Speculation has been swirling for a while now that Pfizer—which has “for several months now ... been strongly suggesting it might engage in larger M&A”—could try for BMS or AZ, both of which have I-O programs that are further along than its own, Anderson wrote in a Monday note to clients. Bavencio, as the fourth PD-1/PD-L1 med to hit the scene, “seems like it will struggle to gain much traction,” and early clinical studies suggest its side effects might be worse than those of its peers, he pointed out.
And Pfizer CEO Ian Read has already acknowledged that the breakup fee it would owe its German partner in that event would be a drop in the bucket.
“I don’t think that any type of breakup fee would be material compared to the size of a large deal,” he told investors on Pfizer’s Q1 conference call in May.
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But Pfizer has also repeatedly stressed that it’s “committed” and “focused” where the partnership is concerned, and Anderson’s inclined to take the company at its word. After all, executives have been upfront about so many of the company’s other major moves: They informed investors years in advance that they were looking at a large-scale split, though it ultimately never happened; they expressed interest in a generics pickup before nabbing Hospira; and they kept up tax inversion talk all the way through to the later-scuttled Allergan agreement, Anderson noted.
“Many management teams, when asked difficult or sensitive questions, will often give predictably vague answers,” he wrote. But in Pfizer’s case—"given its history as a consistently transparent company that reliably signals its intentions"—their answers may hold more truth.
“In our view, it would be uncharacteristic of them to strongly support avelumab one minute, and then ditch it the next,” he added.
It may be a while before investors find out of Anderson is right or wrong, though. He also predicted that a buy of BMS or AZ wouldn’t happen until Pfizer gets some clarity around whether the first-line lung-cancer CTLA4 combo approach both companies are pursuing holds any promise. On that front, AstraZeneca likely won’t have data until this fall, while Bristol’s should arrive next year.