Pfizer has pulled another surprise out of its hat. The pharma giant, late last week, announced that it had signed a deal with GlaxoSmithKline to merge both companies’ HIV divisions into one new company that will work independently to develop treatments and market existing drugs.
The firms will split equity 85/15, with the larger portion going to GSK—an established player in the HIV field, which once wore the crown as the world’s biggest HIV drug supplier. The new company is going up against Gilead, the current leader in the HIV space thanks to its once-daily, fixed-dose treatment Atripla.
The revenue split reflects the value of the marketed products, but the equity could change based on certain regulatory and operational achievement milestones. If all of the milestones are met, the equity split shifts to 75.5 percent for GSK and 24.5 percent for Pfizer. And if Pfizer’s contributions outweigh GSK’s, then Pfizer’s interest can increase even further.
“Essentially, this is a pay-for-performance model for your pipeline,” Pfizer spokesperson Joan Campion said.
This is a different approach for Pfizer, which recently launched a restructuring plan based on individual disease state–specific business units that house both commercial and development groups. The company also touted the fact that it is now considering outlicensing compounds that aren’t moving through R&D fast enough.
“Both companies looked at a variety of options, but we believe this is the most innovative solution for an HIV/AIDS business,” Campion said.
Campion clarified that Pfizer Inc. will continue to do research in HIV/AIDS, and that vaccines are not included in the transaction. Pfizer is acquiring a robust vaccine business when its acquisition of Wyeth closes.
“If you look at Pfizer and GSK together, it’s a very complimentary fit,” Campion said. “We both have very strong R&D resources that will contribute to the company.”
Pfizer currently has Selzentry/Celsentri on the market as well as a sizable pipeline. GSK comes to the table with a strong commercialization and distribution force, as well as a number of marketed products that are approaching loss of exclusivity.
The deal is expected to close in the fourth quarter of 2009. No word yet on the name for the new company, which will be headquartered in London with US operations based out of Research Triangle Park, NC. Commercial operations of both companies will be consolidated in the new firm. Under the agreement, the new company will contract with GSK and Pfizer for manufacturing and research.
GSK spokesperson Kevin Colgan explained that there is a possibility that the new company will create combination therapies based on the drugs the two firms currently have on the market.
“HIV is a disease category that is in need of new medications, so we see this as an opportunity to fulfill an unmet need. We are continuing to invest in developing new medicines to treat HIV and AIDS,” Colgan said.