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Pfizer Inks a $1.6 Billion Deal with AstraZeneca

In light of its recent acquisition activity, Pfizer‘s (NYSE: PFE) latest asset purchase might seem small, but it’s nevertheless significant. The company has agreed to pay up to nearly $1.6 billion to purchase several antibiotics assets from AstraZeneca (NYSE: AZN).

For its money, Pfizer will receive the commercialization and development rights to antibiotics Zavicefta, Merrem/Meronem, and Zinforo. It will also gain a pair of clinical development assets, aztreonam-avibactam and CXL.

As is typical in the pharmaceutical industry, Pfizer will not pay the full price of the acquisition immediately. It has agreed to an upfront payment of $550 million, and another $175 million in January 2019. It will then be obligated for up to $250 million in milestone payments, up to $600 million in sales-related obligations, and royalties on Zavicefta and aztreonam-avibactam.

In the press release trumpeting the acquisition, Pfizer said that it “will help expand patient access to these important medicines and enhance our global expertise and offerings in this increasingly important area of therapeutics, in addition to providing the opportunity for near-term revenue growth.”

The company does not expect the transaction to affect its guidance for this fiscal year.

That’s perhaps because it’s dwarfed by other buys it has made recently. The most high-profile of these is its recent $14 billion deal to purchase of Medivation. For that price, it gets a portfolio of oncology drugs, including the top-selling prostate cancer treatment Xtandi. And shortly before the Medivation deal was locked, Pfizer sewed up a $5 billion-plus arrangement to buy the intriguing biopharma company Anacor Pharmaceuticals.

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Pfizer expects the acquisition of AstraZeneca assets to close in the fourth quarter of this year. It is subject to approval from antitrust regulators in certain countries.

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Eric Volkman has no position in any stocks mentioned.

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