Pfizer opens checkbook

Industry giant to buy Encysive Pharma for $195 million

NEW YORK—Pfizer Inc. announced recently it reached an agreement to acquire Encysive Pharmaceuticals Inc. and its Thelin lung-disorder medicine that has repeatedly failed to win U.S. approval. Under the terms of the agreement, Pfizer will make a cash tender offer for all issued and outstanding shares of Encysive for $2.35 per share, representing an equity value of approximately $195 million.

"The acquisition of Encysive will add growing, near-term revenue from the European market and increase our already strong presence in the cardio-respiratory arena with a product that complements Revatio," said Ian Read, Pfizer's president of pharmaceutical operations.

Encysive is a biopharmaceutical company whose product for the treatment of pulmonary arterial hypertension, or PAH, is commercially available in much of the European Union and is approved in other markets.

Through the deal, Pfizer will acquire the rights to Thelin, a receptor antagonist for the treatment of PAH, as well as Encysive's other pipeline candidates. The acquisition of Encysive will add growing, near-term revenue from the European market and increase Pfizer's already strong presence in the cardio-respiratory arena with a product that complements Pfizer's Revatio, a PAH treatment.

The seeds of the deal were sown last summer, according to George W. Cole, president and CEO of Encysive.

"The process initiated in July of 2007 to review Encysive's strategic alternatives led us to consider a range of opportunities for increasing shareholder value,"says Cole. "After a thorough analysis, Encysive's board of directors concluded that this cash transaction with Pfizer represents the best option for our shareholders now. Pfizer has come with a superior offer and with an in-depth understanding of pulmonary arterial hypertension, our primary therapeutic focus. We look forward to working with representatives of Pfizer in finalizing this transaction, and in transitioning our U.S. and EU operations."

Ian Read, president of Pfizer's Worldwide Pharmaceutical Operations, said the acquisition will increase Pfizer's already strong presence in the cardio-respiratory arena with a product that complements Revatio, a PAH treatment that was discovered and developed by Pfizer researchers.

"Our commitment to pursue compelling science taking place outside of our laboratories is ongoing, and the acquisition of Encysive is an example of that effort," adds Martin Mackay, Ph.D., president of Pfizer Global Research and Development. "With this agreement, we will gain an important marketed product in PAH and will have the opportunity to complete the development of this new medicine to treat this devastating disease."

But Pfizer does have some work to do to gain approval stateside for Thelin. The FDA has issued three approvable letters for the drug without allowing it to come to market.

"Pfizer plans to conduct a pivotal Phase III trial to support registration [of Thelin] in the U.S." Pfizer notes in a press release announcing the planned acquisition, adding that the drug is already approved in the European Union, Australia and Canada.

Thelin is a once-daily pill that works through a different mechanism than Pfizer's own approved Revatio treatment for PAH. Revatio, which has the same active ingredient as Pfizer's widely used anti-impotence treatment Viagra, relaxes smooth muscle cells lining blood vessels and thereby improves blood flow to particular areas of the body.

The transaction is expected to close in the second quarter of 2008, subject to customary closing conditions.
 


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