Pfizer Snaps Up Coley for Vaccine Boost

11/16/07

It’s not the Massachusetts deal everyone was waiting for—as all eyes have been on Biogen Idec and, more recently, Genzyme. But Pfizer (NYSE: PFE) finally pounced again today, announcing it’s buying former partner Coley Pharmaceutical Group (NASDAQ: COLY) of Wellesley for $164 million in a move aimed at bolstering the pharma giant’s position in vaccine development. Pfizer’s yearning is not surprising. Vaccines, Coley’s speciality, are undergoing a revitalization, and Pfizer trails competitors like Merck and GlaxoSmithKline, which have gotten a big boost from major recent vaccine launches.

In a statement, Pfizer CEO Jeffrey B. Kindler called the all-cash Coley acquisition, which is expected to close early next year, “an important component of Pfizer’s vaccine strategy…” He added that Coley’s products “have the potential to significantly enhance future vaccine and immunotherapeutic approaches to a broad range of diseases…where we have strong collaborative research in place.”

Coley is a pioneer in what’s called TLR (toll-like receptor)-based drug development: The goal here is to stimulate a specific type of immune response. (See this great New York Times article.) Besides regular therapeutics, the company also makes adjuvants that help vaccines work better. Coley’s been very successful in that field, netting partnerships with pharma giants Merck, Novartis, and GlaxoSmithKline around its Vaximmune TLR9 adjuvant. TLR9 is a hot target, and Coley seems to have a strong intellectual property position related to it. For example, Dynavax’s Heplisav hepatitis B vaccine, which was just licensed to Merck, is produced under a license from Coley. That product is now in Phase 3 trials.

On the therapeutic side, Coley’s pipeline was seriously dented when its lead product, called PF-3512676, turned in poor Phase II results. PF-3512676 was being jointly developed with Pfizer as a combination therapy (with chemotherapy) against non-small cell lung cancer. It’s no longer pursuing that approval, but Pfizer may keep the drug alive, testing it in combination with a new antibody (a CTLA4 antagonist called tremelimumab) that is now in Phase 3 trials. That drug is one of Pfizer’s emerging bright hopes in oncology. And Coley’s technology might neatly complement Pfizer’s. Pfizer scientist Dmitri Pavlov recently told me that, “In the past, immune therapies, whether they were vaccines or therapeutics, have not shown strong responses. But by targeting CTL4 you can sustain the immune signal. I think it supplies a much-needed addition.”

The acquisitions are bound to continue at Pfizer, which is desperate for new products, particularly biotech ones—another key area where it is weak. Ever since it was revealed in August that activist investor Carl Icahn had taken a large stake in Biogen Idec and was pushing for a sale of the company, speculation has been rampant that Pfizer was the most likely purchaser. Pfizer’s name has also come up as a potential bidder for Genzyme, and there’s been even more speculation since SEC filings released this week showed that Icahn had also purchased a large piece of that company.

When asked at an MIT forum last month if Biogen Idec might be the next acquisition, new Pfizer R&D head Martin McKay said it was “as good a prospect as any other biotech.” He added that, “We have a stated goal to be a top-tier biotech.”

Today, though, the Coley deal was front and center. When the market closed, Pfizer’s stock up $0.10 to $23.39. Coley was up $4.81 (160 percent), to $7.81.

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