In an effort to boost its vaccine and biological development pipeline, Pfizer Inc. is acquiring Coley Pharmaceutical Group Inc. in a deal worth about $164 million.
News of the acquisition sent Coley shares (NASDAQ:COLY) skyrocketing 160.3 percent Friday, up $4.81, to close at $7.81.
Under the terms of the agreement, Pfizer will pay $8 per share for Coley's outstanding common stock. Shareholders holding about 27 percent of Coley shares have agreed to tender their shares in the offer, the company said. The acquisition is expected to close in early 2008.
Wellesley, Mass.-based Coley specializes in developing vaccines and drugs that stimulate or inhibit Toll-like receptors (TLRs) to target cancer, asthma and autoimmune diseases.
Pfizer has been partnering with Coley for the past two years on the biotech's lead TLR9 agonist drug candidate PF-3512676 for the treatment of cancer.
However, the program suffered a clinical setback in June when Pfizer decided to discontinue two Phase II and two Phase III clinical trials of PF-3512676 in lung cancer after an interim analysis of the Phase III studies showed there was no evidence that the compound produced additional clinical efficacy over that achieved with the standard cytotoxic chemotherapy regimen alone. (See BioWorld Today, June 21, 2007.)
That setback, CEO Robert L. Bratzler said Friday during a conference call, "shifted" Coley's product commercialization timeline.
"Our access to milestone and royalty revenues necessary for funding drug development and fortifying our pipeline was delayed," he said.
The firm recognized that its "most significant value-creation opportunity," VaxImmune, a vaccine adjuvant currently being evaluated in 35 clinical studies for cancer, infectious disease and biowarfare defense, was "at least five years out," Bratzler said.
So, he explained, the company evaluated various options that would accelerate future value creation without dilution and without unduly compromising the development of the firm's early stage drug candidates.
As Coley considered its strategic alternatives, Bratzler continued, "we could not overlook the potential synergies that could be derived from our relationships with our stellar list of global pharmaceutical partners," which includes GlaxoSmithKline plc, Merck & Co. Inc. and Novartis AG.
Since signing its licensing agreement with New York-based Pfizer in 2005, he said, the pharmaceutical maker has "consistently demonstrated" that it is a "supportive, dedicated and world-class partner."
Among the many reasons the acquisition of Coley by Pfizer was so attractive, Bratzler said, was "the fact that the two companies share a strategic commitment to the future potential of innovative vaccine technology and immunologic treatments of a broad range of diseases. Moreover, Pfizer possesses the resources as well as the scientific and clinical expertise to maximize the potential of Coley's proprietary TLR-based product candidates across the full range of applications, both for use as vaccine adjuvants as well as novel therapeutics."
When the acquisition deal closes, Bratzler noted, Pfizer will own the biotech's second- and third-generation vaccine adjuvants "exclusively . . . for their use in both therapeutic and prophylactic vaccines across the full range of applications."
Coley's vaccine adjuvant platform not only will enable Pfizer to broaden its development program, he contended, but also will add "immunological horsepower" to the pharmaceutical maker's vaccine portfolio.
Despite the setback in June with PF-3512676, Bratzler said, development of the compound as a treatment for cancer "remains unchanged."
"Pfizer is totally committed to this program," he maintained. "That's one of the reasons we were obviously very excited about the prospects of joining forces in this transaction with Pfizer."
Pfizer currently is investigating PF-3512676 in a Phase II clinical trial in combination with Tarceva (erlotinib) for the treatment of refractory non-small-cell lung cancer and a Phase I clinical trial in combination with Pfizer's anti-CTLA4 antibody, tremelimumab, for the treatment of advanced melanoma.
Coley announced last month that Pfizer had nominated a second-generation TLR9 agonist compound discovered by the biotech for future clinical development against cancers. (See BioWorld Today, Oct. 31, 2007.)
"We see tremendous synergies and potential applications for our drug candidates in the areas of cancer, inflammation, autoimmune and infectious diseases - all key therapeutic areas for Pfizer," Bratzler affirmed. "We don't think we could have found a more committed or a more qualified partner to progress our pipeline in our pioneering technology. We believe that under Pfizer's direction, our mission of developing TLR-based medicines that improve human health, prolong life and alleviate suffering will be achieved."