News of Pfizer Inc.'s buyout of Embrex Inc. boosted the animal vaccine firm's stock by 40 percent, and the transaction could be seen as a reminder that big pharma has a growing interest in vaccine technology.
Pfizer, of New York, made a splash a month ago in the human vaccine space with a purchase of the DNA vaccine company PowderMed Ltd., of Oxford, UK. In addition, Novartis AG recently gobbled up the remainder of Chiron Corp. that it didn't already own, largely for the latter's vaccine business.
Historically, neither Pfizer nor Basel, Switzerland-based Novartis have focused on human vaccines, and many such companies traditionally stayed away from those products because of their "bad rap," said Sharon Seiler, an analyst with Punk, Ziegel and Co. in New York. That's partly because vaccines didn't generate much in the way of sales growth, and some felt they had reached the end of the line, scientifically.
But that mentality is shifting, she told BioWorld Today, and vaccines' visibility is on the upswing.
"A lot has changed," Seiler said, "for a number of reasons," including new opportunities related to vectors, adjuvants and recombinant technologies. That's providing "hope for addressing vaccines that didn't seem tractable before," she said. Vaccines don't face much generic competition, and there's more of an interest in preventative medicine for adults and children than before. Plus, the recent high-profile approvals of Gardasil in human papillomavirus for Merck & Co. Inc., of Whitehouse Station, N.J., and GlaxoSmithKline plc, of London, with its new flu vaccine, FluLaval, plus Madison, N.J.-based Wyeth's Prevnar for Streptococcus pneumoniae crossing the blockbuster sales milestone, have heightened vaccine awareness.
"Success begets interest," Seiler said.
Going forward, she predicted more big pharma interest in vaccines, both from those with existing franchises and others looking for an initial footprint.
Pfizer's deal for Embrex will help the bottom line in the animal health division. For $155 million — a three-times multiple of Embrex's 2005 revenue — Research Triangle Park, N.C.-based Embrex will be absorbed. Bob Fauteux, a Pfizer spokesman, said the buyout gives his company's longstanding animal health franchise a clear entry into poultry, an area it hasn't occupied since divesting a feed additive business six years ago.
Embrex's highest profile product is its Inovoject vaccine-delivery system, an in ovo injection technology that inoculates chickens while they are still in the egg. For example, it's used in vaccinating more than 80 percent of North American poultry against Marek's disease, a viral autoimmune disease that's highly contagious and destructive among birds but not harmful to humans. The automated system punches a tiny hole into the egg for a needle to deliver a therapeutic product to the embryo, a process that usually occurs with three days remaining in the bird's 21-day incubation period.
Fauteux said Pfizer made the purchase to supplement its animal health business, which last year generated $2.2 billion in sales. Along those same lines, Pfizer two years ago purchased an Australian firm called CSL Animal Health, then a division of CSL Ltd. in Melbourne, for its livestock vaccines.
Calling animal vaccines "a valuable and growing segment," Fauteux said Embrex's technology provides an opportunity to develop "new, innovative, value-added poultry vaccines that will have a much better delivery system into the marketplace" through that company's existing presence.
On Wednesday, Embrex's stock (NASDAQ:EMBX) jumped $4.72 to $16.64, just below the $17-per-share acquisition price. A day earlier, the stock closed at $11.92.
The deal's terms call for Pfizer to pay cash for 100 percent of Embrex's equity, making Embrex a wholly owned subsidiary. The acquisition, which remains subject to shareholder approval, antitrust clearance and certain foreign filings, as well as other customary closing conditions, is expected to close next quarter.