Pfizer (PFE) recently entered into two deals. While one deal was signed with biopharma company Halozyme Therapeutics, Inc. (HALO), the second deal was signed with clinical intelligence company, Humedica.
Under the agreement with Halozyme, Pfizer will develop and commercialize products using its proprietary biologics in combination with Halozyme’s Enhanze technology. Enhanze, Halozyme's proprietary drug delivery platform, is based on the company's patented recombinant human hyaluronidase enzyme (rHuPH20).
Up to six targets will be developed and commercialized by Pfizer using Halozyme’s rHuPH20. Pfizer will initially pay $8 million including an upfront fee for exclusive licenses to two identified targets in the primary and specialty care settings. Besides this, Halozyme is entitled to receive payments based on the achievement of development, regulatory and sales milestones. Halozyme will also receive royalties on net sales of licensed products.
Under the second agreement, Pfizer and Humedica will work on combining clinical informatics and life science knowledge so as to gain a better understanding of the needs of patients and the effectiveness of treatments. This should help improve patient outcomes.
While Halozyme shares were up on the news regarding its agreement with Pfizer, we do not expect the Halozyme or the Humedica agreements to have any impact on Pfizer’s shares. We currently have a Neutral recommendation on both Pfizer and Halozyme. Both stocks carry a Zacks #3 Rank (Hold). We expect near-term earnings at Pfizer to be driven by cost cutting efforts and share repurchases. Longer-term growth will be dependent on the success of drug development.