Pfizer's Stake In HIV Breakthrough

| About: Pfizer Inc. (PFE)

Pfizer, Inc. (NYSE:PFE) appears to have missed out on a significant opportunity when it was revealed yesterday that one of its jointly developed drugs was a component of a treatment therapy that appears to have eliminated the HIV virus in a newborn.

The company received unexpected attention over the weekend related to the successful treatment and potential "cure" of a child born with the AIDS virus at the 20th Conference of Retroviruses and Opportunistic Infections (CROI) in Atlanta, GA.

The team overseeing the infant indicated that their treatment regimen was administered hours after birth and included a combination of lamivudine, zidovudine (AZT) and nevirapine. The group revealed that though treatment was provided for approximately 18 months, a 5-month period followed where the patient's parent did not return for therapy. It was then revealed upon retesting that the child had no trace of the virus.

The treatment regimen for the infant included drugs developed by a Pfizer joint venture, Viiv Healthcare with GlaxoSmithKline, plc (NYSE:GSK) and an Abbott Laboratories (NYSE:ABT) joint venture, Kaletra. Viiv Health care was founded in November 2009 and remains solely focused on HIV and AIDS research. In addition to lamivudine (Epivir) the company's current product portfolio includes 9 other approved drugs and the company received notice in February that their compound dolutegravir had been granted FDA priority status.

Lamivudine (3TC) suppressed the ability of the human immunodeficiency virus (HIV) and hepatitis B from multiplying in human patients. It was originally approved in October 1995 for use in adults and pediatrics and has since received expanded approvals with the most recent occurring in November of 2012 largely for additional dosing and drug combination options. It is currently marketed by GSK under the branded names Zeffix, Heptovir, Epivir and Epivir-HBV and is also used as a therapy in treating hepatitis B infections.

Pfizer initially held a 15% position in the Viiv joint venture but that was eroded to a 13.5% stake in the company when the Japanese pharmaceutical company Shionagi & Co. Ltd. acquired a 10% share in October 2012.

At this point, little of the treatment is fully understood given the exploratory nature of the regimen. However, with a population of 300,000 babies born annually with the infection worldwide, 3.4 million children and 34.2 million people worldwide respectively living with HIV this development certainly appears to be a catalyst of potential interest for GSK shareholders.

Should the treatment become a standard, Galaxo stands to be the clear potential winner among the drug development companies. Viiv accounted for approximately 6.5% of GSK sales in FY 2012 and Ziffix recorded sales of $386 million. We feel that the combined potential increased demand could result in a $0.02 2013 catalyst and $0.04 in fiscal 2014.

While this may ultimately prove to be a notable starting point to eradicating the disease, we do not feel that the discovery will have a material impact on Pfizer's sales projections given the company's limited commitment to the joint venture at this time.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.