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Pfizer (NYSE:PFE) has found a way out of having to go to court against Brigham Young University regarding the issue of royalties allegedly wrongly withheld from the revenue of the drug Celebrex. Celebrex is a pain reliever that has been extremely successful since its entering the market. Brigham Young University was suing Pfizer because it felt that it had been cheated out of billions of dollars in royalties. It had aided in the development of the drug and wanted reimbursement. Naturally, Pfizer wanted to avoid making it to the court date without a settlement, because it would have meant monumentally bad publicity for a long time.

The lawsuit was filed in October 2006 by Brigham Young University and it claimed that Daniel Simmons, a professor at the University, had discovered an enzyme and a gene called Cox 2. These discoveries allowed for the development of Celebrex, which is an anti-inflammatory, but avoids the long-term side effects of other drugs, specifically aspirin. Allegedly, the original contract that governed this research included the guarantee that Brigham Young University would receive royalties when the drug went out on the market. This contract was between the university and Monsanto, a company that eventually became a part of Pfizer. Monsanto arbitrarily canceled the contract and neglected to place Simmons on patents. It misappropriated his work to create the drug.

Celebrex was among the most successful (financially) drugs of all time. It is thought to have brought in upwards of $35 billion. Obviously Brigham Young did not want to miss out on this money entirely. It had claimed that it was owed at least $9.7 billion in royalties, but was never paid. Pfizer was very concerned about the possibility of going to court because, aside from the bad publicity, the jury could have potentially taken the total revenue from Celebrex sales and then imposed triple damages. This would have turned in to a much larger disaster for Pfizer than it had to be, so it decided to settle out of the lawsuit before the trial, which was scheduled to begin on May 29.

Pfizer and Brigham Young University sat down before U.S. District Judge David Sam in Utah for settlement talks on April 27. According to a news release that Pfizer put out on May 1, it stated that it had "reached an amicable settlement on confidential terms." It declined to comment further. Brigham Young University did not say much either, but it did say that "We are very pleased with how this matter has been resolved. By terms on the settlement, our response this morning can only reiterate what is stated in the released press statement." Part of the settlement is that Pfizer will establish a Dan Simmons Chair in recognition of Simmons. In the statement that it released, Pfizer also said, of this aspect of the settlement, "We are pleased to resolve this matter and the uncertainty of litigation, and to be in a position to support Dr. Simmons' research efforts at BYU." In court documents, Pfizer had argued that the discovery made by Simmons was not a key to the development of Celebrex which, it claimed, was largely the result of the work of its own scientists.

Pfizer, along with Protalix Biotherapeutics (NYSEMKT:PLX), recently got the go-ahead from United States drug regulators for an experimental biotech drug meant to treat a rare genetic disease called Gaucher. The chemical in this intravenous drug is known as taliglucerase alfa. Last year, the Food and Drug Administration rejected the drug and asked for more data from the companies. This latest news means that the companies can go ahead with production of this drug, which could mean great things for both companies, not to mention the people who are in need of this new drug. Gaucher disease is caused by an enzyme deficiency that prevents the breakdown of certain fats in the body.

The new biotech drug that Pfizer and Protalix are producing is different from most biotech drugs. Rather than using cells from mammals, it is made from plant cells, using genetically modified carrot cells. This drug, known as Elelyso, is the first of its kind. The drug is not the first to treat Gaucher disease. Genzyme produces a medication called Cerezyme, but it costs about $200,000 per year. Genzyme is hoping that a new plant in the U.S. will make it more affordable, but Pfizer is expecting to sell its new medication for significantly less. Another company, Shire (SHPGY), makes a drug for Gaucher called Vpriv, but it failed recently to gain FDA approval to manufacture its drug in the U.S.

Pfizer is hoping that it can make treatment for Gaucher much more accessible in the U.S. than these other companies have been able to. There are about 6,000 people in the U.S. who suffer from this disease, or, more specifically, Type 1 Gaucher disease, which is the specific type of the disease that this new drug treats. Pfizer plans to take measures to make it more convenient to get treatment, such as keeping 24 months of inventory on hand for all of the 1,500 to 2,000 patients who are currently receiving treatment for Gaucher in the U.S.

The timing of the new drug's approval is good for Pfizer. It's competitors have been keeping busy and the drug giant does not want to surrender any of its market share. Rival GlaxoSmithKline (NYSE:GSK) has been rumored to be eyeing the possibility of buying another rival company, AstraZeneca (NYSE:AZN). The latter of the companies has found a string of non-approvals for its recent drug developments and its stock has suffered accordingly. GlaxoSmithKline has officially denied the rumors, but that may not mean much. The drug industry has been as busy as ever with mergers and acquisitions, performing over 200 of these deals just last month.

Another rival, Eli Lilly (NYSE:LLY) is dealing with perhaps the most bizarre news in the industry right now. The company's Connecticut warehouse was the target of history's largest pharmaceutical heist recently, as burglars stole more than $80 million of pills. The company is looking into repairing damages to both its pill supply and reputation. Keep an eye on this bizarre story and how it turns out.

As for Pfizer, it is optimistic that it can take over a huge share of the Gaucher market. This market is projected to reach around $4.5 billion by 2016. Analysts agree that this is the likely projection for the drug and that it will likely take off in a big way for both companies. Both companies (Pfizer and Protalix) saw significant increases in stock price immediately after the news broke that the FDA approved this new drug, which tells me that shareholders are expecting it to be a big deal as well. Protalix has seen a 23% rise in stock price since the news broke. That should be the extent of its rise, for now. Pfizer also saw an increase, but not anything as large as 23%. I expect Pfizer's price to keep rising in the near future, making it a great time to buy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.