Pfizer Eyes Kevetrin?

| About: Pfizer Inc. (PFE)

Former FDA Deputy Commissioner Dr. Scott Gottlieb, a resident fellow at the American Enterprise Institute, recently said in a Wall St Journal article that "at its peak Pfizer's (NYSE:PFE) blockbuster drug Lipitor generated 13 billion dollars in annual revenue. At the end of November 2011, Lipitor went off patent and now generics are on the market." Dr. Gottlieb further described the Lipitor patent expiration event as a major turning point for the pharmaceutical industry, "Big drug makers aren't chasing drugs like Lipitor anymore..." in part because the manner in which new drugs are discovered is very different from the methods of research fashioned during the 70s and 80s.

A few months after Gottlieb's clairvoyant statement, it was announced on April 24th, 2012 that Pfizer sold its baby food business to Nestle (OTCPK:NSRGY) for 11.9 billion dollars. Pfizer's CEO, Ian C. Read, commented after the sale that the transaction would help Pfizer focus on its core business of developing, manufacturing, and marketing of pharmaceuticals. At the end of 2011, Pfizer had 3.5 billion in cash and short term investments and about 20 billion in receivables. With the addition of 11.9 billion from the baby food business sale, Pfizer has approximately 15 billion in cash. Pfizer must make decisions to acquire or speedily develop products that replace the many billions of dollars in annual revenue that the baby food division and formerly-patented Lipitor generated, or they will attract institutional interest that will apply substantial pressure on management to obtain value from its approximately 40 billion in cash and receivables.

Dr. Gottlieb may well be accurate that Pfizer and other Big Pharmas may not be looking for a single new 13 billion annual revenue pharma compound. However, if any of them happened to spot an intellectual property platform or a single drug in-trial that could fill the void, they would move to acquire or at least joint venture it. Recently the street witnessed Celgene (NASDAQ:CELG) make a 925 million dollar structured acquisition of Avila (350 million dollars upfront cash), a small private biopharma with one primary oncolytic compound focused on hemoglobic cancers in mid-stage FDA 1 trials. Avila's primary drug is derived from intellectual property that could be the catalyst for an entire new platform of therapeutics. Prior to Celgene pouncing on Avila, I'd never heard of an FDA stage 1 compound company receiving such a juicy takeover offer. I have asked several pharma industry executives and I have received no information that would lead me to believe that there has been a stage 1 FDA compound acquisition that competes with what Celgene paid for Avila. I find evidence in Pfizer's restructuring that big pharma's business model is changing. Celgene's acquisition of Avila certainly indicates that at least one major pharma is attempting to find and develop new multi-billion dollar blockbusters. Big Pharma's pipelines have been scrutinized by more than one analyst as being without enough FDA trial candidates to replace previous successes. Should we expect that more Celgene/Avila premium acquisitions will probably take place, especially where there is potential to develop an entirely new patented platform of unique and very effective drugs?

Work to create more potent oncolytic cocktails is happening at Roche (OTCQX:RHHBY) and Glaxo Smith Kline (NYSE:GSK). Cellceutix's Kevetrin now has dual matriculation at Harvard's Beth Israel. This is an eyebrow-raising feat. How often does any small company like Kevetrin's parent qualify to place a pharmaceutical compound in a Harvard clinical? Kevetrin has two! One for an FDA stage 1 clinical that should start around September 2012 and the other a trial wed by Harvard to Pfizer's multikinase inhibitors for research against renal cancer and melanoma. When Cellceutix announced the research study on March 19, 2012, the contents of the announcement did not identify Pfizer as the owner of the multikinase inhibitors that Beth Israel was joining with Kevetrin.

Cellceutix Corp announced that it has entered into an agreement with Beth Israel Deaconess Medical Center, a teaching hospital of Harvard Medical School, on a research project with Kevetrin. The Medical Center wishes to exploit the nuclear and/or mitochondrial pro-apoptotic function of p53 in melanoma and renal cell carcinoma, two types of cancer that are particularly resistant to therapy. The collaborative studies are completely independent from the planned clinical trials for Kevetrin that will be conducted at these cancer centers and sponsored by Cellceutix.

Harvard's researchers had to believe that Kevetrin could work in conjugation with Pfizer's multikinase inhibitors. Kevetrin had successfully demonstrated itself as extremely safe and effective in stopping, reversing, and at times curing lung, prostate, colon and breast cancer in animal trials. Recently it was announced that in in vitro studies Kevetrin has proven effective against brain cancer. So it's implied in Beth Israel's wedding of Kevetrin to Pfizer's already FDA-approved multikinase inhibitors, that Beth Israel's scientists believe that Kevetrin is not only very safe and extremely effective in animal trials against the major types of cancer but that it is probably an entirely new therapeutic platform having considerable oncolytic application to many, if not all forms of cancer. Indeed if Kevetrin can activate the P53 and P21 in the human genome without any toxic effects or damage to healthy tissue or cells, its therapeutic index might be as broad as the misery, morbidity, and grief index of cancer itself.

If Kevetrin's soon-to-be FDA human trails eclipse in humans that which it has accomplished in mice, we could be looking at an oncolytic therapeutic that either as a solo or part of a drug cocktail may be able to approach the revenue that Lipitor once commanded.

Beth Israel and Pfizer will be able to watch Kevetrin through the dual lenses of both the Pfizer straddle clinicals, as well as the FDA stage 1 at Dana Farber. Remember, Pfizer is the 180 billion cap company with a 15 billion dollar checkbook. A buyout or joint venture twice the size of Celgene's $925 million payment for Avila is pocket change for Pfizer. During or very shortly after Kevetrin's safety profile is established, data may very well be generated that would indicate that Kevetrin's therapeutic platform could have much broader and more significant oncolytic ability than Avila's AVL-292, which is focused on hemoglobic cancers. If indeed that's the case, approximately 16 to 18 months from the initiation of FDA stage 1, Kevetrin might be shared with or owned by a large multinational pharmaceutical company. A point to consider is that the first CEO of Cellceutix was George Evans was former Chief Counsel at Pfizer.

Already in preclinical comparison of in vivo studies Kevetrin appears to apply to far many more types of cancer than Avila's, hemoglobic AVL 292. Thus if Celegene could pay an approximate billion for Avila, one might speculate that Cellceutix, would result in a multiplication of what Avila fetched. If Avila had been a public company with a hundred millions shares, trading at a $1.00 a share--when Celgene tendered their $925 million offer, where do you think Avila's shares would have soared to?

Should Cellceutix's Kevetrin and Pfizer multikinase inhibitors form a cocktail then it will create a blockbuster that could be the primary therapeutic for the approximately 4 to 5 billion dollar melanoma and renal cancer market.

That would just add several more types of cancer to a list which includes lung, prostate, breast, and colon cancer. These four together represent in G7 nations approximately a 25 billion dollar annual market (2015). If the Kevetrin/Pfizer multikinase inhibitor cocktail multiplies the short life expectancy (months) or perhaps carries melanoma and renal cancer patients to the milestones of three to five year survivorship, then Harvard's Beth Israel's hunch will pay out a yield of life improvement. However, Kevetrin's robust animal preclinicals indicate that Kevetrin might well be very therapeutic, not only for the aforementioned cancers but perhaps all forms of P53 related cancer. Thus far in preclinicals Kevetrin has proven to be without any side effects and has been very effective against every form of cancer that it has been used to fight. In FDA 1, although the focus will be proving safety, it is very possible that as the dosages of Kevetrin increase, the cancer patients will experience therapeutic benefits and tumor impact data might be generated that will indicate its putative oncolytic powers previously only demonstrated in animals.

Pfizer is revenue hungry, with a 15 billion dollar checkbook, 40 billion in liquid assets and a desire to make acquisitions that will replace the dramatic reduction in Lipitor sales and the revenue that has evaporated in the sale of its baby food division. Am I saying that Kevetrin could rival the revenue sensation of Lipitor, at peak a 13 billion dollar a year revenue drug? After the FDA stage 1 results are known, it's obvious that I believe that this is a possibility. In fact, if other disease applications are found within Kevetrin's broad and significant patent, my post FDA 1 speculation might be low. According to Fierce Biotech, Pfizer has a well-earned image and reputation of being a "Poster Child of Clinical Failure and Incompetence," however Pfizer is working with Harvard's Beth Israel to help shed that image. I believe that Fierce Biotech would do themselves a favor to follow the Pfizer multikinase inhibitor/Kevetrin development. Other pharmas have taken similar action to work with small biotechs with preclinical and early stage compounds. Many have enhanced their drug pipeline and shareholder value as a result.

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

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