Pfizer’s Bid For Wyeth Sends Ripples Through Trubion Pharmaceuticals, Seattle Biotechs

Pfizer rocked the business world yesterday with its $68 billion bid to acquire Madison, NJ-based Wyeth (NYSE: WYE), and the ripple effect was felt here in the Northwest. Nobody in town has a bigger stake in this deal than Seattle-based Trubion Pharmaceuticals (NASDAQ: TRBN).

Trubion’s lead drug candidate for rheumatoid arthritis, TRU-015, has been part of a collaboration with Wyeth since December 2005. That deal brought Trubion $40 million in upfront cash, shifted the drug’s development and commercialization bills onto Wyeth, and made Trubion eligible for as much as $800 million in milestone payments, plus royalties on sales if the drug made it all the way to become an FDA-approved product. Last June, Wyeth elected to extend the research part of the collaboration through Dec. 22, 2009.

Pfizer, the world’s largest drugmaker, didn’t say in its announcement of the proposed Wyeth takeover what will happen to partnerships like the one with Trubion. On the plus side, Pfizer did say the acquisition is supposed to make it “a top-tier player in biotherapeutics and vaccines,” through acquiring multi-billion dollar products like Wyeth’s pneumococcal conjugate vaccine for infants (Prevnar) and its stake in the world’s best-selling biotech drug, etanercept (Enbrel) for rheumatoid arthritis. Then again, Pfizer has also said it wants to cut costs—and eliminate 8,000 jobs—so it’s hard to say exactly what the new bosses will do with any experimental drugs if they complete the deal and send Wyeth’s executives to the exits. A definite answer isn’t coming right away—the deal isn’t supposed to close until the third or fourth quarter of this year.

“It is far too early to tell if or how it will impact Trubion. As of right now, our collaboration agreement with Wyeth is still in effect,” said Trubion spokesman Jim DeNike, in an e-mail. “While we cannot speculate on the ultimate disposition of our programs until after the transaction closes and after information is confirmed, we are encouraged by Pfizer’s stated strategic initiatives as outlined in the merger press release, many of which appear very synergistic with our business objectives.”

Still, I had to ask what the terms of Trubion’s deal say about what happens in the event of a Wyeth takeover. The terms of the partnership agreement call for the new owner of Wyeth to offer Trubion an exclusive opportunity to buy back its stake in the licensed products “on commercially reasonable terms.” If they can’t agree to terms, then the new owner could divest the license to another company, as long as it doesn’t end up offering better terms than it did to Trubion.

Pfizer doesn’t appear to have any drugs in its development pipeline for rheumatoid arthritis, according to a survey by the Pharmaceutical Research & Manufacturers Association. What’s more, Pfizer doesn’t appear to have any drug of its own in development designed to work like Trubion’s TRU-015, which blocks a target on B cells known as CD-20, DeNike says. Rheumatoid arthritis drugs are certainly the kind of market that can get the attention of a company as large as Pfizer, since the class of treatments generated an estimated $10 billion in sales in 2006, according to IMS Health.

Still, the uncertainty over what Pfizer will do this year has to be an unwelcome headache for Trubion. The company is already coming off a brutal year. Its stock has collapsed … Next Page »

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