The AstraZeneca-Pfizer deal is not dead yet, even though AstraZeneca’s declaration that it rejected Pfizer’s so-called final bid makes it appear that Pfizer’s attempt to take on the AstraZeneca pipeline, and a considerable tax benefit, is over.
The reason: final is not really final until May 26. UK rules allow Pfizer to raise its final bid if AstraZeneca recommends the existing bid, after which Pfizer can increase its offer.
The proposed deal has created a storm among AZ shareholders, with major owners AXA, Jupiter and Legal & General saying the British drugmaker should take the deal, while Bloomberg reports investor Neil Woodford says the company should stay independent. Bloomberg reports that Woodford, who used to run UK investment firm Invesco, says AZ’s long-term outlook is strong. Woodford told Bloomberg that CEO Pascal Soriot has transformed the company’s pipeline “from one of the poorest in the industry to arguably the best.”
Soriot laid out his case for independence earlier this month, noting that the company’s prospects could lead AstraZeneca to earn more than $45 billion in sales by 2023. Some speculated at the time that the plea was more of an ask for more money that it was an effort to stay single.
Analysts have said $45 billion seems a little optimistic. Forbes contributor John LaMattina noted Wednesday that Soriot expects 19 experimental drugs to move into Phase III by the end of 2015, but says that this would be a feat for any company. He notes that Phase II is when most drugs drop out, and that AZ’s Phase II-to-Phase-III transition rate is around 15%, lagging the industry’s overall survival rate of around 29%.
