Pfizer has cash to burn—so it can buy this growing biotech

Rumors that Pfizer (PFE) is in “advanced negotiations” for an acquisition Global Blood Therapeutics (GBT) for about $5 billion sent GBT shares flying for a second day in a row on Friday.


Global Blood Therapeutics makes a sickle cell disease treatment called Oxbryta for patients age 4 and older. According to the Wall Street Journal, Pfizer is ready to finalize deal for Global Blood in the next days. However, other suitors are in the mix and the deal is not set in stone. Pfizer representatives did not immediately return a request for comment. A spokesman for GBT declined to comment.

Shares of GBT have soared this week of rumours, first reported Wednesday by Bloomberg. Shares jumped more than 41% on Thursday, breaking out of a long consolidation with a point of purchase at 40.79, acc

Afternoon is traded today’s stock marketshares jumped another 37.5% near 66. Pfizer stock fell 0.9% near 49.40.

GBT Stock: rare disease efforts

Global Blood Therapeutics was founded in 2011. It sells Oxbryta to treat sickle cell disease and has two other promising treatments in early-stage human testing. Recent efforts are also in sickle cell disease and vaso-occlusive crises, a complication of sickle cell anemia.

In the June quarter, GBT stock analysts expect Oxbryta to generate more than $64 million in sales. Global Blood Therapeutics is set to report second-quarter earnings on Monday.

The purchase of Global Blood will strengthen Pfizer’s efforts in rare diseases. Today, this portfolio mainly includes Vyndaqel. Vyndaqel treats a disorder in which abnormal protein accumulates of the heart. In the second quarter, Vyndaqel generated $552 million in sales. The entire rare disease business brought in $909 million in sales, up just 2%.

So is Vyndaqel likely to face competition in the near future. Alnylam Pharmaceuticals (ALNI) and Intellia Therapeutics (NTLA) are among them fishing for the treatment of the same disease. So there is pressure to add to that portfolio. Rare diseases accounted for just 3% of Pfizer’s total revenue in the June quarter.

Pfizer has cash to burn

Analysts have been rooting for Pfizer to become more acquisitive. Her covid vaccine and anti virus pill brought in huge money. Pfizer expects $54 billion in revenue this year between the two products alone — the fruits of which it can invest in acquisitions like GBT stock.

This year, Pfizer agreed to buy the migraine drug assets of Biohaven Pharmaceuticals (BHVN), invested $25 million in Akero Therapeutics (ACRO) and teamed up with Roivant Sciences to launch Proivant Therapeutics in autoimmune diseases.

But sickle cell disease is an attractive market. Researchers now understand the cause of the disease. Crispr Therapeutics (CRSP) and Vertex Pharmaceuticals (VRTX) are also working on a gene editing approach.

However, GBT shares were limited until this week. Stocks now have a Relative strength assessment of 98 out of the best possible 99. This puts their 12-month performance in the top 2% of all stocks in terms of share price performance, according to IBD Digital.

Follow Alison Gatlin on Twitter at @IBD_AGatlin.


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