On November 1, 2016 Pfizer Inc. (NYSE: PFE) reported financial results for third-quarter 2016 and narrowed certain 2016 financial guidance ranges (Press release, Pfizer, NOV 1, 2016, View Source [SID1234516137]). Schedule your 30 min Free 1stOncology Demo! On September 3, 2015, Pfizer acquired Hospira, Inc. (Hospira). Consequently, financial results for the third quarter and first nine months of 2016 include legacy Hospira global operations while financial results for the third quarter and first nine months of 2015 include only one month of legacy Hospira U.S. operations but no financial results from legacy Hospira international operations(3).
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On June 24, 2016, Pfizer acquired Anacor Pharmaceuticals, Inc. (Anacor). Therefore, financial results for the third quarter and first nine months of 2016 reflect approximately three months of legacy Anacor operations, which were immaterial.
On September 28, 2016, Pfizer acquired Medivation, Inc. (Medivation). Therefore, financial results for the third quarter and first nine months of 2016 reflect three business days of legacy Medivation operations, which were immaterial.
The Company manages its commercial operations through two distinct businesses: Pfizer Innovative Health (IH)(4) (formerly the Innovative Products business) and Pfizer Essential Health (EH)(4)(5) (formerly the Established Products business). Financial results for each of these businesses are presented in the Operating Segment Information section located at the hyperlink below.
Some amounts in this press release may not add due to rounding. All percentages have been calculated using unrounded amounts. References to operational variances(6) pertain to period-over-period growth rates that exclude the impact of foreign exchange as well as the negative currency impact related to Venezuela. Results for the third quarter and first nine months of 2016 and 2015 are summarized below.
OVERALL RESULTS
($ in millions, except
per share amounts)
Third-Quarter Nine Months
2016 2015 Change 2016 2015 Change
Revenues $ 13,045 $ 12,087 8 % $ 39,196 $ 34,804 13 %
Reported Net Income(1) 1,320 2,130 (38 %) 6,355 7,132 (11 %)
Reported Diluted EPS(1) 0.21 0.34 (37 %) 1.03 1.14 (10 %)
Adjusted Net Income(2) 3,726 3,728 — 11,782 10,449 13 %
Adjusted Diluted EPS(2) 0.61 0.60 2 % 1.91 1.67 15 %
REVENUES
($ in millions) Third-Quarter Nine Months
2016 2015 % Change 2016 2015 % Change
Total Oper. Total Oper.
Innovative Health $ 7,332 $ 6,752 9 % 10 % $ 21,471 $ 19,120 12 % 15 %
Essential Health $ 5,712 $ 5,335 7 % 10 % $ 17,725 $ 15,683 13 % 18 %
EH Standalone
(Excl. Legacy Hospira)
4,583 5,005 (8 %) (5 %) 14,259 15,353 (7 %) (2 %)
Legacy Hospira 1,129 330 * * 3,466 330 * *
Total Company $ 13,045 $ 12,087 8 % 10 % $ 39,196 $ 34,804 13 % 16 %
Pfizer Standalone
(Excl. Legacy Hospira)
$ 11,915 $ 11,757 1 % 3 % $ 35,730 $ 34,474 4 % 7 %
* Indicates calculation not meaningful.
2016 FINANCIAL GUIDANCE(7)
Pfizer’s updated 2016 financial guidance is presented below.
Revenues $52.0 to $53.0 billion
(previously $51.0 to $53.0 billion)
Adjusted Cost of Sales(2) as a Percentage of Revenues 21.5% to 22.0%
(previously 21.0% to 22.0%)
Adjusted SI&A Expenses(2) $14.2 to $14.7 billion
(previously $13.7 to $14.7 billion)
Adjusted R&D Expenses(2) $7.8 to $8.1 billion
(previously $7.4 to $7.8 billion)
Adjusted Other (Income)/Deductions(2) Approximately ($600 million) of income
(previously approx. ($500 million) of income)
Effective Tax Rate on Adjusted Income(2) Approximately 24.0%
Adjusted Diluted EPS(2) $2.38 to $2.43
(previously $2.38 to $2.48)
On November 1, 2016, Pfizer announced the decision to discontinue development of bococizumab. As a result, 2016 financial guidance for Adjusted R&D expenses(2) was negatively impacted by $0.3 billion and Adjusted Diluted EPS(2) was negatively impacted by $0.04. A reconciliation of these financial guidance components is presented below.
Adjusted R&D Expenses(2) Adjusted Diluted EPS(2)
Updated 2016 Financial Guidance Excluding the Anticipated Impact of the Decision to Discontinue Development of Bococizumab $7.5 to $7.8 billion $2.42 to $2.47
Anticipated Impact of the Decision to Discontinue Development of Bococizumab — Midpoint of ranges impacted by: $0.3 billion ($0.04)
2016 Financial Guidance Provided on November 1, 2016 $7.8 to $8.1 billion $2.38 to $2.43
EXECUTIVE COMMENTARY
Ian Read, Chairman and Chief Executive Officer, stated, "Our business continues to perform well as demonstrated by the quarter’s financial results. Our Innovative Health business executed strongly behind the latest product launches, and our two recent acquisitions — Medivation and Anacor — are providing new near-term opportunities to potentially drive incremental growth for the business as its product pipeline continues to mature. We see this business as highly focused on those therapeutic areas where it is best positioned to deliver value to patients.
"Within the Essential Health business we continued to refine the portfolio with the announced acquisition of the small molecule anti-infectives franchise from AstraZeneca and the announced sale of the Hospira infusion systems portfolio to ICU Medical. In addition, later this month we will begin shipping Inflectra, a biosimilar to Remicade(8) that will be the first biosimilar monoclonal antibody to be available in the U.S. We remain confident that we will be well-positioned in the emerging biosimilars market with our broad pipeline. With continued strength in emerging markets, the sterile injectables business and the biosimilars portfolio, we anticipate the Essential Health business will be able to transition to a modest revenue growth business on an overall portfolio basis.
"By maintaining our overall high level of financial flexibility and discipline, we are in a strong position to support the strategic initiatives for each business and will remain opportunistic to business development activity in addition to continuing to actively manage our cost structure," Mr. Read concluded.
Frank D’Amelio, Chief Financial Officer, stated, "Overall, I am pleased with our third-quarter 2016 financial results and with our ability to continue delivering shareholder value through prudent capital allocation. We grew revenues by 3% operationally, excluding the impact of foreign exchange and legacy Hospira operations. We also continued to deliver significant value directly to shareholders by returning $10.5 billion to shareholders through dividends and share repurchases in the first nine months of 2016, including the completion of a $5 billion accelerated share repurchase agreement in June 2016. Additionally, we announced and completed the acquisition of Medivation in the third quarter of 2016.
"We raised the midpoint of the range for our 2016 Revenue guidance primarily to reflect our strong performance to date and the inclusion of legacy Medivation operations in fourth-quarter 2016. The midpoint of our range for our 2016 Adjusted Diluted EPS(2) guidance was negatively impacted solely due to our decision to discontinue development of bococizumab. Excluding this impact, the midpoint of our range for our 2016 Adjusted Diluted EPS(2) guidance would have increased by $0.02," Mr. D’Amelio concluded.
QUARTERLY FINANCIAL HIGHLIGHTS (Third-Quarter 2016 vs. Third-Quarter 2015)
Third-quarter 2016 revenues totaled $13.0 billion, an increase of $957 million, or 8% compared to the prior-year quarter, reflecting operational growth of $1.2 billion, or 10%, partially offset by the unfavorable impact of foreign exchange of $224 million, or 2%. Excluding the third-quarter 2015 and 2016 contributions from legacy Hospira operations and foreign exchange, Pfizer-standalone revenues increased by $381 million operationally, or 3%.
Innovative Health Highlights
IH delivered strong revenue growth again this quarter, up 10% operationally, driven by continued growth from key brands including Ibrance, primarily in the U.S., Eliquis globally as well as Xeljanz, Lyrica and Chantix/Champix, all primarily in the U.S. Compared to the year-ago quarter, Ibrance revenue more than doubled while global operational revenue growth for Eliquis and Xeljanz was 92% and 86%, respectively.
This strong third-quarter 2016 operational performance was achieved despite the loss of Rebif alliance revenue compared to the prior-year quarter due to the year-end 2015 expiry of the collaboration agreement to co-promote Rebif in the U.S. as well as lower revenues for Enbrel in most developed Europe markets, primarily due to biosimilar competition.
Global Prevnar/Prevenar 13 revenues were down 2% operationally. In the U.S., Prevnar 13 revenues decreased 3% driven by an expected decline in revenues for the Adult indication due to a high initial capture rate of the eligible population following its successful fourth-quarter 2014 launch, which resulted in a smaller remaining "catch up" opportunity compared to the prior-year quarter, partially offset by the impact of favorable timing of government purchases for the pediatric indication. Internationally, Prevenar 13 revenues grew 1% operationally driven by a modest increase in uptake for the Adult indication.
Essential Health Highlights
EH revenues increased 10% operationally, primarily due to the inclusion of legacy Hospira operations, and to a lesser extent, the performance of the EH Standalone Sterile Injectables(9) portfolio, partially offset by the loss of exclusivity and associated generic competition for certain Peri-LOE products(9), primarily Lyrica and Zyvox, both primarily in most developed Europe markets.
Revenues excluding the contribution from the legacy Hospira portfolio (EH Standalone) declined 5% operationally, reflecting a 15% operational decline from the Peri-LOE Products(9) portfolio and a 4% operational decline from the EH Standalone Legacy Established Products(9) portfolio, partially offset by 7% operational growth from the EH Standalone Sterile Injectable Pharmaceuticals(9) portfolio.
EH revenues in emerging markets increased 9% operationally, primarily driven by the inclusion of legacy Hospira operations as well as 20% operational growth from the EH Standalone Sterile Injectable Pharmaceuticals(9) portfolio and 3% operational growth from the EH Standalone Legacy Established Products(9) portfolio.
GAAP Reported(1) Income Statement Highlights
SELECTED TOTAL COMPANY REPORTED COSTS AND EXPENSES(1)
($ in millions)
(Favorable)/Unfavorable
Third-Quarter Nine Months
2016 2015 % Change 2016 2015 % Change
Total Oper. Total Oper.
Cost of Sales(1) $ 3,085 $ 2,219 39 % 30 % $ 9,111 $ 6,238 46 % 40 %
Percent of Revenues 23.6 % 18.4 % N/A N/A 23.2 % 17.9 % N/A N/A
SI&A Expenses(1) 3,559 3,270 9 % 11 % 10,414 9,761 7 % 10 %
R&D Expenses(1) 1,881 1,722 9 % 10 % 5,360 5,342 — 1 %
Total $ 8,525 $ 7,211 18 % 17 % $ 24,885 $ 21,340 17 % 16 %
Other (Income)/Deductions––net(1) $ 1,417 $ 661 * * $ 2,815 $ 670 * *
Effective Tax Rate on Reported Income(1) 17.7 % 21.0 % 15.8 % 23.4 %
* Indicates calculation not meaningful.
The increase in third-quarter 2016 Other deductions––net(1) was primarily driven by an impairment charge as a result of the pending Hospira Infusion Systems transaction.
The diluted weighted-average shares outstanding declined by 105 million shares compared to the prior-year quarter due to Pfizer’s share repurchase program, primarily reflecting the impact of a $5 billion accelerated share repurchase agreement executed in March 2016 and completed in June 2016.
Adjusted(2) Income Statement Highlights
SELECTED TOTAL COMPANY ADJUSTED COSTS AND EXPENSES(2)
($ in millions)
(Favorable)/Unfavorable
Third-Quarter Nine Months
2016 2015 % Change 2016 2015 % Change
Total Oper. Total Oper.
Adjusted Cost of Sales(2) $ 2,957 $ 2,108 40 % 31 % $ 8,584 $ 6,037 42 % 36 %
Percent of Revenues 22.7 % 17.4 % N/A N/A 21.9 % 17.3 % N/A N/A
Adjusted SI&A Expenses(2) 3,531 3,276 8 % 10 % 10,342 9,726 6 % 9 %
Adjusted R&D Expenses(2) 1,873 1,725 9 % 9 % 5,336 5,334
—
—
Total $ 8,361 $ 7,109 18 % 16 % $ 24,262 $ 21,098 15 % 15 %
Adjusted Other (Income)/Deductions—net(2)
($168 ) ($90 ) 86 % 61 % ($547 ) ($410 ) 33 % 56 %
Effective Tax Rate on Adjusted Income(2) 22.7 % 25.8 % 23.3 % 25.3 %
A full reconciliation of Reported(1) to Adjusted(2) financial measures and associated footnotes can be found starting on page 20 of the press release located at the hyperlink below.
RECENT NOTABLE DEVELOPMENTS (SINCE AUGUST 2, 2016)
Product Developments
Chantix/Champix (varenicline) — In September 2016, the U.S. Food and Drug Administration’s (FDA) Psychopharmacologic Drugs Advisory Committee and Drug Safety Risk Management Advisory Committee reviewed data from EAGLES (Evaluating Adverse Events in a Global Smoking Cessation Study) evaluating the neuropsychiatric safety of Chantix. The Committees recommended by a majority vote to remove the boxed warning regarding serious neuropsychiatric adverse events from the Chantix labeling. The role of the Advisory Committees is to provide recommendations to the FDA; however, the FDA makes the final labeling decisions. Earlier this year, Pfizer submitted to the FDA a supplemental New Drug Application (sNDA) requesting updates to the Chantix labeling based on the safety and efficacy outcomes of EAGLES. In addition to requesting removal of the boxed warning, Pfizer proposed retaining the Warnings and Precautions section in the labeling regarding serious neuropsychiatric events occurring in patients attempting to quit smoking and updating it with EAGLES data. Pfizer believes that such a warning would sufficiently inform prescribers of the possibility that these types of events may occur.
Ibrance (palbociclib) — Pfizer announced in September 2016 that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has adopted a positive opinion recommending that Ibrance be granted marketing authorization in the European Union (EU) for the treatment of women with hormone receptor-positive, human epidermal growth factor receptor 2-negative locally advanced or metastatic breast cancer. The CHMP’s positive opinion is for Ibrance to be used in combination with an aromatase inhibitor, as well as in combination with fulvestrant in women who have received prior endocrine therapy. The CHMP’s opinion will now be reviewed by the European Commission (EC).
Inflectra (infliximab-dyyb) — Pfizer announced in October 2016 that it will begin shipment of Inflectra, a biosimilar of Remicade(8) (infliximab) to wholesalers in the U.S. in late November 2016. Inflectra will be introduced at a 15% discount to the current wholesaler acquisition cost (WAC) of Remicade(8), its reference product. WAC is not inclusive of discounts to payers, providers, distributors and other purchasing organizations. Pfizer holds exclusive commercialization rights to Celltrion’s Inflectra in the U.S., and has already successfully introduced Inflectra in other markets across the globe.
Inlyta (axitinib) — At the annual meeting of the European Society for Medical Oncology (ESMO 2016) in October 2016, Pfizer announced data from two ongoing, investigational Phase 1b studies of Inlyta combined with a checkpoint inhibitor:
In one study, Inlyta was combined with pembrolizumab, a PD-1 inhibitor known as Keytruda(10) and marketed by Merck, known as MSD outside the United States and Canada (Merck/MSD), in treatment-naïve patients with advanced renal cell carcinoma (RCC).
The study was designed to establish dosing and evaluate the safety and anti-tumor activity of Inlyta when combined with pembrolizumab in first-line treatment of advanced RCC. Early indicators from the study point to strong response rates for this combination, with 37 patients (71.2%, confidence internal 56.9, 82.9) achieving objective responses (three complete responses and 34 partial responses); 10 patients had stable disease and 5 patients had disease progression.
Preliminary results from a similar, separate study (JAVELIN Renal 100) combining Inlyta with avelumab, an investigational, fully human anti-PD-L1 IgG1 monoclonal antibody that is being co-developed by Merck KGaA, Darmstadt, Germany (Merck KGaA) and Pfizer, were also presented and suggested evidence of anti-tumor activity for this combination. In this study, five out of six patients treated so far had confirmed partial responses (objective response rate 83.3%, 95% confidence interval: 35.9, 99.6) and one patient with tumor shrinkage not meeting partial response criteria had stable disease.
Based on these Phase 1 results, two independent global Phase 3 trials evaluating these combinations — Inlyta plus pembrolizumab and Inlyta plus avelumab — each compared with Sutent (sunitinib) in first-line advanced RCC are now enrolling patients.
Sutent (sunitinib malate) — At ESMO (Free ESMO Whitepaper) 2016, Pfizer presented results from the Phase 3 S-TRAC clinical trial (Sunitinib Trial as Adjuvant Treatment of Renal Cancer) investigating Sutent as an adjuvant therapy. The trial showed Sutent extended disease-free survival by more than one year versus placebo in patients who were at high risk for recurrence after surgical resection of RCC. The results were also published online by The New England Journal of Medicine. Based on the results of S-TRAC, Pfizer is in discussions with global regulatory authorities to determine potential next steps.
Trumenba (rLP2086, Meningococcal Serogroup B Bivalent Recombinant Lipoprotein vaccine) — In October 2016, Pfizer announced that the U.S. Centers for Disease Control and Prevention’s (CDC) Advisory Committee on Immunization Practices (ACIP) voted to recommend the following for Trumenba:
For persons at increased risk for meningococcal disease and for use during serogroup B outbreaks, 3 doses of Trumenba should be administered at 0, 1-2, and 6 months.
When given to healthy adolescents who are not at increased risk for meningococcal disease, 2 doses of Trumenba should be administered at 0 and 6 months. If the second dose is given at an interval of less than 6 months, a third dose should be given at least 6 months after the first dose.
The ACIP recommendation will be forwarded to the director of the CDC and the U.S. Department of Health and Human Services for review and approval. Once approved, the recommendations are published in the Morbidity and Mortality Weekly Report (MMWR). In 2015, the CDC’s ACIP recommended serogroup B meningococcal (MenB) vaccination for certain persons aged 10 years and older at increased risk for meningococcal disease. They also recommended that a MenB vaccine series may be administered to adolescents and young adults 16 through 23 years of age (preferred age 16 through 18) to provide short-term protection against most strains of MenB disease. In October 2014, Trumenba was granted Accelerated Approval by the FDA for active immunization to prevent invasive disease caused by Neisseria meningitidis serogroup B in individuals 10 through 25 years of age.
Xalkori (crizotinib) — In August 2016, Pfizer announced that the EC has approved Xalkori for the treatment of adults with ROS1-positive advanced non-small cell lung cancer (NSCLC). In the EU, Xalkori is also indicated for treatment of adults with anaplastic lymphoma kinase (ALK)-positive advanced NSCLC. In March 2016, Xalkori was approved by the FDA for patients with metastatic NSCLC whose tumors are ROS1-positive.
Xtandi (enzalutamide) — In October 2016, Pfizer and Astellas Pharma Inc. announced that the FDA approved a sNDA to update the U.S. product labeling for Xtandi capsules to include new clinical data versus bicalutamide from the TERRAIN study. The data demonstrate improvement in radiographic progression-free survival (rPFS) in patients with metastatic castration-resistant prostate cancer (CRPC) who were treated with Xtandi compared to patients who were treated with bicalutamide. The TERRAIN study evaluated men with metastatic CRPC and the results from this study were published in The Lancet Oncology. The updated label includes data that enzalutamide reduces the risk of radiographic progression or death by 40% compared with bicalutamide, showing a median rPFS of 19.5 months for the enzalutamide group versus a median of 13.4 months for the bicalutamide group (hazard ratio = 0.60 [0.43, 0.83]; 95% confidence interval) based on an analysis recommended by the FDA. The safety profile of enzalutamide was consistent with results of earlier enzalutamide trials.
Pipeline Developments
A comprehensive update of Pfizer’s development pipeline was published today and is now available at www.pfizer.com/pipeline. It includes an overview of Pfizer’s research and a list of compounds in development with targeted indication and phase of development, as well as mechanism of action for candidates from Phase 2 through registration.
Avelumab (PF-06834635, MSB0010718C) — In October 2016, Merck KGaA and Pfizer announced that the EMA has validated for review Merck KGaA’s Marketing Authorization Application (MAA) for avelumab, for the proposed indication of metastatic Merkel cell carcinoma (MCC), a rare and aggressive skin cancer, which impacts approximately 2,500 Europeans a year. If approved, avelumab could be the first approved treatment indicated for metastatic MCC in the EU. The avelumab metastatic MCC MAA submission is supported by data from JAVELIN Merkel 200, a multicenter, single-arm, open-label, Phase 2 study of 88 patients with metastatic
MCC whose disease had progressed after at least one chemotherapy treatment.
Bococizumab (PF-04950615, RN316) — Pfizer announced in November 2016 the discontinuation of the global clinical development program for bococizumab, its investigational Proprotein Convertase Subtilisin Kexin type 9 inhibitor (PCSK9i). The totality of clinical information now available for bococizumab, taken together with the evolving treatment and market landscape for lipid-lowering agents, indicates that bococizumab is not likely to provide value to patients, physicians, or shareholders. As a result, Pfizer has decided to discontinue the development program, including the two ongoing cardiovascular outcome studies.
Ertugliflozin (PF-04971729) — Pfizer and Merck/MSD announced in September 2016 that a Phase 3 study (VERTIS SITA2) of ertugliflozin, an investigational oral SGLT2 inhibitor for the treatment of patients with type 2 diabetes, met its primary endpoint. Both 5 mg and 15 mg daily doses of ertugliflozin showed significantly greater reductions in A1C (an average measure of blood glucose over the past two to three months) of 0.69% and 0.76%, respectively, compared with placebo (p<0.001, for both comparisons), when added to patients on a background of sitagliptin (100 mg/day) and stable metformin (≥1500 mg/day). These study results were presented for the first time during the 52nd Annual Meeting of the European Association for the Study of Diabetes (EASD). Merck/MSD and Pfizer plan to submit New Drug Applications to the FDA for ertugliflozin and two fixed-dose combinations (ertugliflozin plus Januvia(11) (sitagliptin) and ertugliflozin plus metformin) by the end of 2016, with additional regulatory submissions outside of the U.S. to follow in 2017.
PF-04518600 — At ESMO (Free ESMO Whitepaper) 2016, Pfizer presented the latest safety, anti-tumor activity and biomarker data from a first-in-human single-agent study of investigational immunotherapy PF-04518600, an OX40 agonist, in a variety of advanced cancers. Preliminary results evaluating 25 patients suggest that PF-04518600 is tolerated up to 3 mg/kg and showed early anti-tumor activity.
PF-06438179 (infliximab-Pfizer) — Pfizer announced in September 2016 that the confirmatory study (REFLECTIONS B537-02) evaluating the efficacy, safety, and immunogenicity of PF-06438179 (infliximab-Pfizer) compared to Remicade(8) (infliximab) met its primary endpoint. The trial demonstrated equivalent efficacy of the proposed biosimilar PF-06438179 to the originator product as measured by the American College of Rheumatology 20 (ACR20) response at Week 14. PF-06438179 is being developed as a potential biosimilar to Remicade(8). In February 2016, Sandoz acquired the rights from Pfizer for the development, commercialization and manufacture of PF-06438179 in the 28 countries that form the European Economic Area (EEA). Under the terms of the agreement, Pfizer retains commercialization and manufacturing rights to PF-06438179 in countries outside the EEA.
Corporate Developments
In October 2016, ICU Medical Inc. (ICU Medical) and Pfizer announced that they entered into a definitive agreement under which ICU Medical will acquire all of Pfizer’s global infusion therapy net assets, Hospira Infusion Systems (HIS), for approximately $1 billion in cash and ICU Medical stock. HIS includes IV pumps, solutions and devices. Under the terms of the agreement, Pfizer will receive approximately $400 million in newly issued shares of ICU Medical common stock and $600 million in cash from ICU Medical, subject to customary adjustments for net working capital. Upon completion of the transaction, which the companies expect to occur in the first quarter of 2017 subject to customary closing conditions including required regulatory approvals, Pfizer will own approximately 16.6% of ICU Medical. Pfizer has also agreed to certain restrictions on transfer of its shares for at least 18 months.
In September 2016, Pfizer announced the completion of its acquisition of Medivation for approximately $14.3 billion in cash ($13.9 billion, net of cash acquired). Pfizer continues to expect the transaction to be immediately accretive to Adjusted Diluted EPS(2) by approximately $0.05 in the first full year following the close, with additional accretion and growth anticipated thereafter(12).
Medivation is now a wholly-owned subsidiary of Pfizer.
In September 2016, Pfizer announced that, after an extensive evaluation, the company’s Board of Directors and Executive Leadership Team determined that Pfizer is best positioned to maximize future shareholder value creation in its current structure and will not pursue splitting Pfizer Innovative Health and Pfizer Essential Health into two, separate publicly-traded companies at this time. Pfizer will move forward with a focus on its strategic priorities to grow and increase operational efficiency to be more competitive.
In September 2016, Pfizer entered into an exclusive option and license agreement with OncoImmune, Inc. (OncoImmune) for ONC-392, a novel, potentially differentiated preclinical anti-CTLA4 monoclonal antibody in a deal worth up to $250 million in upfront and potential milestone payments. Under the terms of the agreement, Pfizer plans to evaluate ONC-392 up until a certain agreed-upon time to determine whether it will exercise its option to exclusively license ONC-392 as well as any other OncoImmune anti-
CTLA4 antibodies. If Pfizer exercises its option under the agreement, Pfizer would be responsible for all development and potential commercialization of the program, and OncoImmune would be eligible to receive potential developmental and commercial milestone payments as well as royalties, tiered from mid-single up to low-double digits, on sales of any potential resulting products.
Pfizer announced in August 2016 that it entered into an agreement with AstraZeneca to acquire the development and commercialization rights to its small molecule anti-infectives business, primarily outside the U.S. The agreement includes the commercialization and development rights to the newly approved EU drug ZaviceftaTM (ceftazidime-avibactam), the marketed agents MerremTM/MeronemTM (meropenem) and ZinforoTM (ceftaroline fosamil), and the clinical development assets aztreonam-avibactam (ATM-AVI) and CXL (ceftaroline fosamil-AVI). Under the terms of the agreement, Pfizer will make an upfront payment of $550 million to AstraZeneca upon the close of the transaction and a deferred payment of $175 million in January 2019. In addition, AstraZeneca is eligible to receive up to $250 million in milestone payments, up to $600 million in sales-related payments, as well as tiered royalties on sales of ZaviceftaTM and ATM-AVI in certain markets. The transaction is expected to close in the fourth quarter of 2016, subject to customary closing conditions, including antitrust clearance in certain jurisdictions.
In August 2016, Pfizer acquired all the remaining equity in Bamboo Therapeutics, Inc. (Bamboo), a privately held biotechnology company, focused on developing gene therapies for the potential treatment of patients with certain rare diseases relating to neuromuscular conditions and those affecting the central nervous system, for $150 million, plus potential milestone payments of up to $495 million contingent upon the progression of key assets through development, regulatory approval and commercialization. Pfizer previously purchased a minority stake in Bamboo in the first quarter of 2016 for a payment of approximately $43 million. This acquisition provides Pfizer with several clinical and pre-clinical assets that complement its rare disease portfolio, an advanced recombinant Adeno-Associated Virus vector design and production technology, and a fully functional Phase 1/2 gene therapy manufacturing facility. Bamboo is now a wholly-owned subsidiary of Pfizer.