American pharmaceutical giant Pfizer Inc. (NYSE: PFE) is boosting its hematology drug pipeline with the acquisition of Global Blood Therapeutics (NASDAQ: GBT) in a $5.4 billion all-cash deal.
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How Does the Deal Benefit Pfizer?
Global Blood Therapeutics is a clinical-stage biopharmaceutical company with a focus on discovering drugs to treat rare blood disorders. Its very first drug Oxbryta® (voxelotor) tablets, was approved in 2019 for the treatment of sickle cell disease (SCD), which is a life-threatening inherited blood disorder affecting people mainly of African, Middle Eastern, and South Asian descent. Notably, Oxbryta contributed $195 million in sales in 2021 and $55.2 million in the first quarter of 2022.
Plus, GBT has other two promising drugs in its pipeline for the treatment of hemolysis and Vaso-occlusive crisis (VOC) which are under clinical trials. GBT expects that combined sales of all these three drugs could earn worldwide peak sales of more than $3 billion.
Considering the above points, adding GBT’s drugs to its portfolio would definitely boost Pfizer’s sales over the years. Plus, the growing concerns of dimming sales from COVID-19 vaccines will also be offset by an increase in sales from other drugs.
How Much is Pfizer Paying for GBT?
Pfizer and GBT have entered into a definitive agreement under which Pfizer will pay $68.50 per share in cash for all outstanding shares of Global Blood Therapeutics. This represents a premium of 7.3% to GBT’s closing price on Friday. The total consideration amounts to $5.4 billion net of debt and cash. The Board of Directors of both companies have unanimously approved the deal, while GBT stockholders’ approval is awaited, along with other customary conditions.
Commenting on the same, Pfizer Chairman and CEO Albert Bourla said, “The deep market knowledge and scientific and clinical capabilities we have built over three decades in rare hematology will enable us to accelerate innovation for the sickle cell disease community and bring these treatments to patients as quickly as possible.”
What is the Target Price for Pfizer?
The Wall Street community is cautiously optimistic about PFE stock with a Moderate Buy consensus rating based on five Buys and eight Holds. The average Pfizer price target of $57.42 implies 15.8% upside potential to current levels. Meanwhile, the stock has lost 10.4% so far this year.
Remarkably, financial bloggers are 93% bullish on PFE stock compared to a sector average of 69%. Pfizer also pays a quarterly cash common dividend of $0.40 per share, boasting an impressive dividend yield of 3.23%.
Final Thoughts
Pfizer is making the right moves by acquiring a slew of pharma companies with a strong pipeline of drugs. This should pacify the analysts’ concerns about slowing sales from Comirnaty and Paxlovid owing to the falling COVID-19 cases.
Recently, Pfizer reported solid second-quarter results on the heels of solid vaccine sales. Pfizer is well positioned for both short- and long-term growth trajectories, with COVID-19 vaccine sales still on the rise and newer drugs being added to its portfolio.
