Ebb & Flow

Encysive (NASDAQ:ENCY) has never disclosed exactly what the FDA doesn't like about the company's Phase III data on Thelin sitaxsentan, which has received three FDA approvable letters for pulmonary arterial hypertension (PAH) despite already being on the market in Europe, Canada and Australia. But Pfizer (NYSE:PFE) obviously thinks it can fix the problem with another trial, which would make it the only company with two PAH products that work via different mechanisms.

The pharma is acquiring Encysive for only $195 million, or $2.35 per share, a 118% premium to the stock's $1.08 close on Tuesday, before the deal was announced.

Pfizer's PAH product is Revatio sildenafil, the phosphodiesterase-5 (PDE-5) inhibitor also marketed as Viagra to treat erectile dysfunction (ED).

Thelin is a small molecule endothelin A receptor antagonist similar to two marketed PAH products: Letairis ambrisentan from Gilead (NASDAQ: GILD) and Tracleer bosentan from Actelion (SWX:ATLN).

Letairis was approved in June 2007 and Tracleer had more than $1 billion in sales last year. Letairis targets the endothelin A receptor, while Tracleer hits both A and B.

In December 2007, Encysive said it expected $40-$50 million in 2008 sales of Thelin. It also said it expected $10.5-$11.5 million in 2007 sales. At Sept. 30, the company had $54 million in cash with a 3Q operating loss of $17 million.

In the most recent approvable letter in July 2007, FDA said Encysive had not demonstrated substantial evidence of effectiveness needed to approve Thelin and suggested ENCY conduct an additional study to demonstrate its effectiveness in exercise capacity as measured by change in six-minute walk distance.

Pfizer said it plans to conduct a

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