Pfizer / Wyeth - The Opportunity Costs for R&D

Derek Lowe has a great post over at SeekingAlpha.com about the drag on productivity that this merger is having on both Companies' R&D Departments. Derek writes:

I’d imagine that things have slowed down a great deal. No one knows what the future will be like, what parts of the company will stay, and which people will be asked to stay with them. How do you make plans under those conditions? For many people, the project they’re working on is now very much a secondary consideration.

Even outside the personal level, there are a lot of paralyzing influences. The same uncertainties about individual jobs apply to development projects. Some of what Wyeth is working on surely overlaps with what Pfizer’s already doing. So which project goes forward? Not both of a matched set, that’s for sure. There are some projects at both companies that are dead in the water, but no one can be sure which ones, and no one will know for some time to come....all this has a ferocious price, when you measure it in opportunity costs. The people caught up in all this could be doing something much more productive with their time, for sure. This sort of thing doesn’t show up on the books. And the longer the process drags on, the worse it’ll be.

Derek is correct....not every cost will show up 'on the books'. And this merger could ultimately prove to be extremely expensive for Pfizer....both in terms of Real Costs and Opportunity Costs.

Pfizer - Wyeth - Bane for Small Biotechs???

The NY Times has an article today entitled "Wyeth Deal May Slow Pfizer Biotech Acquisitions".
The article states,

"Pfizer’s deal to buy a big pharmaceuticals rival, Wyeth, raises questions about how willing — or able — Pfizer will be to enter deals anytime soon with biotechnology companies, many of which are struggling to stay in business."

And, in the article, Oleg Nodelman, portfolio manager at the Biotechnology Value Fund is quoted as saying,

“There are probably 5,000 biotech companies out there that are waiting for a deal to save them."

However, Mr. Nodelman is not totally pessimistic regarding the future of the smaller biotechs.
The article closes by saying that fortunately -

"Big pharmaceutical companies are not the only ones who can buy companies or drugs. In some cases, mid-size biotech companies like Cephalon and Myriad Genetics are outracing larger companies to snap up some drugs.

That is why Mr. Nodelman, at the Biotechnology Value Fund, said he did not expect the Pfizer-Wyeth deal to have much of a braking effect on acquisitions of small companies or their drugs. “All it means is there is one less company that might do a deal with them.”

Geron's Embryonic Stem Cell Trial - Not exactly what the Media is touting

The FDA just approved the first human trial embryonic stem cell derived based treatment.
Geron Corp. has announced that the FDA approved its application to begin trials for an embryonic stem cell -derived treatment for spinal cord injuries.

The media is playing up this development as evidence of a 'Brave New World' with regards to Stem Cell research....that we are at the cusp of new research using Embryonic Stem Cells, and that the new Obama administration is shepherding in this new era in Research.
Forbes.com wrote:

The change has already begun. Just two days after his inauguration, President Barack Obama is set to clear the way for the first human testing of embryonic stem cells on people with spinal injuries, and biopharmaceutical firms like Geron are set to benefit.

Yet the facts say otherwise.

According to an L.A. Times article, even Dr. Thomas Okarma, Geron's CEO,...'the timing of the FDA's decision -- made late Wednesday but announced Friday by the company -- had nothing to do with the change of administrations in Washington....."We have no evidence that there was any political shadow over this process." '

Even more important according to Dr. David van Gend, National Director of Australians for Ethical Stem Cell Research, is the fact that Embryonic Stem Cells (ESC's) are not:

"....being given to patients at last. They are not. They never have been and never can be put into humans, because embryonic stem cells form tumors in animals. Only adult stem cells can be put into humans – and have been used now successfully in thousands of patients.”

Further reading shows that what Geron is actually doing is testing to see if their "hESC-derived oligodendrocyte progenitor cells that have demonstrated remyelinating and nerve growth stimulating properties leading to restoration of function in animal models of acute spinal cord injury", actually works in humans.
Again the distinction is important.....they are not injecting actual ESC's into people....the cells are actually derived from ESC's.

So while the research Geron is conducting is absolutely exciting and promising.....it is not exactly what the Media is touting....

Pfizer and Wyeth - Misery loves company?????

Eben Tessari writes "5 Reasons Pfizer Shouldn't Buy Wyeth" over at SeekingAlpha.com.
You can read his complete post here.

And what is Eben's only justification for the proposed merger? - "Misery loves company."
Not exactly a stellar reason to consummate a $60 Billion merger.

Pfizer - Wyeth Merger - Is it a bad idea?

With all the talk about the proposed merger between Pfizer and Wyeth....I took the time to re-read an article from Fortune Magazine that I had saved on my computer. It was written in August 2007. You can read the article here.
Although some of the details and facts discussed in the article are dated [the article is 18 months old].....I wonder how many of you would agree with the author's conclusions. John Simons' closed his article by writing:

Pfizer could have an investor revolt on its hands if it does decide to propose a Wyeth acquisition. In recent years, top management has sworn off its appetite for big deals, promising a new focus on targeted acquisitions and alliances with smaller (read: more innovative) drugmakers and biotechs. Last winter, incoming CEO Jeff Kindler promised Pfizer would radically change the way it does business. That departure from the old way included a round of difficult cost cutting and "right-sizing" at the company. So, Pfizer needs to continue it's austerity campaign, and "oh yeah", in the meantime, conjure up some novel medicines.

The question is.....is John's assessment still correct in 2009....or is it time for Pfizer to do a deal?
Will this deal make Pfizer's problems go away?
What are your thoughts?...............

Merck goes hunting - Other deals pending???

Merck has made good on its promise to make deal making a priority in 2009.
Last Friday, just 9 days into the New Year, Merck announced that the company had signed a diabetes and obesity drug deal with Galapagos worth up to $233 million. You can read the specifics about the deal here.

And with Pfizer's Jeff Kindler telling the press that Pfizer is willing to do a deal with a big rival....Who knows....2009 may be a very active year on the M&A front.

Missing Pharmalot

Ed Silverman who runs the blog Pharmalot just posted a surprising announcement today.
He is shutting down Pharmalot. You can read his post here.

I thoroughly enjoyed reading Pharmalot daily and I learned a tremendous amount from Ed.
Ed is a tremendous writer and has a Herculean work ethic. As he jokes he lives tethered to his laptop.

Ed....we are going to miss you in the blogosphere. Best of luck!!!