By Josh Nathan-Kazis

Pfizer has thrown itself into the fiercest horse race in biopharma, saying late Monday it had bought the rights to an experimental cancer drug in a competitive and promising category. Analysts say it may have overpaid.

The big move in biotech for the past few years has been for global players in the industry to make deals with Chinese biopharma companies to license PD-1/VEGF bispecific antibodies, a new type of tumor-killing treatment. The race heated up last June, when the U.S.-based biotech Summit Therapeutics said that its PD-1/VEGF bispecific antibody, licensed from a Chinese company called Akeso, beat Merck's Keytruda in lung-cancer patients.

Now, everyone seems to be piling into the race. Merck announced a deal to license a Chinese PD-1/VEGF in November. BioNTech has one, too.

Pfizer is coming late, and it appears to be paying a steep price for its tardiness. The company said it would pay the Chinese biopharma company 3SBio $1.3 billion upfront for the rights to develop and sell a PD-1/VEGF bispecific antibody called SSGJ-707. It agreed to potential milestone payments of $4.8 billion as well as "tiered double-digit royalties" if the drug is approved.

That is a lot of money, particularly compared with what Merck paid six months ago. At the time, Merck said it would give its Chinese partner LaNova an upfront payment of $588 million, and potential milestone payments of up to $2.7 billion.

Analysts say that the 3SBio drug needs to be a smash hit for the new deal to make sense.

"We see the deal as a high-risk move dependent upon either the class far exceeding estimates or SSGJ-707 establishing itself as best in class," Cantor Fitzgerald analyst Carter Gould wrote late Monday. "Pfizer already had relatively limited margin for error, and we see this further limiting the company's optionality."

Pfizer shares were up 2.4% early Tuesday. The stock is down 11% this year and has fallen 60% since the start of 2022.

As a long-awaited series of patent expirations approach, investors remain uncertain about the company' strategy for continued growth. Pfizer is relying on deals like the $43 billion acquisition of the cancer biotech Seagen, disclosed in March 2023, to rebuild its product portfolio.

The new 32Bio deal appears to be an effort not to miss out on what may be the next big wave of cancer treatments. The problem is that the field is crowded, and that Summit's drug not only looks very good, but has a significant lead.

"We think Akeso has set a very high bar for the PD-1/VEGF competition, with its first-mover initiatives and clinical superiority over gold-standard Keytruda," Jefferies analyst Cui Cui wrote Tuesday, referring to Summit's Chinese partner.

Pfizer does have a partnership with Summit, announced in February, where the companies are testing Summit's PD-1/VEGF in combination with some Pfizer cancer drugs. But that deal wouldn't give Pfizer any rights to Summit's drug.

On an earnings call late last month, Pfizer executives said they had the capacity to spend between $10 billion and $15 billion on deals this year. The Monday night announcement commits a chunk of that to the PD-1/VEGF race. It is a hedge against Pfizer missing out on the next big thing, but it isn't a cheap one.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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May 20, 2025 10:46 ET (14:46 GMT)

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