When Pfizer (PFE 0.29%) included statistics in its recent earnings release showing its pipeline performance over the past five years, there was a not-so-subtle message. The blue-chip pharmaceutical company wanted to let investors know it had an impressive track record of drug development despite some recent high-publicity setbacks.

That said, the CEO's pledge of growth may force his hand into a big acquisition to make up for the company's disappointments. After a transformation that pins future success on developing innovative medicines in areas like oncology and immunology, it might just be the acquisition of a vaccine partner that helps him keep his word.

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1. The current portfolio doesn't address market opportunity

In October, Ibrance, the company's drug for a common type of breast cancer, failed to meet its goal of preventing the disease from recurring in high-risk, early-stage patients after surgery. It was the second such disappointment for the treatment as an adjuvant, an additional drug given to lower the risk of recurrence after a patient receives the primary treatment. Ibrance also failed to reach its endpoints in a similar study in May. 

The drug still dominates the existing market for certain advanced stage patients, but that could also shift due to the recent results. Eli Lilly's (LLY -1.29%) competing treatment Verzenio reduced recurrence by more than 25% in a clinical study of a similar early stage patient group that reported results in September. Not only will the early stage patients not receive Ibrance, Verzenio's success will reduce the number of patients who end up with metastatic breast cancer that might have later received the Pfizer treatment.

Although Ibrance brought in $5.4 billion in sales last year compared to only $913 million for Verzenio, the latter grew 57% from the previous year compared to just 8% for Ibrance. Pfizer may need a different approach if it wants to take advantage of an adjuvant opportunity that analysts have estimated at between $3 billion and $8 billion annually. That different approach could be messenger RNA (mRNA), the same technology used by partner BioNTech (BNTX 1.64%) to develop the first COVID-19 vaccine authorized in the U.S. BioNTech is already in a phase 2 trial adding its treatment to a Regeneron drug to prevent the recurrence of melanoma. That could translate well to the breast cancer market, opening the door for Pfizer to areas that have been assumed closed after Ibrance's failures.

2. The questionable future for JAK inhibitors

Although Xeljanz (Pfizer's drug for autoimmune disorders including rheumatoid arthritis) is already approved, the company's study to monitor the safety of the medication showed it was associated with an elevated risk of heart attacks and cancer. The drug is known as a JAK inhibitor, because it interferes with the ability of the Janus kinase family of enzymes to signal the immune system. In an overactive immune system, this causes inflammation and pain. Its safety was compared to an alternative group of drugs called TNF inhibitors, so-named because they limit the protein called tumor necrosis factor that causes inflammation. 

Xeljanz, along with others in its category, have been plagued by safety concerns for years. In 2019, regulators in the U.S. warned of the increased risk of blood clots and death for those taking a higher dose of the medication, and a competing JAK inhibitor from Gilead Sciences was delayed at least two years after a request for more safety data. Despite being the top selling JAK inhibitor, bringing in $2.4 billion in 2020, the fate of Xeljanz is uncertain. Some analysts believe the entire JAK class could be under scrutiny, which would include Pfizer's abrocitinib, a treatment for atopic dermatitis that management believes could hit $3 billion in annual sales. A decision on that drug is expected in April.

Once again, BioNTech could offer a solution. Although the research is only weeks old, BioNTech CEO Ugur Sahin led a team to design an mRNA vaccine for autoimmune disease symptoms in mice. The team was able to prevent all clinical signs of the multiple sclerosis-like symptoms in mice if administered before the onset of disease, as well as restore motor function to the mice when the vaccine was administered after disease onset. Pfizer's CEO has been clear that his focus is on assets that can be commercialized in the next seven years, but with uncertainty surrounding so much of the company's autoimmune portfolio, and the market for autoimmune treatments approaching $150 billion annually, the potential for an acquisition of BioNTech to redefine medicine has to be considered. If regulatory agencies restrict the Pfizer's existing paths to growth, management may make a more drastic pivot to a new approach.

3. They already have the perfect acquisition target

Before they became the first to develop an authorized vaccine for SARS-CoV-2, German drugmaker BioNTech and Pfizer joined forces to work on a flu vaccine using mRNA. Through the relationship, the Pfizer CEO has expressed the utmost respect for the BioNTech co-founder saying among other things, "He is a man of principles. I trust him 100 percent." If Bourla is considering a deal, that sentiment should make it a lot easier to fork over the tens of billions of dollars it would take.

Since his tenure as CEO began in 2019, the Pfizer CEO has completely remade the company in the hopes it can be an innovation machine, developing treatments that are either first to market, or the best available. BioNTech's gene-based disease fighting platform is the kind of innovation he hoped Pfizer would be delivering under his leadership, and the mRNA platform is not restricted to any particular area of disease. Accordingly, Bourla has hinted at collaborations with BioNTech beyond vaccines. Recent developments could intensify those discussions.

A true reinvention

Pfizer has pivoted toward a reliance on innovation after stagnant sales over the past five years, but recent setbacks in oncology and immunology risk undermining the strategy just as it is getting started. For a company trying to recapture the glory of its innovative past, Pfizer couldn't find a better acquisition candidate than its trusted partner with a revolutionary development platform that just helped it complete one of the most amazing scientific accomplishments in human history. 

An acquisition of BioNTech could renew investors' confidence in the prospect of new treatments in the largest market opportunities while reinforcing the impression of conservatism and capital stewardship. Despite an undoubtedly high price tag, the partnership has already shown the power of BioNTech's proprietary gene-based technology and Pfizer's global development, regulatory, and manufacturing expertise. After a series of setbacks, the answer to Pfizer's problems could be right in front of its eyes.