Speaking back in May on his company's Q1 2021 earnings call, Pfizer (PFE -0.43%) CEO Albert Bourla stated, "You should expect to see a lot of ... business development deals that will allow us to bring in-house a lot of potential medicines that could become [approved treatments] ... in the second part of the decade."  With pre-tax profit on its COVID-19 vaccine in the high 20% range and Bourla's company guiding for $78 billion to $80 billion in revenue for 2021 (with more than $33 billion of that coming from the vaccine), there's certainly money to be spent on acquisitions. Let's look at three potential candidates that could help Pfizer to further secure its future.

The budding oncology research machine

If Pfizer wants to fill its pipeline with precision-medicine oncology drugs for the next decade, perhaps it will consider Blueprint Medicines (BPMC -0.79%). This $5 billion biotech is the first and only company to have two internally discovered and developed medicines that received U.S. Food and Drug Administration (FDA) approval within a decade of its founding.

Five people standing around a desk, while two of them shake hands.

Image source: Getty Images.

Its first oncology drug, Gavreto, is a once-a-day oral medication for non-small cell lung cancer, as well as certain types of thyroid cancer with a mutation in a specific gene called RET. Altogether, these markets add up to about 6,000 patients annually in the U.S. 

At a cost of $231,000 per patient per year, that's a $1.3 billion addressable market for which Blueprint and partner Roche will split costs and profits 50-50 in the U.S. While Gavreto competes with Eli Lilly's Retevmo in this market, the Roche-Blueprint product currently has a 40% share of the RET-inhibitor space, despite being the second one to the party.

The precision-medicine company also has two candidates entering phase 1 studies for non-small cell lung cancer with mutations within a specific gene called EGFR. AstraZeneca's Tagrisso, which has a similar target, hauled in a whopping $4.3 billion-plus in FY 2020.

While there is some tough competition out there, Blueprint has shown it can quickly bring drugs to market. With plenty of financial support and a large seasoned sales force already in place, Pfizer could rapidly capitalize on a buyout of this $5 billion business. And we haven't even mentioned Blueprint's other approved drug, which is for a rare disease called mastocytosis and has an addressable market in the U.S. of at least $800 million.

The safe rare-disease tuck-in

When Aurinia Pharmaceuticals' (AUPH 5.61%) Lupkynis was approved in January, it became the first oral therapy approved for lupus nephritis that doesn't require monitoring of drug levels. Lupus nephritis is an autoimmune disorder that's especially harsh on the kidneys, with approximately 10% to 30% of patients experiencing kidney failure within 15 years, despite current therapies.

This disease affects about 80,000 to 100,000 people in the U.S., but fortunately, when combined with current standards of care, Aurinia's drug is more likely to improve kidney function. In fact, 40.8% of patients see improvements in renal function after 52 treatments with Lupkynis, versus 22.5% receiving standard-of-care treatment alone.

The autoimmune-focused biotech expects an average annualized net revenue per patient of approximately $65,000. With at least 65,000 potential patients in the U.S., that's a total addressable market of more than $4 billion.

Even better, this doesn't even get into the potential for Lupkynis to treat other autoimmune diseases. Pfizer already has multiple compounds aimed at various autoimmune conditions, and this $1.8 billion company seems like an obvious tuck-in acquisition for the pharma giant. It has an approved drug with a blockbuster addressable market, and that drug may have optionality for other autoimmune conditions as well (though it's not actively being studied in other diseases at the moment).

The next frontier in COVID treatment

With COVID-19 cases rising worldwide, there's a pressing need for an efficacious oral therapy that can be administered not only to hospitalized patients but also to those well enough to be given a prescription as outpatients. Pharma Atea Pharmaceuticals (AVIR -2.43%) reported interim phase 2 results at the end of June showing that its lead COVID-19 oral treatment, AT-527, could rapidly reduce the viral load in COVID-19 patients.

After two days of treatment, patients experienced an 80% greater viral-load reduction compared to placebo -- and this difference was maintained eight days after the start of treatment. Atea partnered with Roche in October 2020 on AT-527, and the drug is now in an ongoing worldwide phase 3 trial with results due in the second half of 2021. After its raging success with BioNTech on their coronavirus vaccine, Pfizer may be willing to double down on partnerships in the COVID-19 space -- especially with Bourla's company raising its 2021 sales forecast of its partnered COVID-19 vaccine to $33.5 billion for the year.

With Atea valued at just $2.1 billion yet having megablockbuster potential, there's a lot of upside for Pfizer. An Atea buyout also would provide a safety net should Pfizer's own oral combination therapy for COVID, which just entered phase 2/3 trials, fizzle out.

If I were Albert Bourla, which would I choose? On July 22, Pfizer announced a global collaboration with Arvinas, which has a breast cancer treatment in phase 2 trials. The deal cost Pfizer $650 million upfront, as well as a $350 million equity investment and up to $1.4 billion in milestone payments. Given this, the behemoth may not be looking for another oncology company right away. And despite impressive COVID-19 data from Atea, Pfizer has its own oral coronavirus treatment early in progress, though not quite as far along in clinical trials.

That leaves Aurinia, which I believe to be the safest buy on the list for pharmaceutical investors -- Pfizer included. With a market cap of less than $2 billion and a potential blockbuster that has possible optionality into other autoimmune diseases, Aurinia looks undervalued and could find itself being acquired sooner rather than later.