Pfizer (NYSE:PFE) has a unique problem. The company's annual revenue haul was upped in a big way this year, thanks to its BioNTech-partnered COVID-19 vaccine. While explosive revenue growth is always a good thing, Pfizer is now tasked with finding a way to keep its top line headed in the right direction over the long haul. The issue at hand is that the drugmaker's COVID-19 vaccine sales have probably already peaked. Wall Street, in fact, expects Pfizer's top line to drop by a hefty 11% next year as a direct result of declining coronavirus vaccine sales.

What's more, the drugmaker will have to contend with the upcoming patent expiration for its Bristol Myers Squibb-partnered blood thinner Eliquis in the second half of the current decade. That's a big deal. Eliquis generated a noteworthy $1.35 billion in revenue in the third quarter alone. Pfizer has one of the better pipelines in the industry, but it doesn't sport any assets capable of offsetting rapidly falling sales for two mega-blockbuster products within a few short years of one another. 

The good news is that Pfizer's cash position should exceed $30 billion by year's end. The company thus has sufficient firepower to execute multiple mergers and acquisitions (M&A) to address this issue. As a matter of fact, the pharma titan has seemingly already told Wall Street that it plans on being active on the M&A front in the near future. During its recent third-quarter conference call, for example, Pfizer's chief business and innovation officer Aamir Malik had this to say about the company's business development strategy: 

We see business development, frankly, as a very important part of our strategy, and we plan to be very active in dealmaking. Specifically, we are gonna be interested in compelling later-stage assets that can contribute positively to the top-line growth in the back half of the decade.

And we're also gonna be interested in accessing medical breakthroughs that are in earlier stages of development. And we, frankly, see focusing in these areas as being much more value-creating than synergy-driven deals that require lots of resource-intensive integrations that can take a long time to complete. Obviously, we don't speak in absolutes, and we never say never. But right now, our focus will be, as I described, on compelling later-stage assets and earlier-stage medical breakthroughs in biopharma.  

A person putting two puzzle pieces together with sunlight in the background.

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Which biotechs might be on Pfizer's wishlist?

Biopharma acquisitions are notoriously hard to predict. But Pfizer does have a well-known interest in acquiring early-stage cancer assets, especially from companies with novel platforms. Which cutting-edge oncology companies make sense as a takeover target for the pharma giant? The following two names would dovetail nicely with the company's top-notch oncology portfolio.

  1. Adaptimmune Therapeutics (NASDAQ:ADAP) is a U.K. based anti-cancer cell therapy company. The biotech's main attraction as a potential takeover target is its unique lineup of genetically modified T-cell therapies for solid tumors. Cellular immunotherapy has fallen out of favor with investors of late due to a combination of slower-than-expected commercial ramp ups for the leaders in the space, as well as some high-profile clinical flops. As a result, Adaptimmune's market cap currently stands at a meager $853 million at the time of writing. Pfizer might consider this small-cap oncology company because its platform has the potential to become a best-in-class approach for a host of solid tumors. Moreover, it could probably be bought out for less than $3 billion. The clear-cut problem with this hypothetical deal is that Adaptimmune already has multiple big pharma partners, including GlaxoSmithKline and Roche. Any deal would, therefore, have to address these entanglements. 
  2. Affimed (NASDAQ:AFMD) is a German cancer immunotherapy company. The biotech's novel approach to cancer treatment centers around so-called "Innate Cell Engagers" that are designed to restore a patient's innate immune system function. Affimed's lead product candidate, AFM13, is presently in a potentially pivotal trial as a monotherapy for relapsed/refractory peripheral T-cell lymphoma. Later down the line, the German biotech also has trials underway to evaluate its unique anti-cancer platform in combination with natural killer cells and checkpoint inhibitor therapies. With a market cap of $840 million, Pfizer could probably add this intriguing immunotherapy company to its lineup for about $2 billion. 

Should investors buy these speculative buyout targets?

It is never a good idea to buy a biotech stock solely for its appeal as a takeover candidate. Adaptimmune and Affimed, though, both sport extremely attractive valuations at the moment. Moreover, each of these tiny biopharmas has the pieces in place to produce important new therapies in the fight against cancer. So while speculative in nature, aggressive investors might want to consider buying these two cancer stocks for their potential as both a buyout target and their stellar organic growth prospects.   

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.