Shares of Pfizer (PFE -0.61%) were rising 2.5% as of 11:18 a.m. ET on Thursday while the major market indexes were declining. The gain came after the big drugmaker announced plans to buy privately held ReViral for up to $525 million.
Investors appeared to view the acquisition of ReViral as a great fit for Pfizer. ReViral's pipeline features sisunatovir, an experimental oral therapy for treating respiratory syncytial virus (RSV) infection. ReViral is currently evaluating sisunatovir in two phase 2 studies targeting RSV in adults and infants.
Pfizer hopes to win regulatory approvals in the not-too-distant future for its RSV vaccine candidate PF-06928316. The experimental vaccine is in late-stage testing. Annaliesa Anderson, chief scientific officer for Pfizer's bacterial vaccines and hospital unit, said, "The proposed acquisition of ReViral's pipeline of therapeutic candidates is complementary to our efforts to advance the first vaccine candidate to help protect against this harmful disease."
It's likely that investors also applauded the structure of the deal. Pfizer isn't paying $525 million upfront to buy ReViral. Instead, the total amount includes payments that hinge on the successful completion of key development milestones. This reduces Pfizer's risk with the transaction. Pfizer believes that ReViral's programs have the potential to generate at least $1.5 billion in peak sales.
Pfizer must now secure regulatory approvals for the acquisition of ReViral. With the nice move for the big pharma stock today, there are clear expectations of a smooth path to closing the deal. It won't be surprising if Pfizer makes additional acquisitions this year with the company's cash stockpile surging due to its COVID-19 program revenue.