I'm not sure whether Pfizer's
The company just licensed a drug that treats a few diseases I'd never heard of. Its maker? Auxilium Pharmaceuticals
Pfizer is paying $75 million up front to license the European and Asian rights for Auxilium's Xiaflex. The drug has already completed phase 3 trials for Dupuytren's contracture, a disease of the hand that causes fingers to contract. Xiaflex is also in a phase 2b trial for Peyronie's disease, a painful condition that causes the penis to curve during erections. Both problems are caused by the buildup of collagen -- thus the potential two-for-one deal when licensing Xiaflex. Pfizer is on the hook for another $410 million, should the drug get approved and meet marketing goals.
But really, Pfizer, is that the best you can do with your $26 billion war chest? $75 million purchases for Pfizer are kind of like Warren Buffett buying a Jake Peavy rookie card. It could be a good investment, but it's not going to change the net worth of the investor much.
Why not leave the random orphan-drug marketing to Genzyme and BioMarin
Pfizer can sit on the cash, if that's what management thinks is best, but don't pretend that these little deals will save the company. It'll take an awful lot of Xiaflexs to make up for Lipitor's demise.
Further frugal Foolishness:
Pfizer, JPMorgan Chase, and Bank of America are Motley Fool Income Investor selections. Pfizer is also an Inside Value pick. BioMarin is a Rule Breakers recommendation. Biogen Idec is a Stock Advisor selection. The Fool owns shares of Pfizer. Try any of our Foolish newsletter services free for 30 days.
Fool contributor Brian Orelli, Ph.D., loves his Padres and his Cubs, so a Peavy trade won't matter that much to him. He doesn't own shares of any company mentioned in this article. The Fool's disclosure policy is more of a lacrosse fan.