Allergan's pipeline doesn't get enough respect, if you ask Pfizer

Pfizer ($PFE), wending toward a record-setting $160 billion merger with Allergan ($AGN), said its soon-to-be subsidiary doesn't get the R&D credit it deserves among industry insiders.

Mikael Dolsten, Pfizer's president of worldwide R&D

The two companies went public with their merger intentions in November, but this week's J.P. Morgan Healthcare Conference gave each a chance to tout the potential of their market-shifting marriage. And chief among their talking points is that Allergan, which carries the rap of being research-averse, has an "underappreciated" pipeline of novel therapies in development.

"There has been a lot of attention on financial aspects of the deal, but there has been an underestimation of the Allergan pipeline," Pfizer R&D boss Mikael Dolsten told Reuters.

Allergan CEO Brent Saunders

Chief among Allergan's investigational drugs is rapastinel, a treatment for depression, followed by the gastrointestinal drug relamorelin, a uterine fibroid therapy called Esmya and a Phase II migraine treatment acquired from Merck ($MRK), Dolsten said. Each is worth more than $1 billion a year in eventual peak sales, according to Allergan.

The narrative around Pfizer and Allergan's planned merger has largely focused on finances: The deal gives Pfizer an Irish address and thus a lower tax bill, and Allergan's star product Botox is expected to benefit from its new parent's global sales network.

But just as notable is what buying Allergan will do for Pfizer's storied research operation, Dolsten said, talking up potentially "transformational" therapies in the company's pipeline.

Yet Allergan's R&D-light reputation didn't come to be by accident. Brent Saunders, the company's CEO, has long said that drug discovery is not a core competency of Big Pharma, preferring instead to swoop in and acquire other company's assets once they've proven clinical value.

Saunders, who once claimed early-stage R&D "has not returned its cost of capital," has walked back some of his more strident positions in recent months. In the rollout of Pfizer and Allergan's planned merger, he has pointed to the potential of the two companies' more than 100 assets in mid- to late-stage development, calling that "the jet fuel that will keep the growth moving forward."

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