In January, Warner-Lambert (WL; Morris Plains, NJ) announced an agreement to acquire Agouron Pharmaceuticals (San Diego, CA) in a stock deal worth $2.1 billion. As a result, WL will gain Agouron's drug discovery technology; the top-selling HIV protease inhibitor, Viracept; and six compounds in development, including the matrix metalloproteinase inhibitor (MMPI) AG3340 for cancer, and the AIDS vaccine Remune.

"From the Agouron perspective, [the acquisition] makes some sense," says Richard van den Broek, analyst at Hambrecht & Quist (New York). "WL will bring additional strengths to developing the Agouron pipeline and now [Agouron] will be able to advance its products without the pressure of quarter-to-quarterperformance." And for WL, he says, "it's simply an accretive deal."

However, Charles Engelberg, analyst at AmeriCal Securities (San Francisco, CA), says, "Superficially the deal looks OK...but we think it's an extremely speculative pipeline." He points out that "there are no MMPIs approved for cancer, and it's very speculative whether that approach is ever going to work." And as for Remune, "it is sugar water, in our opinion." (WL declined to comment on both products.)

Moreover, initial enthusiasm for protease inhibitors is waning, and there's a whole new class of competitors coming out—such as Dupont's Sustiva—that will increasingly affect sales of such drugs as Viracept, Engelberg says. He suggests that any number of companies—Scios (Mountain View, CA), for example—might have been a better fit for WL, which has no presence in AIDS. "[WL] really wasn't the buyer that most people were speculating [for Agouron]," agrees van den Broek.

"When the Remune clinical trial results come out negative in March or April—as we know they will," says Engelberg, "and [WL] gets nowhere with the MMPI, hopefully they [WL] will be more careful next time."