Dive Brief:

• Pfizer is teaming up with Germany's BioNTech to create a new influenza vaccine based on messenger RNA technology in a collaboration worth up to $425 million.
• The companies will jointly contribute to R&D efforts until the vaccines make it through first-in-human testing, at which point Pfizer will take full control.
• Per the terms of the deal, BioNTech will get $120 million in upfront, equity and near-term research payments and could receive an additional $305 million in various milestone payments. The biotech is also eligible for up to double-digit tiered royalty payments on worldwide sales of any vaccine that reaches the market.

Dive Insight:

Though not the most lucrative area of drug development, vaccines can offer a steady stream of revenue for companies able to commercialize them.

Take Pfizer. Over the last few years, the big pharma has reported around $6 billion in annual revenue from its vaccine portfolio — and reaped especially high returns on its pneumococcus product Prevnar 13. And with its latest deal, Pfizer is taking aim at the flu.

It's a competitive area of vaccine development, dominated by Sanofi and Sequiris, an influenza vaccine business that Australian manufacturer CSL acquired from Novartis in mid-2015. Other heavyweights are trying to gain a stronger foothold too, including Roche. Last month, the Swiss pharma giant and owner of the widely used Tamiflu brand touted Phase 3 results that showed its experimental flu drug improved symptoms of the illness faster than placebo in certain high-risk patients.

Unlike many of its peers, Pfizer is looking to tackle the flu via mRNA. 

The idea there is that "mRNA vaccines offer a novel approach to code for any protein or multiple proteins, and the potential to manufacture higher potency flu vaccines more rapidly and at a lower cost than contemporary flu vaccines," Kathrin Jansen, Pfizer's head of vaccine research and development, said in an Aug. 16 statement.

Pfizer's investments aren't just in flu either. It's working on a next-generation pneumococcal vaccine as well as a Phase 3 vaccine for clostridium difficile (C. diff) infection that will last more than three years and enroll 16,000 participants.

"This is a significant disease burden," Pfizer CEO Ian Read said of C. diff during the company's second quarter earnings call. "We need to invest. We need to make sure we get to the events and expand the cohorts. So we're putting a lot of money into vaccine trials as well."

As for BioNTech, the smaller biotech can beef up its R&D stature with a large, well-financed partner.

"A significant presence in infectious disease supports our goal of building a global immunotherapy company that provides more effective and precise immune-mediated approaches for the prevention and treatment of serious illnesses, such as the prevention of flu and the treatment of cancer," BioNTech CEO Ugur Sahin said in a statement.