UPDATE 1-Pfizer says to buy Encysive and Thelin lung drug

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By Ransdell Pierson

NEW YORK, Feb 20 (Reuters) - Pfizer Inc (PFE.N: Quote, Profile, Research) on Wednesday said it has agreed to pay about $195 million to acquire Encysive Pharmaceuticals Inc (ENCY.O: Quote, Profile, Research) and its Thelin lung-disorder medicine that has repeatedly failed to win U.S. approval.

Pfizer, which badly needs new medicines to offset sales declines for its drugs facing generic competition, said it will make a cash offer for all Encysive shares at $2.35 apiece, for an equity value of $195 million. That is more than double Encysive's closing share price on Tuesday of $1.08.

Pfizer said it has also agreed to assume Encysive's change of control repurchase obligations under its 2.5 percent convertible senior notes.

The U.S. Food and Drug Administration has issued three approvable letters for Thelin, which is used to treat pulmonary arterial hypertension, without allowing it to come to market.

The often-fatal condition is characterized by very high blood pressure in the arteries between the lungs and heart and is estimated to affect about 100,000 people in North America and Europe.

"Pfizer plans to conduct a pivotal Phase III trial to support registration in the U.S." of Thelin, Pfizer said in its release, noting that the drug is already approved in the European Union, Australia and Canada.

Thelin is a once-daily pill that works through a different mechanism than Pfizer's own approved Revatio treatment for pulmonary arterial hypertension.