Earnings Preview: Pfizer to Report Q1 Results
Pfizer Inc. will discuss developments with some key experimental drugs, a patent victory that preserves revenue and a setback on its new arthritis pill when it reports first-quarter results Tuesday morning.
WHAT TO WATCH FOR: CEO Ian Read will discuss sales of key drugs and the drugmaker's recent partial initial public offering in which it spun off 20 percent of its veterinary medicine business, now called Zoetis Inc. That raised about $6 billion.
Analysts on Pfizer's conference call Tuesday likely will ask about plans for the remaining 80 percent of Zoetis that Pfizer, the world's second-biggest drugmaker by revenue, still owns. Read told shareholders at Pfizer's annual meeting Thursday that's still under review.
Pfizer last year raised nearly $12 billion by selling its nutritional business to Nestle SA, but some investors have pushed for more divestitures.
Management likely will discuss early sales results for Eliquis, a potential blockbuster that's part of a new generation of blood thinners meant to prevent strokes. Pfizer and partner Bristol-Myers Squibb Co. won approval for the twice-a-day pill at the end of December in both the U.S. and Japan.
Read will note an 18-month patent term extension until December 2015 for Celebrex, after the U.S. Patent & Trademark Office last month granted a new patent to correct technical deficiencies in the original one. The popular pain reliever is one of New York-based Pfizer's top sellers with about $2.7 billion in annual sales.
The Viagra maker should note the European Union in January approved use of Pfizer's Prevnar 13 vaccine — the top-selling vaccine in history — for use in children aged 6 to 17. In March, the EU granted conditional approval for bosutinib, a daily pill for patients with a specific genetic variation of the blood cancer chronic myeloid leukemia. That means Pfizer can begin selling it but will need to collect additional data about its safety and effectiveness.
On the downside, advisers to European drug regulators late Thursday rejected Pfizer's application to sell its new rheumatoid arthritis pill, Xeljanz. It's already approved in the U.S. and a few other countries, but EU regulators wrote that they concluded it didn't control progression of the immune disorder enough to offset side effects, including tumors in some patients. Pfizer plans to appeal the ruling and may discuss its thinking Tuesday.
Bernstein Research analyst Dr. Timothy Anderson maintained his "buy" recommendation for Pfizer, estimating that European sales of Xeljanz would hit only $518 million in 2020 — barely 1 percent of Pfizer's anticipated total revenue then.
Xeljanz is part of a surge of new cancer medicines from Pfizer, which a few years ago made cancer part of its research focus. Pfizer launched three new medicines — Xalkori, Inlyta and Bosulif — for multiple types of cancer during a 13-month stretch from August 2011 through September 2012.
Another experimental cancer drug, palbociclib for advanced breast cancer, two weeks ago got a "breakthrough therapy" designation from the Food and Drug Administration. That's meant to speedup final testing and approval of the drug.
WHY IT MATTERS: Pfizer has been hurt as generic competition cuts into sales of roughly two-thirds of its drugs. The biggest hit has been copycat versions of Lipitor, which was the world's best-selling drug for nearly a decade and still had annual sales of around $10 billion when generic competition started in December 2011.
Pfizer needs to boost sales of its latest drugs, as well as get some experimental ones approved, to offset the continuing losses to generic competition. Like many other drugmakers, it's been cutting costs to boost profit, but there's likely very little fat left to trim. Pfizer and most of its rivals have been focusing on developing very-expensive drugs for rare disorders and on expanding sales in emerging markets such as China, but there's a limit to how much money those strategies can generate.
WHAT'S EXPECTED: Analysts surveyed by FactSet expect, on average, adjusted earnings of 55 cents per share and sales of $13.99 billion.
LAST YEAR'S QUARTER: Pfizer posted net income of $1.79 billion, or 24 cents per share, on revenue of $15.4 billion. Excluding one-time items it earned 58 cents a share in last year's first quarter.
Linda A. Johnson can be followed at http://twitter.com/LindaJ_onPharma