Pfizer Analyst Day Recap
All the Pfizer you can handle...
Whether you are interested in big pharma, big biotech, or small biotech, this morning's 9am presentation from Pfizer (PFE) is a must-listen. How will Pfizer address generic Zocor competition? Will they announce expanded interest into oncology? Who will they be interested in buying or, alternately, what medical areas will their B/D people look to first.
Some Pfizer guidance...
- 2007-2008 high single digit EPS gains.
- 2006 adjusted EPS $2.00
- 2006 reported EPS $1.52-1.56
- 2006 revenues comparable to 2005
- $1B stock buyback in 2006 alone under current program, dependent on BD activity
- $16B in cash flow in 2006
- $19B cash flow by 2008
- $37B cash repatriated for business development, R&D, and new product launches
- 26% increase of Q1-2006 dividend ($0.24/share)
- Q3-2006 targeted deadline for spin-out of consumer healthcare business, which they believe has a median "trading valuation" more than $10B
More from Pfizer legal...
Will seek "full amount of damages" (usually legal-speak for treble damages) in the patent fight they won on Acupril (quinapril) against Ranbaxy and Teva (TEVA). Those two companies sold $300M at generic prices since December 2004. The courts said the patent infringement was "willful."
Will aggressively pursue what they say are labeling errors against Teva and Sandoz Generics version of the blockbuster antibiotic Zithromax (azithromycin). They will also also seek patent remedies, believing a more recent derivative patent is still in effect.
More from Pfizer...
- Will sell Lipitor against generics on the basis of pharmacoeconomic meta-analysis of prior trials, the CARDS study showing a risk of stroke, and comparative therapetutic index (efficacy/side effects)
- The IDEAL trial will be among the first to see pharmacoeconomic analysis. Watch for a journal article in the next couple of months.
- Expect to see much more about Lipitor's stroke benefits
- Re-issue in the market showing 8% Q/Q growth
- Pfizer (PFE) will be providing significant support to Celebrex sales. They will focus on the lack of GI side effects or, alternately, the existence of GI side effects in other drugs for arthritis (like aspirin).
- Will file in juvenile arthritis, chronic pain
I'm a little surprised about how foreceful they are being on Celebrex. Look for them to really push this drug into the healthcare provider channel.
All Pfizer, all day...
Pfizer (PFE) went through a select group of their products to point out their stories and provide 2006 sales guidance. Lipitor (cholesterol, 2006 estimate >$13B), Celebrex (arthritis 2006 estimate >$2B), Geodon (mental health, 2006 estimate $800M), and Lyrica (neuropathic pain, 2006 estimate $900M) were the first.
Pfizer turns to newest drugs to market...
- Claiming a 44% quit rate, compared to 29.5% for Zyban and 17.7% for placebo.
- Designated by American Heart Association as a 2005 top-ten medical advance
- Pfizer's 2010 sales guidance of $1.1B, more than double analyst's current estimates
Exhubera (inhaled insulin for diabetes)
- Believe that lack of injections will increase compliance, allowing regular insulin therapy to begin earlier after diagnosis because of less patient resistance
- Inhaler device about as big as your sunglasses case
- Launch mid-2006
- Pfizer 2010 sales estimate of $2.0B well above analyst's current estimates
Sutent (GIST and RCC tumors)
- Gift from FDA by making it the first -ever cancer therapy approved for two indications at the same time (GIST and RCC)
- Sutent on market now
- Marketing against Onyx (ONXX) Nexavar and perhaps Genentech's (DNA) Avastin. Avastin could be targeted by asserting Sutent's dual action (anti-PDFR, anti-angiogeneis) against Avastin's anti-angiogenesis activity alone.
- Pfizer targeting breast, lung, and colorectal cancer next. NCI will do trials in gynecological and brain cancers as well as earlier-stage RCC.
- Sutent 2010 estimate of $1.6B is double analysts' current estimates
Now the good stuff from PFE... future R&D (1 of 3)
- Flattening of R&D spending is not a flattening of R&D work. It's a function of lower IT spending and better productivity
- Oncology is the 5th largest focus area, after cardio, infectious disease, inflammation, and CNS
- Productivity is 4 products for every 45 validated candidates. Plan to do this every year by 2010-2011 via 6 Phase II starts, 5 NDAs, and 4 new products only from internally developed products. Acquired products above and beyond these numbers.
- 33% of revenues from acquired products is the goal
- Will likely have 19 NDAs filed between 2001-2006, one short of their stated goal
Now the good stuff from PFE... future R&D (2 of 3)
Highlights from late-stage pipeline
- Oporia for osteoporosis given a not-approvable letter due to theoretical safety concerns. Pfizer has two Phase III trials under way that should answer this question.
- Dynastat for acute pain (opioid-sparing COX-2 inhibitor) also given a non-approvable letter in the U.S.A. despite being approved in 30 countries with 4M patient prescriptions. The concern was cardiovascular issues in patients with risk. Pfizer sounded less certain about this one.
- Indiplon for insomnia (partnered with Neurocrine-NBIX) currently under review. NDA includes data on 8000 patients from 70 clinical trials. FDA action anticipated Q2-2006
- Eraxis for treatment of fungal infections (acquired via Vicuron purchase). Received an approvable letter from the FDA in 2005. Final approval Q1-2006 anticipated
- Zevin antibiotic, also from Vicuron. A once-weekly IV drug. Also has an FDA approvable letter, which Pfizer hopes to convert to approval in Q2-2006
Now the good stuff from PFE... future R&D (3 of 3)
- Maraviroc, an HIV drug. Phase III trials underway with a 2006 NDA submission target in treatment-experienced patients
- A "New licensing opportunity TBA" for NDA filing in 2006. Expect an announcement on which one in 1H-2006.
- Torcetrapib is expected as a 2007 NDA, probably mid-to late (my estimate given the trial data won't be available until late 2006). Morbidity and mortality data will not be available until 2009. As you know, I believe it is this 2009 data that will be necessary to understand whether torcetrapib works.
- Asenapine for schizophrenia and bi-polar disorder (5M customers) in co-development with Organon. Early 2007 NDA.
- Ticilimumab (anti-CTLA4) in Phase III trials. NDA submission in 2007. Pfizer owes significant royalties to Medarex (MEDX) via a patent cross-license. Abgenix (Amgen-AMGN) provided the humanized antibody and also is due royalties.
- A couple of dozen drugs in the pipeline for oncology alone, most of them monoclonal antibodies.
It bears mentioning that biotech is getting whacked today. Only 34 advancers in the 160-stock NASDAQ Biotech Index (NBI). The one bright sign is the NBI is outperforming the BTK, but that's minor given the flood of red dye.
(My apologies, but I had a prior engagement I had to leave for. I tuned out of the PFE presentation at 12:10pm EST and these Q&A notes go through only to that time.
Torcetrapib has a hypertension issue. The question was whether these patients could be genetically detected prior to dosing. The answer was that they are not. They are handling it by patient monitoring and dosing of norvasc to handle the high blood pressure. The company expects data from the imaging studies in 2006, but perhaps not fast enough for the 2H-2006 AHA meeting.
Analysts are very worried about the hypertension issue on torcetrapib. Several questions about how to deal with this and whether earlier-stage HDL drugs have avoided the problem. Some analysts clearly believe this problem is likely to cause the FDA to wait for 2009 hard endpoint data (morbidity and mortality) to make their decision. The company notes the increases are moderate over time and patients can be treated or removed from torcetrapib.
The company mentioned launching torcetrapib as a single-agent, responding to public criticism of previously stated plans to make it available only as a combination with Lipitor. The questioner asked if that decision was a trade-off with the FDA. The company said it was simply a business decision to keep it combined to match it medically and scientifically. Will make it available to others if they want to spend $800M to test it with their statin.
Backup CETP-inhibitor to torcetrapib? We have a robust HDL program, many of which are in Phase II. I note that former Biotech Monthly favorite Esperion was focused on HDL and was acquired by Pfizer in 2003 for $1.3B.
European regulators have signalled they would rather wait for 2009 morbidity and mortality data before approving torcetrapib. PFE's response is they are early in the discussion process with EU regulators and PFE has not been told the EU will not accept the IVUS data for approval. PFE reiterates that for both the US and EU it depends on the quality of the IVUS data to be released towards the end of 2006.
Several questions on making sure Lipitor stays off restrictions inside insurance reimbursement plans. An expected trend is that insurers will require doctors to prescribe generic Zocor first before they are allowed to prescribe Lipitor. Pfizer has been successful in heading off similar initiatives, but not in an era.
Several questions to help the analysts figure out their financial models.
Oncology area a priority for biz dev (acquisitions)? "We are well-represented in oncology with our pipeline, but it is a absolutely a target for business development activity." (paraphrased).
Good question about how all the managed care people are forecasting higher profits due to drug cost savings via Medicare Part D yet Pfizer is forecasting higher sales. The answer was essentially that everyone can benefit from better drugs with better pharmacoeconomics from new drugs.
The company is pursuing a second-generation Exhubera device.
Pipeline replacements for hypertension (Norvasc) and depression (Zoloft)? Nothing specific for hypertension, focusing on cardiovascular health instead because Norvasc is probably too good to make much improvement on. We have many depression candidates in the pipeline, though nothing near term.
I note that biotech turned around after the Pfizer (PFE) call ended. What appears to be doing best are companies who have an unpartnered Phase III drug due to be sent to the FDA some time this year. Pfizer said they would acquire a product 2H-2006 that would add another NDA to their total for 2006 and the search is on for which one it might be. We have several in our coverage universe, so that's where our search will start.
Have a good weekend, everyone!
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