Baxter International’s (BAX) CEO Robert Parkinson on Q3 2014 Results – Earnings Call Transcript

October 21, 2014 8:07 am | By More

Source: Seeking Alpha

 

Baxter International Q3 2014 Results Earnings Call – Webcast Audio

 

Baxter International Inc. (NYSE:BAX)

Q3 2014 Results Earnings Conference Call

October 16, 2014, 08:30 AM ET

Executives

Robert L. Parkinson, Jr. – Chairman and CEO

Ludwig N. Hantson – President, BioScience

Robert J. Hombach – Corporate VP and CFO

Mary Kay Ladone – Corporate VP, IR

Analysts

David Roman – Goldman Sachs

David Lewis – Morgan Stanley

Matt Miksic – Piper Jaffray

Robert Hopkins – BAML

Mike Weinstein – JPMorgan

Lawrence S. Keusch – Raymond James & Associates, Inc.

Kristen Stewart – Deutsche Bank

Bruce Nudell – Credit Suisse

Glenn Novarro – RBC Capital Markets

Operator

Good morning ladies and gentlemen and welcome to the Baxter International’s, third quarter earnings conference call. Your lines will remain in a listen-only mode until the question-and-answer segment of today’s call (Operator Instructions). As a reminder this call is being recorded by Baxter and is copyrighted material. It cannot be recorded or rebroadcast without Baxter’s permission. If you have any objections, please disconnect at this time.

I would now like to turn the call over to Ms. Mary Kay Ladone, Corporate Vice President, Investor Relations at Baxter International. Ms. Ladone, you may begin.

Mary Kay Ladone – Corporate VP, IR

Thanks Pam. Good morning everyone and welcome to our Q3, 2014 earnings conference call. Joining me today are Bob Parkinson, CEO and Chairman of Baxter International; Ludwig Hantson, President, BioScience; and Bob Hombach, Chief Financial Officer.

Before we get started, let me remind you that this presentation, including comments regarding our financial outlook, new product developments and regulatory matters contain forward-looking statements that involve risks and uncertainties and of course our actual results could differ materially from our current expectations. Please refer to today’s press release and our SEC filings for more detailed concerning factors that could cause actual results to differ materially.

In addition, in today’s call, non-GAAP financial measures will be used to help investors understand Baxter’s ongoing business performance. A reconciliation of the non-GAAP financial measures being discussed today to the comparable GAAP financial measures is included in our earnings release issued this morning and available on our website.

Now I’d like to turn the call over to Bob Parkinson.

Robert L. Parkinson, Jr. – Chairman and CEO

Thanks Mary Kay. Good morning and thank you all for calling in. As you saw in this morning’s press release Baxter reported strong financial results for the third quarter, which exceeded expectations. Relative to our guidance which included vaccines adjusted earnings increased 9% to $1.35 per diluted share and worldwide sales advanced 13%. Excluding foreign currency and Gambro, from both periods, global sales increase 6%. I am very pleased with overall organic sales performance from ongoing operations as the third quarter represents the highest quarterly growth of this year. This affords us the opportunity to increase investments and research and development and further enhance manufacturing and quality and operational excellence as we position our company for sustained success.

In recent months we’ve continued to make progress in strengthening the portfolio with new collaborations advancing the new product pipeline through the achievement of meaningful milestones and the organization remains engaged in working to separate Baxter into two leading global healthcare companies aimed at enhancing shareholder value over the long term. For example within BioScience we are building on the strategic decision to expand our presence in the area of oncology, leveraging the company’s heritage of success in developing new therapies that treat unmet medical needs for patients with rare diseases.

Not only has living Ludwig been building an experienced team of oncology leaders including senior clinical development, business development and proven commercial executives but we also continue to see partnership opportunities to expand the pipeline.

You may recall that last month we signed an exclusive license and collaboration agreement with Merrimack Pharmaceuticals for the development and commercialization of MM-398, an investigational drug candidate for the treatment of patients with metastatic pancreatic cancer, previously treated with the gemcitabine-based therapy. As you know pancreatic cancer is a rare and deadly disease that’s difficult to diagnose and has limited treatment options.

Through this agreement BioScience gains exclusive commercialization rights for all potential indications of MM-398 outside the United States and Taiwan. MM-398 has demonstrated robust survival results in a global Phase 3 trial that will be the basis for regulatory submissions outside the U.S. beginning in 2015. BioScience now has four oncology assets; MM-398, [inaudible] and BAX-069 with the potential for numerous indications for patients with hematologic and solid malignancies.

We look forward to discussing the progress of the oncology portfolio and advancement of the pipeline in the future. The bioscience organization also continues to enhance its focus on specific disease areas, centered on core areas of expertise in hematology, immunology and through technology platforms like gene therapy and biosimilars. It’s for this reason that we elected to divest the commercial vaccines business, including the NeisVac-C and FSME vaccines and during the third quarter announced a definitive agreement with Pfizer. We’re working to close this transaction in the fourth quarter and continue to explore strategic options, including the potential for partnering or divesting the R&D development programs focused on influenza and line disease.

In addition we’ve also achieved an array of significant pipeline milestones including the FDA approval of HYQVIA is the first subcutaneous immune globulant, a transformational subcutaneous treatment for adult patients with primary immunodeficiency. HYQVIA is the first subcutaneous immune globulant treatment approved with the dosing regimen requiring only one infusion per month and one injection site per fusion to deliver it full therapeutic dose while maintaining the same efficacy safety and tolerability profile in its currently marketed products.

Today many patients received IV infusions in a doctor’s office or infusion center and current subcutaneous treatments require weekly or bi-weekly treatment with multiple infusion sites per treatment. We expect to launch HYQVIA in the United States next week and are evaluating regulatory requirements and initiation of additional clinical trials for new indications. As a reminder the global market for primary immunodeficiency is approximately $2 billion and only approximately 35% of patients are treated subcutaneously, providing a unique opportunity for HYQVIA as a differentiated therapy.

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