Source: Seeking Alpha
Pfizer Inc. (NYSE:PFE)
Q2 2014 Earnings Conference Call
July 29, 2014 10:00 AM ET
Chuck Triano – SVP of IR
Ian Read – Chairman and CEO
Frank D’Amelio – CFO
Mikael Dolsten – President of Worldwide Research and Development
Albert Bourla – President of Vaccines, Oncology and Consumer
Geno Germano – President of Global Innovative Pharma
John Young – President of Established Pharma
Doug Lankler – General Counsel
Chris Schott – JPMorgan
Vamil Divan – Credit Suisse
Tim Anderson – Sanford Bernstein
Jami Rubin – Goldman Sachs
John Boris – SunTrust Robinson
David Risinger – Morgan Stanley
Colin Bristow – Bank of America
Marc Goodman – UBS
Seamus Fernandez – Leerink
Jeff Holford – Jefferies
Alex Arfaei – BMO Capital Markets
Andrew Baum – Citi
Mark Schoenebaum – ISI Group
Steve Scala – Cowen
Good day, everyone and welcome to Pfizer’s Second Quarter 2014 Earnings Conference Call. Today’s call is being recorded. At this time, I would like to turn the call over to Mr. Chuck Triano, Senior Vice President of Investor Relations. Please go ahead, sir.
Thank you, operator. Good morning and thank you for joining us today to review Pfizer’s second quarter 2014 performance. I am joined today in by our Chairman and CEO, Ian Read; Frank D’Amelio, our CFO; Mikael Dolsten, President of Worldwide Research and Development; Albert Bourla, President of Vaccines, Oncology and Consumer; Geno Germano, President of Global Innovative Pharma; John Young, President of Established Pharma and Doug Lankler, General Counsel.
The slides that will be presented on the call can be viewed at pfizer.com, by clicking on the link for Pfizer Quarterly Corporate Performance Second Quarter 2014, which located in the Investor Presentations section in the lower right hand corner of this page.
Before we start, I would like to remind you that our discussions during the call will include forward-looking statements and that actual results could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ are discussed in Pfizer’s 2013 Annual Report on Form 10-K and in our reports on Forms 10-Q and 8-K.
Discussion during the call will also include certain financial measures that were not prepared in accordance with Generally Accepted Accounting Principles. Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in Pfizer’s current report on Form 8-K dated today.
We will now make prepared remarks and then we will move to a question and answer session. With that, I will now turn the call over to Ian Read. Ian?
Thank you Chuck and thank you all for joining our call this morning. I will begin with some brief comments from the quarter. Overall we saw good performance and strong operational growth in a number of areas including Lyrica in developed markets, Prevnar primarily in the U.S. and in emerging markets and Celebrex worldwide.
Our recently launched brands are making solid gains. Eliquis grew sequentially 50% quarter-on-quarter on a global basis while Xeljanz posted sequential growth quarter roughly 30% primarily in the U.S. With the continuation of this momentum these products are on a trajectory to become meaningful contributors to our underlying business in the coming quarters. We also are looking continued uptake with Xalkori and Inlyta globally.
Revenues in our consumer business increased 15% operationally primarily due to the recent launch of Nexium 24HR in the U.S. in late May. We also saw strong companywide performance within the emerging markets, revenue increased 11% operationally compared to the year ago quarter driven by growth in China, Venezuela, Argentina and Brazil.
Despite to somewhat slower start to the year, each of our businesses is performing well in the face of ongoing product losses of exclusivity for innovative businesses and continued pricing pressures and changing market dynamics effecting our established business.
I would also point out the negative impact of LOEs and the revenue loss resulting from the exploration of some co-promoted revenues was 1.7 billion for the first six months. This impact mass the companywide operational revenue growth from all other products during the first half of the year which was 3% overall.
In evaluating our performance now that we have been operating in our new commercial model since the beginning of the year, I believe this structure is providing greater transparency into the operations of each business and on a daily basis it enables decision making that better optimizes the performance and portfolio of each of our segments.
Furthermore we remain encouraged by key developments that demonstrate our pipeline momentum. Of particular note, we expect to complete the submission of the palbociclib new drug application to the FDA in August. This submission is based on the final result of PALOMA-1, a randomized, Phase 2 trial comparing the combination of palbociclib plus letrozole versus letrozole alone as the first line treatment of postmenopausal women with estrogen positive HER2 negative advanced breast cancer. We will publically communicate once we’ve completed our submission. Also of note, our Phase III palbociclib trials in advanced breast cancer PALOMA-II and PALOMA-III are progressing and both trials have completed recruitment of new patients.
In addition, the number of Phase III studies where we are collaborating with leading international breast cancer investigators are open and enrolling patients with both advanced and early breast cancer and we have active exploration underway of multiple Phase I and II studies in non-breast indications.
Given the outbreaks of meningitis B disease on several US college campuses in 2013, we work closely with the FDA to submit our biologics license application for accelerated approval of our meningitis B vaccine for the prevention of meningococcal disease and in adolescent to young adults.
We look forward to the meeting that adjusted the scheduled to take place on August 13th by the CDC Advisory committee on immunization practices ACIP to discuss and vote on a potentially expanded recommendation for Prevnar 13 use in adults.
We had a comprehensive Xeljanz program that is progressing with Phase III studies underway and you see in psoriatic arthritis and Phase II studies in psoriasis for top reviews, Crohn’s disease and ankylosing spondylitis. We continue to enroll patients in Phase III trials of bococizumab for cholesterol lowering and high risk individuals, the total flows into the treatment of diabetes and later this year we expect to begin enrolling patients for the Rapunzel for the treatment of vaso-occlusive crises individuals of sickle cell anemia.
As we ended the second half of this year, our strategy, focus and priorities remain unchanged, supported by the steady performance of each of our commercial segments. When it comes to business development, we will continue to evaluate all opportunities regardless of the size through the lens of value creation for our shareholders and enhancing the competitors of our businesses.
Our most recent announced acquisitions and collaborations are example to enablers of our strategy. We expect far more meaningfully increase the size of our sterile injectable business through their existing and out licensed portfolios sterile injectables as well as the medium and long-term through the potential of their pipeline. And if we see promising result as we move forward with the selector’s collaboration to develop immune therapies against select [indiscernible] oncology, we believe it has the potential for changing the way cancer is treated.
In summary, for the remainder of this year, we will be focused on executing our plans and taking the actions that will further strengthen and globally position us as the market leader in each of our business segments.
We remain committed to advancing innovative therapies on behalf of patients we serve, prudently managing deploying capital, to drive the greatest value for our shareholders and creating a culture within the organization where [indiscernible] creatively take prudent risk in operating with an entrepreneurial mindset.
I will now turn it over to Frank to take you through the financial details of the quarter.
Thanks Ian and good day everyone. As always the charts we are reviewing today are included in our webcast. As a reminder, because of the focused position of Zoetis on June 23, 2013, the financial results of the animal health business and the gain associated with its fully disposition are reported as a discontinued operation in the consolidated statements of income for the second quarter and first six months of 2013.
Now let’s move on to the financials.