Pfizer third-quarter profit beats estimates, oncology drugs shine
(Reuters) - Pfizer Inc reported better-than-expected third-quarter earnings on Tuesday, helped by cuts in costs and growing sales of cancer medicines approved over the past two years.
The largest U.S. drugmaker, whose shares rose 1.7 percent, earned $2.59 billion, or 39 cents per share. That compared with $3.21 billion, or 43 cents per share, in last year's quarter.
Excluding special charges of $572 million related to restructurings, asset writedowns and other costs, Pfizer earned 58 cents per share. Analysts, on average, expected 56 cents per share, according to Thomson Reuters I/B/E/S.
"I like the quarter; it was better than we expected, mainly from cost cutting and a lower tax rate," said Herman Saftlas, an analyst with S&P Capital Inc. The effective tax rate fell 0.4 percent to 27.6 percent in the quarter.
Saftlas raised his 12-month share-price target on Pfizer to $35, from $33, saying the company will report data in coming months from trials of a number of promising experimental drugs and from studies testing new uses of its already marketed drugs.
"My feeling is they are making traction on their pipeline and if they get some good readouts from these trials, we could see Pfizer shares go higher," Saftlas said.
The bright spot in Pfizer's earnings report was sales of its oncology drugs, which jumped 24 percent to $407 million.
Oncology has become one of Pfizer's biggest priorities, with the introductions of Xalkori for lung cancer in 2011, Inlyta for kidney cancer in 2012 and Bosulif this year for chronic myelogenous leukemia.
Pfizer is counting on them to become lucrative products, and is developing other cancer medicines with possibly far bigger sales potential. They include an experimental treatment for advanced breast cancer, called palbociclib, which industry analysts consider a potential blockbuster.
Xalkori sales almost doubled to $73 million in the quarter, while Inlyta sales nearly tripled to $83 million.
The company is also focusing on new drugs for a variety of chronic diseases. It said on Tuesday it had begun late-stage trials of bococizumab, a drug to reduce "bad" LDL cholesterol by blocking a protein called PCSK9. Amgen Inc and a partnership of Regeneron Inc and Sanofi are conducting late-stage trials of similar injectable drugs, which analysts believe could become big sellers.
In mid-stage trials, the Regeneron and Amgen drugs slashed LDL cholesterol more than 60 percent in patients already taking statin drugs, such as Pfizer's Lipitor.
"It's a very competitive segment and we're in it to be competitive," Pfizer Chief Executive Officer Ian Read said in an interview.
Pfizer said it is working with Eli Lilly and Co to complete development of a new type of drug for osteoarthritis and back pain, called tanezumab, whose trials have been halted several times by regulators over safety concerns. It works by blocking a protein called Nerve Growth Factor.
Read said tanezumab could be an attractive alternative to opioids and to standard pain drugs that can cause bleeding and ulcers. He said a new category of pain drag was "desperately needed."
Global company sales fell 2 percent to $12.64 billion, hurt by generic competition for cholesterol fighter Lipitor and other medicines. Wall Street had expected $12.7 billion. Sales would have been flat if not for the stronger dollar, which lowers the value of sales outside the United States.
Sales of Pfizer's biggest product, Lyrica for nerve pain, rose 10 percent to $1.14 billion. Prevnar, a vaccine against pneumococcal bacteria that can cause pneumonia and other infections, grew 1 percent to $959 million, a moderate turnaround from a 3 percent decline in the prior quarter.
But sales of Lipitor, which lost U.S. patent protection in late 2011, fell 29 percent to $533 million, as the drug faced generics in more overseas markets. But its sales topped Wall Street expectations by almost $55 million, Jefferies analyst Jeffrey Holford said in a research note.
Pfizer forecast full-year 2013 earnings of $2.15 to $2.20 per share, excluding special items, from its earlier view of $2.10 to $2.20 per share.