UPDATE 4-Pfizer beats profit estimates, investors eye experimental drugs

Tue Jan 28, 2014 2:07pm EST

By Ransdell Pierson
    Jan 28 (Reuters) - Pfizer Inc reported
better-than-expected fourth-quarter results on Tuesday, helped
by higher sales of drugs for cancer, nerve pain and arthritis,
and forecast 2014 earnings in line with Wall Street estimates.
    The biggest U.S. drugmaker said it earned $2.57 billion, or
40 cents per share, in the fourth quarter. That compared with
$6.32 billion, or 86 cents per share, in the year-earlier
quarter when the company recorded a $4.8 billion gain from
selling its nutritional products business to Swiss food group
Nestle SA.
    Excluding special items, Pfizer earned 56 cents per share.
Analysts, on average, expected 52 cents per share, according to
Thomson Reuters I/B/E/S.

   JP Morgan analyst Chris Schott said quarterly results were
solid and driven by unexpectedly strong sales and
lower-than-expected expenses.
    Schott said investors remain focused mainly on the company's
pipeline of experimental drugs, including a treatment for
advanced breast cancer called palbociclib and studies to
determine whether Pfizer's blockbuster Prevnar vaccine against
pneumococcal bacteria can prevent pneumonia in adults age 65 and
older.
    "We believe Pfizer shares could see meaningful upside in the
event of positive data for palbociclib," Schott said.
    Some analysts expect the drug, which has been granted a
"breakthrough" drug designation from the U.S. Food and Drug
Administration, to garner annual sales of more than $5 billion
if ongoing trials succeed and it is approved.
    
    REALLY HUGE OPPORTUNITY
    "It's a really huge opportunity," Pfizer research chief
Mikael Dolsten said in an interview on Tuesday, adding that
palbociclib could also hold promise in treating newly diagnosed
and recurrent breast cancer, melanoma, lung cancer and other
malignancies.
    Novartis AG and Eli Lilly are also racing
to develop drugs similar to palbociclib, which is meant to stunt
growth of cancer cells by blocking two enzymes, cyclin-dependent
kinases 4 and 6.  
    Other drugmakers, including Merck & Co and
Bristol-Myers Squibb Co, are racing to develop a
different class of cancer drugs called PD-1 inhibitors that
enable the immune system to recognize cancer cells and attack
them.
    Dolsten said Pfizer's own experimental immuno oncology drugs
might be able to be used in combination with PD-1 inhibitors and
other cancer drugs that target specific proteins. They include
vaccines and antibody drug conjugates, which are antibodies that
carry payloads of other drugs.
    Oncology has become one of Pfizer's biggest priorities, with
the introductions of Xalkori for lung cancer in 2011, and
approvals in 2012 of Inlyta for kidney cancer and Bosulif for
chronic myelogenous leukemia last year.
    But the company's oncology program suffered a setback on
Monday when Pfizer said an experimental treatment for lung
cancer, dacomitinib, failed to meet its goals in two late-stage
studies among patients who had received prior treatment for
advanced non-small cell lung cancer.
    Pfizer's effective tax rate fell 2 percentage points to 27.7
percent in the fourth quarter, largely related to audit
settlements with overseas governments, bolstering quarterly
results.
    Global company revenue fell 2 percent to $13.56 billion,
hurt by competition from cheaper generic forms of its medicines.
But they topped Wall Street forecasts of $13.35 billion. Revenue
would have grown 1 percent if not for the stronger dollar, which
lowers the value of sales in overseas markets.
    Pfizer said it expects full-year earnings in 2014, excluding
special items, of $2.20 to $2.30 per share. That is roughly in
line with Wall Street expectations of $2.28 per share, and
assumes that Pfizer buys back $5 billion worth of its common
stock during the year. 
    Inlyta and Xalkori sales doubled in the quarter, to $102
million and $89 million, respectively.   
    Sales of Lyrica, a Pfizer treatment for nerve pain that is
its biggest product, rose 11 percent in the fourth quarter to
$1.26 billion, while sales of Prevnar rose 3 percent to $1.1
billion. Sales of Enbrel, a treatment for psoriasis and
arthritis, rose 5 percent to $1 billion. And Celebrex, used to
treat pain and arthritis, rose 6 percent to $798 million. But
sales of impotence treatment Viagra fell 14 percent to $476
million, hurt by sharply lower sales in overseas markets.
    Company shares rose 3 percent to $30.54 in afternoon trading
on the New York Stock Exchange, amid a 1.1 percent advance for
the ARCA Pharmaceutical Index.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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