Pfizer Biopharmaceuticals Group's Late-Stage Pipeline Looks Well Positioned

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About: Pfizer Inc. (PFE), Includes: BMY
by: Chestnut Asset Management
Summary

Pfizer has been investing heavily in establishing a competitive pipeline of innovative medicines.

In-market and innovative brands have driven performance but face headwinds.

The late stage pipeline looks good and is at position for maturity; 2019 readouts will be telling.

Pfizer (PFE) has been hard to progress through a contentious period as loss of exclusivity overshadows the company’s built in forward earnings projections. The latest corporate communications from Pfizer suggest that the period of uncertain overhang is now behind the company. The company’s R&D team have been pushing through multipipe potentially transformative and blockbuster potential pipeline candidates, that may not be reflected into the company’s current trading price. Wall Street appears optimistic yet divided on the company’s strategic approach to M&A, with a preferability for targeting pipeline supportive bolt-on acquisitions as opposed to large scale transformative deals, such as an acquisition of Bristol Myers (BMY) which was once linked to the company.

Weighing the Positives and Negatives When Looking at In-Market Brands

Brands such as Ibrance, Eliquis, Xeljanz and Xtandi are amongst those that are carrying the weight of progress amongst Pfizer’s (PFE) innovative medicines unit. "This business had another strong year, growing its top-line 6% operationally, thanks to the continued strength of several key brands, including: Ibrance, Eliquis and Xeljanz globally; and Prevenar 13 primarily in emerging markets” Pfizer CEO. As Pfizer as signaled, these brands contain favorable LOE horizons and multiple opportunities for patent extension through combinations or new clinical applications. In addition to these agents, Pfizer (PFE) has stressed the broad array of diversified late stage pipeline candidates that can support meaningful top-line growth in the years ahead,

Looking, specifically, the brands carrying the innovative medicines unit, reveals insights that reveal Pfizer’s (PFE) interest in stressing the significance of the late stage pipeline:

  • Ibrance script growth is slowing, however, the adjuvant indication provides an opportunity for the brand to adjust sales upwards: "Our current growth driver for Ibrance remains outside of the U.S., particularly in developed Europe and Japan. And we had another quarter of solid growth here. Ibrance has achieved reimbursement in the majority of international developed markets, and despite increasing competition has maintained greater than 90% of total CDK class volume in these key markets." Pfizer CEO
  • Resolutions over reimbursement challenges and potential new indications will help drive growth in Xtandi sales. "Our alliance revenues in the U.S. were up 18% for the full year. And when combined with our royalty income on ex-U.S. sales totaled nearly $1 billion in 2018. We are continuing to see an increased number of urologists prescribing Xtandi. And our launch of the expanded indication in nonmetastatic prostate cancer in the U.S., following the July approval, made it the first and only FDA approved oral medication for both, nonmetastatic and metastatic castration-resistant prostate cancer." Pfizer CEO
  • Xeljanz, the oral JAK inhibitor, received positive sales growth in 2018 from an expanded indication. "Xeljanz had a tremendous performance with revenues increasing 33% operationally to $1.8 billion. Our fourth quarter results continued a pattern of extremely strong performance for Xeljanz with scripts up 35% compared with the prior year quarter. This was driven by continued growth in rheumatoid arthritis prescriptions, as well as increased contributions from the drug's recent expansion into psoriatic arthritis and ulcerative colitis." Pfizer CEO

Late Stage Offers Hope

With a look to the future, the Pfizer (PFE) late-stage pipeline looks promising, with an opportunity to expand the company’s performances in the innovative medicines unit. Tanezumab is an intriguing opportunity given the opioid epidemic, and Wall Street expectations are for additional trials to readout for this candidate in 2019. Following which, an FDA a filing will be made; should all go to plan Tanezumab could be a blockbuster drug for Pfizer (PFE). Fidanacogene elaparvovec is another interest pipeline prospect for Pfizer (PFE) given the size of the hemophilia B market. Finally, Rivipansel is in an ongoing phase 3 study for treating vaso-occlusive crisis (VOC) in hospitalized patients with sickle cell disease with data expected to readout in the first half of 2019. As stated on the Q4 call "we see the potential in 2019 for several inflection points that will further advance our pipeline. These include potential U.S. approvals for a combination of Bavencio and Inlyta for first line renal cell carcinoma as well as for up to four biosimilars, trastuzumab, bevacizumab, rituximab and adalimumab, which when taken together represent a potential blockbuster opportunity for Pfizer. We also expect Phase 3 readouts for rivipansel in sickle cell disease and for our JAK1 in atopic dermatitis as well as further Phase 3 readouts for tanezumab, which has the potential to address the serious unmet needs of the more than 27 million Americans living with osteoarthritis and more than 33 million suffering chronic low back pain." Pfizer CEO

Conclusion

To conclude, though we see multiple catalysts for Pfizer’s leading Innovative Medicine’s brands, the company’s efforts to add value to the late stage pipeline have largely been accomplished. Trial readouts through the course of 2019, if as anticipated, with lead to FDA submissions and regulatory approvals that can promote Pfizer’s (PFE) top-line performances for the years to come.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.