[July 28, 2015] |
|
PFIZER REPORTS SECOND-QUARTER 2015 RESULTS
Pfizer Inc. (NYSE: PFE) reported financial results for second-quarter
2015 and announced increases to the midpoints of its 2015 financial
guidance(3) ranges for reported revenues(1) and
reported(1) and adjusted(2) diluted EPS.
The company manages its commercial operations through two distinct
businesses: an Innovative Products business and an Established Products
business. The Innovative Products business is composed of two operating
segments: the Global Innovative Pharmaceutical segment (GIP)(4)
and the Global Vaccines, Oncology and Consumer Healthcare
segment (VOC)(4). The Established Products business
consists of the Global Established Pharmaceutical segment (GEP)(4).
Financial results for each of these segments are presented in the Operating
Segment Information section.
Some amounts in this press release may not add due to rounding. All
percentages have been calculated using unrounded amounts. Results for
the second quarter and first six months of 2015 and 2014 are summarized
below.
|
OVERALL RESULTS
|
|
|
|
|
|
|
|
|
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($ in millions, except
per share amounts)
|
Second-Quarter
|
|
|
Six Months
|
|
2015
|
2014
|
Change
|
|
|
2015
|
2014
|
Change
|
Reported Revenues(1)
|
$
|
11,853
|
|
$
|
12,773
|
|
(7
|
%)
|
|
|
$
|
22,717
|
|
$
|
24,126
|
|
(6
|
%)
|
Adjusted Income(2)
|
|
3,525
|
|
|
3,769
|
|
(6
|
%)
|
|
|
|
6,721
|
|
|
7,434
|
|
(10
|
%)
|
Adjusted Diluted EPS(2)
|
|
0.56
|
|
|
0.58
|
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(3
|
%)
|
|
|
|
1.07
|
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1.15
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(7
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%)
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Reported Net Income(1)
|
|
2,626
|
|
|
2,912
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(10
|
%)
|
|
|
|
5,002
|
|
|
5,241
|
|
(5
|
%)
|
Reported Diluted EPS(1)
|
|
0.42
|
|
|
0.45
|
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(7
|
%)
|
|
|
|
0.80
|
|
|
0.81
|
|
(1
|
%)
|
|
|
|
|
|
|
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REVENUES
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|
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($ in millions)
|
Second-Quarter
|
|
|
Six Months
|
|
2015
|
2014
|
% Change
|
|
|
2015
|
2014
|
% Change
|
|
Total
|
Oper.
|
|
|
Total
|
Oper.
|
Innovative Products
|
$
|
6,630
|
|
$
|
6,126
|
|
8
|
%
|
17
|
%
|
|
|
$
|
12,368
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|
$
|
11,376
|
|
9
|
%
|
17
|
%
|
GIP(4)
|
|
3,497
|
|
|
3,547
|
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(1
|
%)
|
8
|
%
|
|
|
|
6,572
|
|
|
6,623
|
|
(1
|
%)
|
7
|
%
|
Global Vaccines(4)
|
|
1,580
|
|
|
1,097
|
|
44
|
%
|
52
|
%
|
|
|
|
2,908
|
|
|
2,022
|
|
44
|
%
|
52
|
%
|
Consumer Healthcare(4)
|
|
840
|
|
|
912
|
|
(8
|
%)
|
(2
|
%)
|
|
|
|
1,648
|
|
|
1,673
|
|
(1
|
%)
|
4
|
%
|
Global Oncology(4)
|
|
713
|
|
|
570
|
|
25
|
%
|
36
|
%
|
|
|
|
1,240
|
|
|
1,058
|
|
17
|
%
|
27
|
%
|
Established Products
|
$
|
5,090
|
|
$
|
6,513
|
|
(22
|
%)
|
(14
|
%)
|
|
|
$
|
10,104
|
|
$
|
12,503
|
|
(19
|
%)
|
(12
|
%)
|
GEP(4)
|
|
5,090
|
|
|
6,513
|
|
(22
|
%)
|
(14
|
%)
|
|
|
|
10,104
|
|
|
12,503
|
|
(19
|
%)
|
(12
|
%)
|
Other(5)
|
|
133
|
|
|
134
|
|
-
|
|
2
|
%
|
|
|
|
244
|
|
|
247
|
|
(1
|
%)
|
1
|
%
|
Total
|
$
|
11,853
|
|
$
|
12,773
|
|
(7
|
%)
|
1
|
%
|
|
|
$
|
22,717
|
|
$
|
24,126
|
|
(6
|
%)
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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SELECTED TOTAL COMPANY ADJUSTED COSTS AND EXPENSES(2)
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($ in millions)
(Favorable)/Unfavorable
|
Second-Quarter
|
|
|
Six Months
|
|
2015
|
2014
|
% Change
|
|
|
2015
|
2014
|
% Change
|
|
Total
|
Oper.
|
|
|
Total
|
Oper.
|
Cost of Sales(2)
|
$
|
2,123
|
|
$
|
2,320
|
|
(8
|
%)
|
2
|
%
|
|
|
$
|
3,930
|
|
$
|
4,306
|
|
(9
|
%)
|
4
|
%
|
Percent of Revenues(1)
|
|
17.9
|
%
|
|
18.2
|
%
|
N/A
|
N/A
|
|
|
|
17.3
|
%
|
|
17.8
|
%
|
N/A
|
N/A
|
SI&A Expenses(2)
|
|
3,372
|
|
|
3,486
|
|
(3
|
%)
|
3
|
%
|
|
|
|
6,449
|
|
|
6,506
|
|
(1
|
%)
|
5
|
%
|
R&D Expenses(2)
|
|
1,732
|
|
|
1,714
|
|
1
|
%
|
3
|
%
|
|
|
|
3,609
|
|
|
3,326
|
|
9
|
%
|
10
|
%
|
Total
|
$
|
7,226
|
|
$
|
7,520
|
|
(4
|
%)
|
3
|
%
|
|
|
$
|
13,988
|
|
$
|
14,138
|
|
(1
|
%)
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax Rate(2)
|
|
25.6
|
%
|
|
27.9
|
%
|
|
|
|
|
|
25.0
|
%
|
|
26.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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2015 FINANCIAL GUIDANCE(3)
The ranges for certain components of Pfizer's 2015 financial guidance
have been updated as set forth below:
|
|
Reported Revenues(1)
|
$45.0 to $46.0 billion
|
(previously $44.0 to $46.0 billion)
|
Adjusted Cost of Sales(2) as a Percentage of Reported
Revenues(1)
|
18.0% to 18.5%
|
(previously 18.5% to 19.5%)
|
Adjusted SI&A Expenses(2)
|
$12.8 to $13.8 billion
|
Adjusted R&D Expenses(2)
|
$7.3 to $7.6 billion
|
(previously $6.9 to $7.4 billion)
|
Adjusted Other (Income)/Deductions(2)
|
Approximately ($500 million) of income
|
Effective Tax Rate on Adjusted Income(2)
|
Approximately 25.0%
|
Reported Diluted EPS(1)
|
$1.38 to $1.47
|
(previously $1.32 to $1.47)
|
Adjusted Diluted EPS(2)
|
$2.01 to $2.07
|
(previously $1.95 to $2.05)
|
|
|
EXECUTIVE COMMENTARY
Ian Read, Chairman and Chief Executive Officer, stated, "Our
second-quarter and year-to-date financial performance is the result of
continued business momentum, driven by solid execution of recent product
launches in our Innovative Products business, notably Ibrance and
Prevnar 13 in adults in the U.S., along with continued growth from
Eliquis and Xeljanz, increased focus on and support of growth
initiatives within our Established Products business as well as
shareholder-friendly capital allocation. For the remainder of 2015, we
look forward to completing the pending acquisition of Hospira, Inc.
(Hospira), which we expect will meaningfully enhance our Established
Products business, particularly in sterile injectables and biosimilars,
and continuing to advance our late-stage pipeline in important areas
such as oncology and immuno-oncology, vaccines, rare disease,
cardiovascular disease and biosimilars. I continue to see both of our
businesses as highly focused, well managed and competitively positioned
in their key markets."
Frank D'Amelio, Chief Financial Officer, stated, "Overall, I am very
pleased with our second-quarter 2015 financial results. We were able to
grow revenues by 1% excluding the impact of foreign exchange, marking
the third consecutive quarter of operational revenue growth, despite the
continued significant negative impact from product losses of
exclusivity, primarily Celebrex and Zyvox in the U.S. and Lyrica in
certain developed Europe markets.
"As a result of our strong operational performance to date coupled with
an improved operational outlook for the remainder of the year, we are
raising the midpoint of our 2015 financial guidance(3) range
for reported revenues(1) by $500 million and the midpoint of
our guidance range for adjusted diluted EPS(2) by $0.04.
Changes in foreign exchange rates since mid-April 2015 did not
materially impact our latest guidance," Mr. D'Amelio concluded.
QUARTERLY FINANCIAL HIGHLIGHTS (Second-Quarter 2015 vs.
Second-Quarter 2014)
Reported revenues(1) decreased $920 million, or 7%, which
reflects operational growth of $125 million, or 1%, more than offset by
the unfavorable impact of foreign exchange of $1.0 billion, or 8%.
Excluding the impact of foreign exchange, adjusted diluted EPS(2)
increased by approximately 6%.
Operational revenue growth in developed markets was driven by the
performance of several key products, including Prevnar 13 in adults,
Eliquis, Ibrance and Xeljanz -- all products that are early in their
life cycles -- as well as from vaccines acquired last year from Baxter
International Inc. (Baxter). In emerging markets, revenues increased 6%
operationally, reflecting continued strong operational growth, primarily
from Lipitor and Prevenar 13.
Operational revenue growth was partially offset primarily by the loss of
exclusivity and immediate multi-source generic competition for Celebrex
in the U.S. as well as Zyvox in the U.S. and Lyrica in certain developed
Europe markets.
Innovative Products Business Highlights
Revenues for the Innovative Products business increased 17%
operationally, reflecting the following:
-
GIP(3) revenues increased 8% operationally, primarily due
to strong operational performance of recently launched products,
including Eliquis globally and Xeljanz in the U.S., in addition to the
continued strong performances of Lyrica in the U.S. and Japan and
Viagra in the U.S. Operational growth was partially offset by generic
competition for Rapamune in the U.S., which began in October 2014, and
by increased competition for BeneFIX in the U.S.
-
VOC(3) revenues increased 29% operationally, reflecting the
following:
-
Global Vaccines(3) revenues increased 52%
operationally. Prevnar 13 revenue in the U.S. increased 87%,
primarily driven by continued strong uptake among adults.
International revenues increased 25% operationally, driven by
Prevenar 13, which grew 10% operationally, primarily reflecting
increased shipments associated with Gavi, the Vaccine Alliance,
the favorable impact of Prevenar's inclusion in additional
national immunization programs in certain emerging markets
compared with the year-ago quarter, as well as the inclusion in
second-quarter 2015 of revenues associated with the acquisition of
Baxter's portfolio of marketed vaccines in Europe.
-
Consumer Healthcare(3) revenues decreased 2%
operationally, primarily due to the non-recurrence of initial
retailer stocking associated with the launch of Nexium 24HR in the
U.S. in the prior-year quarter. Excluding Nexium 24HR, the
Consumer Healthcare business in the U.S. increased 5%, driven by
increased promotional support for key brands. Additionally,
revenues from emerging markets increased 11% operationally,
primarily driven by China and Venezuela.
-
Global Oncology(3) revenues increased 36%
operationally, primarily driven by strong momentum following the
February 2015 U.S. launch of Ibrance for advanced breast cancer
and, to a lesser extent, stronger demand for Sutent, Inlyta and
Xalkori in most markets.
Established Products Business Highlights
-
GEP(3) revenues decreased 14% operationally, primarily due
to the loss of exclusivity and immediate launch of multi-source
generic competition for Celebrex in the U.S. in December 2014 as well
as generic competition for Zyvox in the U.S. beginning in first-half
2015 and for Lyrica in certain developed Europe markets beginning in
first-quarter 2015. Revenues for Lipitor in developed markets declined
as a result of continued generic competition. Additionally, the
co-promotion collaboration for Spiriva has terminated in most
countries, including in the U.S. in April 2014. These declines were
partially offset by growth in emerging markets, where revenues
increased 2% operationally, primarily driven by Lipitor.
Income Statement Highlights
-
Adjusted cost of sales, adjusted SI&A expenses and adjusted R&D
expenses(2) in the aggregate increased $225 million
operationally, or 3%, reflecting the following operational factors:
-
higher adjusted cost of sales(2), primarily reflecting
an increase in sales volume partially offset by a decrease in
royalty expense;
-
higher adjusted SI&A expense(2), primarily
reflecting increased investments to support recently launched
products and other in-line products, largely offset by continued
benefits from cost-reduction and productivity initiatives; and
-
higher adjusted R&D expense(2), primarily due to
incremental investment in the late-stage pipeline, primarily
bococizumab, partially offset by lower clinical trial spend for
Trumenba, Prevnar 13 adult, and certain oncology products, as well
as the completion of postmarketing commitments for certain in-line
products.
-
The effective tax rate on adjusted income(2) declined 2.3
percentage points to 25.6% from 27.9%. This decline was primarily due
to a favorable change in the jurisdictional mix of earnings partially
offset by a decline in tax benefits associated with the resolution of
certain tax positions pertaining to prior years, with various foreign
tax authorities.
-
The diluted weighted-average shares outstanding declined by 201
million shares compared to the prior-year quarter due to Pfizer's
share repurchase program, including the impact of the $5 billion
accelerated share repurchase agreement executed in February 2015 and
completed in July 2015.
-
In addition to the aforementioned factors, second-quarter 2015
reported earnings were primarily impacted by the following:
Unfavorable
impacts:
-
higher legal charges and acquisition-related costs associated with
the pending acquisition of Hospira in second-quarter 2015 compared
to the prior-year quarter; and
-
higher charges incurred in second-quarter 2015 for business and
legal entity alignment activities.
Favorable impacts:
-
lower restructuring and other charges associated with
cost-reduction and productivity initiatives and lower purchase
accounting adjustments in second-quarter 2015 compared to the
prior-year quarter; and
-
a lower effective tax rate, primarily due to a favorable change in
the jurisdictional mix of earnings partially offset by a decline
in tax benefits associated with the resolution of certain tax
positions pertaining to prior years, with various foreign tax
authorities.
RECENT NOTABLE DEVELOPMENTS
Product Developments
-
Ibrance (palbociclib) -- Pfizer announced in May 2015 study
results demonstrating palbociclib in combination with fulvestrant was
superior to treatment with a standard of care, fulvestrant, by
significantly extending progression-free survival (PFS) in women with
hormone receptor-positive, human epidermal growth factor receptor
2-negative (HER2-) metastatic breast cancer whose disease has
progressed during or after endocrine therapy (Hazard Ratio: 0.42,
median PFS: 9.2 vs. 3.8 months, in their respective arms, p<0.000001).
Results from the Phase 3 PALOMA-3 study were presented as a
late-breaker at the 51st Annual Meeting of the American
Society of Clinical Oncology (ASCO) in June 2015. The PALOMA-3 study
met its primary endpoint of PFS at the interim analysis and was
stopped early in April 2015 due to efficacy based on an assessment by
an independent Data Monitoring Committee. Benefit from palbociclib was
demonstrated across all pre-specified subgroups, including both
pre/perimenopausal and postmenopausal patients. At the time of the PFS
analysis, overall survival (OS) data were immature. The adverse events
observed with palbociclib in combination with fulvestrant in PALOMA-3
were consistent with their respective labeled adverse event
profiles. Pfizer plans to submit a supplemental New Drug Application
to the U.S. Food and Drug Administration (FDA) in fourth-quarter 2015
for potential inclusion of data from the PALOMA-3 study in the U.S.
label. Additionally, Pfizer intends to file a Marketing Authorisation
Application for palbociclib with the European Medicines Agency (EMA)
in third-quarter 2015. The planned EMA submission will include data
from the PALOMA-1 study, which evaluated palbociclib plus letrozole in
women with estrogen receptor positive, HER2- locally advanced or newly
diagnosed metastatic breast cancer, as well as data from the PALOMA-3
study.
-
Trumenba -- Pfizer announced in June 2015 that the U.S. Centers
for Disease Control and Prevention's (CDC) Advisory Committee on
Immunization Practices (ACIP) voted to recommend that decisions to
vaccinate adolescents and young adults 16 through 23 years of age
against serogroup B meningococcal (MenB) disease should be made at the
individual level with healthcare providers. Specifically, the ACIP
voted that a MenB vaccine series may be administered to adolescents
and young adults 16 through 23 years of age to provide short-term
protection against most strains of MenB disease. The preferred age for
MenB vaccination is 16 through 18 years of age. This recommendation
expands the CDC's ACIP February 2015 recommendation for MenB
vaccination.
-
Xeljanz (tofacitinib)
-
Pfizer presented in June 2015 more than 20 abstracts at the
European League Against Rheumatism Annual Congress (EULAR),
including over six years of safety and efficacy data from two
long-term extension studies, real-world experience analyses, and
clinical, patient-reported and radiographic efficacy outcomes with
Xeljanz monotherapy, as well as health economics outcomes research
that include patient-preference data for Xeljanz in patients with
rheumatoid arthritis (RA). Additionally, results from the Xeljanz
11 mg once daily clinical pharmacology program were presented
during the Congress, demonstrating equivalence in key
pharmacokinetic parameters to Xeljanz 5 mg twice daily.
-
Pfizer presented in June 2015 twelve presentations, including new
data on tofacitinib for chronic plaque psoriasis and atopic
dermatitis, at the 23rd World Congress of Dermatology
meeting. Among the highlights were three late-breaking
presentations, including 52-week pooled results from the Oral
treatment Psoriasis Trials (OPT) pivotal studies, an integrated
safety summary across the OPT development program for oral
tofacitinib, and the first presentation of two-year results from
OPT Extend, the ongoing long-term extension study of tofacitinib
in moderate to severe chronic plaque psoriasis.
-
Pfizer announced in July 2015 that the FDA accepted for review
Pfizer's new drug application for Xeljanz 11 mg once daily
modified release tablets for the treatment of moderate to severe
RA in patients who have had an inadequate response or intolerance
to methotrexate. The FDA has provided an anticipated Prescription
Drug User Fee Act (PDUFA) action date in February 2016.
-
Xalkori -- Pfizer announced in April 2015 that Xalkori
(crizotinib) received Breakthrough Therapy designation by the FDA for
the potential treatment of patients with ROS1-positive non-small cell
lung cancer (NSCLC). Occurring in approximately one percent of NSCLC
cases, ROS1-positive NSCLC represents a particular molecular subgroup
of NSCLC. Xalkori currently is approved in the U.S. for the treatment
of patients with metastatic NSCLC whose tumors are anaplastic lymphoma
kinase (ALK)-positive as detected by a FDA-approved test. Pfizer will
work closely with the FDA on the development of Xalkori for
ROS1-positive NSCLC and provide the information needed to support a
potential regulatory submission.
Pipeline Developments
A comprehensive update of Pfizer's development pipeline was published
today and is now available at www.pfizer.com/pipeline.
It includes an overview of Pfizer's research and a list of compounds in
development with targeted indication and phase of development, as well
as mechanism of action for candidates from Phase 2 through registration.
-
At ASCO 2015, Pfizer Oncology presented data showcasing the clinical
progress of several marketed products and investigational compounds
spanning multiple tumor types, including breast cancer, NSCLC and
non-Hodgkin's lymphoma (NHL). Pfizer abstracts included data for two
investigational agents, highlighting the depth of Pfizer's
immunotherapy pipeline and heritage in lung cancer and personalized
medicine: PF-05082566, a fully humanized monoclonal antibody that
stimulates signaling through 4-1BB in patients with CD20+ NHL and the
first ever clinical data for PF-06463922, a novel adenosine
triphosphate competitive small molecule inhibitor of ALK/ROS1, in
patients with advanced ALK+ or ROS1+ NSCLC. Pfizer also presented new
analyses from the pivotal Phase 2 PALOMA-1 trial for Ibrance
(palbociclib), providing additional data on patient subgroups of
interest. The Merck KGaA-Pfizer Alliance also presented 10 abstracts
on avelumab, providing the latest preliminary clinical results across
various tumor types, including NSCLC and ovarian cancer.
-
PF-06290510 (Staphylococcus aureus (S. aureus)
vaccine candidate) -- In July 2015, Pfizer announced enrollment of
the first patient in a Phase 2b clinical trial of its investigational S.
aureus multi-antigen vaccine in adults undergoing elective spinal
fusion surgery. The purpose of the study, named STRIVE (STaphylococcus
aureus SuRgical Inpatient Vaccine Efficacy), is to evaluate the
safety and efficacy of the vaccine to determine if it prevents
postoperative invasive S. aureus infections in patients
undergoing elective spinal surgery. The trial is expected to enroll
approximately 2,600 patients with final results expected in 2017.
PF-06290510 was granted Fast Track designation by the FDA in February
2014.
-
PF-06425090 (Clostridium difficile (C. difficile)
vaccine candidate) -- In November 2014, Pfizer disclosed that in a
previous Phase 2 study, enrollment and vaccination of further subjects
was halted due to several observed cases of severe local
reactogenicity (redness). Pfizer has since identified a new path
forward using an alternate formulation. In July 2015, Pfizer initiated
a new Phase 2 study to evaluate the safety, tolerability and
immunogenicity of its investigational C. difficile vaccine in
healthy adults 65 to 85 years of age. The trial is expected to enroll
approximately 850 patients with final results expected in 2017.
PF-06425090 was granted Fast Track designation by the FDA in August
2014.
-
Lipitor Over-the-Counter (OTC) -- A Phase 3 "actual use" trial
intended to simulate the OTC use of Lipitor (atorvastatin calcium) 10
mg was completed in December 2014. The study did not meet its primary
objectives of demonstrating patient compliance with the direction to
check their low-density lipoprotein cholesterol (LDL-C) level and,
after checking their LDL-C level, take appropriate action based on
their test results. Based on dialogue with the FDA about the program
and analysis of this data, the program was terminated.
-
PF-06410293 -- In July 2015, Pfizer began dosing patients in a
multinational Phase 3 clinical trial of PF-06410293, a potential
biosimilar to Humira®(6) (adalimumab). The Phase 3 clinical
trial will evaluate the efficacy, safety, and immunogenicity of
PF-06410293 plus methotrexate and adalimumab sourced from the EU plus
methotrexate in subjects with moderately to severely active rheumatoid
arthritis who have had an inadequate response to methotrexate
monotherapy.
-
Rivipansel -- Pfizer announced in June 2015 that the first
patient has been enrolled in the RESET (Rivipansel: Evaluating Safety,
Efficacy and Time to Discharge) study, a Phase 3 clinical trial
assessing the efficacy and safety of rivipansel for the treatment of
vaso-occlusive crisis in hospitalized individuals with sickle cell
disease who are six years of age or older. This multicenter,
randomized, double-blind, placebo-controlled, parallel-group study is
expected to enroll at least 350 people. Rivipansel has received Orphan
Drug and Fast Track status from the FDA, and this study is being
conducted under a Special Protocol Assessment, in agreement with the
FDA.
-
Avelumab (MSB0010718C) -- Merck KGaA and Pfizer announced in
April 2015 the initiation and first patient treated in a Phase 3 study
designed to assess the efficacy and safety of the investigational
cancer immunotherapy avelumab, compared with docetaxel, in patients
with stage IIIb/IV NSCLC who have experienced disease progression
after receiving a prior platinum-containing doublet therapy. The Phase
3 study is an open-label, multicenter, 1:1 randomized clinical trial
where patients with stage IIIb/IV NSCLC will receive either avelumab
or docetaxel, regardless of programmed death-ligand 1 (PD-L1) status.
Approximately 650 patients will participate across 290 sites in more
than 30 countries in North America, South America, Asia, Africa and
Europe. The study is part of the JAVELIN clinical trial program for
avelumab.
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PF-06439535 -- In May 2015, Pfizer began dosing patients in a
multinational Phase 3 clinical trial of PF-06439535, a potential
biosimilar to Avastin®(7) (bevacizumab). The Phase 3
clinical trial will evaluate the efficacy and safety of PF-06439535
plus paclitaxel and carboplatin against Avastin sourced from the EU
plus paclitaxel and carboplatin by comparing the best confirmed
objective response rate by week 19 in first-line treatment for
patients with advanced (unresectable, locally advanced, recurrent or
metastatic) non-squamous NSCLC.
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Inotuzumab Ozogamicin -- Pfizer announced in April 2015 that
the Phase 3 INO-VATE ALL study investigating the treatment of
inotuzumab ozogamicin met the primary endpoint of complete response or
complete response with incomplete blood count recovery (CR/CRi)
demonstrating a higher complete hematologic remission rate in adult
patients with relapsed or refractory CD22-positive acute lymphoblastic
leukemia compared to that achieved with standard of care chemotherapy.
Pfizer is discussing these data with the FDA and other regulatory
agencies. Pfizer is continuing the study to allow for the data on OS,
a separate primary endpoint, to mature.
Corporate Developments
-
Pfizer announced in June 2015 that it has entered into an agreement
with GlaxoSmithKline to acquire its quadrivalent meningitis ACWY
vaccines, Nimenrix and Mencevax, for a total consideration of
approximately $130 million (€115 million). This transaction will add
two high-quality and complementary vaccines to Pfizer's portfolio,
allowing the company to reach a broader global population. This
transaction is not expected to have any significant impact on Pfizer's
2015 financial performance. The transaction is subject to customary
closing conditions as well as regulatory approvals in several markets,
and is expected to close in the second half of 2015.
-
Pfizer announced in May 2015 that it received a request for additional
information from the U.S. Federal Trade Commission (FTC) with respect
to its previously announced pending acquisition of Hospira. The
request for information from the FTC, often referred to as a "second
request," was anticipated as part of the regulatory process under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. Pfizer continues
to work cooperatively and expeditiously with the FTC in connection
with its review. The transaction is subject to customary closing
conditions, including regulatory approvals in several jurisdictions.
On May 13, 2015, Hospira shareholders voted in favor of the proposal
to adopt the merger agreement, which was also a condition to closing
the transaction. Pfizer and Hospira continue to expect the transaction
to close in the second half of 2015.
-
In April 2015, Pfizer acquired a minority equity interest in AM-Pharma
B.V., a privately held Dutch biopharmaceutical company focused on the
development of recombinant human Alkaline Phosphatase for inflammatory
diseases, and secured an exclusive option to acquire the remaining
equity in the company. Under the terms of the agreement, Pfizer paid
$87.5 million for both the exclusive option and the minority equity
interest and Pfizer may make additional payments of up to $512.5
million upon exercise of the option and potential launch of any
product that may result from this investment.
Please find Pfizer's press release and associated financial tables,
including reconciliations of certain GAAP reported to non-GAAP adjusted
information, at the following hyperlink:
http://www.pfizer.com/system/files/presentation/Q2_2015_PFE_Earnings_Press_Release_asdfenlfi.pdf
(Note: If clicking on the above link does not open up a new web page,
you may need to cut and paste the above URL into your browser's address
bar.)
For additional details, see the associated financial schedules and
product revenue tables attached to the press release located at the
hyperlink referred to above and the attached disclosure notice.
(1)
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Reported revenues is defined as revenues in accordance with U.S.
generally accepted accounting principles (GAAP). Reported net income
is defined as net income attributable to Pfizer Inc. in accordance
with U.S. GAAP. Reported diluted earnings per share (EPS) is defined
as reported diluted EPS attributable to Pfizer Inc. common
shareholders in accordance with U.S. GAAP.
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(2)
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Adjusted income and its components and Adjusted diluted EPS are
defined as reported U.S. GAAP net income(1) and its
components and reported diluted EPS(1) excluding
purchase accounting adjustments, acquisition-related costs,
discontinued operations and certain significant items. Adjusted
revenues, Adjusted cost of sales, Adjusted selling, informational
and administrative (SI&A) expenses, Adjusted research and
development (R&D) expenses and Adjusted other (income)/deductions
are income statement line items prepared on the same basis as, and
therefore components of, the overall Adjusted income measure. As
described under Adjusted income in the Management's
Discussion and Analysis of Financial Condition and Results of
Operations section of Pfizer's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 29, 2015, management uses Adjusted
income, among other factors, to set performance goals and to
measure the performance of the overall company. We believe that
investors' understanding of our performance is enhanced by
disclosing this measure. See the accompanying reconciliations of
certain GAAP Reported to non-GAAP Adjusted information for the
second quarter and first six months of 2015 and 2014, as well as
reconciliations of full-year 2015 guidance for Adjusted income and
Adjusted diluted EPS to full-year 2015 guidance for Reported net
income(1) and Reported diluted EPS(1). The
Adjusted income and its components and Adjusted diluted EPS
measures are not, and should not be viewed as, substitutes for
U.S. GAAP net income and its components and diluted EPS.
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(3)
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The 2015 financial guidance reflects the following:
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Does not assume the completion of any business development
transactions not completed as of June 28, 2015, including any one-time
upfront payments associated with such transactions. 2015 financial
guidance does not reflect any impact from the pending acquisition of
Hospira. The transaction is expected to close during the second half
of 2015.
-
Excludes the potential effects of the resolution of litigation-related
matters not substantially resolved as of June 28, 2015.
-
Exchange rates assumed are a blend of the actual exchange rates in
effect through second-quarter 2015 and the mid-July 2015 exchange
rates for the remainder of the year. Excludes the impact of a
potential devaluation of the Venezuelan bolivar.
-
Guidance for reported revenues(1) reflects the anticipated
negative impact of $3.4 billion due to recent and expected generic
competition for certain products that have recently lost or are
anticipated to soon lose patent protection, partially offset by
anticipated revenue growth from certain other products.
-
Guidance for reported revenues(1) also reflects the
anticipated negative impact of $3.3 billion as a result of unfavorable
changes in essentially all foreign exchange rates relative to the U.S.
dollar compared to foreign exchange rates from 2014. The anticipated
negative impact on reported(1) and adjusted(2)
diluted EPS resulting from unfavorable changes in foreign exchange
rates compared to foreign exchange rates from 2014 is approximately
$0.19.
-
Guidance for the effective tax rate on adjusted income(2) does
not assume the renewal of the U.S. R&D tax credit. The renewal of the
R&D tax credit is not anticipated to have a material impact on the
effective tax rate on adjusted income(2).
-
Guidance for reported(1) and adjusted diluted EPS(2)
assumes diluted weighted-average shares outstanding of approximately
6.25 billion shares, inclusive of share repurchases in 2015. Share
repurchases in 2015 were composed of $1.0 billion of shares
repurchased through January 30, 2015, a $5.0 billion accelerated share
repurchase agreement executed in February 2015 and a $0.2 billion cash
payment in July 2015 to satisfy the settlement terms of the
accelerated share repurchase agreement. Pfizer elected to settle the
terms of the accelerated share repurchase agreement with cash as
opposed to the commensurate value in shares. Actual and projected
dilution related to employee compensation programs is expected to
partially offset these share repurchases.
-
Reconciliation of the 2015 Adjusted income(2) and Adjusted
diluted EPS(2) guidance to the 2015 Reported net income
attributable to Pfizer Inc. and Reported diluted EPS attributable to
Pfizer Inc. common shareholders guidance:
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($ in billions, except per share amounts)
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Income/(Expense)
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Net Income
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Diluted EPS
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Adjusted income/diluted EPS(2) guidance
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$12.6 - $13.0
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$2.01 - $2.07
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Purchase accounting impacts of transactions completed as of June 28,
2015
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(2.6)
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(0.41)
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Restructuring and implementation costs
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(0.7) - (0.9)
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(0.11) - (0.14)
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Business and legal entity alignment costs
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(0.3)
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(0.05)
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Certain other items incurred through June 28, 2015
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(0.2)
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(0.03)
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Reported net income attributable to Pfizer Inc./diluted EPS(1)
guidance
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$8.6 - $9.2
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$1.38 - $1.47
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(4)
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For a description of the revenues in each business, see the "Our
Strategy-Commercial Operations" sub-section in the Overview of
Our Performance, Operating Environment, Strategy and Outlook
section of Pfizer's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 29, 2015.
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(5)
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Other includes revenues generated from Pfizer CentreSource, our
contract manufacturing and bulk pharmaceutical chemical sales
organization, and revenues related to our transitional manufacturing
and supply agreements with Zoetis, Inc.
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(6)
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Humira® is a registered U.S. trademark of Abbvie Biotechnology Ltd.
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(7)
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Avastin® is a registered U.S. trademark of Genentech, Inc.
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DISCLOSURE NOTICE: The information contained in this earnings release
and the attachments is as of July 28, 2015. We assume no obligation to
update forward-looking statements contained in this earnings release and
the attachments as a result of new information or future events or
developments.
This earnings release and the attachments contain forward-looking
statements about our anticipated future operating and financial
performance, business plans and prospects, in-line products and product
candidates, strategic reviews, capital allocation, business-development
plans, and plans relating to share repurchases and dividends, among
other things, that involve substantial risks and uncertainties. You can
identify these statements by the fact that they use future dates or use
words such as "will," "may," "could," "likely," "ongoing," "anticipate,"
"estimate," "expect," "project," "intend," "plan," "believe," "target,"
"forecast," "goal," "objective," "aim" and other words and terms of
similar meaning. Among the factors that could cause actual results to
differ materially from past results and future plans and projected
future results are the following:
-
the outcome of research and development activities, including, without
limitation, the ability to meet anticipated clinical trial
commencement and completion dates, regulatory submission and approval
dates, and launch dates for product candidates, as well as the
possibility of unfavorable clinical trial results, including
unfavorable new clinical data and additional analyses of existing
clinical data;
-
decisions by regulatory authorities regarding whether and when to
approve our drug applications, which will depend on the assessment by
such regulatory authorities of the benefit-risk profile suggested by
the totality of the efficacy and safety information submitted; and
decisions by regulatory authorities regarding labeling, ingredients
and other matters that could affect the availability or commercial
potential of our products;
-
the speed with which regulatory authorizations, pricing approvals and
product launches may be achieved;
-
the outcome of post-approval clinical trials, which could result in
the loss of marketing approval for a product or changes in the
labeling for, and/or increased or new concerns about the safety or
efficacy of, a product that could affect its availability or
commercial potential;
-
risks associated with interim data, including the risk that final
results of studies for which interim data have been provided and/or
additional clinical trials may be different from (including less
favorable than) the interim data results and may not support further
clinical development of the applicable product candidate or indication;
-
the success of external business-development activities, including the
ability to satisfy the conditions to closing of announced transactions
in the anticipated timeframe or at all, including our and Hospira's
ability to satisfy the conditions to closing our merger agreement;
-
competitive developments, including the impact on our competitive
position of new product entrants, in-line branded products, generic
products, private label products and product candidates that treat
diseases and conditions similar to those treated by our in-line drugs
and drug candidates;
-
the implementation by the FDA of an abbreviated legal pathway to
approve biosimilar products, which could subject our biologic products
to competition from biosimilar products in the U.S., with attendant
competitive pressures, after the expiration of any applicable
exclusivity period and patent rights;
-
the ability to meet generic and branded competition after the loss of
patent protection for our products or competitor products;
-
the ability to successfully market both new and existing products
domestically and internationally;
-
difficulties or delays in manufacturing;
-
trade buying patterns;
-
the impact of existing and future legislation and regulatory
provisions on product exclusivity;
-
trends toward managed care and healthcare cost containment;
-
the impact of any significant spending reductions affecting Medicare,
Medicaid or other publicly funded or subsidized health programs or
changes in the tax treatment of employer-sponsored health insurance
that may be implemented, and/or any significant additional taxes or
fees that may be imposed on the pharmaceutical industry as part of any
broad deficit-reduction effort;
-
the impact of U.S. healthcare legislation enacted in 2010-the Patient
Protection and Affordable Care Act, as amended by the Health Care and
Education Reconciliation Act-and of any modification or repeal of any
of the provisions thereof;
-
U.S. federal or state legislation or regulatory action affecting,
among other things, pharmaceutical product pricing, reimbursement or
access, including under Medicaid, Medicare and other publicly funded
or subsidized health programs; the importation of prescription drugs
from outside the U.S. at prices that are regulated by governments of
various foreign countries; direct-to-consumer advertising and
interactions with healthcare professionals; and the use of comparative
effectiveness methodologies that could be implemented in a manner that
focuses primarily on the cost differences and minimizes the
therapeutic differences among pharmaceutical products and restricts
access to innovative medicines; as well as pricing pressures as a
result of highly competitive insurance markets;
-
legislation or regulatory action in markets outside the U.S. affecting
pharmaceutical product pricing, reimbursement or access, including, in
particular, continued government-mandated price reductions for certain
biopharmaceutical products and government-imposed access restrictions
in certain countries;
-
the exposure of our operations outside the U.S. to possible capital
and exchange controls, expropriation and other restrictive government
actions, changes in intellectual property legal protections and
remedies, as well as political unrest and unstable governments and
legal systems;
-
contingencies related to actual or alleged environmental contamination;
-
claims and concerns that may arise regarding the safety or efficacy of
in-line products and product candidates;
-
any significant breakdown, infiltration or interruption of our
information technology systems and infrastructure;
-
legal defense costs, insurance expenses, settlement costs, the risk of
an adverse decision or settlement and the adequacy of reserves related
to product liability, patent protection, government investigations,
consumer, commercial, securities, antitrust, environmental and tax
issues, ongoing efforts to explore various means for resolving
asbestos litigation, and other legal proceedings;
-
our ability to protect our patents and other intellectual property,
both domestically and internationally;
-
interest rate and foreign currency exchange rate fluctuations,
including the impact of possible currency devaluations in countries
experiencing high inflation rates;
-
governmental laws and regulations affecting domestic and foreign
operations, including, without limitation, tax obligations and changes
affecting the tax treatment by the U.S. of income earned outside the
U.S. that may result from pending and possible future proposals;
-
any significant issues involving our largest wholesaler customers,
which account for a substantial portion of our revenues;
-
the possible impact of the increased presence of counterfeit medicines
in the pharmaceutical supply chain on our revenues and on patient
confidence in the integrity of our medicines;
-
any significant issues that may arise related to the outsourcing of
certain operational and staff functions to third parties, including
with regard to quality, timeliness and compliance with applicable
legal requirements and industry standards;
-
any significant issues that may arise related to our joint ventures
and other third-party business arrangements;
-
changes in U.S. generally accepted accounting principles;
-
uncertainties related to general economic, political, business,
industry, regulatory and market conditions including, without
limitation, uncertainties related to the impact on us, our customers,
suppliers and lenders and counterparties to our foreign-exchange and
interest-rate agreements of challenging global economic conditions and
recent and possible future changes in global financial markets; and
the related risk that our allowance for doubtful accounts may not be
adequate;
-
any changes in business, political and economic conditions due to
actual or threatened terrorist activity in the U.S. and other parts of
the world, and related U.S. military action overseas;
-
growth in costs and expenses;
-
changes in our product, segment and geographic mix; and
-
the impact of acquisitions, divestitures, restructurings, internal
reorganizations, product recalls and withdrawals and other unusual
items, including our ability to realize the projected benefits of our
cost-reduction and productivity initiatives, including those related
to our research and development organization, of the internal
separation of our commercial operations into our new operating
structure and of our pending acquisition of Hospira.
A further list and description of risks, uncertainties and other matters
can be found in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2014 and in our subsequent reports on Form 10-Q, in each
case including in the sections thereof captioned "Forward-Looking
Information and Factors That May Affect Future Results" and "Item 1A.
Risk Factors", and in our subsequent reports on Form 8-K.
The operating segment information provided in this earnings release and
the attachments does not purport to represent the revenues, costs and
income from continuing operations before provision for taxes on income
that each of our operating segments would have recorded had each segment
operated as a standalone company during the periods presented.
This earnings release may include discussion of certain clinical studies
relating to various in-line products and/or product candidates. These
studies typically are part of a larger body of clinical data relating to
such products or product candidates, and the discussion herein should be
considered in the context of the larger body of data. In addition,
clinical trial data are subject to differing interpretations, and, even
when we view data as sufficient to support the safety and/or
effectiveness of a product candidate or a new indication for an in-line
product, regulatory authorities may not share our views and may require
additional data or may deny approval altogether.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150728005829/en/
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