M&A is always a hot topic during Pfizer Inc.'s earnings calls, with investors eager to see the company bolster its growth prospects, particularly given recent speculation the company could be looking to make a bigger splash in immuno-oncology by buying a rival like Bristol-Myers Squibb Co.
Pfizer CEO Ian Read and CFO Frank D'Amelio said they aren't ruling out a mega-deal, during the company's third quarter earnings call Oct. 31, which gave analysts an opportunity to press management on their latest thinking on M&A and other topics. And when an analyst pushed for a comment on whether or not big deals at the company have been value-enhancing, both executives agreed they have.
"As we've always said, we're agnostic to size," Read said, while D'Amelio highlighted Pfizer's $68bn acquisition of Wyeth in 2009.
"I think the retrospective on that is it's been very value-enhancing," he said. "If you look at our portfolio today, much of it has come from the Wyeth acquisition. When we announced that deal, we announced what, $4bn in synergies? We clearly exceeded that."
But Read would not provide any additional insight into the company's current thinking on a deal in the IO space as it relates to PD-1/L1. Pfizer already launched its own PD-L1 inhibitor, under a partnership with Merck KGAA, in March in Merkel cell carcinoma, but the partners were late to the game with Bavencio (avelumab), and are trying to catch up in the crowded category. (Also see "Pfizer's Avelumab Makes Its Debut, In Rare Form Of Skin Cancer" - Scrip, 23 Mar, 2017.)
"On avelumab, we remain committed to our programs with our partner," Read said. "Regarding any rumors you may or may not have heard, I really can't speculate on them."
Beyond M&A, the execs covered a lot of ground including pipeline updates, strategic options for consumer healthcare, and industry trends like Amazon entering the pharmaceutical distribution business. Here are 10 other notable discussion points from Pfizer's third quarter call:
- Ibrance Sales Through The Roof: The CDK4/6 inhibitor Ibrance (palbociclib) continues to impress, despite the entry of new competition earlier this year, Novartis AG's Kisqali (ribociclib) and Eli Lilly & Co.'s Verzenio (abemaciclib). Ibrance has been a key driver of growth for Pfizer since it debuted in early 2015, and it appears poised to remain that way. Sales of Ibrance jumped 60% in the third quarter over the year-ago quarter to $878m. Sales in the US grew 34% to $713m.
- Consumer Healthcare Asset Swap An Option: Pfizer revealed Oct. 10 it is exploring strategic alternatives for its consumer healthcare business, which includes brands like Advil and Nexium 24HR OTC, but hasn't commented since. (Also see "Pfizer Déjà Vu: Is It Time To Sell The Consumer Health Business?" - Scrip, 10 Oct, 2017.) Read said the decision came about as part of a regular business review and the company is considering everything from a full or partial separation of the business to deciding to retain it. An asset swap could also be an option, he said. "I think the process we're going to take in the strategic review may shake loose more alternatives in that aspect," Read said.
- Eucrisa Will Be A $2bn-Plus Product: Pfizer isn't backing off early forecasts for the topical atopic dermatitis product Eucrisa (crisaborole) to become a blockbuster, despite a slow start. Pfizer launched Eucrisa in January as the first new drug for atopic dermatitis in more than a decade as part of a move into dermatology. (Also see "Pfizer’s Eucrisa Approval By FDA Adds New Dermatology Anchor" - Scrip, 14 Dec, 2016.) But the launch appears off to a slow start, generating just $15m in the third quarter. Group President-Pfizer Innovative Health Albert Bourla insisted Pfizer is sticking to its early blockbuster forecasts for Eucrisa. "We think that it will be a $2bn-plus product, and we are very excited with the progress," he said. He said the company used significant sampling and couponing, including a free trial voucher, to launch the drug, and only 50% of commercial lives have unrestricted access to the drug.
- On Amazon And Pharma Distribution: While Amazon has not publicly announced plans to enter the prescription drug arena, reports the company is pursuing pharma distribution licenses in several states has fueled speculation that major pharmacy disruption could be on the horizon. When asked about his thoughts on Amazon entering the market, Read said: "Any system of distribution where you can cut costs and get a wide availability of products to patients is something that the whole industry will be interested in." But, he said a new model taking on pharmacy benefit management could still be a challenge, given issues over deciding differential access. "That's a whole different skillset," Read said.
- Tanezumab Data In 2018: The anti-nerve growth factor class could present a new option for pain relief, without the risk of addiction associated with opioids, though the class has run up against some safety issues. Nonetheless, Pfizer and partner Eli Lilly & Co. are continuing to develop tanezumab in six Phase III clinical trials for osteoarthritis and chronic back pain in roughly 7,000 patients. "We are very encouraged and optimistic that this could be a real, very important option for patients going forward," President Worldwide R&D Mikael Dolsten said. Data from the studies will begin to read out in mid-2018, he said.
- Established Products Business Return To Growth Plan: Pfizer Established Products is poised to return to growth, Group President-Pfizer Essential Health John Young insisted. The business segment, tasked with managing Pfizer's mature drugs and loss of patent exclusivities, faces challenges given the portfolio's dynamics. However, Young said the business is on track to meet its goal of returning to low- to mid-single digit growth. Excluding losses of exclusivity (accounting for about $339m in the third quarter) and the divestiture of Hospira's infusion systems business, sales were flat, Young said. Sales declined 7% in the quarter to $5.05bn on a reported basis. "Whilst we are still on that path to recovery, I think we remain committed to and actually very positive about the aspiration to turn around this business to the growth profile that we've outlined," Young said.
- IO/IO Combo Data On The Horizon: Much of Pfizer's come-from-behind strategy in immuno-oncology hinges on leapfrogging the competition by developing novel IO/IO combinations. Read said the company is on track to have combination data in hand testing the PD-L1 inhibitor Bavencio in combination with 4-1BB later this year, and ready for presentation in 2018, as well as data from a triple combination (PD-L1 plus 4-1BB and OX40) in late 2018. Pfizer and Merck are running nine pivotal trials with Bavencio, with third-line gastric data expected to read out shortly, followed in 2018 by second-line lung cancer and second-line ovarian cancer.
- On Biosimilars, "Enough Is Enough": Inflectra, the first biosimilar version of Johnson & Johnson's Remicade (infliximab), is facing a challenging launch in the US, in part because of J&J's defensive contracting strategy that has effectively blocked the drug from accessing much of the reimbursable market. Pfizer has filed a lawsuit against its rival claiming the contracts are anti-competitive. (Also see "Pfizer Sets The Stage For A Biosimilar Showdown Over Exclusive Contracts" - Scrip, 20 Sep, 2017.) Inflectra generated $34m in the US in the third quarter. When asked about the reimbursement challenges, Read said, "I think the solution to this will come from a societal view that biosimilars are there to provide access to patients once the patent has expired and that enough is enough."
- An Xtandi recovery?: Sales of the prostate cancer drug Xtandi (enzalutamide)may be stabilizing after Pfizer has faced an unexpected challenge related to increased use of patient assistance programs to pay for treatment that has negatively impacted sales. Volume was up 15% in the third quarter, although Pfizer's alliance revenues only increased 2% over the prior-year quarter to $150m. "We are pleased to report that we have now recorded sequential revenue growth for two consecutive quarters," Read said. "The patient assistance program proportion of total demand was comparable with that seen in the first and second quarters, and we continue to expect that the program's utilization will normalize as we move into next year." The unanticipated bump in the road for Xtandi made investors nervous after the company spent $14bn to acquire Medivation Inc. last year, but positive Phase III data from the PROSPER study, released in September, showed benefits in non-metastatic castration-resistant prostate cancer in patients treated with Xtandi, which has taken some of the pressure off Pfizer to prove the value of the deal. (Also see "Pfizer Poised To PROSPER From Xtandi In Expanded Indication" - Scrip, 14 Sep, 2017.)
- Succession Plan: One interesting question that stood out and maybe took Read by surprise was about Pfizer's succession plan. The chief executive has led the firm for going on seven years, after being appointed to succeed Jeffrey Kindler in December 2010 in a sudden management shakeup just as the company was headed over the Lipitor patent cliff. (Also see "Pfizer Sets The Stage For A Biosimilar Showdown Over Exclusive Contracts" - Scrip, 20 Sep, 2017.) Time flies, though, when it comes to leading one of the world's biggest pharmas and every leadership reign has an eventual expiration. Read didn't sound ready to pass the baton anytime soon, however. "[At] Pfizer, like all major companies, the board has a responsibility on succession planning. We have a robust succession process within Pfizer. And at due points that succession plan will become active."