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Earnings Preview: Pfizer to report on new drugs

Linda a. Johnson, AP Business Writer

TRENTON, N.J. (AP) -- Pfizer Inc. will update analysts on progress on its experimental drugs, particularly its growing cancer medicine franchise, and discuss sales of key drugs as it tries to rebound from a revenue drop caused by generic competition, when it reports second-quarter results Tuesday morning.

WHAT TO WATCH FOR: CEO Ian Read should discuss initial sales of new blood thinner Eliquis, a divestiture meant to sharpen Pfizer's focus and yet another approval for Prevnar 13, the top-selling vaccine in history.

Prevnar 13, for preventing ear infections, meningitis and other pneumococcal infections, was approved recently in Europe for 18- to 49-year-olds, making that the first place where it's approved for every age group. The shot brought the world's second-biggest drugmaker $4.1 billion last year.

Pfizer on June 24 divested its remaining 80 percent stake in its animal health business, now a separate company called Zoetis Inc., by giving Zoetis shares to Pfizer shareholders who wanted to swap. Pfizer held an initial public offering of Zoetis stock in February, raising $2.2 billion.

That was the latest step in Pfizer's strategy of divesting non-core businesses to focus on creating prescription medicines for people, particularly for disorders lacking good treatments. Pfizer already had divested its nutrition and capsule-making businesses.

The New York-based company likely will report minimal sales of Eliquis, the latest entry in a new generation of anticlotting drugs. It's approved for preventing strokes in patients with the heart arrhythmia atrial fibrillation. Pfizer and partner Bristol-Myers Squibb Co. launched the drug in February, and Bristol-Myers on Thursday reported its share of sales at just $12 million in the second quarter.

The new drugs are intended to supplant the longtime standard treatment, warfarin, a generic drug that's much cheaper but requires frequent blood tests to keep the dose correct. Eliquis hit the market at least 18 months after rivals Pradaxa, from German drugmaker Boehringer Ingelheim, and Xarelto from partners Johnson & Johnson and Bayer Healthcare.

Pfizer and Bristol-Myers recently applied for U.S. approval to also market it for preventing dangerous blood clots in large veins after knee or hip replacement surgery.

Executives will note important advances and a setback in Pfizer's cancer portfolio.

Pfizer made cancer a research priority several years ago and launched three new medicines — Xalkori, Inlyta and Bosulif — for multiple cancer types during a 13-month stretch from August 2011 through September 2012. Sales of those drugs will be discussed.

In April, breast cancer drug palbociclib — likely the first drug in Pfizer's next wave of cancer drugs — won designation as a breakthrough therapy from the Food and Drug Administration. That will speed up final testing and review of the drug, and analysts will want details.

But the company in May said it was scrapping development of a drug for non-Hodgkin's lymphoma because patient testing showed it didn't increase survival.

In another setback, advisers to European Union regulators on Thursday reiterated their April 25 recommendation against approving Pfizer's new pill for rheumatoid arthritis, Xeljanz. Widely advertised, it's meant to compete with injected biologic drugs including Pfizer's own Enbrel, which treats multiple immune-related disorders. It's been on sale in the U.S. since last November, for easing symptoms of the immune disorder, and is under review for slowing progression of joint damage.

Pfizer may discuss results of its precedent-setting move in May to start selling impotence drug Viagra online to counteract the massive amount of counterfeiting of the pill on the Internet.

It also will note a June settlement with two companies that sold generic versions of its popular heartburn treatment Protonix while they were challenging its patent, which hadn't yet expired. A jury ruled the patent was valid, and that ruling was upheld on appeal. Under the settlement, the generic drugmakers will pay Pfizer and its partner in marketing Protonix, Japan's Takeda Pharmaceutical, $2.15 billion, with Pfizer getting 64 percent of that.

WHY IT MATTERS: Pfizer has some promising new drugs starting to build up sales and quite a few established drugs that bring in well over $1 billion a year, including Viagra, Enbrel and pain medicines Lyrica and Celebrex. It also has several drugs in mid- or late-stage human testing that could become big sellers — not because they'll be taken by millions, but because they are for rare or complex disorders and so will command high prices.

But the company's financial results likely will continue to be overshadowed for a while by the many billions of dollars in annual revenue lost to recent generic competition. The biggest hit came when cholesterol reducer Lipitor, the biggest-selling medicine ever with a peak of about $13 billion a year, got generic competition late in 2011.

That hit has left Pfizer, like fellow drugmakers Bristol-Myers Squibb Co. and Merck & Co., with a revenue base down a few billion dollars from its 2011 peak.

WHAT'S EXPECTED: Analysts surveyed by FactSet expect, on average, adjusted earnings of 56 cents per share and sales of $13.22 billion.

LAST YEAR'S QUARTER: Pfizer posted net income of $3.25 billion, or 43 cents per share, on revenue of $15.06 billion.


Linda A. Johnson can be followed at https://twitter.com/LindaJ_onPharma