PFIZER REPORTS FIRST-QUARTER 2019 RESULTS
Pfizer will work with the FDA and other regulatory agencies to review the full results upon completion of this study.
Pfizer Inc. (NYSE: PFE) reported financial results for first-quarter
2019 and raised the midpoint of its 2019 financial guidance for adjusted
diluted EPS(2).
At the start of the 2019 fiscal year(3), Pfizer reorganized
its commercial operations into three businesses:
-
Pfizer Biopharmaceuticals Group (Biopharma), a science-based
innovative medicines business, which includes all of the previous
Innovative Health business units (except Consumer Healthcare) as well
as a new Hospital business unit that commercializes Pfizer’s global
portfolio of sterile injectable and anti-infective medicines and
includes Pfizer’s contract manufacturing operation, Pfizer CentreOne.
Pfizer also incorporated its biosimilar portfolio into its Oncology
and Inflammation & Immunology business units and certain legacy
established products into the Internal Medicine business unit. -
Upjohn, a global, off-patent branded and generic established medicines
business, which includes 20 off-patent solid oral dose legacy brands
including Lyrica, Lipitor, Norvasc, Viagra and Celebrex, as well as
certain generic medicines. -
Consumer Healthcare(4), which includes Pfizer’s
over-the-counter medicines.
Results for the first quarter of 2019 and 2018(3) are
summarized below.
OVERALL |
|||||||||||
($ in millions, except
per share amounts) |
First-Quarter | ||||||||||
2019 | 2018 | Change | |||||||||
Revenues | $ | 13,118 | $ | 12,906 | 2 | % | |||||
Reported Net Income(1) | 3,884 | 3,561 | 9 | % | |||||||
Reported Diluted EPS(1) | 0.68 | 0.59 | 15 | % | |||||||
Adjusted Income(2) | 4,891 | 4,555 | 7 | % | |||||||
Adjusted Diluted EPS(2) | 0.85 | 0.75 | 13 | % | |||||||
REVENUES | ||||||||||||||
($ in millions) | First-Quarter | |||||||||||||
2019 | 2018 | % Change | ||||||||||||
Total | Oper. | |||||||||||||
Biopharma | $ | 9,185 | $ | 8,881 | 3 | % | 7 | % | ||||||
Upjohn | 3,075 | 3,120 | (1 | %) | 1 | % | ||||||||
Consumer Healthcare(4) | 858 | 905 | (5 | %) | (2 | %) | ||||||||
Total Company | $ | 13,118 | $ | 12,906 | 2 | % | 5 | % | ||||||
Some amounts in this press release may not add due to rounding. All
percentages have been calculated using unrounded amounts. References to
operational variances pertain to period-over-period growth rates that
exclude the impact of foreign exchange(5).
2019 FINANCIAL GUIDANCE(6)
Pfizer’s updated 2019 financial guidance is presented below. Financial
guidance continues to reflect a full year of revenue and expense
contributions from Consumer Healthcare(4).
-
Guidance for Adjusted Other (Income)/Deductions(2) was
increased by $100 million, primarily due to milestone income recorded
in first-quarter 2019. -
The midpoint of the guidance range for Adjusted diluted EPS(2)
was increased by $0.01 to an updated range of $2.83 to $2.93,
reflecting a $0.03 operational improvement, primarily due to the
aforementioned increase to Adjusted other income(2),
partially offset by unfavorable changes in foreign exchange rates
since mid-January 2019, which had an incremental negative impact of
$0.02.
Revenues | $52.0 to $54.0 billion | ||
Adjusted Cost of Sales(2) as a Percentage of Revenues | 20.8% to 21.8% | ||
Adjusted SI&A Expenses(2) | $13.5 to $14.5 billion | ||
Adjusted R&D Expenses(2) | $7.8 to $8.3 billion | ||
Adjusted Other (Income)/Deductions(2) |
Approximately $200 million of income |
||
Effective Tax Rate on Adjusted Income(2) | Approximately 16.0% | ||
Adjusted Diluted EPS(2) |
$2.83 to $2.93
(previously $2.82 to $2.92) |
||
Financial guidance for Adjusted diluted EPS(2) reflects share
repurchases totaling $8.9 billion in 2019. Dilution related to
share-based employee compensation programs is currently expected to
offset the reduction in shares associated with these share repurchases
by approximately half.
CAPITAL ALLOCATION
-
During first-quarter 2019, Pfizer returned $10.9 billion directly to
shareholders, through a combination of:
- $2.0 billion of dividends, or $0.36 per share of common stock; and
-
$8.9 billion of share repurchases, composed of $2.1 billion of
open-market share repurchases and a $6.8 billion accelerated share
repurchase agreement executed in February 2019.
-
As of April 30, 2019, Pfizer’s remaining share repurchase
authorization was $5.3 billion.
EXECUTIVE COMMENTARY
Dr. Albert Bourla, Pfizer’s Chief Executive Officer, stated, “Our
first-quarter 2019 financial results were strong, driven by continued
strength from certain Biopharma brands, primarily Eliquis, Ibrance,
Prevnar 13/Prevenar 13 and Xeljanz, as well as strong operational growth
from certain Upjohn brands, primarily in China. Our new commercial
structure is designed to maximize today’s revenue growth opportunities
while transitioning the company to a period post-2020 where we expect
sustained mid-single-digit operational revenue growth through 2025. We
remain focused on executing on our commercial strategies, managing
expenses, advancing our pipeline and prudently allocating our capital to
position Pfizer for sustainable success.
“Our pipeline continues to deliver differentiated therapies that have
the potential to improve the standard of care for patients across
multiple therapeutic areas. In the first four months of 2019, we have
received five regulatory approvals and presented Phase 3 data for Xtandi
in metastatic hormone-sensitive prostate cancer as well as Phase 2
immunogenicity data in adults for our 20-valent pneumococcal vaccine
candidate. Over the rest of 2019, we are looking forward to potential
U.S. regulatory approvals for tafamidis in transthyretin cardiomyopathy,
our Bavencio-Inlyta combination for the treatment of first-line renal
cell carcinoma as well as for our biosimilar rituximab, bevacizumab and
adalimumab molecules. We also expect Phase 3 read outs in 2019 for
PF-04965842, our Janus kinase-1 (JAK1) inhibitor in development for
moderate-to-severe atopic dermatitis, and rivipansel, in development for
vaso-occlusive crisis from sickle cell disease. I believe our pipeline
today represents an unprecedented opportunity to deliver a life-changing
impact for millions of patients while enhancing value for all of our
stakeholders,” Dr. Bourla concluded.
Frank D’Amelio, Chief Financial Officer and Executive Vice President,
Business Operations and Global Supply, stated, “Overall, I was pleased
with our first-quarter 2019 financial performance. We were able to
achieve 5% operational revenue growth and delivered Adjusted diluted EPS(2)
growth of 13%, primarily reflecting the strong performance of certain
key products and the net impact of our share repurchases. We reaffirmed
our 2019 financial guidance for revenues. Additionally, we raised the
midpoint of our guidance range for Adjusted diluted EPS(2) by
$0.01, reflecting a $0.03 operational improvement, primarily due to
approximately $100 million of incremental Adjusted other income(2)
that was recorded in first-quarter 2019, partially offset by a $0.02
negative impact reflecting unfavorable changes in foreign exchange rates
since mid-January 2019. Finally, in first-quarter 2019, we returned
$10.9 billion directly to shareholders through share repurchases and
dividends.”
QUARTERLY FINANCIAL HIGHLIGHTS (First-Quarter 2019 vs. First-Quarter
2018)
First-quarter 2019 revenues totaled $13.1 billion, an increase of $211
million, or 2%, compared to the prior-year quarter, reflecting
operational growth of $664 million, or 5%, partially offset by the
unfavorable impact of foreign exchange of $453 million, or 4%.
Pfizer Biopharmaceuticals Group (Biopharma) Revenue Highlights
First-quarter 2019 Biopharma revenues totaled $9.2 billion, up 7%
operationally, primarily driven by:
-
Eliquis globally, up 36% operationally, primarily driven by continued
increased adoption in non-valvular atrial fibrillation as well as oral
anti-coagulant market share gains; - Ibrance globally, up 25% operationally, primarily driven by:
-
107% operational growth in international markets, reflecting continued
strong uptake following launches in developed Europe, Japan and
certain emerging markets; and -
2% growth in the U.S., reflecting continued moderating volumes in
approved metastatic breast cancer indications;
-
Prevnar 13/Prevenar 13 globally, up 10% operationally, primarily
driven by:
-
31% operational growth in emerging markets, reflecting the favorable
overall impact of timing and increased volume associated with
government purchases for the pediatric indication and increased
shipments associated with Gavi, the Vaccine Alliance, partially
offset primarily by the non-recurrence of volumes associated with an
adult national immunization program in first-quarter 2018; and -
6% growth in the U.S., reflecting increased government purchases in
first-quarter 2019 for the pediatric indication, partially offset by
the continued decline in revenues for the adult indication due to a
declining “catch up” opportunity compared to the prior-year quarter;
and
- Xeljanz globally, up 34% operationally, driven by:
-
89% operational growth in international markets, primarily reflecting
continued uptake in the rheumatoid arthritis indication as well as
from the recent launch of the ulcerative colitis indication in certain
developed markets; and -
18% growth in the U.S., reflecting continued strong volume growth in
the rheumatoid arthritis indication and from the launches of the
psoriatic arthritis and ulcerative colitis indications, partially
offset by expected higher rebating and unfavorable channel mix in
first-quarter 2019,
partially offset primarily by lower revenues for:
-
the Hospital business in the U.S., down 8%, primarily due to the
continued expected negative impact from generic competition for
products that have previously lost marketing exclusivity; and -
certain rare disease products, including the hemophilia franchises
primarily due to competitive pressures, and Genotropin in the U.S.,
primarily due to unfavorable channel mix.
Upjohn Revenue Highlights
First-quarter 2019 Upjohn revenues totaled $3.1 billion, up 1%
operationally, reflecting:
-
25% operational growth in emerging markets, driven by strong,
volume-driven operational growth in China, primarily from Lipitor,
Norvasc and Celebrex; and -
10% operational growth in Japan, primarily driven by strong volume
growth from Lyrica and Celebrex,
partially offset by:
-
13% operational decline in developed markets excluding Japan,
primarily driven by lower revenues for:
-
Viagra and Upjohn’s authorized generic for Viagra in the U.S.
resulting from increased generic competition following Viagra’s
December 2017 patent expiration; -
Lyrica, primarily due to lower volumes in the U.S., reflecting
wholesaler destocking in advance of anticipated generic competition
beginning on June 30, 2019, and in developed Europe, reflecting
continued generic competition; and -
Greenstone, Upjohn’s authorized generic subsidiary, primarily due to
continued industry-wide pricing challenges in the U.S.
Consumer Healthcare(4) Revenue Highlights
First-quarter 2019 Consumer Healthcare(4) revenues totaled
$858 million, down 2% operationally, reflecting an 8% decline in the
U.S., partially offset by 4% operational growth in international markets.
GAAP Reported(1) Income Statement Highlights
SELECTED TOTAL COMPANY REPORTED COSTS AND EXPENSES(1) | ||||||||||||
($ in millions)
(Favorable)/Unfavorable |
First-Quarter | |||||||||||
2019 | 2018 | % Change | ||||||||||
Total | Oper. | |||||||||||
Cost of Sales(1) | $ | 2,433 | $ | 2,563 | (5%) | 3% | ||||||
Percent of Revenues | 18.5 | % | 19.9 | % | N/A | N/A | ||||||
SI&A Expenses(1) | 3,339 | 3,412 | (2%) | — | ||||||||
R&D Expenses(1) | 1,703 | 1,743 | (2%) | (1%) | ||||||||
Total | $ | 7,474 | $ | 7,718 | (3%) | 1% | ||||||
Other (Income)/Deductions––net(1) | $ | 92 | ($ 178 | ) | * | * | ||||||
Effective Tax Rate on Reported Income(1) | 10.0 | % | 13.5 | % | ||||||||
* Indicates calculation not meaningful. |
Pfizer recorded other deductions––net(1) in first-quarter
2019 compared with other income––net(1) in the prior-year
quarter, primarily driven by:
-
higher net losses on the early retirement of certain outstanding debt
securities; - higher business and legal entity alignment costs;
- higher asset impairments charges;
- higher net interest expense; and
-
lower income from collaborations, out-licensing and sale of
compound/product rights,
partially offset primarily by:
- a favorable change in the fair value of contingent consideration.
Adjusted(2) Income Statement Highlights
SELECTED TOTAL COMPANY ADJUSTED COSTS AND EXPENSES(2) | ||||||||||||
($ in millions)
(Favorable)/Unfavorable |
First-Quarter | |||||||||||
2019 | 2018 | % Change | ||||||||||
Total | Oper. | |||||||||||
Adjusted Cost of Sales(2) | $ | 2,415 | $ | 2,536 | (5%) | 4% | ||||||
Percent of Revenues | 18.4 | % | 19.7 | % | N/A | N/A | ||||||
Adjusted SI&A Expenses(2) | 3,311 | 3,286 | 1% | 3% | ||||||||
Adjusted R&D Expenses(2) | 1,693 | 1,739 | (3%) | (2%) | ||||||||
Total | $ | 7,419 | $ | 7,561 | (2%) | 2% | ||||||
Adjusted Other (Income)/Deductions––net(2) | ($135 | ) | ($204 | ) | (34%) | (39%) | ||||||
Effective Tax Rate on Adjusted Income(2) | 15.2 | % | 16.7 | % | ||||||||
First-quarter 2019 diluted weighted-average shares outstanding used to
calculate Reported(1) and Adjusted(2) diluted EPS
declined by 307 million shares compared to the prior-year quarter
primarily due to Pfizer’s ongoing share repurchase program, reflecting
the impact of share repurchases during 2018 and in first-quarter 2019,
partially offset by dilution related to share-based employee
compensation programs.
A full reconciliation of Reported(1) to Adjusted(2)
financial measures and associated footnotes can be found starting on
page 18 of the press release located at the hyperlink below.
RECENT NOTABLE DEVELOPMENTS (Since January 29, 2019)
Product Developments
- Bavencio (avelumab)
-
In March 2019, Merck KGaA, Darmstadt, Germany, which operates its
biopharmaceutical business as EMD Serono in the U.S. and Canada (Merck
KGaA), and Pfizer announced that the European Medicines Agency (EMA)
validated for review the Type II variation application for Bavencio in
combination with Inlyta (axitinib) for the treatment of patients with
advanced renal cell carcinoma (RCC). -
In March 2019, Merck KGaA and Pfizer announced the discontinuation of
the ongoing Phase 3 JAVELIN Ovarian PARP 100 study evaluating the
efficacy and safety of avelumab in combination with chemotherapy
followed by maintenance therapy of avelumab in combination with
talazoparib, a poly (ADP-ribose) polymerase (PARP) inhibitor, versus
an active comparator in treatment-naïve patients with locally advanced
or metastatic ovarian cancer. -
In February 2019, Merck KGaA and Pfizer announced that the U.S. Food
and Drug Administration (FDA) has accepted for priority review the
supplemental Biologics License Application (BLA) for Bavencio in
combination with Inlyta (axitinib) for patients with advanced RCC. The
Prescription Drug User Fee Act goal date for a decision by the FDA is
in June 2019.
-
Eliquis (apixaban) -- In March 2019, the Bristol-Myers
Squibb-Pfizer Alliance announced results from the Phase 4 AUGUSTUS
trial evaluating Eliquis versus vitamin K antagonists (VKAs) in
patients with non-valvular atrial fibrillation and recent acute
coronary syndrome and/or undergoing percutaneous coronary
intervention. Results showed that in patients receiving a P2Y12
inhibitor with or without aspirin (antiplatelet therapies), the
proportion of patients with major or clinically relevant non-major
bleeding at six months was significantly lower for those treated
with Eliquis compared to those treated with a VKA. These data were
featured as a late-breaking oral presentation at the American College
of Cardiology’s 68th Annual Scientific Session 2019 and
simultaneously published in the New England Journal of Medicine. -
Ibrance (palbociclib) -- In April 2019, Pfizer announced that
the FDA approved a supplemental New Drug Application to expand the
indications for Ibrance in combination with an aromatase inhibitor or
fulvestrant to include men with hormone receptor-positive (HR+), human
epidermal growth factor receptor 2 (HER2)-negative advanced or
metastatic breast cancer. The approval is based on data from
electronic health records and postmarketing reports of the real-world
use of Ibrance in male patients sourced from three databases: IQVIA
Insurance database, Flatiron Health Breast Cancer database and the
Pfizer global safety database. -
Lorbrena/Lorviqua (lorlatinib) -- In March 2019, Pfizer
announced that the Committee for Medicinal Products for Human Use
(CHMP) of the European Medicines Agency (EMA) adopted a positive
opinion for Lorviqua (approved in the U.S., Canada, and Japan under
the brand name Lorbrena), an anaplastic lymphoma kinase (ALK) tyrosine
kinase inhibitor (TKI), recommending conditional marketing
authorization in the European Union (EU) as a monotherapy treatment
for adult patients with ALK-positive advanced non-small cell lung
cancer (NSCLC) whose disease has progressed after alectinib or
ceritinib as the first ALK TKI therapy, or crizotinib and at least one
other ALK TKI. Conversion to normal approval is contingent on
provisions of comprehensive data confirming that the benefit-risk
balance is positive. The CHMP’s opinion will be reviewed by the
European Commission (EC), with a decision expected in the coming
months. -
Talzenna (talazoparib) -- In April 2019, Pfizer announced that
the CHMP of the EMA adopted a positive opinion for Talzenna
recommending marketing authorization in the EU as a monotherapy
treatment for adult patients with germline breast cancer
susceptibility gene (gBRCA)1/2-mutations, who have HER2-negative
locally advanced or metastatic breast cancer. Patients should have
been previously treated with an anthracycline and/or a taxane in the
(neo)adjuvant, locally advanced or metastatic setting unless patients
were not suitable for these treatments. Patients with HR+ breast
cancer should have been treated with a prior endocrine-based therapy,
or be considered unsuitable for endocrine-based therapy. The CHMP’s
opinion will be reviewed by the EC, with a decision expected in the
coming months. -
Trazimera (trastuzumab-qyyp) -- In March 2019, Pfizer announced
that the FDA approved Trazimera, a biosimilar to Herceptin®(7), for
the treatment of HER2 overexpressing breast cancer and HER2
overexpressing metastatic gastric or gastroesophageal junction
adenocarcinoma. Trazimera is Pfizer’s first oncology monoclonal
antibody biosimilar and its fifth biosimilar to be approved by the
FDA. Trazimera was approved for use in the EU in July 2018 for the
same indications. -
Vizimpro (dacomitinib) -- In April 2019, Pfizer announced that
the EC approved Vizimpro in the EU as monotherapy for the first-line
treatment of adult patients with locally advanced or metastatic NSCLC
with epidermal growth factor receptor-activating mutations. -
Xeljanz (tofacitinib) -- In February 2019, Pfizer announced
that it modified an ongoing post-marketing requirement study
evaluating the safety of Xeljanz at two doses, 10 mg twice daily (BID)
and 5 mg BID, versus a tumor necrosis factor inhibitor (TNFi) control
group in patients with rheumatoid arthritis. Following notification
from the tofacitinib rheumatology Data Safety Monitoring Board (DSMB)
of a safety signal regarding the Xeljanz 10 mg BID treatment group,
Pfizer transitioned all patients in the Xeljanz 10 mg BID treatment
group to the Xeljanz 5 mg BID treatment group. The DSMB observed that
patients in this study that were treated with Xeljanz 10 mg BID had a
statistically and clinically important difference in the occurrence of
pulmonary embolism, compared with patients who were treated with a
TNFi. The DSMB also noted an increase in overall mortality in the
Xeljanz 10 mg BID treatment group compared to the Xeljanz 5 mg BID and
TNFi treatment groups. The DSMB also stated it firmly believes that
the risk-benefit profile of Xeljanz 5 mg BID in comparison to the TNFi
group remains appropriately balanced in this study. The Xeljanz 5 mg
BID dose is the FDA approved dose for adult patients with moderate to
severe rheumatoid arthritis. This study was designed to assess the
risk of cardiovascular (CV) events and therefore in contrast to
previous Xeljanz studies, patients were required to be at least 50
years of age and have at least one CV risk factor to be eligible for
participation in this study. All patients entered the study on stable
doses of background methotrexate. Pfizer will work with the FDA and
other regulatory agencies to review the full results upon completion
of this study. -
Xtandi (enzalutamide) -- In February 2019, Astellas Pharma Inc.
and Pfizer announced results from the Phase 3 ARCHES trial in men with
metastatic hormone-sensitive prostate cancer (mHSPC). The results
showed that Xtandi plus androgen deprivation therapy (ADT) met the
primary endpoint by significantly reducing the risk of radiographic
progression or death by 61% versus ADT alone. Adverse events in the
ARCHES clinical trial were generally consistent with those reported in
enzalutamide clinical trials in patients with castration-resistant
prostate cancer. These data were presented in an oral session at the
2019 Genitourinary Cancers Symposium. -
Zirabev (PF-06439535, biosimilar bevacizumab) -- In February
2019, Pfizer announced the EC approved Zirabev, a biosimilar to Avastin®(8),
for the treatment of metastatic carcinoma of the colon or rectum,
metastatic breast cancer, unresectable advanced, metastatic or
recurrent NSCLC, advanced and/or metastatic RCC and persistent,
recurrent or metastatic carcinoma of the cervix.
Pipeline Developments
A comprehensive update of Pfizer’s development pipeline was published
today and is now available at www.pfizer.com/science/drug-product-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 some candidates in Phase 1 and all candidates
from Phase 2 through registration.
-
PF-06482077 (20-Valent Pneumococcal Conjugate Vaccine) -- In
April 2019, Pfizer presented data from a Phase 2 proof-of-concept
study for its 20-valent pneumococcal conjugate vaccine (20vPnC)
candidate, PF-06482077, which is being investigated for the prevention
of invasive disease and pneumonia caused by Streptococcus pneumoniae
serotypes contained in the vaccine in adults aged 18 years and older.
The presentation was delivered at the 29th European
Congress of Clinical Microbiology and Infectious Diseases. Pfizer’s
20vPnC candidate includes the 13 serotypes contained in Prevnar 13
plus seven additional serotypes serotypes (8, 10A, 11A,12F, 15B, 22F,
and 33F). Pfizer is enrolling three Phase 3 studies evaluating 20vPnC
in adults. Combined, these three studies will enroll more than 6,000
adult subjects, including populations of vaccine-naïve adults and
adults with prior pneumococcal vaccination. Pfizer expects to submit a
BLA to the FDA by the end of 2020, subject to the successful
completion of Phase 3 studies in adults. -
PF-07055480 (SB-525) -- In April 2019, Sangamo Therapeutics,
Inc. (Sangamo) and Pfizer announced interim data from the Phase 1/2
Alta study evaluating investigational SB-525 gene therapy for severe
hemophilia A. Data indicate that SB-525 was generally well-tolerated
and demonstrated a dose-dependent increase in Factor VIII levels
across the four dosage cohorts. Eight patients in total were dosed.
Based on these results, the Safety Monitoring Committee (SMC)
recommended cohort expansion at the 3e13 vg/kg dose. Longer-term
follow-up data will be presented at an upcoming scientific meeting.
Per the SMC recommendation and study protocol, the fourth cohort will
be expanded by up to five patients. Patient enrollment is underway.
SB-525 is being developed as part of a global collaboration between
Sangamo and Pfizer. - Tanezumab (PF-4383119)
-
In April 2019, Pfizer and Eli Lilly and Company (Lilly) announced
top-line results from a Phase 3 study evaluating tanezumab 2.5 mg and
5 mg. The objective of the study was to compare the long-term joint
safety and 16-week efficacy of tanezumab relative to nonsteroidal
anti-inflammatory drugs (NSAIDs) in patients with moderate-to-severe
osteoarthritis (OA) of the hip or knee. The tanezumab 5 mg treatment
arm met two of the three co-primary efficacy endpoints, demonstrating
a statistically significant improvement in pain and physical function
compared to NSAIDs at the 16-week analysis, while patients’ overall
assessment of their OA was not statistically different than NSAIDs.
Patients who received tanezumab 2.5 mg did not experience a
statistically significant improvement in pain, physical function or
patients’ overall assessment of their OA at 16 weeks compared to
NSAIDs. In the safety analysis, there was a higher rate of joint
safety events in the tanezumab arms compared to NSAIDs at 80 weeks;
the difference was statistically significant. Pfizer and Lilly
continue to analyze these results and are assessing potential next
steps for tanezumab. The full results from this study will be
submitted for future scientific publication or presentation. -
In February 2019, Pfizer and Lilly announced positive top-line results
from a Phase 3 study evaluating tanezumab in patients with
moderate-to-severe chronic low back pain. In the study, treatment with
tanezumab 10 mg met the primary endpoint, demonstrating a
statistically significant improvement in pain at 16 weeks compared to
placebo. The tanezumab 5 mg arm demonstrated a numerical improvement
in pain, but did not reach statistical significance compared to
placebo at the week 16 analysis. The full results from this study will
be submitted for future scientific publication or presentation.
Corporate Developments
-
In March 2019, Vivet Therapeutics (Vivet), a privately held gene
therapy biotech company dedicated to developing gene therapy
treatments for inherited liver disorders with high unmet medical need,
and Pfizer announced that Pfizer has acquired a 15% equity interest in
Vivet and secured an exclusive option to acquire all outstanding
shares. Pfizer and Vivet will collaborate on the development of
VTX-801, Vivet’s proprietary treatment candidate for Wilson disease.
Under the terms of the transaction, Pfizer paid approximately €45
million ($51 million) upon signing and will pay an additional €20
million ($23 million) upon achievement of a development milestone. If
Pfizer exercises its option to acquire the remaining outstanding
shares, it may pay up to €540 million ($613 million) inclusive of the
option exercise payment and subject to the achievement of certain
post-acquisition clinical, regulatory and commercial milestones.
Pfizer can exercise its option to acquire 100% of Vivet following the
company’s delivery of certain data from the Phase 1/2 clinical trial
for VTX-801. As part of the transaction, Pfizer senior executive
Monika Vnuk, M.D., Vice President, Worldwide Business Development,
will join Vivet’s Board of Directors. Other terms of the transaction
were not disclosed.
Pfizer's first-quarter 2019 earnings conference call with investment
analysts is scheduled for Tuesday, April 30, 2019 at 10:00 a.m. EDT. For
instructions on how to join the conference call or the webcast, please
refer to the previously-issued press release located on the company’s
investor website (www.pfizer.com/investors).
Slides that will accompany today’s webcast were posted to the company’s
investor website at 6:45 a.m. EDT, concurrent with the issuance of this
press release. Pfizer intends to continue this practice for future
earnings announcements.
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:
https://investors.pfizer.com/files/doc_financials/Quarterly/2019/q1/Q1-2019-PFE-Earnings-Release.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) |
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) are defined as diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. GAAP. |
||
(2) |
Adjusted income and its components and Adjusted diluted EPS are |
||
(3) |
Pfizer’s fiscal year-end for international subsidiaries is November 30 while Pfizer’s fiscal year-end for U.S. subsidiaries is December 31. Therefore, Pfizer’s first quarter for U.S. subsidiaries reflects the three months ending on March 31, 2019 and April 1, 2018 while Pfizer’s first quarter for subsidiaries operating outside the U.S. reflects the three months ending on February 24, 2019 and February 25, 2018. |
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(4) |
In December 2018, Pfizer entered into a definitive agreement with GSK under which the two companies have agreed to combine their respective consumer healthcare businesses into a new consumer healthcare joint venture that will operate globally under the GSK Consumer Healthcare name. In exchange for contributing its Consumer Healthcare business, Pfizer will receive a 32% equity stake in the new company and GSK will own the remaining 68% of the new company. Upon the closing of the transaction, which is expected to occur in the second half of 2019, subject to customary closing conditions including GSK shareholder approval and required regulatory approvals, Pfizer anticipates deconsolidating its Consumer Healthcare business and will begin to receive its pro rata share of the joint venture’s earnings and dividends, which will be paid on a quarterly basis. |
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(5) |
References to operational variances in this press release pertain to period-over-period growth rates that exclude the impact of foreign exchange. The operational variances are determined by multiplying or dividing, as appropriate, the current period U.S. dollar results by the current period average foreign exchange rates and then multiplying or dividing, as appropriate, those amounts by the prior-year period average foreign exchange rates. Although exchange rate changes are part of Pfizer’s business, they are not within Pfizer’s control. Exchange rate changes, however, can mask positive or negative trends in the business; therefore, Pfizer believes presenting operational variances provides useful information in evaluating the results of its business. |
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(6) | The 2019 financial guidance reflects the following: | ||
• |
Pfizer does not provide guidance for GAAP Reported financial |
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• |
Does not assume the completion of any business development |
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• |
Reflects a full year of revenue and expense contributions from |
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• |
Reflects an anticipated negative revenue impact of $2.6 billion |
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• |
Exchange rates assumed are a blend of the actual exchange rates in |
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• |
Guidance for Adjusted diluted EPS(2) assumes diluted |
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(7) |
Herceptin® is a registered U.S. trademark of Genentech, Inc. |
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(8) | Avastin® is a registered U.S. trademark of Genentech, Inc. |
DISCLOSURE NOTICE: Except where otherwise noted, the information
contained in this earnings release and the related attachments is as of
April 30, 2019. We assume no obligation to update any forward-looking
statements contained in this earnings release and the related
attachments as a result of new information or future events or
developments.
This earnings release and the related attachments contain
forward-looking statements about our anticipated future operating and
financial performance, business plans and prospects, expectations for
in-line products and product candidates, including anticipated
regulatory submissions, data read-outs, study starts, approvals, revenue
contribution, growth, performance, timing of exclusivity and potential
benefits, strategic reviews, capital allocation objectives,
business-development plans, benefits anticipated from the reorganization
of our commercial operations into three businesses which became
effective at the beginning of our 2019 fiscal year, our acquisitions and
other business development activities, our proposed transaction with GSK
to combine our respective consumer healthcare businesses into a new
consumer healthcare joint venture, our ability to successfully
capitalize on growth opportunities or prospects, manufacturing and
product supply 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,” “assume,” “target,” “forecast,” “guidance,” “goal,”
“objective,” “aim,” “seek” 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 pre-clinical or clinical
endpoints, commencement and/or completion dates for our pre-clinical
or clinical trials, regulatory submission dates, regulatory approval
dates and/or launch dates, as well as the possibility of unfavorable
pre-clinical and clinical trial results, including the possibility of
unfavorable new clinical data and further analyses of existing
clinical data; -
the risk we may not be able to successfully address all of the
comments received from regulatory authorities such as the U.S. Food
and Drug Administration (FDA) or the European Medicines Agency (EMA),
or obtain approval from regulators, which will depend on myriad
factors, including such regulator making a determination as to whether
a product’s benefits outweigh its known risks and a determination of
the product’s efficacy; regulatory decisions impacting labeling,
manufacturing processes, safety and/or other matters; and
recommendations by technical or advisory committees, such as the
Advisory Committee on Immunization Practices, that may impact the use
of our vaccines; -
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, changes in product labeling, and/or
new or increased concerns about the side effects or efficacy of, a
product that could affect its availability or commercial potential; -
the success of external business-development activities, including the
ability to identify and execute on potential business development
opportunities, the ability to satisfy the conditions to closing of
announced transactions in the anticipated time frame or at all, the
ability to realize the anticipated benefits of any such transactions,
and the potential need to obtain additional equity or debt financing
to pursue these opportunities which could result in increased leverage
and impact our credit ratings; -
competitive developments, including the impact on our competitive
position of new product entrants, in-line branded products, generic
products, private label products, biosimilars 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 and regulatory authorities in certain
countries of an abbreviated legal pathway to approve biosimilar
products, which could subject our biologic products to competition
from biosimilar products, with attendant competitive pressures, after
the expiration of any applicable exclusivity period and patent rights; -
risks related to our ability to develop and launch biosimilars,
including risks associated with “at risk” launches, defined as the
marketing of a product by Pfizer before the final resolution of
litigation (including any appeals) brought by a third party alleging
that such marketing would infringe one or more patents owned or
controlled by the third party, and access challenges for our
biosimilar products where our product may not receive appropriate
formulary access or remains in a disadvantaged position relative to
the innovator product; -
the ability to meet competition from generic, branded and biosimilar
products after the loss or expiration 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, including delays caused by
natural events, such as hurricanes; supply shortages at our
facilities; and legal or regulatory actions, such as warning letters,
suspension of manufacturing, seizure of product, injunctions,
debarment, voluntary recall of a product or failure to secure product
approvals; - trade buying patterns;
-
the impact of existing and future legislation and regulatory
provisions on product exclusivity; -
trends toward managed care and healthcare cost containment, and our
ability to obtain or maintain timely or adequate pricing or favorable
formulary placement for our products; -
the impact of any significant spending reductions or cost controls
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; -
the impact of any U.S. healthcare reform or legislation, including any
replacement, repeal, modification or invalidation of some or all of
the provisions of the U.S. Patient Protection and Affordable Care Act,
as amended by the Health Care and Education Reconciliation Act; -
U.S. federal or state legislation or regulatory action and/or policy
efforts affecting, among other things, pharmaceutical product pricing,
reimbursement or access, including under Medicaid, Medicare and other
publicly funded or subsidized health programs; patient out-of-pocket
costs for medicines, manufacturer prices and/or price increases that
could result in new mandatory rebates and discounts or other pricing
restrictions; general budget control actions; the importation of
prescription drugs from outside the U.S. at prices that are regulated
by governments of various foreign countries; revisions to
reimbursement of biopharmaceuticals under government programs;
restrictions on U.S. direct-to-consumer advertising; limitations on
interactions with healthcare professionals; or 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 for our
products 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 reductions in prices and
access restrictions for certain biopharmaceutical products to control
costs in those markets; -
the exposure of our operations outside the U.S. to possible capital
and exchange controls, economic conditions, expropriation and other
restrictive government actions, changes in intellectual property legal
protections and remedies, as well as political unrest, unstable
governments and legal systems and inter-governmental disputes; - 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 and settlement costs;
-
the risk of an adverse decision or settlement and the adequacy of
reserves related to legal proceedings, including patent litigation,
such as claims that our patents are invalid and/or do not cover the
product of the generic drug manufacturer or where one or more third
parties seeks damages and/or injunctive relief to compensate for
alleged infringement of its patents by our commercial or other
activities, product liability and other product-related litigation,
including personal injury, consumer, off-label promotion, securities,
antitrust and breach of contract claims, commercial, environmental,
government investigations, employment and other legal proceedings,
including various means for resolving asbestos litigation, as well as
tax issues; -
the risk that our currently pending or future patent applications may
not result in issued patents, or be granted on a timely basis, or any
patent-term extensions that we seek may not be granted on a timely
basis, if at all; -
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,
including further clarifications and/or interpretations of the Tax
Cuts and Jobs Act enacted in 2017; -
any significant issues involving our largest wholesale distributors,
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; -
the end result of any negotiations between the U.K. government and the
EU regarding the terms of the U.K.’s exit from the EU, which could
have implications on our research, commercial and general business
operations in the U.K. and the EU, including the approval and supply
of our products; -
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 or regulatory 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;
-
further clarifications and/or changes in interpretations of existing
laws and regulations, or changes in laws and regulations, in the U.S.
and other countries; -
uncertainties related to general economic, political, business,
industry, regulatory and market conditions including, without
limitation, uncertainties related to the impact on Pfizer, 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; the related risk that our allowance for doubtful
accounts may not be adequate; and the risks related to volatility of
our income due to changes in the market value of equity investments; -
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;
-
the impact of purchase accounting adjustments, acquisition-related
costs, discontinued operations and certain significant items; -
the impact of acquisitions, divestitures, restructurings, internal
reorganizations, including the reorganization of our commercial
operations into three businesses effective at the beginning of the
company’s 2019 fiscal year, any other corporate strategic initiatives,
and cost-reduction and productivity initiatives, each of which
requires upfront costs but may fail to yield anticipated benefits and
may result in unexpected costs or organizational disruption; - the impact of product recalls, withdrawals and other unusual items;
-
the risk of an impairment charge related to our intangible assets,
goodwill or equity-method investments; - risks related to internal control over financial reporting;
-
risks and uncertainties related to acquisitions, including, among
other things, the ability to realize the anticipated benefits of those
acquisitions, including the possibility that the expected cost savings
and/or accretion from certain of those acquisitions will not be
realized or will not be realized within the expected time frame; the
risk that the businesses will not be integrated successfully;
disruption from the transactions making it more difficult to maintain
business and operational relationships; risks related to our ability
to grow revenues for certain acquired products; significant
transaction costs; and unknown liabilities; and -
risks and uncertainties related to our proposed transaction with GSK
to combine our respective consumer healthcare businesses into a new
consumer healthcare joint venture, including, among other things,
risks related to the satisfaction of the conditions to closing the
transaction (including the failure to obtain necessary regulatory and
GSK shareholder approvals) in the anticipated timeframe or at all and
the possibility that the transaction does not close, risks related to
the ability to realize the anticipated benefits of the transaction,
including the possibility that the expected benefits and cost
synergies from the proposed transaction will not be realized or will
not be realized within the expected time period, the risk that the
businesses will not be integrated successfully, the possibility that a
future separation of the joint venture may not occur, disruption from
the transaction making it more difficult to maintain business and
operational relationships, negative effects of the announcement or the
consummation of the proposed transaction on the market price of
Pfizer’s common stock and on Pfizer’s operating results, significant
transaction costs, unknown liabilities, the risk of litigation and/or
regulatory actions related to the proposed transaction, other business
effects, including the effects of industry, market, economic,
political or regulatory conditions, future exchange and interest
rates, changes in tax and other laws, regulations, rates and policies,
future business combinations or disposals and competitive developments.
We cannot guarantee that any forward-looking statement will be realized.
Achievement of anticipated results is subject to substantial risks,
uncertainties and inaccurate assumptions. Should known or unknown risks
or uncertainties materialize or should underlying assumptions prove
inaccurate, actual results could vary materially from past results and
those anticipated, estimated or projected. Investors should bear this in
mind as they consider forward-looking statements, and are cautioned not
to put undue reliance on forward-looking statements. 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,
2018 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 related 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.
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