WASHINGTON, Dec. 1 (UPI) -- Pfizer, which began the week by announcing it would reduce its U.S. sales force, ended the week raising its profits forecast for 2006 and announcing plans to expand its drug pipeline significantly over the next few years.
Prudential analyst Tim Anderson viewed the news favorably but was skeptical about Pfizer's newfound optimism about its pipeline, particularly its anti-atherosclerosis treatment torcetrapib/atorvastatin, or T/A.
"Recall that just about a month ago, management seemed to talk cautiously on the regulatory prospects of T/A during its (third quarter) earnings call," Anderson stated in a research report issued Friday.
Pfizer also emphasized a number of compounds that are in mid-stage development, suggesting they could have a strong phase 3 pipeline in a few years.
"This will be important because investors are already fretting the 2010/2011 timeframe when Lipitor loses patent protection," Anderson stated. "For now, however, many of these compounds are likely to be viewed as too early to really be significant drivers of near-term share price appreciation."
Pfizer said Thursday at its R&D day that it plans to expand the number of compounds in phase 3 from six to 16 by 2009. The company anticipates this will translate into four new products per year beginning in 2011.
Pfizer increased its earnings-per-share guidance for 2006 from $2.00 per share to $2.05, due to a trend of slightly higher revenues and lower costs than it previously expected. The company said it also anticipates EPS growth in high single digits in 2007 and 2008.
Morgan Stanley analyst Jami Rubin also saw the Pfizer news along with its sales-force reduction as a positive development.
"We reiterate our 'overweight' and view management's raised guidance and the recently announced sales force cuts as a positive sign of momentum," Rubin stated in a research report issued Friday. Morgan Stanley did not respond to United Press International's request for comment.
He noted that, despite Pfizer's emphasis on "the impressive depth and breadth of its pipeline," T/A will still completely overshadow everything else in the company's hopper.
"We expect the near term outlook to be driven primarily by cost-cutting and acquisition/licensing activities, as the mid- to later-stage pipeline gains greater momentum to manage through the loss of Lipitor," Rubin added.
Bank of America analyst Chris Schott was impressed by Pfizer's pipeline, particularly in the oncology area, calling it underappreciated overall.
"We are reiterating our 'buy' rating based on Pfizer's stronger-than-expected pipeline coupled with incremental restructuring efforts," Schott stated in a research report.
However, Schott remained skeptical about T/A's future. "Management provided a more upbeat tone on torcetrapib's approvability on imaging studies, but gave limited incremental information," he noted. "We maintain our expectations that outcome data will be required for approval and have forecast a late 2010 launch."
Compounds in the oncology area that show promise include new indications for Sutent, PF-03512676 for non-small cell lung cancer and ticilimumab for melanoma, Schott stated. In addition, axitinib is entering phase 3 in 2007 for thyroid and other solid tumors, and four phase 2 oncology programs are showing progress.
Other pipeline products worth mentioning include CP-690,550, which is in phase 2 for rheumatoid arthritis, and CP-945,598, which is in phase 3 for obesity, Schott stated.
Bank of America did not respond to UPI's request for comment from Schott.
Bear Stearns analyst John Boris raised his earnings-per-share estimates for Pfizer but said the lack of products coming out of its pipeline over the next year or two might motivate the company to look for a strategic acquisition to help it overcome this shortcoming.
"While our EPS growth outlook is attractive relative to (Pfizer's) valuation, the company's new product flow between 2006-08 is uninspiring, especially as we consider our three- and five-year incremental revenue projections of $2.3 billion and $5.3 billion that have been crippled by patent expirations, weakening global Lipitor performance, and partnering/pipeline setbacks (e.g., Exubera, Macugen, indiplon, asenapine, Oporia)," Boris stated in a research report issued Friday.
Pfizer "might consider a large, strategically-driven acquisition with a late-stage pipeline," he added.
In the long term, however, Boris liked Pfizer's potential obesity drug CP-945,598, estimating it could bring in sales of $400 million in 2012.
He projected axitinib could generate sales of $200 million in 2012, followed by CP-690,550 with sales of $150 million.
Bear Stearns told UPI Boris does not talk to the press.
