Pfizer Misses Target, Soft Guidance, And Other News: The Good, Bad And Ugly Of Biopharma

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Summary

Pfizer Misses Q4 Target, offers Soft Guidance

Pfizer (PFE) stock stumbled as the company reported lower than expected numbers for its fourth quarter. It also provided lackluster guidance for the upcoming FY 2020. The company’s revenue fell as it lost exclusivity on its key drugs. Pfizer transferred its consumer health business to a joint venture and the impact of this move was visible on the quarterly numbers.

Pfizer reported net loss of $0.06 per share for the fourth quarter, slightly down from net loss of $0.07 per share for the corresponding quarter of the previous year. Its adjusted earnings at $3.11 fell short of consensus estimate of $3.24 billion. For the fourth quarter, the company’s revenue stood at $12.69 billion, narrowly surpassing the $12.61 billion expected by the markets.

The company also provided guidance for the coming year, albeit it stood on the softer side. Pfizer expects its adjusted earnings per share to be in the range of $2.82 and $2.92 while the guidance for the revenue stood in the range of $48.5 billion and $50.5 billion. The company expects its UpJohn and Mylan transaction to be completed by mid of 2020. The transaction will result in sharpening the focus of the company on innovation.

The company felt the pain of losing market exclusivity of its leading pain treatment, Lyrica. Its sale declined by more than two thirds to register $433 million in revenue. The revenue from Upjohn declined 32 percent to $2.156 billion. Upjohn is a wholly-owned business of Pfizer and is scheduled to be merged with Mylan this year. The Upjohn segment includes blockbuster drugs such as Viagra and Lyrica.

The results highlighted the company’s inability to turn its strong pipeline into viable products as its quarterly revenue tumbled 9.2 percent on a year-over-year basis. The past year had been tough for the pharma giant as several analysts downgraded the stock. In the last 12 months, it has lost over 12 percent of its value, hitting its 18 months low in mid of 2019. While the stock recovered afterwards, it still has not managed to touch earlier highs. Pfizer will likely have a couple of issues to contend with in the coming months. The pharma giant may face scrutiny from the regulators regarding the increase in drug prices.

On the positive side, the company can expect solid performance from Vyndaqel and Vyndamax, heart disease meds. The drugs were given FDA approval in May 2019 as treatment for ATTR cardiomyopathy, a rare but potentially fatal heart disease. Both the drugs registered global revenue of $473 million in the past year. It is estimated that there are nearly 100,000 patients in the United States suffering from this ailment while global estimates are pegged at 500,000. The company has so far assisted 9,000 diagnosis, out of which 5,500 received prescriptions.

SURF gets an IND from the FDA

Surface Oncology (SURF) announced that its IND applications for Phase 1 studies of drug candidates SRF388 and SRF617 have been signed off by the FDA. The company also reported that it has started a restructuring plan to ensure that it has cash runway into 2022. For this purpose, Surface Oncology anticipates trimming its workforce by 35 percent. The company has brought four internally-developed programs to the IND stage.

Surface Oncology now plans to start Phase 1 clinical trials for both the drug candidates. SRF617 is a fully human anti-CD30 antibody being developed for treating solid tumors. The treatment will act both as a monotherapy as well as in combination with other therapies. It aims to promote anti-tumor immunity using a dual mechanism involved reduction of immunosuppressive adenosine and driving the extracellular accumulation of immunostimulatory ATP within the tumor microenvironment.

SRF388 is a fully human anti-IL-27 antibody for treating certain cancers including kidneys and liver, where IL-27 appears to play an important role in the immunosuppressive tumor microenvironment. The company plans to release clinical updates for both SRF617 and SRF388 by the end of 2020.

Apart from these drug candidates, the company is also working on SRF 813 which targets CD112R. It also has a regulatory T-cell program, for which it may seek partnership to boost the profile. Surface Oncology is an immuno-oncology company and is focused on developing next-generation antibody therapies with relevance to the tumor microenvironment.

PerkinElmer Provides Lackluster 2020 Guidance

PerkinElmer (PKI) reported its fourth quarter and full year results while providing lower than expected guidance for 2020. The company’s revenue during the fourth quarter showed a 7 percent increase on a year-over-year basis to touch $805.5 million, up from the $756.3 million it had reported for the corresponding quarter of the previous year. The markets were expecting the company to report its revenue at $800.1 million.

PerkinElmer’s net income for the quarter stood at $64.5 million, down from $71.3 million for the fourth quarter of the previous year. On a per share basis, the company’s net income stood at $0.58 per share while its adjusted net income is $0.64 per share.

The company’s research and development expenditure decreased more than 8 percent to touch $47.6 million in the fourth quarter. The company’s expenditure for the corresponding quarter of the previous year stood at $52 million.

PerkinElmer’s full year revenue was reported at $2.88 billion, up from $2.78 billion for the previous year, showing a 4 percent gain. However, there was a decline in its full year net income to $227.6 million, down from $237.9 million it had earned in 2018.

PerkinElmer provided soft guidance for 2020 where it expects its full year revenue to be in the range of $3.05 billion and $3.09 billion. Its EPS from continuing operations will likely be in the range of $2.89 and $2.99. The adjusted EPS is likely to be in the range of $4.50 and $4.60.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.