Albert Bourla – TheNewsHub

Pfizer tops earnings estimates, hikes full-year guidance as Covid products help sales

Harsh — Tue, 29 Oct 2024 17:37:24 +0000

The PAXLOVID antiviral medications nirmatrelvir co-packaged with ritonavir were developed by Pfizer to treat the virus.

Patrick T. Fallon | Afp | Getty Images

Pfizer on Tuesday reported third-quarter revenue and adjusted profit that blew past expectations as the company’s Covid vaccine and antiviral pill Paxlovid helped boost sales.

The pharmaceutical giant also hiked its full-year outlook and now expects to book adjusted earnings per share of $2.75 to $2.95, up from its previous guidance of 2.45 to $2.65 per share.

Pfizer now expects revenue in a range of $61 billion to $64 billion, up from a previous revenue forecast of between $59.5 billion and $62.5 billion. That includes roughly $5 billion in expected revenue from its Covid vaccine and $5.5 billion from Paxlovid.

The results are a much-needed win for Pfizer CEO Albert Bourla, who is facing new pressure from activist investor Starboard Value. The firm has a roughly $1 billion stake in the pharmaceutical company.

Still, shares of Pfizer fell more than 2% on Tuesday.

Here’s what the company reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: $1.06 adjusted vs. 62 cents expected
Revenue: $17.7 billion vs. $14.95 billion expected

The company booked third-quarter net income of $4.47 billion, or 78 cents per share. That compares with a net loss of $2.38 billion, or 42 cents per share, during the same period a year ago. Excluding certain items, including restructuring charges and costs associated with intangible assets, the company posted earnings per share of $1.06 for the quarter.

Pfizer reported revenue of $17.7 billion for the third quarter, up 31% from the same period a year ago.

It is a critical quarterly report for Pfizer, which is cutting costs as it works to recover from the rapid decline of its Covid business and share price over the last two years. The drugmaker’s shares are trading at about half of their pandemic-era high, putting the company’s market cap at roughly $163 billion.

contends that Pfizer failed to capitalize on the windfall earned from its Covid products and, in the process, destroyed tens of billions of dollars in market value. Smith points to what he believes are management’s poor investments in research and development and hefty acquisitions that have yet to be fruitful for the struggling company.

Notably during the quarter, Pfizer withdrew from world markets a critical sickle cell drug it had acquired in a $5.4 billion deal for Global Blood Therapeutics. Starboard is calling for a massive overhaul at Pfizer, saying that the company needs to be more disciplined in its investments.

Bourla said Tuesday he and other executives met with Starboard two weeks ago, and called it “constructive and cordial.”

Pfizer agrees with some of the points Starboard raised, but has “vastly different views on many others,” Bourla said. For example, Starboard challenged Pfizer’s capital deployment for business development. But Pfizer believes its deals will bring significant shareholder returns, Bourla said.

Bourla pointed to changes Pfizer has implemented over the last 10 months, such as appointing new executives and separating its U.S. and international businesses.

Still, he said, “We will engage productively with our shareholders, including Starboard” and consider “all good ideas that are offered.”

Meanwhile, Pfizer reiterated Tuesday it is on track to deliver at least $4 billion in savings by the end of the year. The company in May announced a multiyear plan to slash costs, with the first phase of the effort slated to deliver $1.5 billion in savings by 2027.

whopping $43 billion.

Those drugs brought in $854 million in revenue for the quarter, including $409 million from a targeted treatment for bladder cancer called Padcev as well as $268 million from Adectris, a drug that targets certain lymphomas. Pfizer completed its acquisition of Seagen in December.

Revenue also got a boost from sales of Pfizer’s Vyndaqel drugs, which are used to treat a certain type of cardiomyopathy, a disease of the heart muscle. Those drugs booked $1.45 billion in sales, up 62% from the third quarter of 2023.

Analysts had expected that group of drugs to rake in $1.37 billion for the quarter, according to estimates from StreetAccount.

Pfizer said its blood thinner Eliquis, which is co-marketed by Bristol Myers Squibb, also helped drive revenue growth during the period. The drug posted $1.62 billion in revenue for the quarter, up 8% from the year-earlier period.

That is slightly higher than the $1.59 billion that analysts were expecting, according to StreetAccount.

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Sales of Eliquis could take a hit in 2026, however, when a new price for the drug goes into effect for certain Medicare patients following negotiations with the federal government. Those price negotiations are a key provision of President Joe Biden‘s Inflation Reduction Act that the pharmaceutical industry fiercely opposes.

Meanwhile, Pfizer’s vaccine against respiratory syncytial virus, or RSV, saw $356 million in revenue for the third quarter. The shot, known as Abrysvo, entered the market during the third quarter of 2023 for seniors and expectant mothers who can pass on protection to their fetuses.

Analysts had expected the shot to generate sales of $255.4 million, according to StreetAccount estimates.

Last week, Pfizer’s RSV shot won approval for adults ages 18 to 59 who are at increased risk for the disease – a decision that will likely significantly expand the reach of the jab in the U.S.

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Pfizer threatened to sue renegade executives prior to activist schism, Starboard's Smith says

Harsh — Thu, 10 Oct 2024 19:33:00 +0000

Ian Read, former CEO of Pfizer Inc., gestures as he speaks during a panel session at the World Economic Forum in Davos, Switzerland, on Jan. 17, 2017.

Simon Dawson | Bloomberg | Getty Images

Activist Starboard Value accused Pfizer of threatening litigation against the company’s former CEO and chief financial officer in order to get them to break ranks with the investor’s nascent turnaround campaign at the pharmaceutical giant.

Starboard managing member Jeff Smith said in a Thursday letter to Pfizer’s board that the company or its advisors also “threatened” to claw back former chief executive Ian Read and ex-CFO Frank D’Amelio’s past compensation and cancel their unvested shares.

Smith asked that the board assemble a special committee to investigate the matter, describing it as “highly inappropriate, flagrantly unethical, and a significant breach of fiduciary obligations.”

The risk of legal liability was a driving factor in Read and D’Amelio’s public backing of Pfizer CEO Albert Bourla late Wednesday night, said a person familiar with the interactions between the company and the two former executives.

Pfizer shares slipped overnight as news of the two executives’ breakaway emerged, and opened down roughly 2.5% in Thursday morning trading.

Starboard’s Smith said that when the activist approached the two executives, both expressed “concerns” about Pfizer’s direction under Bourla and offered to help Starboard in its turnaround campaign.

Starboard did not respond to CNBC’s requests for comment. A Pfizer spokesperson declined to comment.

Smith and Bourla are slated to meet in person next week, Smith said, confirming earlier reports. The agenda of the discussion could not be learned, but people familiar with Starboard’s thinking previously said Pfizer’s focus on disciplined cost structure and mergers and acquisitions had suffered under Bourla’s leadership.

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Former Pfizer CEO, finance chief step back from Starboard's activist campaign

Harsh — Thu, 10 Oct 2024 02:39:01 +0000

Ian Read, chairman and chief executive officer of Pfizer, speaks as President Donald Trump, left, listens during an announcement on a new pharmaceutical glass packaging initiative in the Roosevelt Room of the White House in Washington, D.C., July 20, 2017.

Andrew Harrer | Bloomberg | Getty Images

Former Pfizer CEO Ian Read and ex-CFO Frank D’Amelio said Wednesday evening that they would step away from Starboard Value’s campaign at the struggling pharmaceutical giant, just days after news of the activist’s stake broke.

Read and D’Amelio said they were “fully supportive” of Pfizer CEO Albert Bourla in a joint statement made via an investment bank and confirmed to be authentic. The duo had been in contact with a number of directors shortly before news of Starboard’s stake broke Sunday evening, according to people familiar with the matter.

“We are confident that over time they will deliver shareholder value,” the two former executives said of Pfizer’s current board and management. The company’s shares are essentially flat for the year and are off by roughly 50% from their 2021 highs.

The statement was made through Guggenheim Securities, which has long advised Pfizer on dealmaking. A representative for the bank declined to comment beyond the release.

The about face comes as Pfizer’s board grapples with the activist’s efforts, and just days before Starboard’s Jeff Smith was slated to meet with CEO Bourla, said people familiar with the matter. For executives to join, and then walk away from an activist’s campaign is highly unusual.

It was also not immediately clear what impact, if any, the breakaway would have on Starboard’s campaign. A representative for the activist fund did not immediately return a request for comment. Starboard, one of the largest and most tenacious activist funds, has amassed a roughly $1 billion position in the pharmaceutical firm, CNBC previously reported.

Jeff Smith, the managing member at Starboard, has previously mounted campaigns at Autodesk and Salesforce in recent months. While it typically focuses on the technology sector, it also built stakes in Starbucks and Wall Street Journal parent News Corp this year.

Representatives for Pfizer did not return requests for comment.

Healthy Returns: What activist Starboard's $1 billion stake means for Pfizer

Harsh — Tue, 08 Oct 2024 20:46:17 +0000

Jakub Porzycki | Nurphoto | Getty Images

A version of this article first appeared in CNBC’s Healthy Returns newsletter, which brings the latest health-care news straight to your inbox. Subscribe here to receive future editions.

Happy Tuesday! Pfizer‘s troubles may finally be coming to a head.

Former executives of the pharmaceutical giant are backing a push by activist investor Starboard Value to turn around the struggling company, according to recent reports.

Starboard has a roughly $1 billion stake in the drugmaker and approached former Pfizer CEO Ian Read and ex-CFO Frank D’Amelio, both of whom expressed interest in supporting the activist investor’s efforts to shake up the company, CNBC previously reported. As of late Tuesday, Pfizer has a market cap of roughly $165 billion.

Read and D’Amelio relayed proposals from Starboard to several members of the company’s board on Sunday, the Financial Times reported on Monday, citing sources familiar with the conversations. Still, the details of the turnaround plan are scant.

Read was Pfizer’s CEO from 2010 through 2018, while D’Amelio was Pfizer’s chief financial officer from 2007 to 2021.

Here’s why it matters: Read and D’Amelio’s reported involvement is a rare instance of former executives engaging in what could be an activist fight for the future of one of the largest pharmaceutical companies in the world.

Investors have been clamoring for change at Pfizer, whose shares are down more than 30% over the past two years. The company has struggled to recover from the rapid decline of its Covid business, which raked in record-breaking revenue during the peak of the pandemic.

Pfizer CEO Albert Bourla is facing mounting pressure to improve the company’s performance after several commercial missteps over the past two years – including disappointing data on an experimental obesity pill and a slower-than-expected launch of a respiratory syncytial virus vaccine – along with a costly M&A strategy that has yet to yield significant returns.

Pfizer is betting big on oncology, and particularly its whopping $43 billion acquisition of cancer drug developer Seagen, to regain its footing. But that deal may take years to pay off. Meanwhile, Pfizer last month pulled a key sickle cell disease drug from global markets – the centerpiece of its roughly $5 billion buyout of Global Blood Therapeutics in 2022.

Starboard’s turnaround push raises questions about Bourla’s fate at the company.

“We’ve sensed investor frustration with CEO Albert Bourla since at least the beginning of 2023,” BMO Capital Markets analyst Evan Seigerman wrote in a research note Monday.

Still, he said, “While placing blame on one person may seem easy, rarely will it result in a quick turn-around.”

Other analysts similarly said there may be no quick fix by an activist investor.

“We await future developments, but we do not see low-hanging fruit to boost shareholder value,” Leerink Partners analyst David Risinger wrote in a research note on Monday.

Risinger said that’s because the company faces “revenue growth constraints” over the next five years, driven by patent expirations for top-selling drugs and pressure from competitors. Pfizer has also pursued significant cost-cutting efforts, he added. The company last fall announced that it would cut $4 billion in costs and in May disclosed another multi-year plan to slash roughly $1.5 billion in expenses by 2027.

Pfizer’s debt levels are also relatively high, Risinger noted, with $57.5 billion in debt as of June 30. He said that may only be partially reduced by selling more shares from its assets, such as the consumer health business Haleon.

We’ll continue to follow Starboard’s turnaround push, so stay tuned for our coverage.

Feel free to send any tips, suggestions, story ideas and data to Annika at annikakim.constantino@nbcuni.com.

Hims & Hers Health, a direct-to-consumer health-care company, closed 10% higher on Monday following the announcement that the stock is being added to the S&P SmallCap 600.

The S&P Dow Jones Indices said Hims & Hers will replace Vector Group ahead of the opening bell on Oct. 9, according to a release Friday. Japan Tobacco completed its acquisition of Vector Group, which operates tobacco and real estate businesses, on Monday.

Hims & Hers offers treatments for weight loss, sexual health, hair loss and other conditions, and the stock is up nearly 120% year to date as of Monday’s close. However, shares of the company tumbled last week after the U.S. Food and Drug Administration announced tirzepatide injections are no longer in shortage.

Tirzepatide is the active ingredient in Eli Lilly’s GLP-1 weight loss drug Zepbound and diabetes drug Mounjaro. Hims & Hers doesn’t offer these medications through its platform, but CEO Andrew Dudum told investors in August that the company was looking to introduce access to compounded versions in the near future, as well as the branded versions when supply allowed.

Compounded medications are custom-made alternatives to the brand drugs, and they can be produced when brand-name treatments are in shortage. Hims & Hers has been offering customers compounded versions of semaglutide, the active ingredient in Novo Nordisk’s GLP-1s called Wegovy and Ozempic.

“We don’t offer access to tirzepatide at this time,” a Hims & Hers spokesperson told CNBC in a statement Monday. “Whenever we bring a treatment to our platform, our first consideration is how accessible it will be for the large majority of customers and accessible means consistently available at a reasonable price.”

Hims & Hers is one of several digital health companies selling compounded GLP-1 medications as a cheaper alternative for consumers while demand for the weight loss and diabetes drugs spikes. But they’re not a foolproof way to carve out a piece of the anti-obesity drug market, which some analysts estimate could generate $100 billion in annual revenue by 2030.

Both Zepbound and Mounjaro are under patent protection in the U.S., and Eli Lilly does not supply the active ingredient of those two drugs to outside groups. The FDA warned last week that outsourcing facilities are generally restricted from compounding copies of an approved drug unless it’s on the shortage list.

“When a drug shortage is resolved, FDA generally considers the drug to be commercially available,” the agency said on its website. “Certain amounts are permissible under the law as long as the compounding is not done ‘regularly or in inordinate amounts.'”

Though Hims & Hers does not offer compounded tirzepatide, the FDA’s announcement was enough to spook investors. Shares of Hims & Hers closed down nearly 10% on Thursday.

Analysts at Citi said that Hims & Hers will not be directly impacted by the tirzepatide news, but it does limit the company’s total addressable market. It also suggests that shortages could resolve faster than anticipated, they added.

“HIMS has maintained that it will be able to continue to compound GLP-1s after shortages abate by changing the form factor/formulation/dosage for the clinical benefit of an individual,” the analysts wrote in a Thursday note. “In our view, this sets HIMS up for a legal battle in the coming months.”

Feel free to send any tips, suggestions, story ideas and data to Ashley at ashley.capoot@nbcuni.com.