Pfizer’s Pipeline: 2 Drugs That May Drive Future Revenues

Source: Thinkstock

Source: Thinkstock

Pfizer (NYSE:PFE) is one of my favorite pharmaceutical/biotech companies out there. I have long held this stock in tax-favored accounts and it is the largest of my portfolio holdings devoted to healthcare. It is among the largest research and development based companies in America. While the company has had its ups and downs, it remains a reliable stock. Today, all attention seems to be focused on earnings. Let me be clear — the company will beat estimates at times and miss them at times. What matters is that earnings are rising over time.

This past quarter, Pfizer earned 57 cents per share, excluding certain items, two cents above estimates. Revenue, though, fell short of consensus as sales weakened. However, I own this stock for the long-term because it is a dividend machine. It has paid dividends for 302 straight quarters, and the payouts continue to rise. At 3.0 percent to 3.5 percent, this interest compounds. On that note, as a long-term investor, I am concerned with the sustainability of the company’s earnings. Thus, the purpose of this article is to provide an update on two of the products in the pipeline.

There are a number of different pharmaceuticals for a variety of medical conditions in numerous stages of development. First, leading the pack with strong news is palbociclib (PD-0332991), a breast cancer treatment. Pfizer recently announced detailed results from the PALOMA-1 study, a randomized Phase 2 study of palbociclib in combination with letrozole.

PALOMA-1 achieved its primary endpoint by significantly prolonging progression free survival (PFS) compared with letrozole alone in post-menopausal women with estrogen receptor-positive human epidermal growth factor receptor 2-negative locally advanced or metastatic breast cancer. For women treated with the combination of palbociclib plus letrozole, the median PFS was 20.2 months, a statistically significant improvement compared to the 10.2 months of PFS in women who received letrozole alone (Hazard Ratio=0.488 [95 percent CI: 0.319, 0.748]; p=0.0004.) This statistically significant finding bodes extremely well for this drug.

Final results for the secondary efficacy endpoints of duration of treatment and clinical benefit rate demonstrated superiority in the palbociclib plus letrozole arm compared to the letrozole-only arm. Additionally, an initial assessment of overall survival (OS), a secondary endpoint, was performed. Based on the events accrued at the time of final PFS analysis, a median OS of 37.5 months was observed in the combination arm versus 33.3 months for those who received letrozole alone, a difference of 4.2 months (Hazard Ratio=0.813, 95 percent CI: 0.492, 1.345), which was not statistically significant. A follow-up OS analysis will be conducted following the accrual of additional events.

The combination of palbociclib and letrozole was generally well-tolerated and the safety profile of the combination was consistent with previously reported data. Pfizer continues to work with the FDA and other regulatory authorities to define the appropriate regulatory path forward for palbociclib. Pfizer also entered into an agreement with Merck (NYSE:MRK) to explore the pre-clinical combination of MK-3475 and Pfizer’s palbociclib. Merck is conducting these pre-clinical studies. Further studies would depend on the outcome of the ongoing pre-clinical studies as well as subsequent agreement by Merck and Pfizer.

Pfizer also has an anti-cholesterol drug brewing. Recently, Pfizer announced the Phase 2b results of a 24-week, randomized, placebo-controlled, dose-ranging study of bococizumab, the proposed generic name for chemical code “RN316.” Statin-treated patients with high cholesterol were randomized to various doses of either bococizumab twice or once monthly subcutaneous administration or placebo. The study met its primary endpoint across all doses, demonstrating that bococizumab significantly reduced low density lipoprotein cholesterol from baseline compared to placebo in adults with high cholesterol also taking statin therapy. The percentage of patients reporting adverse events or serious adverse events was similar across placebo and bococizumab treatment groups.

A Phase 3 program, including two cardiovascular outcome studies as well as multiple lipid-lowering studies, was initiated in October 2013, to evaluate the efficacy and safety of bococizumab 150 mg dosed twice monthly. With the number of Americans developing complications associated with high cholesterol, new drugs coming to market are needed, and bococizumab could be a cash cow for the company.

There are numerous other compounds with significant progress that will be addressed in a follow-up article. Further, it is of great interest how current therapies are performing to ensure continued income in the next several years. These will also be addressed at later time, but can be found in detail here. The future of the company will be determined by the current product and research pipeline (not accounting for mergers/agreements/buyouts.) Both pablociclib and bococizumab appear to be meeting endpoints of interest and are two strong candidates for the future of the company. Should these endpoints continue to be met in larger trials that are underway, it will set Pfizer up nicely for two sources of revenue in the coming decade provided they receive FDA approval.