What to Look for When Pfizer Inc. Reports Earnings

Read the full article at The Motley Fool, here.

Pfizer's  (NYSE: PFE  )  earnings call is coming up on Tuesday, January 28, just after the market opens. Losses from generic competition, an ongoing organizational overhaul, and string of recent downgrades will make this one of the most listened to calls of the season. With this much attention, there is likely to be a great deal of noise immediately following the call, but here are a a few critical points to help you focus on the essentials.

Unloading generics
Halfway through last year, Pfizer discussed the separation of its commercial operations into three distinct units. Two units for patent protected brands and one for generics. According to Reuters, Valeant Pharmaceuticals (NYSE: VRX  ) , Mylan Inc (NASDAQ: MYL  ) , andActavis (NYSE: ACT  ) , are all interested, but there's a small problem -- they probably can't afford it.

VRX Free Cash Flow (TTM) data by YCharts

Pfizer's generics operations are contained within its Established Products and Emerging Markets reporting segment. It hauled in about $14.5 billion during the first nine months of 2013. The odds of any one of the above companies raising enough cash to make an outright purchase are slim. Also, the sale of smaller pieces to interested parties would probably incur enough taxes to erode the sales' profitability.

The company could avoid the tax charges if...

You can finish this article here, or check out the latest 50 posts at The Motley Fool from Cory Renauer.

GlaxoSmithKline and Personalized Medicine Take Another Leap Forward

Read the full article at The Motley Fool, here.

Earlier this month, the FDA granted an accelerated approval to GlaxoSmithKline (NYSE: GSK  )  for Mekinist and Tafinlar as an oral combination therapy for treatment of patients with inoperable melanoma. Merck  (NYSE: MRK  ) has a promising new compound that may give it some competition going forward. For now, this relatively straight-forward label expansion holds important lessons for pharmaceutical companies, and investors.

The FDA had already approved Mekinist for patients with BRAF V600E or V600K mutations, and Tafinlar for patients with BRAF V600E only. Although the National Cancer Institute estimates over 920,000 Americans are living with melanoma, this is the first approved combination therapy.

Vertically integrated
Glaxo's recently approved combination therapy requires a positive result from BioMérieux's THxID BRAF Kit. As the number of new medicines with required companion diagnostics continues rising, few companies are better positioned to take advantage of this trend than Roche  (NASDAQOTH: RHHBY  ) . The Swiss giant is the world leader in in vitro diagnostics, and has its eye on personalized medicine. Early last year it won approval for Kadcyla, a late stage breast cancer therapy it developed in partnership with Immunogen(NASDAQ: IMGN  ) . Roche's subsidiary, Ventana, will be providing the companion diagnostic for Kadcyla.

Competition from Merck
Glaxo's melanoma combo-therapy is likely to face competition in the future from Merck's PD-1 immunotherapy lambrolizumab (MK-3475). In November 2013, the company released compelling data. At one year, the overall survival rate was 81%. With numbers like this, it's likely that this therapy will hit the market, and it may hit sooner rather than later. Merck has initiated a rolling submission for lambrolizumab's biologics license application. This means the FDA is reviewing data as it becomes available in an attempt to speed this promising therapy into physician's hands.

Why specific is good
Melanoma is one of the most commonly diagnosed cancers, and about half of all melanoma patients harbor a BRAF mutation. Glaxo's combo therapy was approved fairly quickly based on results from a 162 patient, open-label trial with an objective response endpoint, not years of overall survival data. The drug's genetic specificity played a role in this relatively speedy approval.

As an investor, the advantages of an accelerated review are that...

Read the rest here. Check out the latest 50 posts at The Motley Fool from Cory Renauer.

Can Pfizer Inc. Recover From Its Latest Lung Cancer Setback?

Read the full article at The Motley Fool, here.

Over the past several years, Pfizer (NYSE: PFE  ) has taken bold steps to streamline its operations and improve profitability after a wave of patent expirations. Focusing on the company's emerging oncology segment seemed like a great plan, until the recent failures of a lung cancer candidate with high expectations.

Dacomitinib is an epidermal growth factor receptor tyrosine kinase inhibitor, one of many tumor fighting drugs more commonly referred to as EGFR inhibitors. This experimental drug was expected to eventually put its non-small cell lung cancer (NCLSC) competitors on the ropes. Unlike Tarceva from Roche (NASDAQOTH: RHHBY  ) and Iressa from partners AstraZeneca (NYSE: AZN  ) and Teva (NYSE: TEVA  ) , Pfizer's unique therapy is irreversible and acts on multiple receptor types. Let's take a look at just how far this will set back the restructured pharma giant.

The prize
Combined, Tarceva and and Iressa racked up about $2 billion worldwide in 2012. Dacomitinib wasn't expected to be a blockbuster on the scale of a drug like Lipitor, which was Pfizer's most successful drug and formerly the top-selling drug in the world. However, dacomitinib's failed trials would sting much less if they occurred during earlier stages of development.

What went wrong
Not long ago, dacomitinib had the competition shaking in their boots. Results from a 188 patient trial released at the end of 2012 showed significantly stronger responses when compared to Tarceva. The problem with the drug wasn't safety or response rates, but...

You can finish this article, here, or check out the latest 50 posts at The Motley Fool from Cory Renauer.

What You Should Listen for When Biogen Idec Inc. Reports Earnings

Read the full article at The Motley Fool, here.

Biogen Idec (NASDAQ: BIIB  ) will report earnings on Wednesday, January 29. The company's shares are up over 100% over the last twelve months, largely on the success of a new multiple sclerosis therapy that quickly elbowed past competition from both Sanofi (NYSE: SNY  ) and Novartis  (NYSE: NVS  ) . Highly effective new hemophilia therapies likely to be launched ahead of Novo Nordisk's (NYSE: NVO  ) also have investors excited.

Before getting caught up in posted figures versus expectations, it's always a good idea to make your own assessment of a company's long-term prospects. Let's take a closer look at a few key factors that we can listen for during the call. This way we can cut through the noise and measure the company's chances of continued success.

Insider selling
Before getting into critical factors that will affect Biogen's future profitability, we should address an issue that could cloud your judgement. You may have noticed news of insider selling at Biogen. This is true, but I don't think it's cause for alarm. As of January 23, 2014, five different directors, but not officers, have sold a combined 29,770 shares. The transactions represent just about 0.013% of total shares outstanding.

While it is certainly worth paying attention to insider transactions, viewed in context, I don't see any smoking gun here. At a recent price north of $310, the company's shares are trading at over 40 times trailing-twelve-month earnings. Generally in situations like these, without a real surprise to the upside, price gains made in anticipation of an earnings report are quickly wiped out. Given the odds, you can't blame insiders for taking some of their profits off the table beforehand.

Tecfidera launch
Insider transactions aside, we should take a good look at what to expect regarding Biogen's main sources of revenue. First up is the wildly successful oral multiple sclerosis therapy Tecfidera. Introduced in the beginning of April 2013, after six months it had already beat out Sanofi's Aubagio, and Novartis's Gilenya in terms of market share. According to Biogen Idec CEO, George Scangos, there are about 8,000-9,000 prescribing physicians for MS in the US. Six months after its launch, Tecfidera had been prescribed by...

You can finish this article, here, or check out the latest 50 posts at The Motley Fool from Cory Renauer.

3 Things Investors Must Watch at Bristol-Myers Squibb Co.

Read the full article at The Motley Fool, here.

Bristol-Myers Squibb's (NYSE: BMY  ) end of year earnings report is coming up this Friday after the market opens. The company is going through a transformative phase, so we can expect the release and subsequent conference call to generate a great deal of noise. It's easy to get caught up in the ebb and flow created by analysts, but I think it's best to highlight some items to look out for so we can determine for ourselves whether the company is on the right path, or stumbling in the dark.

Eliquis' launch
The launch of Eliquis, marketed in partnership with Pfizer (NYSE: PFE  ) has been a disappointment so far. A slow US launch had to be expected, as it followed Boehringer Ingelheim's Pradaxa, and Xarelto from Johnson & Johnson (NYSE: JNJ  ) into the market. The analyst community was convinced that Eliquis' superior safety profile with respect to dangerous bleeding episodes would propel it past its competition. During the first nine months of 2013, sales of Eliquis in the US only reached $49 million, while Xarelto reached $246 million during Q3 2013 alone.

Bristol-Myers has stepped up its game, by sending physicians into the field to educate other physicians of Eliquis' safety profile. A supplemental new drug application that would extend the anticoagulant to treatment of hip or knee replacement patients post-surgery is also under review. Be sure to keep your eyes and ears open for any signs of improvement from what should already be a drug heading for blockbuster status.

Check out the latest 50 posts at The Motley Fool from Cory Renauer.

Bristol-Myers Squibb Co. Doubles Down On Immuno-oncology

Sorry about the blackjack references, I'll get some new ideas soon. I promise. See the full post here.

Bristol-Myers Squibb  (NYSE: BMY  )  has shown that it is serious about becoming a specialty biopharmaceutical company with an immuno-oncology focus. Although it has some promising compounds both on the market and in the pipeline, competition from Roche (NASDAQOTH: RHHBY  ) and Merck (NYSE: MRK  ) are likely to complicate matters.

The commitment

In November 2013, Bristol-Myers cut R&D staff, severing nearly all discovery work in diabetes, hepatitis C, and neuroscience. The cuts to the crowded and/or risky indications will largely benefit the company's immuno-oncology operations.

Late last year, Bristol-Myers furthered its commitment. Shortly before diabetes treatment Farxiga won approval by the FDA, Bristol-Myers essentially cut its ties to the therapy. On December 19, 2013, AstraZeneca (NYSE: AZN  ) announced that it would acquire Bristol-Myers' stake in their diabetes partnership . Clearly, Bristol-Myers isn't just paying lip-service to restructuring its operations around this promising field of cancer therapy.

Oncology bets aside, the early sale could prove positive for Bristol-Myers. It received $2.7 billion upfront and another $1.4 billion in milestones along with additional sales royalties. Farxiga will face some tough competition with Johnson & Johnson's Invokana. In the near term, it may also compete with Eli Lilly's empagliflozin, another SGLT2 drug currently under FDA review.

Reasons for the excitement

There is plenty of evidence that the immune system recognizes cancerous cells and is capable of eliminating them. In many types of cancer, malignant progression is coupled with severe immunosuppression. In other words, the growth and spreading of tumors usually occurs while the immune system is looking the other way. Investigators once believed tumor cells hid themselves. More recently, researchers understand that tumors effectively blind immune cells to their presence.

Traditional cancer therapies assault normal healthy cells as well cancerous ones. Antibody-drug conjugates, or ADCs, are a more effective way of precision-bombing cancer cells with chemotherapy payloads. Even ADCs inflict some collateral damage to normal tissues.

What makes drugs like Bristol-Myers's Yervoy and nivolumab so exciting, is that they lack toxic payloads. Although they represent no direct threat to cancer cells, they effectively suppress tumors by removing blindfolds, and allowing the immune system to do its job.

The complete post is only available at The Motley Fool, here.

Pfizer Enters a 10K Race Ready for a Marathon

In October 2013, Pfizer (NYSE: PFE  ) began a series of Phase 3 studies for bococizumab. The company intends to dose over 22,000 patients in separate trials sorted by risk type and indication. This monoclonal antibody (MAB) is one of an emerging class of therapies that lower cholesterol through inhibition of proprotein convertase subtilisin/kexin type 9, an enzyme mercifully abbreviated to PCSK9.

Why PCSK9 is a target
Low density lipoprotein cholesterol, the "bad" kind that's often referred to as LDL-C, is typically removed from the bloodstream after attaching to LDL receptors on the surface of liver cells. PCSK9's natural function is to regulate the amount of circulating cholesterol by marking LDL receptors for destruction after they carry LDL-C into a liver cell. In theory, any drug that inhibits this enzyme should also lower circulating LDL-C, which in turn should lower a patient's risk of heart attack.

Taking the "mono" out of monoclonal
Pfizer is not alone in the race to develop a monoclonal antibody to inhibit PCSK9. Amgen (NASDAQ: AMGN  ) has had some luck with two Phase 3 trials involving its PCSK9 inhibitor, evolocumab. In December 2013, Amgen announced its MAB met its primary endpoint of reducing LDL-C at 52 weeks in a study of 901 hyperlipidemia patients.

This data was no doubt followed by a sigh of relief at Amgen. The study is just one of 13 Phase 3 trials with a combined enrollment of over 28,000 patients.

So far, Amgen has been quiet about the details of the Phase 3 study. Results from several Phase 2 trials have shown it to be roughly as effective as Pfizer's bococizumab, however.

In May 2010, Regeneron Pharmaceuticals (NASDAQ: REGN  ) , while partnered with Sanofi (NYSE: SNY  ) , was the first team to show that the inhibition of PCSK9 could significantly lower cholesterol levels in humans. In mid-October 2013, the team was also the first to present Phase 3 data showing it to be highly effective with relatively low dosages over a period of 24 weeks. This was just the first of 12 Phase 3 trials with an expected total enrollment of over 23,000 patients.

Read the complete post only at The Motley Fool, here.

AbbVie doubles down on precision strike cancer treatments

Humira is really raking it in for AbbVie (NYSE: ABBV  ) , but the good times will likely take a turn for the worse when the biologic goes off patent in a few years. For reasons I explained recently, Humira sales are more likely to slide down a bunny slope than fall off a patent cliff. Still, this revenue must be replaced somehow.

Trojan horses for cancer
Abbvie has extended its reach into targeted cancer treatments with antibody-drug conjugates (ADCs). These are monoclonal antibodies (MABs) that carry cell-destroying agents specifically to tumor cells. Instead of the carpet-bombing techniques used by standard chemotherapies, ADCs hang on to their toxic payload until they enter cancerous cells. In theory, patients should benefit from smaller, more effective infusions of toxic compounds.

Riskless in Seattle 
Entirely content to take on the financial risk of developing a smaller biotech's compounds, AbbVie is leapfrogging into this interesting field of cancer therapies with ADC pioneers Seattle Genetics (NASDAQ: SGEN  ) .

AbbVie expanded its partnership to include access to two proprietary technologies of Seattle Genetics: both pyrrolobenzadiazepine (PBD) dimer ADC and EC-mAb site-specific conjugation technologies. AbbVie paid $25 million upfront to use the technologies and will remain responsible for paying all the bills. Seattle Genetics also stands to earn up to $255 million in milestone payments and license fees, plus a percentage of any worldwide sales resulting from the partnership.

This is a huge win for both companies. AbbVie gets ahead in ADC technology fast. Seattle Genetics will turn either a small or large profit without further financial risk.

Read the full article only at The Motley Fool, here.

Ironwood Pharmaceuticals: Sometimes a Blockbuster Isn't Enough

Small biotechnology companies typically risk everything for their first 15 years or so until their first big drugs win approval. Once sales start rolling in, it should be time to invest in the rest of the pipeline. The last thing a long-term investor wants to see is a cut to the R&D department.

Well, Ironwood Pharmaceuticals, Inc. (NASDAQ: IRWD  ) began marketing its first big drug, Linzess, in the U.S. about fifteen months ago. Analyst estimates vary, but it is likely to reach peak sales of more than $1 billion dollars per year. Sales, general, and administrative costs (SG&A) have risen, but R&D has remained somewhat level.

Reports of the launch are positive, but Ironwood's earnings are not. As a result, the company is making cuts. According to a recent report in the Boston Business Journal, some of Ironwood's research staff will be cut during the present quarter.
Lets take a closer look at Ironwood and its Lizness strategy to see if we can explain this head-scratcher.

The opportunity
Bowel disorders are a big business brimming with opportunities. Frost & Sullivan estimates the U.S. market alone is worth more than $4 billion and rising. Between the two main subtypes, irritable bowel syndrome (IBS) and the more severe inflammatory bowel disease (IBD), there is an inverse relationship between the patient pool and the availability of effective therapies.

Read the rest only at The Motley Fool, here.

Eli Lilly Guilty of R&D Hubris?

Last year was tough for pharmaceutical company Eli Lilly  (NYSE: LLY  ) . US patent expirations of Cymbalta in December 2013, and Evista this coming March are going to leave bruises. As a result, the company is expecting revenue for 2014 to fall between $19.2 and $19.8 billion, a level not seen in over 5 years. Its goal for 2014 net income has been set at just $3.0 billion, a serious reduction from present levels.

R&D Hubris?
In anticipation of their own patent cliffs, many of the big players reduced their R&D budgets, in an attempt to earn more with less. Around the same time, Lilly put the pedal to the floor.

Please stay calm
Few will envy chairman, president, and CEO, John C. Lechleiter this year as he attempts to soothe anxious investors. From the earnings guidance released January 7, 2014, Lechleiter began with, "First and foremost, we are replenishing and advancing our pipeline. Today, we have 13 potential new medicines in Phase III testing or submission stage, with 26 more in Phase II. We anticipate obtaining regulatory approvals for and successfully launching multiple products each year for the next few years."

While Lilly's pipeline is robust, the company has some big holes to fill fast. Here's a look at some of the items currently under review by the FDA.

Read the complete article only at The Motley Fool, here.

Quest Diagnostics Is Worthy Of More Attention

After nearly two years of flat to falling revenue, it's just plain difficult for Quest Diagnostics (NYSE: DGX  ) to get any positive attention, especially with the black cloud of reimbursement uncertainty hanging over its industry. To end the year, shares of BRCA test pioneers Myriad Genetics (NASDAQ: MYGN  ) were clobbered after a price readjustment from the Centers of Medicare and Medicade Services. The market has let shares of Quest fall to their lowest level in over two years. This could be an opportunity to pick up a great company at a very attractive price.

Read the full article only at The Motley Fool, here.

Tooting my horn

This is beginning to get a little scary. On the day I submitted this article claiming that fears were already priced in, one of the big fears came true. Shares of Myriad Genetics (NASDAQ: MYGN) immediately tanked, If someone had read my article and bought the day of the knee-jerk reaction they would already be up nearly 20%.
I don't make these sort of investments myself. I can't stomach the volatility. I like to write about them because they get attention. I like to invest in wonderfully dull companies with steady predictable growth. This time I wish I had followed my advice.

A Post Spinoff Look At Abbot Laboratories

Sure, Abbott Laboratories separated its research based bio-pharmaceutical division into the wildly profitible AbbVie. That doesn't mean it is finished finding innovative ways to increase value for its shareholders. Here's a snip from a piece recently published at The Motley Fool. Read the full article here.

Since its modest beginning as a single pharmacy in 1888, Abbott Laboratories (NYSE: ABT  ) has been a health care innovator. Recently, the company has been the subject of analyst upgrades, and purchases by top-performing funds. Now that the dust has settled from the AbbVie spinoff, it's much easier to get a clear picture of the company's growth opportunities. Here are some factors to look out for in the months and years ahead.

A correctable mistake

Skittish investors often exhibit a knee jerk reaction to product recall news. Following the voluntary supplier recall of pediatric nutrition products last August, Abbott shares traded near their lowest levels in months. This was a voluntary recall without any associated health issues, that will probably lead to a year long reduction in topline revenue of 1%-2%. With a company as well diversified and financially sturdy as Abbott, this is exactly the sort of opportunity that smart long-term investors sink their teeth into.

The hit taken by Abbott's International Nutrition segment is likely to reverse before the end of the year. CEO Miles White, claims the voluntary recall of pediatric nutritional products in China that began in August 2013 reduced total company sales by about 1.7% for that quarter. During the first nine months of 2013, International Pediatric Nutritionals grew 14% despite the disruption, making it the company's fastest growing segment. It is likely to continue driving growth, especially once the disruption is mended.

Again, read the article only at The Motley Fool here.

Merck's Vorapaxar Faces Moment Of Truth Before The Real Trouble Begins

The enormous rough diamond, called vorapaxar, that Merck  (NYSE: MRK  ) picked up in the Schering-Plough merger has been cut smaller and smaller during costly late-stage development. The first big setback was a pricey phase 3 trial that measured the prevention of clinical events in patients with acute coronary syndrome. In November 2011, the company announced that the drug did not meet its original endpoint. This failure basically buried the drug's chances of being a primary blood thinner for anyone at risk of heart attack.

Less than half a year later, Merck presented data from a phase 3 trial that measured vorapaxar's ability to reduce risk of cardiovascular events as a secondary prevention in patients with a previous heart attack or stroke. This trial did reach its endpoint, but there was a significant increase in intracranial hemorrhage among patients that had previously suffered a stroke. Again, the potential patient pool for vorapaxar became smaller.

Soon the Merck will go up against an FDA advisory committee to defend the blood thinner. Read the full article only at The Motley Fool, here.

Biosimilars Pose A Mild Threat Compared With Generic Small Molecule Drugs

The first rule of investing in pharmaceuticals is that when a drug loses patent protection, the drug maker loses sales. Remsima, a biosimilar version of Remicade, has been on sale in Korea since September 2012. Why haven't Remicade sales there fallen off a cliff?

Small molecule drugs get immediately hammered by generic competition, losing as much as 90% of sales within a year of losing patent protection. Here's why the makers of some of the world's best selling biologics aren't sweating the competition.