What to Look for When Pfizer Inc. Reports Earnings

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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...

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

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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...

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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.

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