Thursday, April 05, 2007

Calls of Note Part 4

- Merrill Lynch is lowering their EPS projections on Pfizer (NYSE:PFE) to reflect dramatically lower Exubera projections and early entry of generic Norvasc (six months earlier than expected). The Exubera reductions hit 2008E EPS and beyond. The Norvasc reductions only hit 2007E since the firm had already forecast a >90% hit after the expected generic entry date in September 2007. MLCO revised '07E EPS from $2.23 to $2.15 and '08E from $2.38 to $2.35.

Firm has lowered 2012E US Exubera sales from $635M to $250M and ex-U.S. from $165M to
$60M. Despite a full launch to endocrinologists last fall and to primary care in January 2007 (Pfizer is switching to cardiovascular sales force this month), IMS data indicates that less than 1,500 TRxs (total prescriptions) are currently being written on a weekly basis. To compare, Januvia TRxs exceeded 20,000 on a weekly basis three months into launch.

The Associated Press reported March 22, 2007 that John Buse, President-elect of the American Diabetes Association (ADA) and participant in Exubera's trials, said that he sees it as his job to tell people to avoid Exubera: "I think Pfizer will wish they had never gotten into this. I doubt they'll regain their investment. There is no advantage to Exubera and there may be a safety risk. I see it as my job to talk people out of (using) it."

Notablecalls: No real impact on PFE from this call. However, note that Exubera is partnered with Nektar Therapeutics (NASDAQ:NKTR). MLCO slashed their 2012 Exubera sales est to $400 mln from $800 mln (NKTR revenues from $406mn to $316mn) and is in fact lowering their tgt on NKTR to $17 from $20 this AM. The stock has been on tear lately as investors have been betting that the resolution of manufacturing issues, wider availability of Exubera, launch to primary care physicians and a new sales team (PFE's top cardio team) would ignite Exubera sales. Maybe it will, but the sales potential isn't what it was previously thought. Would not be surprised to see a sharp pullback in NKTR over the next couple of days.

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