Pfizer Bumps Up Forecast

The company expects to earn at least $2.05 a share this year.
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Updated from 3:10 p.m. EST

Pfizer

(PFE) - Get Report

nudged up its earnings forecast Thursday, saying it will wring a bit more profit out of its business this year than the drug giant had previously expected.

The company raised its earnings prediction to at least $2.05 a share, before items, from the prior estimate of about $2. Pfizer attributed the revised outlook to a "favorable trend in revenues and lower costs" in the fourth quarter.

On average, analysts polled by Thomson First Call had forecast $2.02, excluding one-time items. Pfizer said full-year earnings should be no less than $1.68 a share when all items are counted.

However, the company is sticking to its previous prediction that earnings per share will grow by a high-single digit percentage for 2007 and 2008. The company also reaffirmed that revenue will be unchanged for the next two years and comparable to what it expects for 2006.

The guidance came as Pfizer was unveiling its R&D efforts to analysts and investors at the company's research facility in Groton, Conn. The presentation provided more information on earlier-stage research than the company had offered in the past, a reflection of new CEO Jeffrey Kindler's desire for greater communication with investors.

Just two days ago, Pfizer said it

would dismiss 20% of its 11,000-member U.S. sales force by year-end as part of a comprehensive cost-cutting plan. More details will be revealed in January.

At the close of trading, shares of Pfizer were up 42 cents, or 1.6%, to $27.49 on heavier-than-average volume.

Of key interest to investors and analysts is the experimental drug torcetrapib, which Pfizer is developing to boost the body's so-called good cholesterol. A key to better heart health is to raise good cholesterol and lower bad cholesterol. Lipitor, the world's biggest-selling prescription drug, is Pfizer's bad-cholesterol fighter.

Pfizer is developing a combination pill containing Lipitor and torcetrapib, and the company expects to learn the results of three late-stage clinical trials of the drug in late March. If the results are positive, Kindler said Pfizer would seek approval for the pill from the Food and Drug Administration during the second half of 2007.

The combination pill has been controversial. Although recent clinical studies show that it has positive effects on cholesterol, the compound also causes a slight increase in blood pressure. Pfizer previously has said the initial results of higher blood pressure "will not alter the favorable clinical profile of

the drug in the treatment of cardiovascular disease."

"We believe strongly" in the pill, Kindler said. Pfizer's financial guidance through 2008 excludes this medication.

The combination pill also would protect the Lipitor franchise, which now accounts for about one-fourth of Pfizer's corporate sales. The key U.S. Lipitor patent expires in March 2010 and another patent expires in June 2011. The earlier Pfizer can launch its combination pill, the easier it will be for the company to convince doctors and patients to switch from Lipitor to the new pill before generic Lipitor floods the market.

Pfizer also revealed that it is working on two other compounds to raise good cholesterol. Both are in the first phase of clinical testing.

Providing an overall look at Pfizer's R&D efforts, Kindler predicted Pfizer would be able to produce "a steady stream of new, internally generated products" by 2011.

One indicator of any drugmaker's prospects is the number of experimental compounds in late-stage clinical testing.

"We now expect that our Phase 3 portfolio will grow dramatically and may even triple from 2006 to 2009," said Dr. John LaMattina, president of global research and development, referring to the final stage of testing before a drug is submitted for regulatory approval. He predicts Pfizer could be producing four products a year from this research starting in 2011.

Among products in advanced stages of development, Pfizer said it expects to file an application next month with the FDA for maraviroc, a treatment for AIDS patients.

Pfizer hopes to begin selling by midyear the antibiotic Zeven, which is still under review by the FDA. Zeven has experienced several regulatory delays since mid-2005. The antibiotic was

acquired last year when Pfizer paid $1.9 billion for Vicuron Pharmaceuticals.

Pfizer said an obesity treatment was in Phase 3 testing as a potential treatment for malignant melanoma, the most deadly form of skin cancer. Next year, it expects to begin Phase 3 testing for axitinib for cancers of the breast, thyroid and lung. Also in 2007, Pfizer plans to start a late-stage clinical test on a treatment for chronic liver disease.

Additionally, in a break from tradition, Pfizer will post on its Web site in the next few weeks a scorecard of experimental compounds in various stages of testing, not just the late-state development products.

"During the past four months, I have repeatedly heard from investors that they would like a broader picture of our pipeline and its potential, as well as a realistic assessment of our opportunities and challenges," said Kindler,

who replaced Hank McKinnell as CEO in late July. McKinnell will remain chairman until February.

"We are providing more detail about the mid- and earlier stages of our pipeline than we have before," Kindler said. The clinical-trial data on the Web site will enable "investors, doctors, patients and their families ... to track our progress over time," Kindler said.

Pfizer executives said they are willing to make an assortment of transactions, ranging from modest acquisitions to collaborations to licensing. Vice Chairman David Shedlarz said Pfizer will be much more disciplined in its dealmaking.

The old strategy followed a "cookie cutter" formula of integrating new products or new companies into Pfizer. The new style will feature "increased creativity" in structuring deals and "increased flexibility in how we integrate new opportunities."

New arrangements will be "grounded in a better understanding of value," Shedlarz said. He characterized potential acquisitions as "opportunistic," filling a gap in its existing drug portfolio or building on core areas of interest.

Acquisitions won't be restricted to drugs, and they could include "synergistic" products and services, such as the inhalation device that is being used for Exubera, the inhaled insulin. A next-generation inhaler is in early stages of development.

One new deal was announced Thursday -- a five-year collaboration with the Scripps Research Institute of La Jolla, Calif., a prominent source of biotechnology research. Representatives of Scripps and Pfizer will work together to assess new approaches to treatments for cancer, diabetes and mental illness.