Baxter International (BAX)

Q2 2010 Earnings Call

July 22, 2010 8:30 am ET

Executives

Robert Parkinson - Chairman, Chief Executive Officer and President

Robert Hombach - Chief Financial Officer, Corporate Vice President and Treasurer

Mary Ladone - Vice President of Investor Relations

Analysts

Matthew Miksic - Piper Jaffray Companies

Michael Weinstein - JP Morgan Chase & Co

Robert Hopkins

David Lewis - Morgan Stanley

Frederick Wise - Leerink Swann LLC

Lawrence Keusch - Morgan Keegan & Company, Inc.

Bruce Nudell - UBS Investment Bank

Presentation

Operator

Good morning, ladies and gentlemen, and welcome to Baxter International Second Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Ms. Mary Kay Ladone, Corporate Vice President, Investor Relations at Baxter International. Ms. Ladone, you may begin.

Mary Ladone

Thanks, Sean, and good morning, everyone. Welcome to our Q2 2010 Earnings Conference Call. Joining me today are Bob Parkinson, CEO and Chairman of Baxter International; and Bob Hombach, Chief Financial Officer.

Before we get started, let me remind you that this presentation, including comments regarding our financial outlook, new product development and regulatory matters contain forward-looking statements that involve risks and uncertainties and of course, our actual results could differ materially from our current expectations. Please refer to today's press release and our SEC filings for more details concerning factors that could cause actual results to differ materially.

In addition, in today's call, non-GAAP financial measures will be used to help investors understand Baxter's ongoing business performance. A reconciliation of the non-GAAP financial measures being discussed today to the comparable GAAP financial measures is included in our earnings release issued this morning and available on our website.

Now I'd like to turn the call over to Bob Parkinson.

Robert Parkinson

Thanks, Mary Kay, and thanks to everyone who are calling in this morning. I'm pleased to announce that our second quarter results that we reported earlier this morning were in line with the guidance that we provided on last quarter's call with adjusted EPS as you saw of $0.93 per share.

On a reported basis, worldwide sales increased 2% for the quarter and on an organic basis, sales were comparable to last year. While Bob Hombach will provide more details on our second quarter financial results and our outlook for the remainder of the year, we're pleased to confirm guidance within the range that we provided to you last quarter, which includes adjusted EPS of $3.93 to $3.98 per share.

While 2010 has been a challenging year for our company, we continue to make progress on a number of fronts. First, as we previously discussed, Baxter and the market more broadly continue to operate through a transition period in the plasma protein market as the macro environment has presented some challenges resulting from high-end employment, the loss of insurance and payers focus on ensuring appropriate utilization.

In addition, over the last few quarters, as we previously mentioned, we've experienced some share loss in GAMMAGARD LIQUID, our premium brand and has implemented new commercial strategies to selectively touch up prices. I'm pleased to report that we're seeing some early positive signs that Baxter share position, as a result of the actions that we've taken, and the U.S. market growth are stabilizing.

As I had mentioned in the past, we remain confident that the Plasma business will be an attractive growth vehicle in the coming years due to the increase in end-user demand resulting from deployment of additional sales resources for those indications that remain under diagnosed and under treated, Baxter's introduction of new and proprietary administration technologies such our HyQ program, expansion of new indications such as MMN and of course, the significant opportunity of a potential Alzheimer's indication.

Second, we continue to fund all key late stage programs and expand the pipeline with select investments in Research & Development as evidenced by a number of recent achievements. Just a few examples, we continue to extend our leadership position in hemophilia, with the initiation of a global Phase I/II clinical trial study in the safety and tolerability of BAX 817 and on-demand recombinant Factor VIIa therapy for patients with hemophilia A or B with an inhibitor.

We commence the Phase I clinical trial for Recombinants Factor IX, a treatment for patients with hemophilia B. The FDA accepted our Biologics License Application or BLA for the subcutaneous delivery of 10% liquid immunoglobulin for patients with primary immune deficiency. The BLA is supported by clinical trial data, which demonstrated efficacy, tolerability and safety of the subcutaneous formulation that were comparable to intravenous therapy.

And finally, we recently received approval in Europe and Canada for the first and only 30-gram dose vial for GAMMAGARD LIQUID. This new dosage form is the most frequently prescribed dose for primary immune deficiency patients and will enhance user convenience. These achievements depicts just a handful of the programs in our pipeline that will present great opportunities for Baxter in the years to come.

Thirdly in the quarter, we were pleased to announce the final details pertaining to the COLLEAGUE Infusion Pump recall in the United States just last week. As we indicated in our press release last week, Baxter will offer replacement, Sigma SPECTRUM infusion pumps or refunds to owners of COLLEAGUE Pumps and will execute the recall over the next two years.

Our primary goal is to support a seamless transition by providing choices that best address the clinical and economic needs of our hospital customers and minimizes disruption to the delivery of patient care. Toward this end, we continue to work with Sigma to increase production capacity of the SPECTRUM pump in order to meet the anticipated demand for this device.

We're pleased to offer closure in definition to our customers, as this has been a very high priority for our company over the last several years. Baxter's a long-standing leader in the infusion pump market and we remain committed to serving patients and hospitals that depend on our products. And as always, I'd be happy to address any further questions you might have on this subject during our Q&A later this morning.

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