Baxter International Management Discusses Q2 2012 Results - Earnings Call Transcript

Baxter International (BAX)

Q2 2012 Earnings Call

July 19, 2012 8:30 am ET


Mary Kay Ladone - Vice President of Investor Relations

Robert L. Parkinson - Chairman, Chief Executive Officer and President

Robert J. Hombach - Chief Financial Officer and Corporate Vice President

Norbert G. Riedel - Chief Scientific Officer and Corporate Vice President


David H. Roman - Goldman Sachs Group Inc., Research Division

Michael N. Weinstein - JP Morgan Chase & Co, Research Division

David R. Lewis - Morgan Stanley, Research Division

Rajeev Jashnani - UBS Investment Bank, Research Division

Robert A. Hopkins - BofA Merrill Lynch, Research Division

Lawrence S. Keusch - Raymond James & Associates, Inc., Research Division

Matthew S. Miksic - Piper Jaffray Companies, Research Division

Kristen M. Stewart - Deutsche Bank AG, Research Division



Good morning, ladies and gentlemen, and welcome to Baxter International's Second Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded by Baxter and is copyrighted material. It cannot be recorded or rebroadcast without Baxter's permission. If you have any objections, please disconnect at this time.

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 Kay Ladone

Thanks, Kevin, and good morning, everyone, and welcome to our Q2 2012 earnings conference call. Joining me today are Bob Parkinson, CEO and Chairman of Baxter International; Bob Hombach, Chief Financial Officer; and Dr. Norbert Riedel, Chief Science and Innovation Officer.

Before we get started, let me remind you that this presentation, including comments regarding our financial outlook, new product developments 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 detail 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 L. Parkinson

Thanks, Mary Kay. Good morning. Thank you for calling in. We're pleased today to announce financial results for the second quarter and also provide you with an update on Baxter's full year 2012 outlook.

As you saw in the press release, which was issued earlier this morning, second quarter sales, after adjusting for FX, increased 4%, and EPS of $1.12 per diluted share was in line with the guidance that we previously provided and reflected an increase of 5% versus the prior year on an adjusted basis. Despite ongoing macroeconomic challenges, we continue to have flexibility to make investments in our core product portfolio of critical therapies, expand further in developing in emerging markets, advance the pipeline and pursue opportunities that will position us well for the future and create long-term value for our shareholders.

Baxter continues to broaden its portfolio through investments in research and development and with business development initiatives aimed at enhancing longer term growth. Some recent achievements include the following: First, we gained FDA approval to market GAMMAGARD LIQUID as a treatment for multifocal motor neuropathy or MMN. This is the first and only immunoglobulin treatment approved for MMN in the United States, where Baxter has been granted orphan drug status and complements the approval received for this indication in Europe last year. MMN represents Baxter's first neurological indication and further differentiates the GAMMAGARD LIQUID brand in the chronic care segment of the global immunoglobulin market. MMN is associated with a progressive limb weakness mostly affecting the upper limbs, which can lead to significant difficulty performing simple manual tasks. We estimate that there are approximately 6,000 to 7,000 people worldwide with MMN. And today, immunoglobulin therapy is the first-line treatment for this debilitating disease.

As you know, Baxter is also evaluating GAMMAGARD LIQUID for the treatment of mild to moderate Alzheimer's disease. Earlier this week, as I'm sure you know, data from abstracts related to the ongoing clinical programs were presented at the Alzheimer's Association International Conference, the AAIC meeting held in Vancouver, Canada. Dr. Norman Relkin of NewYork-Presbyterian Hospital/Weill Cornell Medical Center and the principal investigator in the Alzheimer's trials presented 3-year follow-up data on the Phase II 24-patient study for the first time. As you may recall, the 18-month Phase II clinical results announced in April of 2010 represented the first study in Alzheimer's disease where all 3 measures, cognitive, functional and neuroimaging, reported positive data that were statistically significant. The Phase II study continued to treat 16 patients, open label, with GAMMAGARD LIQUID for a 36-month period. Specifically, 4 subjects who were treated with the optimal dose throughout the study period showed no change from their pretreatment baseline after 36 months on measures of cognition, clinician's global impression of change and activities of daily living, behavior and quality of life scales. While these trials' results are encouraging, the open label extension study included a very small number of participants. The larger Phase III studies, which are currently in progress, will further assess the safety and efficacy of GAMMAGARD LIQUID in the treatment of the disease, and we expect results from the first Phase III study in the first half of 2013.

Within our leading hemophilia franchise, Baxter continues to demonstrate an ongoing commitment to scientific innovation and advancing treatment options for patients living with this hereditary condition. According to the World Federation of Hemophilia, more than 400,000 people in the world have hemophilia and 2/3 are currently undiagnosed or untreated. As the global leader, we remain focused on increasing access and advancing standards of care in improving treatment regimens. Baxter's leading product, ADVATE, continues to be the gold standard treatment in the marketplace given its strong safety, efficacy and convenience profile, which remains a key competitive advantage. We're encouraged by the acceptance of our new prophylaxis label, as evidenced by the strong first half sales performance in the United States. The new label includes an impressive reduction in annual bleed rates, from 44 bleeds when treated on demand to 1 when treated prophylactically, and also offers a new dosing schedule that provides patients the choice of fewer infusions versus standard prophylaxis. In addition, the approval earlier this week of the 4,000 IU dosage strength of ADVATE provides added convenience of single vial dosing for many adult patients, particularly those on a dosing schedule of every 3 days. Also during the quarter, we received approval for ADVATE in China. And we continue to work closely with the Chinese hemophilia community, including both patients and treaters, to provide access to care for this life-saving, life-sustaining therapy. It's estimated that there are 50,000 to 100,000 people in China living with hemophilia A with only a fraction of patients being actively treated.

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