Pfizer lifts profit forecast as CEO sees reason for optimism in 2024

By Bhanvi Satija and Patrick Wingrove

(Reuters) -Pfizer lifted its annual earnings forecast on Wednesday and reported a first-quarter profit above Wall Street estimates, boosted by cost cutting efforts and stronger-than-expected sales of its COVID antiviral treatment.

Sales of Padcev, a treatment for advanced bladder cancer Pfizer gained through its $43 billion deal for Seagen, also came in ahead of analysts' expectations.

The Seagen deal, as well as its $4 billion cost-cutting plan, are a key part of Pfizer's post-COVID growth strategy.

The company raised both ends of its 2024 profit forecast range by 10 cents - less than the first-quarter beat - and now expects to earn $2.15 to $2.35 per share.

"We are cautiously optimistic about what we will achieve in 2024," CEO Albert Bourla said during a call with analysts.

Shares of the New York-based drugmaker, which have lost 11% of their value this year, rose 4% to $26.64.

"I think investors have become so accustomed to disappointments that a solid quarter and an upgrade were always going to be well received," said Derren Nathan, analyst at Hargreaves Lansdown.

Seagen's targeted cancer therapies Padcev and Adcetris brought in combined sales of $598 million in the quarter for Pfizer, although Adcetris sales fell short of analysts' expectations. Pfizer said the Seagen products are its immediate biggest growth drivers for the cancer division.

Sales of Abrysvo for protection against respiratory syncytial virus (RSV) were $145 million, short of the $353.3 million expected by analysts.

Pfizer is fighting for market share for its RSV vaccine with a rival GSK shot, and so far losing, since both were launched last year. GSK's Arexvy currently owns two-thirds of the new RSV vaccine market.

"It would be good to see an acceleration for Abrysvo," Nathan added. "The $145 million feels disappointing. GSK’s Arexvy seems to be gaining acceptance at a quicker rate."

Pfizer said it was making progress on pharmacy contracts for its RSV shot and plans to seek approval for its use in all adults, which would better position it for the 2024 fall season.

Earlier on Wednesday, GSK said Arexvy sales were 182 million pounds ($227.26 million) in the first-quarter, more than 80% of which came from the United States. It said it hoped to launch the shot for those ages 50-59 before the start of the next RSV season.

REVENUE RETENTION

Bourla said the risk to Pfizer products from U.S. government Medicare price negotiations was "not that big" because by the time drugs are selected, they are close to going off patent.

Pfizer's blood thinner Eliquis was one of the 10 drugs deemed among the most costly to Medicare for which the first round of negotiated prices will go into effect in 2026.

A Pfizer executive on the call said the company had filed to extend the U.S. patents for its heart disease drugs Vyndamax and Vyndaqel until December 2028. The drugs are expected to bring in more than $4 billion this year.

Pfizer said it still expects $8 billion in combined sales of its COVID-19 products, the vaccine Comirnaty it shares with BionTech and oral antiviral Paxlovid.

Revenue from COVID products fell to $12.5 billion in 2023, down 78% from the $57 billion of peak in 2022. Analysts expect sales of about $9 billion from both the products this year.

Pfizer last year renegotiated a U.S. contract, allowing the government to return unused Paxlovid inventory. It recorded a $771 million favorable adjustment in the quarter, related to the U.S. government return of some treatment courses.

The $771 million adjustment to the estimated revenue reversal of $3.5 billion last quarter reflects 1.4 million fewer treatment courses returned by the U.S. government through Feb. 29, 2024 versus the estimated 6.5 million expected, a Pfizer spokesperson said.

Prevnar pneumonia vaccines were a bright spot, taking in sales of $1.69 billion that beat estimates of $1.66 billion.

Pfizer posted an adjusted profit of 82 cents per share for the quarter, topping analysts' expectations by 30 cents, according to LSEG data.

(Reporting by Bhanvi Satija and Sriparna Roy in Bengaluru and Patrick Wingrove in New York; Editing by Arun Koyyur and Bill Berkrot)