Pfizer - zu Unrecht im Keller

Clearly, the big news over the weekend was that Pfizer stopped production on its leading pipeline product, torcetrapib. You were even quoted in AP about it. What is your view?

We think this is devastating news for Pfizer (NYSE:PFE). We were already slightly negative on our outlook of the company, but we felt that torcetrapib was one bright spot making the stock worth holding onto. Basically, this drug extended the pipeline of the Lipitor franchise, which loses patent protection in 2010. Therefore, our top-line forecasts for 2010 and beyond are being significantly reduced.

As I said in the AP interview, it's noteworthy to remember that at the end of last month, Pfizer pulled out of its deal with Organon to develop a schizophrenia treatment called asenapine. We expected that that drug would add $500 million in sales by 2010. So that, in addition to the estimated $3 billion in total sales of torcetrapib projected for the same year, leads us to be very wary of Pfizer's long-term growth ability.

Of course, a company the size of Pfizer - the biggest of the Big Pharma group - is expected to account for its growth through cost-cutting acquisitions, or even buy out a slew of biotech companies. But such growth is very risky, expensive and highly speculative. Furthermore, Pfizer's pipeline just doesn't have another drug which offers the sales potential of torcetrapib. I just don't see it happening for Pfizer at this point, and I downgraded the shares to a Sell recommendation with a six-month target price of $20.

Lipitor 101

Lights, Camera, Action

Sum of Parts

Dividend-Discount Model

Conclusion

Aktienkurs halbiert, dafür ein Abschiedsgeschenk in denkwürdiger Größe. Während ich das hier schreibe, sind sind 112 Ariva – User online, das wären pro User 1.767857 $, einfach auch um mal eine Größenordnung zu bekommen.

Bei den Aktionären war er unbeliebt, Analysten fanden ihn ideenlos - und die eigenen Mitarbeiter schalten ihn als jähzornig. Kein Wunder also, dass Hank McKinnell, Ex-Chef des Viagra-Herstellers Pfizer, früher in Rente muss als geplant. Erstaunlich ist nur, wie viel Geld er dabei mitnimmt.

New York - Eigentlich sollte Hank McKinnell, 63, ja noch bis Februar 2007 als Chairman bei Pfizer bleiben. In dieser Woche aber beschloss das Board des weltgrößten Pharma-Konzerns, dass McKinnell drei Monate früher als geplant ersetzt wird. Sein Nachfolger als Chairman wird der 51-jährige Jeffrey Kindler.

Für McKinnell war es die zweite Blitz-Degradierung in diesem Jahr: Schon im Juli wurde er überraschend als CEO des Konzerns abgelöst, ebenfalls durch Kindler. McKinnell musste dafür büßen, dass der Aktienpreis seit Jahren immer weiter abrutschte. Insgesamt hatte die Pfizer-Aktie in der fünfjährigen Ära McKinnell 40 Prozent ihres Wertes eingebüßt.

Der Mann wird wohl trotzdem eine angenehme Rentner-Zeit verleben: Pfizer teilte am Donnerstag mit, dass McKinnell bei seinem Abschied ein Paket von Abfindungen, Boni, Aktien sowie weiteren Zahlungen erhalten wird, dessen Wert sich nach Berechnungen der Nachrichtenagentur Reuters auf 198 Millionen Dollar summiert. Rund 18,3 Millionen Dollar der Summe sind allerdings an den Erfolg der Pfizer-Aktie gekoppelt - sie werden nur ausgezahlt, wenn sich das Papier positiv entwickelt.

Pfizer: Aber der neue Chef bekommt weniger

Pfizer stellt unter anderem den Cholesterinsenker Lipitor und das potenzsteigernde Mittel Viagra her. Analysten hatten moniert, dass der Konzern unter McKinnels Führung zu wenige neue Top-Produkte auf den Markt brachte. Mitarbeiter kritisierten, der Spitzenmanager sei jähzornig.

Pfizer teilte mit, man sei vertraglich verpflichtet, McKinnell mit den beschlossenen Leistungen abzufinden. In seinem letzten vollen Jahr als CEO, 2005, hatte McKinnell ein Grundgehalt von 5,97 Millionen Dollar und eine Gesamtvergütung von 15,88 Millionen Dollar erhalten. Pfizer ließ wissen, der neue Chef erhalte ein niedrigeres Grundgehalt.

itz/Reuters

Gruß + Stöffen

By Justin Blum and Shannon Pettypiece

Jan. 4 (Bloomberg) -- U.S. regulators approved 18 new drugs in 2006, close to an eight-year low, as drugmakers struggled to develop products for hard-to-treat disorders.

The number of medicines recommended for sale in 2006 and 2005 dropped from the annual average of 26 drugs recorded in the previous six years, according to U.S. data. Last year's approvals include Pfizer Inc.'s cancer treatment Sutent and Merck & Co.'s diabetes drug Januvia.

Drugmakers are spending more on research and developing fewer drugs, the U.S. reported last month. The failure rate of compounds in testing has increased as companies target intractable diseases, a government study said. London-based AstraZeneca Plc, for example, scuttled three experimental drugs last year, including treatments for diabetes and stroke.

``This is another year of disappointingly low innovation by the industry,'' said Jerome Avorn, a professor at Harvard Medical School in Boston and author of ``Powerful Medicines: The Benefits, Risks, and Costs of Prescription Drugs.'' ``They are spinning their wheels more because they do not seem to be lean, mean research machines anymore.''

The annual research and development expenses reported by the pharmaceutical industry rose 147 percent to $40 billion in 2004 from $16 billion in 1993, according to inflation-adjusted industry figures cited by the U.S. Government Accountability Office in a December report. During the same period, applications to market drugs that attack disease in a novel way increased 7 percent.

Modifications

Most applications to the U.S. Food and Drug Administration to market drugs in recent years have been for modifications to existing drugs instead of completely new ones, according to the GAO, the investigative arm of Congress.

Last year was the second in a row that 18 ``new molecular entities,'' or drugs with novel chemical ingredients, were approved. During the past eight years, the high point for approvals was 35 in 1999 and the low was 17 in 2002, according to data on the FDA's Web site.

Pfizer and Merck each had two new drugs approved in 2006, the most of any company.

Shares of Whitehouse Station, New Jersey-based Merck rose $1.09, or 2.5 percent, to $45.11 at 4 p.m. in New York Stock Exchange composite trading. Today's increase was the biggest since a 2.6 percent gain on Oct. 20. The stock gained 37 percent last year.

New York-based Pfizer's shares rose 9 cents to $26.38 and gained 11 percent last year. The 14-member Standard & Poor's 500 Pharmaceutical Index gained 13 percent in 2006.

The U.S. rejected some applications to sell new drugs last year, such as Sanofi-Aventis SA's Multaq treatment for irregular heartbeat and Genta Inc.'s Genasense for patients with chronic lymphocytic leukemia

The FDA hasn't yet tallied the number of new drug applications submitted last year, or the number rejected by the agency, said a spokeswoman, Susan Cruzan. The FDA annually releases a report with statistics about new drug applications and approvals. The agency won't disclose the names of rejected drugs, saying the information is proprietary.

`Low Innovation'

The Pharmaceutical Research and Manufacturers of America, the industry's Washington-based trade group, isn't prepared to explain the declines in new-drug approvals, said Alan Goldhammer, a regulatory affairs official with the association.

The experimental drugs are for increasingly complex diseases that are difficult to treat, and research is costing more, he said. Nonetheless, ``the drug development process is alive and well,'' Goldhammer said.

Drugmakers including New York-based Bristol-Myers Squibb Co. acknowledge they are having increasing difficulty developing new medicines. Bristol-Myers is researching treatments for diseases including cancer, HIV and Alzheimer's, for which failure rates are higher, said a company spokeswoman, Tracy Furey.

`Highly Complex Diseases'

``Many of the diseases that fall into these categories are highly complex, which often results in higher failure rates,'' Furey said in an e-mailed statement.

The FDA has faced increased criticism from members of Congress for its oversight of drug safety since Merck withdrew the Vioxx painkiller in 2004 because of increased heart risks. Since the withdrawal, companies may be more reluctant to seek approval for some drugs when studies show there may be a safety problem, says Ira Loss, an analyst who tracks the FDA for Washington Analysis, a research firm.

Goldhammer, the industry spokesman, said there's no evidence the FDA has made new-drug approval more difficult last year.

In addition to new molecular entities, the FDA in 2006 cleared four new biotechnology drugs, treatments derived from living organisms such as mammalian cells. Between 1999 and 2005, the number of annual biotech approvals has ranged from a low of two to a high of seven, according to data compiled by Loss, the Washington analyst.

This year, the number of pharmaceuticals approved by the FDA may increase after the Senate's confirmation in December of Andrew von Eschenbach as FDA commissioner, wrote James Kumpel, an analyst with Friedman Billings Ramsey in Arlington, Virginia. Von Eschenbach was acting chief for more than a year.

New Commissioner

``We believe that a permanent FDA commissioner could be helpful in reducing some of the institution's risk aversion of the bureaucracy, although a Democratic Congress with more active oversight and exacting safety standards might offset the positive momentum in approvals,'' Kumpel wrote.

Pfizer's Sutent attacks tumors in the stomach and kidney differently from other cancer drugs by depriving them of their blood supply. The drug, which had $115 million in sales last year through Oct. 1, is for patients who were resistant or intolerant to Novartis AG's Gleevec, Pfizer said.

Januvia, from Merck, was approved Oct. 16. It is the first of a new class of drugs designed to improve the body's ability to lower high blood sugar. The once-a-day pill spurs the pancreas to produce more insulin and signals the liver to make less glucose.

Last Updated: January 4, 2007 16:29 EST

By Angela Zimm

Jan. 12 (Bloomberg)

Vincent Aita of Kilkenny Capital Management says he picks biotechnology stocks on their potential as takeover targets. The strategy is paying off.

The number of biotech deals, including acquisitions and product alliances, rose 32 percent to 232 last year, according to data compiled by Bloomberg. At least four of Aita's holdings, including Serono SA and Kos Pharmaceuticals Inc., were bought by bigger drugmakers. Aita, who manages about $200 million in health stocks, is betting there will be even more transactions in 2007.

``There is an escalating arms race,'' Aita said in an interview at the JPMorgan Healthcare Conference this week in San Francisco. ``There are more deals to be had.''

Pfizer Inc., the world's largest pharmaceuticals maker, and Merck & Co. may buy biotech companies to make up for a scarcity of experimental medicines and expiring patents for best-selling products. On the shopping list are companies with experimental compounds as well as those with new drug-development science and technologies, investors at the conference said.

Last year the number of biotech deals in North America, including company acquisitions and joint ventures, increased from 175 in 2005, and the average premium rose to 33 percent from 23 percent, based on Bloomberg data.

More transactions and higher premiums are likely this year, according to analysts, investors and company executives interviewed this week at the San Francisco conference, the annual meeting where buyers and sellers gather to make deals. About 7,000 people packed hallways and conference rooms at the Westin St. Francis Hotel to hear presentations from 310 companies.

``Premiums are going up,'' JPMorgan analyst Geoffrey Meacham said in an interview. ``You're seeing a lot of bidding wars.''

Driving the trend are big pharmaceutical companies with billions in cash that need new drugs to ensure growth. New York- based Pfizer may lose almost half of its $51 billion in 2005 sales as a result of competition from generic drugmakers to products with expiring patents. Pfizer, with $30 billion, has entered at least six research partnerships since November. Two transactions for which a value was disclosed totaled a combined $450 million.

Merck, the fourth-largest U.S. drugmaker, may lose $3 billion in sales this year from its top-selling Zocor cholesterol pill because of generic competition. It signed 35 transactions last year, including the $1.1 billion million purchase of San Francisco-based Sirna Therapeutics Inc., which is developing drugs based on blocking genes involved in disease.

Whitehouse Station, New Jersey-based Merck aims to become ``the best biotechnology company,'' Chief Executive Officer Richard Clark said in an interview at this week's meeting. Merck's biotech deals totaled $1.4 billion in 2006.

``It's science and technology and potential companies -- we're looking at all ends of the spectrum,'' Clark said. ``Obviously, it's competitive.''

Eli Lilly & Co., which is offering $2.28 billion to buy its biotech partner Icos Corp., is spending $1.5 billion this decade on building its own biotechnology operations.

``The price of poker has definitely gone up,'' said John Lechleiter, Indianapolis-based Lilly's president and chief operating officer, at the conference. ``There are too few good assets and too many bidders.''

Amgen Inc., the world's biggest biotechnology company, and Biogen Idec Inc. also are considering acquisitions and alliances.

Biogen since May has bought three companies with a combined value exceeding $270 million to reduce reliance on its biggest product, the multiple sclerosis treatment Avonex. Last week, the Cambridge, Massachusetts-based company agreed to pay as much as $120 million for closely held Syntonix Pharmaceuticals, adding experimental treatments for hemophilia.

Merck's shares rose 53 cents, or 1.2 percent, to $44.79 at the close of New York Stock Exchange composite trading. Pfizer added 18 cents to $26.64, and Lilly increased 37 cents to $52.60. Amgen jumped $1.36, or 1.9 percent, to $73.27 in Nasdaq Stock Market composite trading, and Biogen rose 53 cents, or 1 percent, to $50.97.

The pace of acquisitions ``is the most active in our history,'' Biogen CEO James Mullen told investors in a presentation at the conference. There were 10 announced company acquisitions last year, up from 8 in 2005, JPMorgan analyst Meacham said in a Jan. 5 investment report

Premiums over the market price of traded shares also are rising. They ranged from 21 percent for Swiss drugmaker Actelion Ltd.'s purchase of Cotherix Inc., a U.S. biotechnology company, to 170 percent for AnorMed Inc., which Genzyme Corp. took over in a bidding war with rival Millennium Pharmaceuticals Inc.

``Last year saw the first hostile bid by a biotechnology company,'' in the Genzyme takeover of AnorMed, said Steven Burrill, CEO of Burrill & Co., a life-sciences investment adviser in San Francisco.

``Premiums are running 50 percent to 100 percent, which means the market is undervaluing the stocks,'' Burrill said.

Biotechnology companies raised $20 billion in partnership deals last year, up from $17 billion in 2005, according to Burrill.

Companies already aligned with bigger drugmakers through partnerships are likely takeover targets, said Kilkenny's Aita.

Last year Amgen, purchased its partner, Abgenix Inc., to gain control of the cancer drug Vectibix. Genentech Inc., the world's No. 2 biotechnology company, agreed to buy its partner Tanox Inc. in November, gaining the asthma medication Xolair. The $919 million transaction was the first acquisition in Genentech's history.

Biotech companies in partnerships that may be takeover targets include Onyx Pharmaceuticals Inc., which co-markets the Nexavar kidney cancer drug with Bayer AG, and New River Pharmaceuticals Inc., which sold rights to its hyperactivity treatment to London-based Shire Plc, Aita said. Onyx shares rose 24 cents, or 2 percent, to $12.22 at the close of Nasdaq Stock Market trading. New River fell 37 cents to $55.76.

Others include BioMarin Pharmaceutical Inc., which shares a rare-disease drug with Genzyme, and Millennium, which co-markets its Velcade cancer drug with Johnson & Johnson. BioMarin shares gained 33 cents, or 1.9 percent, to $17.67 today and Millennium rose 21 cents, or 1.9 percent, to $11.46.

``You don't often see biotechnology companies selling out of weakness,'' Aita said. ``Partnering and M&A have been the lifeblood of the industry. Consolidation isn't going away.''

Last Updated: January 12, 2007 16:27 EST