NEW YORK – In the wake of a major announcement this past quarter — that it will acquire Seagen in a $43 billion deal — Pfizer is banking on its declining revenues turning the corner in the years ahead, especially in oncology.
"By combining Seagen's category-leading antibody-drug conjugate technology with Pfizer's scale, expertise, and capabilities, we believe we can accelerate potential breakthroughs in cancer medicines and introduce new services to patients around the world," Pfizer CEO and Chairman Albert Bourla said on a conference call to discuss Pfizer's first quarter financial results on Tuesday. "The potential combined commercial infrastructure between Seagen and Pfizer will be three times the size of Seagen alone in the US and four or five times larger globally."
Seagen currently commercializes four oncology drugs including the antibody-drug conjugate Tukysa (tucatinib), which is approved for patients with advanced, HER2-positive breast cancers and those with RAS-wild-type, HER2-positive advanced colorectal cancer. It also markets Adcetris (brentuximab vedotin) for certain lymphoma patients including those with CD30-expressing T-cell lymphoma.
According to Bourla, assuming the acquisition closes, Seagen could contribute more than $10 billion in 2030 risk-adjusted revenues, with potential for further growth beyond 2030 contingent on clinical trial successes. Pfizer expects the deal to officially close in either late 2023 or early 2024, depending on customary conditions.
Revenues dip in Q1
Pfizer's emphasis on the Seagen acquisition comes against the backdrop of revenue declines in the first quarter of 2023. On Tuesday morning, the Manhattan-based drugmaker reported a 4 percent drop in oncology sales for the three months ending March 31, bringing in $2.86 billion versus $2.97 billion during the first quarter of 2022.
Revenues declined 29 percent overall in Q1 2023, most of which was, predictably, related to a dip in COVID-19 vaccination and treatment demand. The drugmaker's overall revenues in the first quarter of 2023 were $18.28 billion compared to $25.66 billion in the prior year's first quarter. Though the decline was significant, it did beat Wall Street analysts' average estimate of $16.59 billion for the first quarter.
While many of Pfizer's oncology drugs saw slight declines during the first quarter of 2023, Pfizer was keen to emphasize several scientific updates that could help the oncology business unit gain ground in the quarters ahead. For example, Pfizer's PARP inhibitor Talzenna (talazoparib) plus its hormone agent Xtandi (enzalutamide), which it comarkets with Astellas, showed a 37 percent reduction in risk of radiographic disease progression or death versus Xtandi plus placebo in patients with metastatic castration-resistant prostate cancer (mCRPC) in the Phase III TALAPRO-2 study presented in February.
Importantly, Pfizer is pushing for this drug combination in an all-comers population — meaning regardless of patients' homologous recombination repair mutation status — even as some oncologists raised concerns that it is perhaps too early to say whether patients without HRR gene mutations benefit from Talzenna. Last week, the oncologic drugs advisory committee (ODAC) to the US Food and Drug Administration weighed in on whether Merck and AstraZeneca's competing PARP inhibitor, Lynparza (olaparib), should be an option for mCRPC regardless of biomarker status. The expert committee voted 11 to 1 to support limiting Lynparza's indication to a BRCA-mutated population rather than supporting the all-comers indication the drugmakers have been pushing for.
Responding to questions about what the ODAC's Lynparza vote could mean for the Talzenna indication, Pfizer Chief Development Officer William Pao said, "We remain confident about our data in the all-comer population. Obviously, we can't compare to [Merck and AstraZeneca's trial] PROpel, [but] notably in TALAPRO-2, we have prospective testing for HRR deficiencies including BRCA1 and BRCA2." Pfizer plans to present additional data for the trial's biomarker-defined subpopulations during the upcoming American Society of Clinical Oncology (ASCO) annual meeting.
In the meantime, the FDA has granted priority review for Talzenna plus Xtandi in this prostate cancer indication, and according to Mikael Dolsten, Pfizer's CSO and president of worldwide research, development, and medical, the drugmaker expects an FDA decision sometime this year. Pfizer is also conducting the TALAPRO-3 clinical trial of the PARP inhibitor-Xtandi combination for patients with HRR-deficient, metastatic castration-sensitive prostate cancer population. "If successful, [TALAPRO-3] may further extend the reach of this potential blockbuster," Dolsten said.
Pfizer did not report Q1 revenues for Talzenna, which, as of now, is approved for BRCA-mutated HER2-negative advanced or metastatic breast cancer. It did report alliance revenue for Xtandi, which brought in $258 million for Pfizer during the first quarter of 2023, down 4 percent from $268 million in Q1 2022.
As for Pfizer's breast cancer drug, the CDK4/6 inhibitor Ibrance (palbociclib), sales were $1.14 billion, down 8 percent from $1.24 billion in Q1 2022. The US sales remained in line with the prior year's first quarter, bringing in $750 million for Pfizer compared to $753 million in Q1 2022. Internationally, the drug's sales declined 19 percent to $394 million from $484 million in the prior year's first quarter.
Revenues for Pfizer's earlier-generation ALK inhibitor Xalkori (crizotinib) declined 13 percent to $111 million from $127 million in Q1 2022. Its newer-generation Lorbrena (lorlatinib), on the other hand, increased 56 percent to $112 million in Q1 2023 from $72 million in Q1 2022.
Pfizer's BRAF-MEK inhibitor combination of Braftovi (encorafenib) and Mektovi (binimetinib) had mixed results in the first quarter of 2023. While Braftovi sales were up 3 percent to $49 million in Q1 2023 from $48 million in Q1 2022, Mektovi sales were flat at $40 million. In early April 2023, the FDA accepted Pfizer's supplemental new drug application for Braftovi plus Mektovi in BRAF V600E-mutant non-small cell lung cancer, and the drugmaker expects to learn of the agency's decision on that new indication during the fourth quarter of 2023.
Pfizer's R&D spending was up 9 percent to $2.51 billion in Q1 2023 compared to $2.30 billion in the prior year's first quarter. The drugmaker spent $3.42 billion on selling, informational, and administrative expenses, up 32 percent from $2.59 billion in Q1 2022.
Pfizer posted net income of $5.54 billion in Q1, or $.97 per share, compared to $7.86 billion, or $1.37 per share, in Q1 2022. The adjusted earnings per share were $1.23, beating Wall Street analysts' average of $.98 per share.
Pfizer is expecting to bring in between $67 billion and $71 billion in revenues for full-year 2023, and adjusted EPS between $3.25 and $3.45. This remains unchanged from the drugmaker's guidance at the end of Q4 2022. Excluding COVID-19 products, Pfizer still expects its 2023 revenues to grow between 7 and 9 percent.