Pfizer Reports Top-Line Results for Rheumatoid Arthritis Treatment Study

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- By Alberto Abaterusso

The top-line results from the Oral Strategy trial of Xeljanz were announced Feb. 16 by Pfizer Inc. (PFE) through the Business Wire.

During the study, Pfizer's Xeljanz (tofacitinib citrate), a Janus kinase (JAK) inhibitor, was tested on rheumatoid arthritis (RA) patients with moderate to severe symptoms.


According to Pfizer, "Oral Strategy is the first trial to compare a JAK inhibitor as monotherapy or in combination with methotrexate (MTX) versus adalimumab (Humira) plus MTX in MTX inadequate responders using ACR50 at Month 6 as the primary endpoint."

The ACR criteria is used to assess and establish improvements in tender or swollen joints and improvements in at least three of the following parameters:

  • acute phase reactant (such as sedimentation rate)

  • patient assessment

  • physician assessment

  • pain scale

  • disability and functional questionnaire



When tested as a combined therapy with methotrexate, it was not inferior to AbbVie's (ABBV) Humira used in combination with methotrexate. However, when Pfizer's JAK inhibitor was tested as a monotherapy on 386 patients, compared to Humira with methotrexate on 388 patients or Xeljanz in combination with methotrexate on 378 patients, it proved to be inferior to the two combined therapies.

The study enrolled a total of 1,152 patients divided into three groups. The first group of 386 subjects were administered five milligrams of JAK inhibitor twice per day. The second group of 378 were administered five milligrams of JAK inhibitor twice per day, plus 12 to 25 milligrams of methotrexate once a week. The third group of 388 subjects were injected with 40 milligrams of AbbVie's Humira every other week. In addition, they received 15 to 25 milligrams of methotrexate once a week.

The company said the complete data will be presented at an upcoming scientific meeting.

The sale of Xeljanz accounted for approximately 27.2% of the revenue for the Inflammation & Immunology segment in the last quarter of 2016 and for approximately 2.03% of the company's total fourth-quarter 2016 revenue.

In the last quarter of 2016, Xeljanz sales grew 61% on a year-over-year basis, showing the medication is gaining market share. Since its approval in 2012, Xeljanz has been prescribed to more than 90,000 patients worldwide.

Rheumatoid arthritis affects the general adult population of developed countries at a rate of 0.5% to 1%.The disease causes an average 50,000 deaths every year all over the world.

Revenue increased 7.9% from $14.05 billion in fourth-quarter 2015 to $13.04 billion in fourth-quarter 2016. The bottom line increased 867.4% from a loss of $172 million in fourth-quarter 2015 to $1.32 billion in fourth-quarter 2016.

During the quarter, Pfizer generated adjusted EPS of 47 cents, an 11.3% decrease on a year-over-year basis. This generated a negative surprise of 6% among analysts since they estimated EPS of 50 cents.

For the current year, analysts estimate EPS of $2.56, representing a 6.7% increase from 2015. For 2018, analysts estimate a 9% growth from 2017.

The analysts' average target price is $37.95. The price ranges between a low of $33 per share and a high of $52 per share. The current average target price represents 10.7% upside from the current price and the recommendation rating is 2.4.

Pfizer is trading at 3.29 times its book value and 12.08 times its Ebitda. The company had approximately $17.9 billion in cash on hand and securities and $42.09 billion in total debt as of Dec. 31, 2016. Of the latter, 75% is long-term debt and 25% is short-term debt.

With a debt-equity ratio is 70.68 versus an industry average ratio of 11.36, Pfizer is more indebted than its peers. The interest coverage ratio is 17.24, which means it can easily pay interest expenses on the outstanding debt.

Over the trailing 12 months, the company generated approximately $32.7 billion from operations. The company distributes a total dividend of $1.28 per share through quarterly payments of 32 cents. The dividend yield is 3.74%.

Pfizer has 6.07 billion shares outstanding. Of those, 0.03% are held by insiders and 72% are held by institutions.

Pfizer is currently trading at $34.29 per share, up three cents or 0.10% from the previous trading day. Year to date, the stock has gained 5.6%.

The company has a market capitalization of $207.9 billion and is more volatile than the market with a beta of 1.02.

The 52-week range is between $28.74 per share and $37.39 per share. The trailing 12-month price-earnings (P/E) ratio is 29.1 and EPS are $1.17.

The price-sales ratio is 3.94 and the forward P/E is 12.28.

The Vanguard Group Inc. and State Street Corp. are the top institutional holders of Pfizer. Vanguard holds 402,108,792 shares valued at $13.06 billion. State Street holds 320,794,199 shares valued at $10.4 billion.

Disclosure: I do not have a position in Pfizer Inc. or in AbbVie Inc.

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