Pfizer profits up on COVID treatment sales as it faces off with activist

By Michael Erman and Bhanvi Satija

(Reuters) -Pfizer reported higher-than-expected profit on Tuesday due to strong sales of COVID treatment Paxlovid, an important win for Chief Executive Albert Bourla as he faces down activist investor Starboard.

The U.S. drugmaker has struggled with a sharp fall in sales of its COVID vaccine and antiviral Paxlovid from pandemic levels, prompting it to launch a cost-cutting program last year and focus on deals to bolster its business.

On Tuesday, the company said the better-than-expected rise in Paxlovid sales reflected higher infection rates during the quarter and strong commercial execution.

“The demand for Paxlovid seems to have stabilized at the current levels and appears to be closely correlated with each wave of COVID-19,” Bourla said in prepared remarks.

Shares were up 1.2% to $29.20 in premarket trading after the company also raised its annual profit and sales forecast. 

Pfizer (NYSE:) shares are trading at roughly half of their pandemic peaks. Investors and analysts have said they want to see improved profitability from the cost cuts as well as revenue growth powered by its recent deals. 

Activist hedge fund Starboard Value has argued that Pfizer’s board needs to hold management accountable for the company’s underperformance, particularly questioning its record for producing profitable new drugs from internal research and development or acquisition.

Pfizer said it was on track to deliver at least $4 billion in savings from its cost cut program this year.

“Management is doing a lot of the things Starboard wants them to. Righting the ship takes time,” BMO analyst Evan Seigerman said. “It’s going to take more than one quarter for folks to gain full confidence. But this is definitely a step in the right direction.”

Paxlovid sales of $2.7 billion in the quarter blew past analysts’ expectations of $456.40 million. The U.S. experienced a late summer spike in COVID-19 cases this year.

COVID vaccine Comirnaty, which Pfizer makes with German partner BioNTech (NASDAQ:), brought in sales of $1.42 billion, compared with expectations of $870 million, according to estimates compiled by LSEG.

The third-quarter results encouraged Pfizer to bump up its annual revenue expectations for Comirnaty and Paxlovid to $10.5 billion, from its previous forecast of $8.5 billion. 

Analysts expect combined sales of about $9 billion from the COVID products this year.

Pfizer raised both ends of its 2024 profit forecast range by 30 cents and expects to earn $2.75 to $2.95 per share.

On an adjusted basis, Pfizer earned $1.06 per share in the third quarter, compared with analysts’ estimates of 62 cents. 

Total revenue of $17.70 billion beat estimates of $14.96 billion.

Pfizer in recent quarters has been beset with disappointing data for a closely watched experimental obesity drug, a weak launch of its respiratory syncytial virus (RSV) vaccine, and pulling its sickle cell disease treatment Oxbryta due to deaths in clinical trials.

The company said it continues to advance two other potential obesity treatments in its pipeline as it looks for a piece of a market some analysts say could reach $150 billion a year in the next decade.