Brokerages Downgrade Pfizer After FDA Restricts Use Of Key Drug
June 10, 1999 11:22 AM
NEW YORK -(Dow Jones)- Several brokerages Thursday downgraded
their ratings on shares of Pfizer Inc. because of new tight restrictions
placed on the antibiotic Trovan, which had been seen as a potential key
product for the drug maker.
Salomon Smith Barney downgraded the shares to "neutral" from "buy,"
ABN AMRO Inc. lowered its rating to "outperform" from "buy" and Banc
of America Securities cut the stock to "hold" from "buy".
In morning trading Thursday, shares of Pfizer (PFE) were down $5, or
4.8%, at $99.938 on volume of 4.5 million. The stock fell 5.5%
Wednesday.
Late Wednesday, the Food and Drug Administration said use of Trovan
should be restricted to treat only acute infections of patients in hospitals
and nursing homes. The stronger-than-expected restrictions came after
the FDA linked the drug to 14 cases of liver failure that resulted in six
deaths. The FDA also said the drug should be used for no longer than
two weeks and should be discontinued sooner if any liver-failure
symptoms are noticed.
A consumer advocacy group had urged the FDA to ban the drug, which
some earlier reports had linked to as many as 140 cases of liver failure.
The critics said that Americans can buy eight other antibiotics from the
same drug class, called quinolones, that are equally effective but less
dangerous to the liver.
Analysts were expecting some sort of label change for the drug, following
an announcement by Pfizer last week that it was in discussions with the
FDA regarding the liver problems. But the restrictions on the drug were
stronger than many on Wall Street anticipated, and will essentially end
outpatient use of Trovan. Outpatient use has represented about
two-thirds of the 2.5 million prescriptions for Trovan to date, according to
Pfizer.
The problems with Trovan are a setback for Pfizer, which has been
hoping the drug evetually would generate blockbuster sales. Trovan had
sales of $160 million last year. Drug makers continually seek new
potential big-sellers to compensate for declines in sales as older drugs
lose patent protection and become vulnerable to generic competitors.
Salomon analyst Christina Heuer on Thursday slashed her Trovan sales
projections to under $100 million in 2002 from $1.2 billion. Salomon cut
its 1999 and 2000 earnings-per-share estimates to $2.40 and $2.75, from
$2.45 and $3.00.
ABN AMRO analyst James Keeney had expected Trovan sales in 1999
of $350 million, rising to $550 million in the year 2000. Keeney now
believes sales this year will stay about flat with 1998 at $165 million,
falling to $100 million in 2000.
This time last year, Pfizer was riding high on expectations for its
impotence drug Viagra. After Viagra's high-profile launch last April, the
drug had blockbuster sales of $400 million in the second quarter. But
sales dropped sharply after some patients found the drug didn't work for
them, insurance companies refused to pay for Viagra, and reports that a
number of men with heart problems died after taking the drug. In the first
quarter of this year, sales of Viagra totaled $193 million.
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