Citi's Thoughts on Pfizer's ASCO Investor Meeting

Pfizer Inc. PFE summarized its oncology pipeline at an investor meeting at the American Society of Clinical Oncology (ASCO) meeting in Chicago last evening, Citi reports. “PFE reviewed data presented on late-stage products including crizotinib, axitinib & bosutinib,” Citi writes. “PFE expects its targeted therapy approach to oncology to yield drug candidates that require smaller clinical trials and shorter trial durations. Oncology will likely play an increasingly prominent role in PFE's Innovative Core growth prospects, with the pipeline generating risk-adjusted sales of $1.4B in ‘15E. “We estimate that branded oncology sales could account for ~$3.1B in ‘15E (~6% of pharma sales) from ~$1.5B in 2010 (+15% CAGR). With a current operating margin of ~68% for Specialty/ Oncology products (ex-G&A and regulatory costs), we estimate that PFE's Oncology franchise generates ~$0.40 of our $2.17 EPS in 2015E. However, even with its Oncology sales, PFE still has a ~$3B deficit between ‘13E & ‘20E Innovative Core sales that cannot be bridged by its oncology pipeline. We believe PFE needs to fill this gap with “bolt-on” acquisitions. We maintain our estimates and Hold rating on PFE's shares.” Pfizer closed Monday at $20.74.