Pfizer 2009 Annual Report Download - page 9

Financial Review
Pfizer Inc. and Subsidiary Companies
•In the fourth quarter of 2008, we completed the acquisition of a number of animal health product lines from Schering-Plough
Corporation (Schering-Plough) for approximately $170 million.
•In September 2008, we announced an agreement with Medivation, Inc. (Medivation) to develop and commercialize Latrepirdine
(Dimebon), Medivation’s investigational drug for treatment of Alzheimer’s disease and Huntington’s disease. Following the expiration of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, the agreement went into effect in October 2008.
Latrepirdine currently is being evaluated in a Phase 3 trial in patients with mild-to-moderate Alzheimer’s disease and in a Phase 3 trial
in patients with Huntington’s disease. Under the collaboration agreement with Medivation, we made an upfront payment of $225 million,
which is included in Research and development expenses in 2008. We also may make additional payments of up to $500 million based
upon development and regulatory milestones, as well as additional milestone payments based upon the successful commercialization
of the product.
•In the second quarter of 2008, we acquired Encysive Pharmaceuticals Inc. (Encysive), a biopharmaceutical company, through a tender
offer, for approximately $200 million, including transaction costs. In addition, in the second quarter of 2008, we acquired Serenex, Inc.
(Serenex), a privately held biotechnology company. In connection with these acquisitions, we recorded approximately $170 million in
Acquisition-related in-process research and development charges and approximately $450 million in intangible assets in 2008.
•In the second quarter of 2008, we entered into an agreement with a subsidiary of Celldex for an exclusive worldwide license to
CDX-110, an experimental therapeutic vaccine in Phase 2 development for the treatment of glioblastoma multiforme, and exclusive
rights to the use of EGFRvIII vaccines in other potential indications. Under the license and development agreement, an upfront
payment was made in 2008. Additional payments exceeding $390 million potentially could be made to Celldex based on the successful
development and commercialization of CDX-110 and additional EGFRvIII vaccine products.
•In the first quarter of 2008, we acquired CovX, a privately held biotherapeutics company, and we acquired all the outstanding shares of
Coley Pharmaceutical Group, Inc., (Coley), a biopharmaceutical company. In connection with these and two smaller acquisitions
related to Animal Health, we recorded approximately $440 million in Acquisition-related in-process research and development charges
in 2008. In 2009, we resolved certain contingencies associated with CovX and recorded $68 million in Acquisition-related in-process
research and development charges.
•In the second quarter of 2007, we entered into a collaboration agreement with Bristol-Myers Squibb Company (BMS) to further develop
and commercialize apixaban, an oral anticoagulant compound discovered by BMS. We made an initial payment to BMS of $250 million
and additional payments to BMS related to product development efforts, which are included in Research and development expenses in
2007. We also may make additional payments of up to $780 million to BMS, based on development and regulatory milestones. In a
separate agreement, we also are collaborating with BMS on the research, development and commercialization of a Pfizer discovery
program, which includes preclinical compounds with potential applications for the treatment of metabolic disorders, including diabetes.
•In April 2007, we agreed with OSI Pharmaceuticals, Inc. (OSI) to terminate a 2002 collaboration agreement to co-promote Macugen, for
the treatment of age-related macular degeneration, in the U.S. We also agreed to amend and restate a 2002 license agreement for
Macugen and to return to OSI all rights to develop and commercialize Macugen in the U.S. In return, OSI granted us an exclusive right
to develop and commercialize Macugen in the rest of the world.
•In the first quarter of 2007, we acquired BioRexis, a privately held biopharmaceutical company with a novel technology platform for
developing new protein drug candidates, and Embrex, an animal health company that possesses a unique vaccine delivery system
known as Inovoject that improves consistency and reliability by inoculating chicks while they still are inside the eggs. In connection with
these and other smaller acquisitions, we recorded $283 million in Acquisition-related in-process research and development charges in
2007.
Our Financial Guidance for 2010
At exchange rates in effect in late January 2010, we forecast 2010 revenues of $67.0 billion to $69.0 billion, Reported diluted
earnings per common share (EPS) of $0.95 to $1.10 and Adjusted diluted EPS of $2.10 to $2.20. For an understanding of Adjusted
income, see the “Adjusted Income” section of this Financial Review.
A reconciliation of 2010 Adjusted income and Adjusted diluted EPS guidance to 2010 Reported Net income attributable to Pfizer Inc.
and Reported diluted EPS attributable to Pfizer Inc. common shareholders guidance follows:
FULL-YEAR 2010 GUIDANCE
(BILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) NET INCOME(a) DILUTED EPS(a)
Adjusted income/diluted EPS(b) guidance ~$17.0 -$17.8 ~$2.10-$2.20
Purchase accounting impacts of transactions completed as of 12/31/09 (6.4) (0.79)
Acquisition-related costs (2.5-2.9) (0.31-0.36)
Reported Net income attributable to Pfizer Inc./diluted EPS guidance ~$7.7-$8.9 ~$0.95-$1.10
(a) Amounts do not assume the completion of any business-development transactions not completed as of December 31, 2009. Amounts exclude the
potential effects of the resolution of litigation-related matters not substantially resolved as of December 31, 2009, as well as the potential impactof
healthcare reform in the U.S.
(b) For an understanding of Adjusted income, see the “Adjusted Income” section of this Financial Review.
2009 Financial Report 7