While questions about its internal reorganization dominated Pfizer Inc.’s second-quarter earnings call on July 30, the company’s management also provided a few updates on its clinical programs. Notably, FDA’s partial clinical hold on the anti-nerve growth factor candidate tanezumab, in development for pain, has been lifted, management said. The company is planning to resume Phase III clinical testing of the product in 2014.

The resumption of the clinical program is contingent on FDA’s review of non-clinical data from tests Pfizer is currently running, Primary Care Business President John Young said. Pfizer was studying tanezumab in a Phase III osteoarthritis trial in June 2010 when a small number of patients experienced worsening osteoarthritis pain that led to joint replacement – the exact problem the drug was supposed to fix.

Pfizer halted the trial, and FDA put the entire class of biologics – several of which are in development across the industry – on clinical hold in December 2010 Also see "Regeneron, J&J, AstraZeneca Pull Plug On NGF Inhibitors In Development For Pain Indications" - Pink Sheet, 30 December, 2010..

Pfizer’s candidate is believed to be the furthest along in development. In addition to the Phase III osteoarthritis trial, the company was also studying the drug in Phase II tests for back pain and diabetic peripheral neuropathy.

Last year, FDA’s Arthritis Advisory Committee recommended that trials of the drugs resume but with strict safety criteria Also see "Anti-NGF Trials Might Resume With Very Narrow Patient Populations" - Pink Sheet, 19 March, 2012.. Pfizer didn’t elaborate on what kinds of safety requirements might be required by FDA.

The pipeline tidbit was one piece of news that emerged from the conference call that largely focused on Pfizer’s new commercial organization ([A#14130729004]). Pfizer outlined a few more details of the new structure during the call, but mainly urged investors not to expect any imminent split up of the business.

Under the reorganization, Pfizer will establish three commercial units, beginning Jan. 1, 2014 in most of the world. The new segments include two innovative products units, one that includes patent-protected specialty and primary care brands, and another that includes oncology, vaccines and consumer products, as well as a value products segment that will include cash-generating mature brands ([A#14130729004]). Emerging Markets, which is currently run as a separate business unit, will be woven into each of the three new business units. Separating emerging markets from Pfizer’s existing Established Products unit has been one of the biggest issues thwarting a split, as the two units are uniquely interwoven.

CFO Frank D’Amelio indicated that a break out of the value business before 2017 is unlikely due to securities reporting obligations, which require three years of audited financial statements. Compiling prospective information would be easier than a retrospective analysis, he said.

Three Units Rather Than Two

Management also provided details on other aspects of the new structure. For example, CEO Ian Read explained why he felt it was important to establish two innovative products units rather than simply one innovative core and one value business – as he has frequently described his vision for Pfizer since taking over as CEO.

The Innovative Products Group headed by Geno Germano will have responsibility for drugs that are expected to have market exclusivity beyond 2015 in areas including inflammation and immunology, cardiovascular and metabolic disease, neuroscience, pain and others. The second group, Vaccines, Oncology and Consumer Health, will be headed by Amy Schulman, currently exec VP, general counsel and business unit lead, Consumer Health. The third business, the Value Products Group, which will largely comprise products that have lost exclusivity or will by 2015, will be headed by John Young, who currently oversees primary care.

“The innovative business under Geno has a collection of large disease areas that cut across both primary care and specialty care, and they have challenges, both capital allocations and the go-to-market model as we look to be more efficient about how we deliver the message and how we get to see primary care physicians,” Read explained.

“The oncology business and vaccines business are smaller businesses,” Read expanded. “We wanted to make sure they didn’t get subsumed into a larger primary care business. They have specific customers. They have dedicated research facilities and research focus, and I thought it was very important for those businesses to maintain their unique focus.”

Certain functions, like business development, will be centralized, but each business unit will have dedicated colleagues, who will work with the business units closely. “We matrixed this in such a way that the reporting is transparent,” said D’Amelio. He said other support functions would work in a similar manner.

Oncology A Bright Spot

Pfizer reported second quarter sales of $12.97 billion, down 7% compared to the year-ago quarter due partly to the unfavorable impact of currency and the loss of exclusivity of Lipitor (atorvastatin) in developed Europe in the second quarter of 2012 and the launch of multi-source generic versions in the U.S. beginning in May 2012. Primary Care sales decreased 17% to $3.33 billion, largely due to the shifting of Lipitor revenue in Europe and Australia to the Established Products unit beginning Jan. 1. Specialty Care sales fell 3% to $3.38 billion. Oncology was a bright spot; sales increased 24% to $399 million fueled by new launches like Inlyta (axitinib) for renal cell carcinoma and Xalkori (crizotinib) for non-small cell lung cancer, though off a substantially smaller revenue base.

Pfizer does have two recent launches in big therapeutic areas that are expected to become eventual blockbusters, the oral JAK inhibitor for rheumatoid arthritis Xeljanz (tofacitinib), approved in November, and the anticoagulant Eliquis (apixaban), approved in December and partnered with Bristol-Myers Squibb Co. Neither launch stands out thus far. Xeljanz generated $22 million in the second quarter, and Bristol reported a disappointing $12 million in sales of Eliquis July 25 Also see "As Eliquis Sales Lag, Bristol/Pfizer Take Action" - Pink Sheet, 25 July, 2013..

Pfizer is also facing a set back with Xeljanz in Europe, where the drug was not approved, even after an appeal and a re-examination by the Committee for Medicinal Products for Human Use (CHMP), due to safety concerns. Read said the company is continuing its discussion with European authorities and evaluating next steps for the drug in Europe, but said the developments will result in several years delay.

Pfizer Plans To Restart Tanezumab Trials In 2014

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