Zacks Small Cap Institutional Research



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|Wyeth, Inc. |(WYE – NYSE) |$48.54 |

Note to Readers: More details to come; changes are highlighted. Except where noted, and highlighted, no other section of this report has been updated.

Reason for Report: Flash Update: Wyeth and Pfizer to divest animal health assets

Prev. Ed.: September 16, 2009; Flash Update: Wyeth says bone drug cuts fracture risks

Brokers’ Recommendations: Neutral: 71.4% (5 firms); Positive: 28.6% (2); Negative: 0.0% (0) Prev. Ed.: 6; 2; 0

Brokers’ Target Price: $49.33 (↓ $0.10 from the last report; 6 firms) Brokers’ Avg. Expected Return: 3.1%

*Though dated August 21, share price and brokers’ materials are as of August 19.

Note: The tables below for Revenue, Margins, and Earnings per Share contain less brokers’ material than the brokers’ material used in the Valuation table. The extra figures in the Valuation table come from reports that did not have accompanying spreadsheet models.

Flash Update

On September 21, 2009, Wyeth and Pfizer Inc. (PFE) announced that they agreed to sell some of their animal health assets to German drugmaker Boehringer Ingelheim. The companies said the divestiture is part of a regulatory approval process associated with Pfizer’s pending $68 billion acquisition of Wyeth. Under the deal, privately held Boehringer will get products that include cattle and small animal vaccines. Boehringer will also receive related assets and intellectual property, primarily from Wyeth's Fort Dodge Animal Health portfolio in the U.S. and Canada. The financial terms of the deal were not disclosed.

Details, other news update and broker comments will be provided in the next edition.

Portfolio Manager Executive Summary [NOTE: Only highlighted material has been changed]

Wyeth, Inc. (WYE), based in Madison, New Jersey, is a diversified pharmaceutical, consumer healthcare, and animal health product company. The company's largest business is pharmaceuticals, and its leading products include therapies for depression and anxiety (Effexor), gastrointestinal disorders (Protonix), infections (Zosyn, Tazocin, and Tygacil), autoimmune diseases (Enbrel), vaccines (Prevnar), and women's healthcare products (Premarin/PremPro). Key brands in WYE’s consumer healthcare group include Advil and Centrum. Wyeth and Pfizer have announced a plan in January 2009 whereby Pfizer will acquire Wyeth in a deal valued at $68 billion, expected to complete in 3Q09 or early 4Q09.

71.4% of the firms in the Digest group were neutral on the stock and 28.6% had a positive outlook. Four analysts did not provide any rating or target price.

Neutral or equivalent outlook (5/12 analysts): Target prices range from $46.00 to $50.00. The analysts with a neutral stance believe that while the company had some pipeline successes, there is not enough in the form of new products and expanding indications to make up for the pipeline failures and to offset the loss of exclusivity through 2010 for two of the company’s largest drugs, Effexor and Protonix, accounting for about 35-40% of profits of the company. While bapineuzumab (Alzheimer disease), the company’s main pipeline drug, if approved offers huge upside to the current share price, based on the less than convincing Phase II trial data and safety concerns in the non ApoE4-carrier cohorts, the neutral side analysts prefer to remain on the sidelines.

Positive or equivalent outlook (2/12 analysts): Target prices range from $50.00 to $51.00. The bullish analysts believe the company’s significant cost-cutting programs, increasing presence in the biologics arena, and low exposure to Medicare legislation outweigh the late-stage pipeline challenges as well as medium-term regulatory overhangs and competitive threats. Moreover, despite the disappointing Phase II results, the positive analysts believe that if bapineuzumab ultimately makes it to the market, it could represent a significant commercial opportunity, given the significant unmet medical need in patients with Alzheimer's disease and the dearth of effective therapies.

August 21, 20

Recent Events [NOTE: Only highlighted material has been changed]

On September 15, 2009, Wyeth said results from a late-stage trial of its osteoporosis drug candidate bazedoxifene show the drug was effective in cutting the risk of vertebral fractures in postmenopausal women. Wyeth said it initially tested two doses of the drug for three years on about 7,500 postmenopausal women aged 55 to 85 years with osteoporosis. Wyeth continued the study for another two years on 4,216 of the women. The data was presented at the American Society for Bone and Mineral Research (ASBMR) Annual Meeting in Colorado.

On August 11, 2009, WYE announced that the FDA has extended the review date for Prevnar-13, improved version of its blockbuster children's vaccine Prevnar, by three months (from September 2009 to December 2009).

On August 4, 2009, the FDA added stronger warnings to a group of best-selling drugs used to treat arthritis and other inflammatory diseases, including WYE’s Enbrel, saying they can increase the risk of cancer in children and adolescents.

Overview [NOTE: Only highlighted material has been changed]

Based in Madison, New Jersey, Wyeth (WYE) is one of the world's largest research-driven pharmaceutical and healthcare products companies. WYE focuses on medicines for women’s health, psychiatric disorders, inflammatory disease, pediatric vaccinations, and gastrointestinal disease, improving the quality of life for people worldwide. The company's major divisions include Wyeth Pharmaceuticals, Wyeth Consumer Healthcare, and Fort Dodge Animal Health. The company’s website is .

The analysts have identified the following factors for evaluating the investment merits of WYE:

|Key Positive Arguments |Key Negative Arguments |

|The PFE-WYE merger represents a protection against the number of pending |Two of the company’s largest drugs, Effexor and Protonix, accounting for |

|patent expiration in 2010/2011 timeframe. |about 35-40% of profits of the company will lose exclusivity in 2010. |

| |Wyeth’s current pipeline is insufficient to fill the gap. |

| |With the lower-than-expected Phase II bapineuzumab results, visibility |

| |into the drug’s potential is significantly reduced until Phase III data, |

| |which will take at least 2 years. |

Note: WYE’s fiscal year ends on December 31.

August 3, 2009

Revenue [NOTE: Only highlighted material has been changed]

The company reported total revenue of $5.7 billion in 2Q09, down 4% y/y, with an unfavorable 6% impact from foreign exchange. Revenue in the quarter was driven primarily by higher sales of Prevnar, Enbrel and the Nutritionals business. The Zacks Digest 2Q09 revenue was in line with the company’s report.

|($ in million) |2Q08A |2008A |1Q09A |2Q09A |3Q09E |

Alliance Revenue: Alliance revenue comprises revenue derived by Wyeth from the sales of Enbrel (in the United States and Canada), Altace, and the Cypher stent from alliances. The Zacks Digest average Alliance revenue was $303.2 million in 2Q09, up 6.8% y/y.

Nutritional Revenue: WYE’s Infant Nutritional business sales of $436 million increased 1% (9% ex-fx) in 2Q09. WYE plans to expand its supply of nutritionals by 60%-70% in the next few years, with the expansion of existing facilities in the Philippines and Singapore and the construction of a new facility in China. The Zacks Digest average Nutritional sales were in line with the company’s report.

Oral Contraceptives Revenue: The Zacks Digest average oral contraceptive revenue was $78 million in 2Q09, down 23.8% y/y.

Consumer Healthcare

Worldwide Consumer Healthcare net revenue declined 5% y/y in 2Q09 to $631 million due to a 7% unfavorable fx impact. The Zacks Digest 2Q09 figures were in line with the company’s report.

On July 14, 2009, Wyeth Consumer Healthcare announced the availability of a new, scientifically advanced, gender- and age-specific adult multivitamin line developed to help meet the nutritional needs of women and men. Centrum Ultra Women's and Men's and Centrum Silver Ultra Women's and Men's are specially formulated taking into account recommendations established by the Institute of Medicine along with the latest nutritional science.

|$ in million |2008A |2009E |20010E |2011E |Est. Growth (’08-’11) |

Animal Health

Worldwide Animal Health net revenue in 2Q09 was $285 million, down 9% y/y. Excluding the unfavorable impact of foreign exchange, worldwide Animal Health net revenue increased 1% y/y in 2Q09. The Zacks Digest 2Q09 figures were in line with the company’s report.

|$ in million |2008A |2009E |20010E |2011E |Est. Growth (’08-’11) |

Provided below is a graphical analysis of segment revenue:

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Specific Products

Note: Recent significant changes made have been highlighted in bold.

Effexor/XR

Indication: Depression and anxiety disorder

Mechanism: Selective serotonin/norepinephrine reuptake inhibitor (SSRI/SNRI)

Product Life Cycle Status: Fully commercialized. Patent will expire in 2010.

Importance: Effexor is the number one anti-depressant outside the US.

Sales: Wyeth reported sales of $772 million in 2Q09, down 25% y/y, primarily due to declines in underlying prescription demand in the US and new generic pressures in the international markets. US sales declined 8% y/y to $614 million. Total prescription trends in the US were down 4.8% sequentially in 2Q09 due to domestic competition and Wyeth’s strong promotion of its next generation product, Pristiq. International sales decreased 55% y/y to $158 million due to generic erosion in the EU markets as the basic patent on Effexor XR expired at the end of 2008. WYE has also shifted most of its promotional efforts to Pristiq. The Zacks Digest 2Q09 revenues were in line with the company’s report.

Competitors: Effexor is competing with other SSRI products like Celexa/Lexapro (FRX), Zoloft (PFE), and Paxil (GSK + generic), Eli Lilly’s Cymbalta (SNRI product), Prozac (LLY), and most recently Pfizer’s Zoloft.

Generics: The US patent for the chemical compound in Effexor XR expired in June 2008. Under a settlement regarding the XR patent, Teva has the right to market a generic version of Effexor in the US (now launched) and a generic version of the extended-release form in the US from July 2010 (subject to conditions, including status of other generics, company challenges), and has already launched the product in Canada. The company recently reached a settlement with several other generics companies whereby they will not launch their versions until 2011; lawsuits with several other companies continue.

|$ in million |2008A |2009E |20010E |2011E |Est. Growth (’08-’11) |

Hormone Replacement Therapy (HRT) Franchise

This franchise includes Premarin and Prempro.

Premarin

Indication: Menopausal symptoms and osteoporosis

Mechanism: Premarin, an estrogen, is proven to increase bone mass and help prevent postmenopausal osteoporosis (bone loss).

Product Life Cycle Status: Marketed; Premarin Vaginal Cream 0.5 gm for less frequent twice-weekly dosing regimen to treat moderate-to-severe postmenopausal dyspareunia (painful sexual intercourse) approved in November 2008.

Safety Issues: Estrogens increase the chances of getting cancer in the uterus.

Additional Studies: On July 13, 2009, Wyeth announced the publication of data that supported daily and twice-weekly use of Premarin Vaginal Cream 0.5 g to relieve some of the bothersome symptoms of moderate-to-severe vulvar and vaginal atrophy, including painful intercourse (dyspareunia). This study evaluated the efficacy of two low-dose regimens of conjugated estrogens (CE) cream (0.5 g daily and twice weekly) using a double-blind, placebo-controlled study design for 12 weeks followed by a 40-week open-label phase. Endometrial safety for both dosing regimens was also assessed in women who completed 52 weeks of therapy. These study results are published in the July/August issue of Menopause: The Journal of the North American Menopause Society.

Prempro

Indication: Menopausal symptoms and osteoporosis

Product Life Cycle Status: Marketed

Sales: According to the company, sales of Premarin/Prempro in 2Q09 were $257 million, a decrease of 5% y/y, with price increases offsetting declining prescription trends. The Zacks Digest average 2Q09 revenue was in line with the company’s report.

|$ in million |2008A |2009E |20010E |2011E |Est. Growth (’08-’11) |

Prevnar

Indication: Life-threatening meningitis, blood infections, pneumonia, and acute otitis media

Mechanism: Prevnar helps protect infants and toddlers from certain pneumococcal bacteria that can cause life-threatening meningitis and blood infections. It is a pneumococcal conjugate vaccine.

Product Life Cycle Status: WYE currently sells Prevnar-7, but only for pediatric use; BLA filed for Prenver-13, a 13-valent pneumococcal conjugate vaccine. It is an upgraded version of Prevnar-7, for infants and children from 2 months to 5 years of age.

Importance: The drug is approved in 88 countries worldwide and is a part of 38 national immunization programs (NIP). Several companies are intending to initiate NIPs.

Regulatory Issues: WYE had completed its US filing for pediatric use of the Prevnar-13 vaccine on March 30, 2009 (a 6-month priority review was granted), and the EU filing in December 2008. Apart from these, the application is currently under review in more than 50 countries.

On August 11, 2009, Wyeth announced it has received notice that the action date for the FDA’s review of the BLA for Prevnar-13 has been extended from September 30, 2009, to December 30, 2009. In response to an FDA request, Wyeth submitted additional analytical method validation and specification information relating to physical/chemical properties of the product in late July 2009. The FDA considered this to be a major amendment and, as a result, they have elected to extend the review cycle for Prevnar-13 by 90 days.

An NDA for Prevnar-7 has been filed in Japan, representing a significant market opportunity, where the product could be available by 2010. In March 2009, Prevnar-7 was also registered by the Russian Ministry of Health and Social Development and is expected to be commercially available later in FY09.

Sales: According to the company, revenue in 2Q09 was $784 million, up 14% y/y (24% on constant currency). Prevnar US sales were up 1% y/y at $323 million, while international sales increased 24% y/y to $461 million. The Zacks Digest average 2Q09 revenue was in line with the company’s report.

Competitors: A potential competitor for Prevnar is GSK’s Streptorix. GSK’s 10-valent product received EU approval in March 2009, which will compete with Prenver 13. GSK does not have plans to launch the product in the US.

Additional Studies: Data from a Phase III European clinical trial of Prevnar 13, presented at the 27th Annual Meeting of the European Society for Pediatric Infectious Diseases (ESPID) in June 2009, showed that the drug has the potential to provide coverage against the 13 most prevalent serotypes associated with pneumococcal disease (PD). The study was conducted in France, Italy, Poland, Spain, and the UK.

Prevnar-13 is also being studied in the adult population for the initial vaccination of a broad (50+ years old) population (with a 2010 filing). It is in Phase III trials, expected to be completed by late 2009, and expected to be filed in early 2010, indicating approval in late 2010. The increased serotype coverage confers better protection and utility, and the follow-on product should quickly supplant the older product. Importantly, the newer version includes coverage of serotype 19A that is emerging as an increasingly important pathogen.

|$ in million |2008A |2009E |20010E |2011E |Est. Growth (’08-’11) |

Protonix

Indication: Gastroesophageal reflux disease (GERD), a condition in which sores develop in the lining of the esophagus. It is also available in the delayed-release oral suspension formulation that provides adult patients who cannot swallow tablets with an effective and convenient way to treat erosive GERD.

Mechanism: Protonix helps to control night time heartburn and other symptoms associated with erosive GERD.

Product Life Cycle Status: Marketed.

Importance: Protonix has certain advantages like a strong clinical profile and a new filterless intravenous (IV) formulation. The IV formulation is more convenient in hospital settings, where Protonix already has the number one market share as a proton pump inhibitor (PPI).

Partners: Wyeth Pharmaceuticals is a license holder of Nycomed.

Sales: According to the company, Protonix posted sales of $237 million in 2Q09, a 4% y/y increase, primarily derived from WYE’s own authorized generic product, which currently has the greatest prescription share of the pantoprazole category. Protonix revenue includes both $87 million from branded sales and $150 million from generic sales. The Zacks Digest average Protonix sales were in line with the company’s report.

Patents: Protonix will lose patent protection in 2010. However, in December 2007, Teva Pharmaceuticals launched a generic version of the drug, followed by Sun Pharmaceutical in January 2008. In response, Wyeth filed a motion filed for a preliminary injunction against the possibility of an early market entry by Teva, but in September 2009 the US district court of New Jersey ruled against WYE. In May 2009 the US court of appeals for the Federal Circuit also refused to give Wyeth a preliminary injunction, ruling that the lower court did not abuse its discretion in declining to order Teva and Sun Pharmaceutical Industries Ltd. to stop producing generic versions of the drug. The case regarding the validity of Wyeth’s patent will now need to go to trial at which the court stated the generic companies will need to meet a higher burden of proof. Wyeth will now bring the case to trial and request a permanent injunction against future generic sales. Management expects that to happen in 4Q09. Wyeth will also sue the generic manufacturers over patent infringement and seek monetary damages including compensation for lost profits.

|$ in million |2008A |2009E |20010E |2011E |Est. Growth (’08-’11) |

Enbrel (Etanercept)

Indication: Rheumatoid arthritis (RA), juvenile RA, ankylosing spondylitis, psoriatic arthritis, and psoriasis.

Mechanism: Enbrel is a type of protein called a tumor necrosis factor (TNF), which can reduce the amount of TNF in the body to normal levels, helping to treat immune diseases, such as rheumatoid arthritis, ankylosing spondylitis, psoriatic arthritis, and psoriasis.

Product Life Cycle Status: Fully commercialized

Importance: It is the leading biotech product in total global sales. Enbrel ranks fifth among the top pharmaceutical products globally by sales. It is also the fastest growing of the top 10 pharmaceutical products.

Safety Issues: AMGN and WYE heightened warnings about tuberculosis and other life-threatening infections on the label of Enbrel.

On August 5, 2009, the FDA announced that the prescription drugs, like Enbrel, used to treat rheumatoid arthritis and other conditions can increase the risk of potentially deadly cancer in children and teenagers. The regulators ordered stronger warnings on such medications. According to the FDA, an analysis of 48 reported cancer cases on the TNF blockers in children using the drugs showed an increased risk of cancer, occurring after 30 months of treatment on average. Eleven of the reported cases were fatal.

Partners: Enbrel is manufactured by Wyeth in partnership with Amgen. WYE books all ex-US Enbrel sales and pays AMGN a royalty on sales. Enbrel is co-promoted by Takeda in Japan. Enbrel has also received approval for the psoriasis indication for the European market.

Regulatory Issues

EU – On June 4, 2009, Wyeth received positive recommendations from the European Committee for Medicinal Products for Human Use (CHMP) for its two recent submissions relating to Enbrel, for plaque psoriasis, and rheumatoid arthritis and other related inflammatory conditions. The CHMP provided its positive recommendation of a continuous dosing regimen for Enbrel based on data from the CRYSTEL and other trials.

In addition, the CHMP recommended the approval of a new 50 mg pre-filled pen (Myclic) for the delivery of Enbrel solution for injection. If approved by the European Commission following the positive recommendation, the new Myclic pen may be particularly useful for patients who have a fear of needles or who find using the syringe difficult.

On January 8, 2009, Enbrel was approved by the European Commission as the first biologic treatment for children aged 8 years and above with severe plaque psoriasis.

US – The company is awaiting a response from the FDA for a pediatric psoriasis indication. In June 2008, an FDA advisory committee recommended by a vote of 8 to 5 to approve Enbrel for pediatric patients. Phase III trial results released in January 2008 studying Enbrel in children aged 4 to 17 years showed 68% of the patients showed at least a 75% improvement in psoriasis symptoms.

Sales: Wyeth reported Enbrel sales of $737 million in 2Q09, up 21% y/y on constant currency basis. Wyeth’s share of sales of Enbrel in the US and Canada is recorded as alliance revenue by the company, which amounted to $303 million in 2Q09, up 7% y/y. The Zacks Digest average 2Q09 revenue was in line with the company’s report.

Competitors: The RA and psoriasis markets are highly competitive. Competition from J&J’s Remicade and Abbott’s Humira are the two biggest long-term challenges. Humira has surpassed Enbrel in overall market share in the anti-TNF alpha category in the EU. J&J also has two other autoimmune compounds drugs, ustekinumab (launched in EU, filed in US) and golimumab (approved in US and Canada, filed in EU), which could provide significant competition. A trial head-to-head data released by J&J showed ustekinumab was significantly more efficacious than Enbrel over twelve weeks in patients with moderate-to-severe psoriasis.

New Data: Data from the COMET (COmbination of Methotrexate and ETanercept in early rheumatoid arthritis) study, ASCEND study and PRESTA study were presented during the European League Against Rheumatism (EULAR) Annual Meeting in Copenhagen in the week ending June 12, 2009.

The COMET study was designed to compare the clinical efficacy and safety of Enbrel and methotrexate combination therapy (EM) with methotrexate alone (M) on clinical disease activity and progressive joint damage in patients with early active rheumatoid arthritis. The percentage of subjects achieving clinical remission was significantly greater in the groups containing Enbrel than in the continued methotrexate monotherapy group. Further, patients who achieved clinical remission had an almost two-fold greater improvement in patient reported outcomes than patients who did not achieve clinical remission.

The ASCEND study compared the efficacy of Enbrel with the DMARD (disease-modifying antirheumatic drugs) sulfasalazine in subjects with ankylosing spondylitis (AS), including those with peripheral joint involvement. Subjects receiving Enbrel showed significantly greater improvement than subjects receiving sulfasalazine in all efficacy assessments, including physical function and spinal mobility.

The PRESTA study was designed to determine the efficacy of two Enbrel dosing regimens in treating psoriatic arthritis (PsA), as measured by PsA response criteria (PsARC), arthritic symptoms, skin manifestations and physical function of subjects with psoriasis and PsA over 24 weeks. Data from the trial showed that Enbrel provided significant improvement compared to baseline in joint symptoms in patients with active psoriatic arthritis in addition to achieving clearer skin. Furthermore, the new data showed that Enbrel significantly relieved two painful and difficult-to-treat features of psoriatic arthritis, in which inflammation occurs in the fingers (dactylitis) and/or at any point where a tendon or ligament is inserted into bone, particularly the heel of the foot (enthesitis).

|$ in million |2008A |2009E |20010E |2011E |Est. Growth (’08-’11) |

Zosyn IV

Indication: Moderate-to-severe infections caused by piperacillin-resistant, piperacillin/tazobactam-susceptible strains of indicated organisms

Product Life Cycle Status: Fully commercialized; generics available

Sales: According to the company, 2Q09 net revenue was $304 million, down 5% y/y, negatively impacted by Fx and the availability of alternative generic forms in some international markets. The Zacks Digest average 2Q09 revenue was in line with the company’s report.

|$ in million |2008A |2009E |20010E |2011E |Est. Growth (’08-’11) |

Tygacil (Tigecycline)

Indication: Complicated intra-abdominal infection (cIAI), complicated skin and skin structure infections (cSSSI), methicillin-resistant Staphylococcus aureus (MRSA), and community-acquired bacterial pneumonia (CAP) in adult patients.

Product Life Cycle Status: Fully commercialized

Regulatory Issues: In late March 2009, WYE received an sNDA approval in the US for the treatment of adult patients with CAP, based on two Phase III clinical studies, in which cure rates with Tygacil were shown to be comparable to those obtained with Levofloxacin.

Application for the approval of the drug for the treatment of CAP was submitted in the EU but was subsequently withdrawn in April 2008 by Wyeth due to concerns by EU regulators over the small number of CAP patients in clinical trials that supported the filing for approval. Wyeth is evaluating the next steps required in order to seek EU approval for this indication.

Sales: Tygacil sales in 2Q09 were $75 million, an increase of 33% y/y. The Zacks Digest average 2Q09 revenue was in line with the company’s report.

Additional Indications: The company is conducting a study for HAP/VAP indication. A recently completed Phase III study for the diabetic foot infection indication (that was expected to be filed in 2009) did not meet its efficacy endpoints.

|$ in million |2008A |2009E |20010E |2011E |Est. Growth (’08-’11) |

Lybrel

Indication: Lybrel is a low-dose oral contraceptive that allows women to go menstruation free for over a year.

Product Life Cycle: Marketed

Importance: Lybrel is the first and only low dose combination contraceptive pill taken 365 days a year, without a placebo phase or pill-free interval.

Regulatory Issues: Annia, the European trade name for Lybrel, is in the referral phase with the final European regulatory outcome expected later in 2009.

Sales: Sales figure is not provided by the company or the brokers.

Additional Studies: Lybrel is in Phase III trials for premenstrual dysphoric disorder. Wyeth will conduct a post-marketing study of thromboembolic events among women prescribed Lybrel compared to women prescribed cyclic oral contraceptives containing 20 µg ethinyl estradiol.

|$ in million |2008A |2009E |20010E |2011E |Est. Growth (’08-’11) |

Torisel

Indication: Torisel is approved to treat advanced renal cell carcinoma (RCC), which accounts for about 85% of all renal cancers.

Mechanism: Torisel is an investigational drug that specifically inhibits the mTOR (mammalian target of rapamycin) kinase, a protein that regulates cell proliferation, cell growth, and cell survival.

Product Life Cycle Status: Marketed

Importance: Torisel is the first targeted renal cancer therapy proven to extend median overall survival versus interferon-alpha, an active comparator.

Sales: According to the Zacks Digest model, 2Q09 Torisel revenue was $38 million, up 20.6% y/y.

Competitors: Torisel competes with Pfizer’s Sutent and Onyx and Bayer’s Nexavar.

Additional Studies: In an effort to extend the reach of Torisel in RCC, Wyeth and Roche initiated a Phase IIIb trial in late May 2008 (INTORACT) testing Torisel plus Avastin (Roche) versus Avastin plus interferon-alpha as a first-line treatment in patients with advanced RCC. The primary endpoint of the study is progression-free survival.

Additional Indications: The drug is under development for the treatment of mantle cell lymphoma (MCL). The product is also in early-stage trials for other tumor types including prostate, lung, head and neck, and hematologic cancers.

|$ in million |2008A |2009E |20010E |2011E |Est. Growth (’08-’11) |

Pristiq/DVS-233 (Desvenlafaxine Succinate)

Indication: Major depressive disorder (MDD) and vasomotor symptoms (VMS)

Product Life Cycle Status: MDD: Marketed in US; MDD indication in EU postponed. VMS: Approvable letter received for VMS from the FDA. EU application for VMS withdrawn.

Importance: This is a next-generation Effexor product. Pristiq is an important product for WYE as it will turn to this next-generation product to make up for the loss in total sales from the loss of patent protection of Effexor XR.

Sales: Pristiq sales were $62 million in 2Q09 versus $49 million in 2Q08. Pristiq was launched in the US market in 3Q08 and it has captured about 1.8% of the new prescription trends and 1.4% of the total prescription trends since its launch.

Additional Studies

VMS (vasomotor symptoms): Wyeth is seeking approval for VMS for which the FDA issued an approvable letter in July 2007. The letter asked the company to provide additional data on the cardiovascular and hepatic safety of Pristiq. The agency has requested the company to collect the data from a randomized placebo-controlled trial of one year or more conducted in postmenopausal women. The additional trial completed enrollment in 1Q09. Wyeth expects to file for approval of the VMS indication in 2010.

Wyeth had also submitted an application to EU regulatory authorities for approval of Pristiq for VMS. However, in March 2008, the company announced that they were withdrawing their application for this indication because the Committee for Medicinal Products for Human Use (CHMP) requested additional studies to address questions about the risk-benefit profile of the drug in the treatment of VMS. Wyeth expects to resubmit its application to the CHMP for VMS following conclusion of an ongoing 12-month study.

Additional Indications: Wyeth is also working on expanding the Pristiq development to include fibromyalgia and diabetic neuropathic pain. However, enrollment for a Phase II trial for fibromyalgia was halted based on an interim analysis, which indicated that the drug would not meet the primary endpoint of a reduction in numeric pain rating scores versus placebo.

|$ in million |2008A |2009E |2010E |2011E |Est. Growth |

Advil

Advil is a leading, non-steroidal, anti-inflammatory drug (NSAID). Wyeth also manufactures Advil PM, which combines the multi-pain relieving power of Advil with a gentle sleep aid. Advil PM offers relief from occasional sleeplessness associated with minor aches and pains, including sore muscles, backache, and minor arthritis pain, helping users fall asleep and maintain the sleep. The Zacks Digest average 2Q09 Advil revenue was $174 million, up 3.4% y/y.

Methylnaltrexone/Relistor

Indication: Opioid-induced constipation (OIC)

Product Life Cycle status: It is being developed in three dosage forms: subcutaneous (marketed in both EU and the US) and oral forms as a treatment platform for OIC (Phase II) and an intravenous (IV) form for post-operative ileus (POI) (Phase III).

Importance: Methylnaltrexone is being studied as a treatment for the peripheral side effects of opioid analgesics without interfering with pain relief.

Partners: Wyeth has partnered Progenics Pharmaceuticals (PGNX) for the development and commercialization of Methylnaltrexone.

Additional Studies: The companies are conducting three clinical studies for the drug. Two (one Phase II trial and one Phase III trial) of the studies are investigating the subcutaneous form for treating OIC patients outside the population of the first NDA and the third, a Phase III trial, is testing the intravenous form for managing POI in a surgical setting in patients at high risk of POI. Topline results of the IV form released in May 2008 for POI showed the drug did not meet its primary (time to recovery of gastrointestinal function) or secondary endpoints, which confirmed earlier preliminary results released in March 2008. The companies will study the results of intravenous trials and then determine whether to continue with the IV program. The companies also announced results from a Phase II trial for the oral form in May 2008. Data showed the oral form significantly improved the occurrence of spontaneous bowel movements. The companies expect to file an NDA for oral methylnaltrexone in late 2009 or early 2010.

Other: On August 4, 2009, Wyeth and Progenics Pharmaceuticals submitted an sNDA to the FDA and an Extension Application to the European Union (E.U.) European Medicines Agency (EMEA) for Relistor subcutaneous injection for a new delivery system, pre-filled syringes. Relistor was approved in 2008 in single-use vials. If approved, pre-filled syringes of Relistor are expected to be available in the US and Europe as early as 1H10. Single-use vials of RELISTOR will continue to be available.

|$ in million |2008A |2009E |2010E |2011E |Est. Growth |

Hemophilia Drugs: Hemophilia is a rare, inherited blood clotting disorder, which affects approximately 130,000 people worldwide. Important products in this category are Benefix and Refacto, which produced combined revenue of $248 million in 2Q09, down 1% y/y (up 9% on constant currency basis). Xyntha (Refacto AF) was approved by the FDA for hemophilia A during 1Q08 and approved in EU in 1Q09.

Wyeth entered into some agreements related to the development of advanced therapies for the treatment of hemophilia. The first agreement, with MediVas, relates to the discovery, development, manufacture, and commercialization of novel biopharmaceuticals that can extend the duration of action of recombinant factor treatments for hemophilia. The second agreement, this time with Nautilus Biotech, relates to the discovery and development of novel recombinant Factor IX proteins for the treatment of hemophilia B. Wyeth has also collaborated with Belgium specialty pharmaceutical company, Elbion NV, for the development of a treatment for schizophrenia. Elbion's phosphodiesterase 10, or PDE 10, program will be used as part of the development.

On June 30, 2009, Wyeth and Catalyst Biosciences, Inc. announced that the two companies have formed an exclusive worldwide collaboration for the discovery, development and commercialization of Factor VIIa products to treat hemophilia and other bleeding conditions. Total payments under the collaboration, including an upfront payment of $21 million, research funding and milestone payments, could exceed $500 million, exclusive of royalty payments.

PIPELINE PRODUCTS

Viviant (bazedoxifene) and Aprela

Viviant and Aprela (bazedoxifene + conjugated estrogen) are two important candidates that highlight the company’s core focus in the area of women’s health. The compound bazedoxifene has potential for providing protection for the treatment of osteoporosis. The drug (known as Conbriza in Europe) is approved in the EU for the treatment of osteoporosis. The company has received two approvable letters from the FDA for Viviant - one for prevention indication and one for the treatment indication. Wyeth expects to file a response to the approvable letters later in 2009.

WYE is also developing a combination product Aprela (bazedoxifene + conjugated estrogens) for the treatment of menopause symptoms and postmenopausal osteoporosis, currently in a Phase III trial (SMART-1 study). On July 27, 2009, Wyeth announced the publication in Fertility and Sterility of data from the SMART-1 study that showed Aprela significantly reduced the frequency and severity of hot flushes and improved measures of vaginal atrophy when compared to placebo. In this study, uterine bleeding was not statistically different from placebo and the rate of endometrial hyperplasia in doses being considered for therapeutic use was less than 1%. Wyeth is reviewing a bio-equivalent work and based on the results, will decide if another study is required before they can file an NDA for Aprela.

Neratinib (HKI-272)

Neratinib is an investigational orally-administered potent and irreversible dual inhibitor of the HER-2 and EGFR kinases. Wyeth initiated the first global Phase III program for neratinib in advanced HER-2-positive breast cancer in 1Q09. On May 29, 2009, Wyeth announced preliminary data from two ongoing Phase 1/2 studies, one evaluating Neratinib in combination with Trastuzumab (Herceptin, Roche) in HER-2 positive breast cancer, and a separate study investigating Neratinib safety and efficacy when given with paclitaxel (Taxol Bristol-Myers Squibb) in patients with HER-2 dependent solid tumors. The data gathered from these studies provide additional evidence suggesting that Neratinib, when combined with these therapies, is an active agent in HER-2 positive breast cancer.

Drugs for Alzheimer’s disease: Wyeth is vigorously focusing on a number of candidates for the treatment of Alzheimer’s disease, which primarily utilizes three platforms: small molecules, antibodies, and vaccines to interact with different targets than that done by the presently available medications for this disease. In total, Wyeth has 10 development programs under way for Alzheimer’s disease. Among these programs, the monoclonal antibody, Bapineuzumab, and the peptide-CRM conjugate, ACC-001, both in collaboration with Elan Pharmaceuticals (ELN), are intended to clear the formation of amyloid plaques in the brain. In addition, lecozotan, a small molecule drug currently in Phase II testing, is designed to enhance the level of critical neurotransmitters in the brain.

Bapineuzumab (AAB-001)

Indication: Alzheimer's disease

Stage of Development: Phase III

Importance: Bapineuzumab is WYE's most advanced product candidate for the treatment of Alzheimer's disease. Bapineuzumab has also been granted fast track status authorization by the FDA.

Additional Studies: The companies initiated enrollment for four Phase III trials (2 US and 2 European) for bapineuzumab prior to the release of Phase II data based on interim results from the Phase II program. Topline results of the Phase II trial were released in June 2008 and the full results were presented at ICAD 2008 in late July. The trial did not hit the primary endpoint (change from baseline in ADAS-cog and DAD scores), but the post-hoc subgroup analysis showed significant efficacy in non-carriers of ApoE4, despite the lack of significant efficacy in the ApoE4 carriers.

The four 18-month Phase III trials are specifically testing the drug in populations with (carrier) and without (non-carrier0 the ApoE4 gene. In April 2009 the companies terminated the highest of the three dosing regimens, 2.0 mg/kg, in the non-carriers due to an increased risk of vascogenic edema. The 0.5 mg/kg and 1.0 mg/kg doses in these two trials will continue as planned. Each of the two non-carrier studies will now enroll 1,000 patients versus the previous 1,250. The two ApoE carrier studies enrollment plans remain unchanged, targeting 800 patients each. Despite the fact that the remainder of the trial is ongoing, the discontinuation of one arm is a set back for the development of Bapineuzumab. Elan completed US carrier population enrollment and is targeting completion of the non-carrier enrollment by the end of 2009. Results from the Phase III trials are expected in December 2010 and April 2011, delayed by over a year. If eventually approved, Wyeth and Elan will split profits of Bapineuzumab 50/50 worldwide.

ACC-001: ACC-001 is a vaccine designed to prime the body's immune system to create antibodies against beta amyloid, the toxic protein that forms plaques in the brain believed to play a key role in Alzheimer’s disease. Wyeth and Elan are developing ACC-001 as a second-generation version of an older Alzheimer’s vaccine, AN1792. Wyeth and Elan suspended a clinical trial involving ACC-001 in April 2008 after a patient was hospitalized due to a skin lesion.

Oncology Drugs: Within the oncology segment, Wyeth possesses a number of early-stage programs across three strategies: cell cycle inhibitors, cell signaling inhibitors, and antibody targeted chemotherapy. The company has nine oncology programs in either pre-clinical, Phase I or Phase II trials. These include four different antibody targeted chemotherapies for acute myelogenous leukemia, non-Hodgkin’s lymphoma, and a variety of solid tumors, including breast, colon, and lung cancer.

Please refer to Zacks Research Digest spreadsheet on WYE for more extensive revenue figures.

Margins [NOTE: Only highlighted material has been changed]

Gross margin was up 70 bps y/y to 73.2% in 2Q09, reflecting favorable changes in product mix. The Zacks Digest average gross margin was in line with the company’s report.

SG&A expenses were $1.57 billion (27.6% of sales), down 9% y/y (4% on constant currency), on head count reductions and restructuring initiatives, partly offset by increased pension expense (which added 2% to expense in 2Q09). The total incremental pension expense for 2009 of about $250 million is recorded throughout the P&L, with about half of the expense in SG&A and the remainder split fairly evenly between R&D and COGS. Excluding the impact of fx and increased pension expense, WYE expects SG&A costs to be down for FY09because of cost management efforts. The Zacks Digest average 2Q09 SG&A expense was in line with the company’s report.

R&D expenses were up 7% y/y (8% on constant currency) to $884 million (15.5% of sales) because of increased late stage clinical trial costs and a $21 million upfront payment to Catalyst BioSciences for hemophilia drug development. Excluding fx, WYE expects R&D expense to increase on a full year basis. The Zacks Digest average 2Q09 R&D expense was in line with the company’s report.

Net interest was an expense of $83 million in 2Q09 (versus an expense of $19 million in 2Q08) due to the decrease in interest income resulting from lower interest rates.

The 2Q09 tax rate decreased 120 bps y/y to 29.3% due to the timing of renewal of the US R&D tax credit (4Q08). WYE continues to expect a full year tax rate of 29%-30%, reflecting increased profits in tax favorable jurisdictions.

|Margins |

|Positive |28.6%↑ |

|Neutral |71.4%↓ |

|Negative |0.0% |

|Avg. Target Price |$49.33↓ |

|Digest High |$51.00 |

|Digest Low |$46.00 |

|No. of Analysts with Target |6/11 |

|Price/Total | |

Capital Structure/Solvency/Cash Flow/Governance/Other [NOTE: Only highlighted material has been changed]

Dividend

On June 11, 2009, WYE declared a dividend of $0.30 per share on the outstanding shares of common stock of the company. The dividend is payable on September 1, 2009, to stockholders of record at the close of business on August 13, 2009.

Acquisitions

Wyeth’s planned merger with Pfizer, Inc is on track to close in 3Q09 or early 4Q09. In January 2009, Wyeth and Pfizer announced a plan whereby Pfizer would acquire Wyeth in a deal valued at about $68 billion. The acquisition will be paid for with a combination of cash and Pfizer common stock and. The deal values Wyeth at $50.19 per share. Wyeth shareholders will receive $33 cash and 0.985 Pfizer shares for every Wyeth share. The purchase price equated to about a 29% premium on the day the acquisition was announced. The value to Wyeth shareholders may change based on fluctuations in Pfizer’s stock price.

On July 20, 2009, Wyeth announced that its stockholders overwhelmingly approved the adoption of its merger agreement with Pfizer at Wyeth's Annual Meeting of Stockholders. Based on a preliminary vote count by Wyeth's transfer agent, over 98 percent of shares voted favored the merger. Approval of the merger agreement required an affirmative vote of the majority of outstanding shares. The acquisition has also received the European Union antitrust regulators clearance.

On August 17, 2009, Wyeth announced that it has called for the full redemption of its outstanding floating rate convertible senior debentures due in 2024 on September 15, 2009. Wyeth is implementing the redemption as part of its acquisition by Pfizer.

On August 6, 2009, Wyeth announced that it has tentatively settled a class-action lawsuit in Delaware Court of Chancery attempting to block its merger with Pfizer and would provide the FDA information needed to gain approval of its long-delayed osteoporosis drug.

August 21, 2009

Potentially Severe Problems [NOTE: Only highlighted material has been changed]

There are none other than those discussed in other sections of this report.

August 3, 200

Long-Term Growth [NOTE: Only highlighted material has been changed]

The loss of marketing exclusivity of Protonix will have a significant negative effect on future revenue growth. Pristiq and Torisel, along with Viviant and Aprela, are expected to be strong revenue generators, but they will not add significantly to the topline until around 2010, about the time that Effexor XR loses patent protection. However, Wyeth may not experience the next wave of substantial revenue growth until 2012 or later, when a number of pipeline candidates are expected to be commercialized. In the meantime, earnings are expected to grow on average in mid single digits through productivity initiatives and share buybacks.

As regards the PFE-WYE merger, both companies are losing their largest products in the 2010/2011 timeframe and expense reductions resulting from the potential business combination could be used to manage through this difficult period. Moreover, with so many key drug products losing patent protection over the next couple of years, little replacement revenue in sight, and industry pressures continuing to mount, one analyst (Caris & Co.) believes that consolidation is a natural conclusion for this mature industry until a new wave of innovation emerges.

Re-acceleration of Prevnar and Enbrel sales due to increased manufacturing, along with the stabilization in HRT sales on low-dose Prempro, would help the company accelerate its growth over the long term, according to analysts.

Though WYE is a quality company in many aspects, it faces various challenges in a difficult pharmaceutical environment. A number of factors, including generic competition, declining R&D productivity, a hostile political environment, and a risk-averse FDA are forcing structural changes in the pharma industry beyond restructuring of company cost bases already underway. Aggressive M&A (like Pfizer-Wyeth, Merck-Schering Plough) within the industry, through the conversion of cash and strong balance sheets into visible revenues and EPS is necessary, and could eliminate the earnings cliff faced by many companies. Significant excess capacity in the industry needs to be eliminated and R&D productivity needs to be improved. Analysts believe these are the only likely paths to multiple expansion in the sector.

August 3, 2009

Upcoming Events [NOTE: Only highlighted material has been changed]

|Date |Event |

|3Q09/4Q09 |Expected closing of the merger with PFE |

Individual Analyst Opinions [NOTE: Only highlighted material has been changed]

POSITIVE RATINGS

Bernstein – Outperform ($51): July 24, 2009: The firm maintained its rating and increased the target price from $50 to $51.

UnionBankSwitz. – Buy ($50): August 11, 2009: The firm maintained a Buy rating and a target price of $50. INVESTMENT SUMMARY: The firm does not expect the small delay in Prevnar-13 to have any negative implication for either WYE’s standalone business or PFE’s proposed acquisition of WYE.

NEUTRAL RATINGS

BMO Capital – Market Perform ($49): July 23, 2009: The firm maintained its rating and increased the target price from $47 to $49, in line with Pfizer’s offer price. INVESTMENT SUMMARY: With the Pfizer acquisition pending, the firm prefers to remain on the sidelines.

Caris & Co. – Average ($50): August 12, 2009: The firm maintained a Neutral rating and a target price of $50.

Citigroup − Hold ($46): August 13, 2009: The firm reiterated its rating and target price. INVESTMENT SUMMARY: The firm sees high likelihood of regulatory approval of the WYE and Pfizer transaction.

Cowen − Neutral: July 23, 2009: The firm reiterated a Neutral rating.

Deutsche Bank − Hold ($50): July 24, 2009: The firm reiterated its rating and target price. INVESTMENT SUMMARY: Since the firm is optimistic about the merits of the acquisition of WYE by PFE, it recommends that investors hold their WYE shares into the closing of the deal.

NEGATIVE RATINGS

None

SUSPENDED RATINGS

Leerink Swann – July 27, 2009: The firm has suspended rating on WYE as it views it as an arbitrage situation.

Barclays Capital – July 24, 2009: The firm suspended rating on the stock as it is acting as a financial advisor to Pfizer on the potential acquisition of Wyeth.

Goldman – July 23, 2009: The firm has not rated the stock.

J.P. Morgan – July 23, 2009: The firm has not rated the stock.

CEASED COVERAGE

MorganStanley – June 10, 2008: The firm dropped coverage on the stock due to the departure of the covering analyst.

|Research Associate |Mayukh Samanta |

|Copy Editor |Avishek Mishra |

|Content Ed. |Avishek Mishra |

|No. of brokers reported/ Total | |

|brokers | |

|Reason for Update |Flash |

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Zacks Research Digest

September 22, 2009

Research Associate: Mayukh Samanta, MBA

Editor: Kinjel Shah, C.A.

Sr. Ed.: Ian Madsen, CFA; imadsen@; 1-800-767-3771, x9417

111 N. Canal Street, Suite 1101 ( Chicago, IL 60606

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