Baxter International Earnings Call Nuggets: Generics Timing and Flexible Dosing Model
Baxter International (NYSE:BAX) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
David Lewis – Morgan Stanley: Maybe a couple of quick questions on the model and maybe a more of a strategic question. I guess a couple of (quick) on the model. Specpharm you talked about a slight change in the guidance for the year. I wonder does that reflect more just the utilization environment you’re seeing here in the first quarter or any change to what you are thinking about the timing of generics in the back half of the year? And the second financial question was non-op guidance is roughly equivalent to which you guided for a few quarters – I’m sorry few months ago, but a very strong non-op quarter this particular quarter maybe you could just walk through some of those dynamics and then one follow-up?
Robert J. Hombach – Corporate VP and CFO: Yeah. I think David; your comments about softer surgical procedures really would drove it. There is no change in our expectation about the potential for generic competition later this year in the space. So, no change there and as it relate to non-op items as I mentioned in my prepared comments two real drivers there; one foreign exchange, the other one sale of intangible asset and so the FX item really related to some volatility around the euro in the first quarter as you know the euro traded anywhere from 137 to 127 during the course of the quarter and given our balance sheet positions and the quarters – the month in which it was most volatile. We had a pretty significant outcome there, but as I mentioned in my prepared comments, we also took some cost into margin that we hadn’t expected. For this quarter, we expected later in the year approximately $20 million and so if I look at the overall picture those two kind of offset.
David Lewis – Morgan Stanley: Then maybe two strategic questions for Bob. I guess interesting competitive chatter at some recent conferences. Bob I wondered if you could comment. The first is surrounding Glendale and the progress. There is some discussion that perhaps Baxter’s behind in their process at Glendale and the refurbishment. Maybe help us understand where you think you are as it relates to Glendale and capacity at the back half of the year. Then, a hemophilia competition, which is obviously next year, another strong hemophilia quarter for Baxter or this particular quarter, maybe talk just a little about what you’re seeing on the strength of PK dosing and the larger 4,000 unit dose and how you expect that to trend this year…
Robert L. Parkinson, Jr. – Chairman and CEO: In terms of old LA, we’re back in operation, consistent with the timetable that we set up, actually a little bit ahead of schedule. So, we’re very pleased with getting that back in production for reasons that we all understand. So no concerns on that issue relative to the core hemophilia franchise. We continue to see momentum in the U.S. in response to the PK dosing and prophylactic use and so, continue to be encouraged by that. So, as it relates to the momentum in that business, particularly in the U.S. and in view of new competitive entrants down the road. Fundamentally David, I would say no change in our position in that regard from what we’ve discussed with you previously. I don’t know Mary Kay if you want to add anything to that.
Mary Kay Ladone – Corporate VP, IR: No, I was just going to say David we have started conformance lot in old LA and as Bob mentioned we remain on track for clearance and to start shipping product in the third quarter, so no change in expectations there. I’d also point out that the strong recombinant sales driven really by ADVATE in the U.S. We are expecting to take out some inventory as we move throughout the year. So we aren’t expecting in our guidance to continue to see as strong performance going forward.
Flexible Dosing Model
Matt Miksic – Piper Jaffray: Just to follow-up on hemophilia. You mentioned in your prepared remarks there was sort of a contribution from competitive gains towards the contribution from increased penetration of prophylaxis and sort of utilization on the ADVATE side. Could you maybe talk about what kind of share you are starting to see here competitively? How much interest there is in this sort of flexible dosing model that you have?
Robert L. Parkinson, Jr. – Chairman and CEO: I don’t know, Matt, that we can add a lot more to my comments in response to David Lewis’s question. We are not going to get into specific market share changes and core market shares and so on. Again as I said before we get a good market response – continue to get a good market response for the PK dosing and prophylaxis use and so on which we are very encouraged by and that’s consistent with what we expected from the outset. So, beyond that I am not sure that there is a lot more – we can’t say or we want to say at this stage…
Robert J. Hombach – Corporate VP and CFO: I would just add that the good news here is that we have multiple avenues to drive accelerated growth going forward converting plasma-derived even with our own patient base converting on-demand to prophylaxis and then certainly for those patients that they are looking for the opportunity to do less infusions on an annual basis moving towards PK dosing. So, you can work – pursuing all those avenues and I think the 4000 IU presentation is going to allow us to continue to drive the PK dosing going forward here still somewhat early days with the third quarter of last year that we really started launching that, but we are seeing progress on all three fronts.
Matt Miksic – Piper Jaffray: That’s understandable. And then on the Alzheimer’s program you mentioned wrapping up the trial in ’15 just maybe walk us through, if you could, you have made some decent progress, this is the second trial and about halfway through enrollment currently, can you walkthrough why it would take – why expected to take until ’15 to complete that?
Robert L. Parkinson, Jr. – Chairman and CEO: Mary Kay, why don’t you handle that?
Mary Kay Ladone – Corporate VP, IR: Sure. Matt, as we mentioned in the prepared comments, we have already enrolled about 200 of the 400 patient and we are expecting to complete enrollment by the end of this year. As you recall, the trial design for the second Phase III is exactly similar to the first Phase III. So, it’s an 18 month follow-up, which would mean that we wouldn’t complete the trial until mid-2015.
Matt Miksic – Piper Jaffray: Then finally just on the fluid systems in the quarter, I didn’t catch the color on why exactly the weakness there at least relative to our estimates. It sounded like from your perspective the growth was in line or sort of solid growth in the quarter, but I guess maybe…
Robert J. Hombach – Corporate VP and CFO: Yeah. It was in line with our expectations. But I think it’s important to remember given the pace of activity in 2012 as we finalize the swap out of colleagues and placed a lot of spectrums in the marketplace. We expect it going into 2013 that pump sales would be lower than 2012 again because of that elevated level of activities. We looked at results in the first quarter again in line with our expectations and so no issues there.