Baxter International Inc. (BAX)

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Baxter International (BAX)

Q3 2020 Earnings Call

October 21, 2010 8:30 a.m.

Executives

Mary Kay Ladone – Vice President of Investor Relations

Robert Parkinson – Chairman, Chief Executive Officer and President

Robert Hombach – Chief Financial Officer, Corporate Vice President and Tresasurer

Analysts

Robert Hopkins – Banc of America

Christine Stuart – Deutsche Bank

Bruce Nudell – UBS

David Lewis – Morgan Stanley

David Roman – Goldman Sachs

Mike Weinstein – JP Morgan

Fredrick Wise – Leerink Swann, LLC

Lawrence Keusch – Morgan Keegan & Company Inc.

Mike Miksic – Piper Jaffray Companies

Presentation

Operator

Good morning, Ladies and Gentlemen, and welcome to Baxter International’s Third Quarter Earnings Conference Call. (Operator Instructions)

As a reminder, this call is being recorded by Baxter and is copywrited material. It cannot be recorded or rebroadcasted without Baxter’s permission. If you have any objections, please disconnect at this time.

I would now like to turn the call over to Ms. Mary Kay Ladone, Corporate Vice President of Investor Relations at Baxter International. Ms. Ladone, you may begin.

Mary Kay Ladone

Thanks, Sean. Good morning everyone, and welcome to our Q3 2010 Earnings Conference Call. Joining me today are Bob Parkinson, CEO and Chairman of Baxter International; and Bob Hombach, Chief Financial Officer.

Before we get started, let me remind you that this presentation, including comments regarding or financial outlook, new product development and regulatory matters contains forward-looking statements that involve risks and uncertainties and of course, our actual results could different materially from our current expectations.

Please refer to today’s press release and our FEC Filing for more details concerning factors that could cause actual results to differ materially.

In addition, in today’s call, non-GAAP financial measures will be used to help investors understand Baxter’s ongoing business performance. A reconciliation of the non-GAAP financial measures being discussed today to the comparable GAAP financial measures is included in our earnings release issue this morning and available on our website.

Now, I’d like to turn the call over to Bob Parkinson.

Robert Parkison

Thank you, Mary Kay. Good morning. Thanks for calling in this morning.

I’m pleased to announce that our Third Quarter Results recorded earlier this morning exceeded the guidance that we provided last quarter with adjusted earnings per share of $1.01 per diluted share.

On a reported basis, worldwide sales increased 3% and on an organic basis, sales increased 4% which compares favorably to our guidance range of 1 to 3%.

While Bob will provide more details on the Third Quarter Financial Results and Outlook for the remainder of the year, as you saw we are reconfirming our earnings guidance at the high end of the range that we provided to all of you last quarter, which now includes adjust ESP of $3.96 to $3.98 per share.

During the quarter we continued to make progress on numerous fronts despite a continuing challenging environment. First as we discussed, Baxter and the market more broadly had been operating through a transition period in the Plasma Protein market.

In the beginning of the second quarter, as you know, we implemented some specific actions to stabilize our share position. I’m encouraged with the progress that we’re making with our demand creation activities and commercial strategies, as evidenced by improved global demand for GAMMAGARD LIQUID. And while we’ll continue to face some difficult comparisons related to healthcare reform and determination of the Winrow agreement, our volume growth has accelerated. Distributor inventory levels of GAMMAGARD remain balanced with underlying demand, and we finalized agreements with the majority of our U.S. customers with terms will now extend through the end of 2011.

As I’ve mentioned in the past, we remain confident that the Plasma Business will be an attractive growth vehicle in the coming years due to an increase in end-user demand; resulting from deployment of additional sales recourses for those indications that remain underdiagnosed and undertreated, Baxter’s introduction of new proprietary administration technologies, expansion of new indications such as MMN, and of course, the significant opportunity of a potential Alzheimer’s indication.

Over the last several months we continued to enhance our market leadership with a number of commercial achieves, a few of which I’d like to highlight.

First, the new five-year contract with Novation, a leading healthcare supply contracting company of VHA, Inc. the University Healthsystem Consortium or UHC, and Provista. This agreement provides access to Baxter’s broad portfolio of products, including IV solutions, drug delivery and parenteral nutritional products, large-volume infusion pumps and IV administration sets and components.

We also announced in the quarter a manufacturing supply and distribution agreement with Kamada for GLASSIA, the first and only liquid alpha1-proteinase inhibitor. Under this agreement, Baxter acquired commercial rights to GLASSIA in the U.S., Australia, New Zealand and in Canada. Under a separate license agreement, we’ve been granted the right to process GLASSIA and will seek necessary regulatory approvals to do so.

GLASSIA was approved by the FDA July, 2010 and was recently launched in the U.S.

Also in the quarter, we announced a collaboration between Baxter and Takeda for the development, product and supply cell-culture based influenza vaccines for the Japanese market.

During the quarter, Takeda was selected as a recipient of a subsidy from the Japanese Government to support an investment associated with the development and production of pandemic influenza vaccines.

Takeda plans to apply for additional government funding under a second supplementary budget and further expand its collaboration with our company.

And finally, we launched a number of new products during the quarter, including Advate in Brazil, the U.S. launch of TachoSil, an absorbable fibrin sealant patch for use in cardiovascular surgery, and the launch in Europe and Canada of the first and only 30-gram dose vial for GAMMAGARD LIQUID and KIOVIG.

This new dosage form is the most frequently prescribed dose for primary immune deficiency patients and will enhance user convenience.

Finally, I’d like to highlight that we continue to fund all of our key late-stage R&D programs as evidenced by a number of milestones which occurred during the quarter. For example, we continued to tend our leadership position in hemophilia and recombinant proteins with the initiation of the global Phase 1-2 clinical trial studying the safety and tolerability of BAX817, a recombinant Factor 78 therapy for the treatment of Hemophilia A or B patients with inhibitors.

And we’ve also dosed the first patient in our Phase 1-3 clinical trial for BAX326, a recombinant Factor 9, treatment for patients with Hemophilia B.

Also during the quarter, we completed our Phase 1 Recombinant von Willebrand Clinical Trial and we expect interim safety and tolerability data to be presented at the American Society of Hematology Meeting in December of this year. In addition, we expect to initiate a Phase 3 trial in 2011.

Read the rest of this transcript for free on seekingalpha.com