Baxter International Inc. (BAX)

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Baxter International (BAX)

Q3 2012 Earnings Call

October 18, 2012 8:30 am ET


Mary Kay Ladone - Vice President of Investor Relations

Robert L. Parkinson - Chairman, Chief Executive Officer and President

Robert J. Hombach - Chief Financial Officer and Corporate Vice President

Norbert G. Riedel - Chief Scientific Officer and Corporate Vice President


Lawrence S. Keusch - Raymond James & Associates, Inc., Research Division

Rajeev Jashnani - UBS Investment Bank, Research Division

David H. Roman - Goldman Sachs Group Inc., Research Division

David R. Lewis - Morgan Stanley, Research Division

Matthew S. Miksic - Piper Jaffray Companies, Research Division

Michael N. Weinstein - JP Morgan Chase & Co, Research Division

Jonathan J. Palmer - Credit Agricole Securities (USA) Inc., Research Division

Matthew Taylor - Barclays Capital, Research Division

Brandon Henry - RBC Capital Markets, LLC, Research Division



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 copyrighted material. It cannot be recorded or rebroadcast 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, Investor Relations at Baxter International. Ms. Ladone, you may begin.

Mary Kay Ladone

Thanks, Sean, and good morning, everyone, and welcome to our third quarter 2012 earnings conference call. Joining me today are Bob Parkinson, CEO and Chairman of Baxter International; Bob Hombach, Chief Financial Officer; and Dr. Norbert Riedel, Chief Science and Innovation Officer.

Before we get started, let me remind you that this presentation, including comments regarding our financial outlook, new product developments and regulatory matters, contain forward-looking statements that involve risks and uncertainties, and of course, our actual results could differ materially from our current expectations. Please refer to today's press release and our SEC filings for more detail 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 issued this morning and available on our website.

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

Robert L. Parkinson

Thanks, Mary Kay. Good morning. Thanks for calling in. We're pleased today to announce our financial results for the third quarter and also provide you with an update on Baxter's full year 2012 outlook. As you saw in the press release that was issued earlier this morning, third quarter sales, after adjusting for FX, increased 5%. EPS of $1.14 per diluted share increased 5% versus the prior year and was in line with the guidance that we previously provided.

As we discussed with you all last week at the Investor Conference, we continue to focus on enhancing growth by optimizing our core business portfolio, advancing the company's new product pipeline, pursuing and accelerating the pace of business development initiatives and capitalizing on the opportunity to develop new business models, which includes public and private partnerships and at improving the quality of and access to care in both developed and emerging markets.

Recent achievements reflect these priorities and were highlighted in this morning's press release. As many of these topics were also covered thoroughly last week, I won't take too much time to review these in depth, but I'd like to take a moment to highlight just a few key points. First, we continue to be very pleased with the success of our new ADVATE prophylaxis label in the U.S. market as evidenced by our strong sales performance in the quarter. And we remain committed to meeting patient needs by enhancing our plasma manufacturing footprint with both internal capacity expansions and external collaborations.

Second, we continue to successfully advance our pipeline. For example, during the quarter, we submitted our regulatory file in the U.S. for BAX 326, a recombinant Factor IX protein, which if approved, will be the only Factor IX product indicated for prophylaxis treatment in the U.S., where most hemophilia B patients today are treated with an on-demand regimen.

We also recently completed enrollment in our first home hemodialysis clinical trial, evaluating the performance and safety of our new device. This study was conducted at 2 centers in the U.S. with 24 patients who collectively received more than 700 dialysis treatments. As you know, this data will support our European CE marking in 2013.

On the business development front, we entered into a collaboration with Onconova for European commercialization rights of rigosertib, a novel targeted anticancer compound. It's currently in a Phase III study for the treatment of MDS, a rare hematological malignancy, and is also in Phase II for an oral formulation for this indication. If approved, this will be an exciting addition to our portfolio, where we can leverage our legacy of treating critical diseases, our existing leadership position in hematology and our sales channel. While hematology is our primary focus for this drug candidate, rigosertib is also in Phase II clinical trials for pancreatic cancer.

In addition, under the terms of our agreement with Momenta Pharmaceuticals, we recently selected a third biosimilar for development, a monoclonal antibody for oncology designated as M511. This is in addition to the selection of M923 and M834 targeted for the treatment of autoimmune and other inflammatory disorders. As you know, Baxter and Momenta had the opportunity to develop up to 6 biosimilars through our partnership.

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