A CFO Departure. A Clinical Miss. A $43 Billion Question Mark. Should You Throw in the Towel on Pfizer Stock?

Pfizer's (NYSE: PFE) shares have lost more than 50% of their value since late 2021 due to poor financial results. The company has tried to bounce back. Notably, it has expanded its pipeline through acquisitions, the most expensive one of which was its $43 billion buyout of Seagen, a cancer-focused drugmaker, in 2023. However, recent developments may suggest to some that Pfizer's efforts to turn things around are not going to work, and the stock may continue moving south.

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A clinical trial flop and a leadership shake-up

One of the promising candidates Pfizer got access to through its acquisition of Seagen was sigvotatug vedotin, an investigational medicine for non-small cell lung cancer (NSCLC), one of the leading causes of cancer death in the world. This is a large market that could help Pfizer generate billions of dollars annually, provided it can gain a foothold in it with this therapy. Unfortunately, that now seems unlikely to happen.

Pfizer recently reported that in a phase 3 clinical trial in previously treated NSCLC patients, sigvotatug vedotin failed to show a statistically significant improvement in overall survival, a key endpoint in cancer clinical studies. In the trial, the medicine was pitted against docetaxel, a chemotherapy medication. These results make it unlikely that sigvotatug vedotin will make significant headway in this narrow indication.

Further, there was more negative news for Pfizer recently. On June 18, the pharmaceutical giant announced that its CFO, Dave Denton, would leave the company on Aug. 15. The market is sometimes wary of leadership changes, especially for a company that has been struggling as much as Pfizer has in recent years. It's also worth noting that the drugmaker will face even more challenges ahead. Pfizer's anticoagulant, Eliquis, one of its best-selling drugs, will lose patent exclusivity by the end of the decade. With all that going on, is it time to give up on Pfizer?

Focus on the long-term

It's a bit premature to definitively say that Pfizer's blockbuster acquisition of Seagen was a waste of money. After all, the company is already benefiting from some of the products the buyout added to its portfolio. For instance, Padcev, a medicine for bladder cancer, is currently an important growth driver for Pfizer. In the first quarter, sales from this therapy totaled $591 million, up 39% year over year. There are also other clinical trial candidates that Pfizer inherited from Seagen that could make significant headway in the next few years.

Elsewhere, Pfizer has other attractive pipeline products that may also help it rebound. The company's work in the weight-loss market finally got a boost -- also thanks to an acquisition -- after several internally developed products went nowhere. Pfizer's GLP-1, MET-097i, showed strong results in phase 2 studies and could eventually become an important medicine in this category. The drugmaker boasts other candidates in areas such as immunology, vaccines, and more.

And some of its newer approvals, such as Abrysvo, a respiratory syncytial virus vaccine, are also performing well. Lastly, Pfizer is a solid dividend stock, with a juicy forward yield of 7.3%. All these factors make the stock attractive, and the CFO change shouldn't alter its prospects much. Pfizer may not bounce back immediately, but the stock could eventually do so as it advances through clinical and regulatory milestones over the next five years. That's why its shares are still a buy.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.