Pfizer Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 1, 2023

There are 22 speakers on the call.

Operator

Good day, everyone, and welcome to Pfizer's Second Quarter 2023 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Chris Stivo, Senior Vice President and Chief Investor Relations Officer. Please go ahead, sir.

Speaker 1

Thank you, Chelsea. Good morning. Welcome to Pfizer's 2nd quarter earnings call. I'm joined today by Doctor. Albert Bourla, Our Chairman and CEO Dave Denton, our CFO Doctor.

Speaker 1

Michael Dolsten, Chief Scientific Officer and President, Pfizer Research and Development. Joining for the Q and A session, we also have Angela Huang, Chief Commercial Officer and President, Global Biopharmaceuticals Business Amir Malik, our Chief Business Innovation Officer Doctor. Chris Balschalk, our Chief Oncology Research and Development Officer and Doug Lankler, our General Counsel. Before we begin the call, I wanted to remind you of some logistical items. The materials for this call and other earnings related materials are on the Investor Relations section of visor.com.

Speaker 1

And of course, my favorite, our forward looking statements. Please see our forward looking statements disclaimer on Slide 3 Additional information regarding these statements and our non GAAP financial measures is available on our earnings release and in our SEC Forms 10 ks and 10 Q under Risk Factors and Forward Looking Information and Factors that May Affect Future Results. Forward looking statements on the call are subject Substantial risks and uncertainties speak only as of the call's original date, and we undertake no obligation to update or revise any of these statements. With that, I will turn the call over to Albert.

Speaker 2

Thank you, Chris. Hello, everyone, and thank you for joining us today. Our Q2 financial results were solid and in line with our expectations. Non COVID-nineteen revenues grew 5% operationally compared with the year ago quarter. Total revenues declined 53% operationally, primarily due to the anticipated revenue declines in both PAXCLOVID and ComerMed.

Speaker 2

Even with these declines, our COVID-nineteen portfolio remained a significant contributor to the business with more than $1,600,000,000 in combined revenues during this quarter. Of course, our patient impact data are equally important Because patients are the reason we exist. Through the 1st 6 months of the year, more than 356,000,000 patients around the world We're treated with our medicines and vaccines. We continue to make progress towards our goal of executing an That occurred prior to 2023, we had 6 approvals and 4 launches in the 1st 6 months of 2023. For the second half of twenty twenty three, we expect 6 additional approvals and 6 additional launches, including the 2 launches that occurred in July.

Speaker 2

Then in 2024, we expect one approval and 4 launches, which, if approved And recommended, we'd raise the total to 19 new launches in approximately 18 months. As you can see in this chart, For this year's launches, we expect the revenue contribution to occur largely in the second half of twenty twenty three Because the first half launches occurred late in the second quarter. And then in 2024, with the additional impact of next year's Launches were displayed an even greater total contribution for our 'nineteen launches. It is important to note that 18 Of the 'nineteen potential launches have been largely derisked from a technical perspective at this point, with the only one remaining Being our RNA through candidate. Equally encouraging is that our pipeline is It's expected to contribute generate to continue generating breakthrough treatments and vaccines long after the 19 we have been discussing.

Speaker 2

We recently reported milestones from several exciting pipeline candidates with the potential to be significant future value drivers. These include Phase III data from mastasibo and novel antibody being studied The publication in the New England Journal of Medicine of Phase II results for our vaccine candidate for maternal immunization against group B And first in human data from our pipeline of potential next generation breast cancer treatments, including our novel CDK4, CDK2 and CAT6 inhibitors. Now I would like to provide some commentary on our COVID-nineteen portfolio. As you all know, during the pandemic, Pfizer demonstrated impressively the power of our research and manufacturing capabilities by bringing to the world The first and most widely used vaccine and oral treatment for COVID-nineteen. These scientific breakthroughs These products have generated to date have enabled us to invest in acquiring Arena, Revire, Bioheaven and Global Blood Therapeutics, which together we expect to contribute approximately EUR 10,000,000,000 of revenues in year 20 3rd.

Speaker 2

In fact, the acquisitions of Biofavent and Global Brand Therapeutics are already contributing to our operational growth, While the acquisition of Arena is expected to start generating revenues towards the end of this year, we also remain Very excited about our planned acquisition of Seazen, which, if approved, is expected to contribute more than EUR 10,000,000,000 in 2,030 revenue. As a result of the positive momentum of our non COVID-nineteen revenues and more importantly, The success of our COVID-nineteen portfolio. Pfizer's overall revenues have increased exponentially compared With our 2019 revenues pro form a for the divestitures of Upjohn and our consumer business. This allowed us to increase investments in R and D and SI and A to support this new revenue base and our The increased investments we are making in R and D and SI and A this year were Based on certain revenue assumptions we made in January for both our COVID-nineteen and non COVID-nineteen products. These assumptions also were incorporated in our 2023 financial guidance.

Speaker 2

Clearly, there is higher level of uncertainty regarding the demand projections for our COVID-nineteen products than for the rest of our business. For example, in January, we set our expectation that approximately 100,000,000 doses of COVID-nineteen would be administered in the U. S. Of which we estimated Pfizer to capture 60% market share. In the 1st 6 months of 2023, 12,400,000 doses were administered in the U.

Speaker 2

S. While the 12,400,000 doses are behind our earlier projections, Our market share for COVID-nineteen is ahead of our previous expectations at 65%. However, the vast majority of respiratory And we expect COVID-nineteen vaccinations to follow this pattern going forward. The uncertainty of the exact timing commercialization was largely removed with the decision by the FDA and CDC to request a change in the composition of the vaccine to address the Omicron XUV1.5 strengths. We believe this will allow us to commercialize the vaccine in September, Assuming the updated vaccines are approved and available by the end of August, of course.

Speaker 2

In the European Union, The uncertainty regarding the vaccines revenue contributions for 'twenty three and beyond was removed When we renegotiated successfully our long term agreement. This agreement spreads the agreed volumes over 4 years. And while it puts pressure on this year's volumes, we believe it also provides longer term revenue certainty in this important market. Similar to what we are experiencing with the vaccine, the second half of the year will play a bigger role in Informing our expectations for the long term demand of PAXCLOVID, the utilization of which follows Very close with the COVID-nineteen infection rates. We expect a new COVID-nineteen wave to start in the U.

Speaker 2

S. This fall, And this expectation is supported by the increase in infection rates we are already seeing. Obviously, the Severity of disease and people's desire for treatment also will be factors as will the ongoing dialogue with the U. S. Government Regarding when we will transition to a commercial model for BRAXCLOP.

Speaker 2

These are the uncertainties. We are acutely aware that all these uncertainties are making it difficult to project the future revenues of Pfizer in this area and at large at Pfizer And also affecting our surprises result. The good news is we will have much more clarity and certainty Regarding how our COVID-nineteen products will perform in a commercial market by the time we report our 3rd quarter financial results, And we expect the uncertainties to be largely eliminated by the end of the year. This is because we expect the vaccination and treatment rates from the from the upcoming respiratory disease season to be a reliable predictor of trends in subsequent years, With some potential upside, of course, if a combination of flu and COVID-nineteen vaccine is brought to market in the future. Additionally, By that point, the timing of transitioning to full commercialization of both Comenity and Maxlovid should become clear.

Speaker 2

Despite this uncertainty, we will continue to invest in our COVID-nineteen portfolio this year in advance of the upcoming respiratory disease season. This is very important. But given the uncertainty, we are also preparing to have the ability to adjust Our 2024 total cost base to align with various future COVID-nineteen, this is With the revenue scenario. In fact, we have already identified specific areas where we can make adjustments primarily within our COVID-nineteen cost base, if demand comes in lower than expected. Dave will provide more details during his remarks.

Speaker 2

Next, I wanted to share a few quick updates of our planned acquisition of Cision, which we believe will be a major driver of our future success. Citizens' shareholders recently overwhelmingly approved the planned We have already raised most of the external financing needed to fund the transaction. We also continue to work closely with regulators, including the Federal Trade Commission the European Commission. In the meantime, our integration planning continues, which will allow us We hit the ground running following an anticipated close later in 2023 or early in 2024, subject to the satisfaction of customary closing conditions. Last week, we announced that Chris Bossorp Chris joined Pfizer's executive leadership team as Chief Oncology Research and Development Officer and Executive Vice President, reporting directly to him.

Speaker 2

In this role, Chris will lead a new end to end oncology R and D organization And with a single point of accountability for the entire oncology pipeline from discovery to early and late phase clinical development. This is similar to the structure we currently have in place for our vaccines, R and D organization, which has proven to be very productive. Pfizer and Caesar share a common vision to deliver life changing treatments for people living with cancer, which is why I'm so pleased. But after closing, Chris Oncology leadership team will include talented, purpose driven and highly productive leaders from both companies. And we made already a numbers about the people that are joining Chris' leadership team.

Speaker 2

We believe this new structure will help further accelerate the delivery of cancer therapies, which is critical Because in the battle against cancer, time is light. As Pfizer's one of Core business principles is the belief that trust is everything. I'm proud to share that in recent months, We have received some wonderful accolades that speak to the trust we are building with external stakeholders. We were named 1 of the 23, 24 Best Companies to Work For by U. S.

Speaker 2

News and World Report. We were listed in Newsweek's list of America's greatest workplaces 2023. For the 3rd year in a row, Pfizer has earned a top 100 score in the 2023 disability equity index, And our own Ray D. Johnson received a disability in 23 Executive Sponsor of the Year award at the National Conference And lastly, our PGSI in ASCO Italy is being recognized by the United Nations for the welcome award working for refugee These recognitions are very important because they strengthen the comment on the situation at our facility in Rocky Mount, North Carolina. First, all of us at Pfizer were relieved But no colleagues were seriously injured when the tornado struck.

Speaker 2

That said, our facility sustained substantial damage As did the neighborhoods where many of our colleagues live, unfortunately. The local leadership team has done an incredible job And we are proceeding with both urgency and caution to determine the best way to get the site back Online as quickly as possible so as to minimize any impact on patients. Of course, we are also Taking steps to ensure the continued safety of our colleagues and contractors, which remains our top priority. And with that, I will now turn it over to Dave. And after Dave, Michael will provide an update on our R and D pipeline.

Speaker 3

Dave? Thank you, Albert, and good morning to everyone. Over the past 24 months, Pfizer has made important investments to position it squarely on track to achieve profitable And sustainable growth, particularly in the back half of this decade. We have strategically invested to expand our commercial portfolio and our late stage pipeline, To further support our long term growth objectives, we are executing the capital allocation strategy designed to effectively deploy our cash. Our strategy is focused on 3 main pillars.

Speaker 3

1st is reinvesting in our business. 2nd is growing our dividends over time. And finally, making value enhancing share repurchases. In the first half of twenty twenty three alone, we've invested $5,200,000,000 in internal R and D returned $4,600,000,000 to shareholders via our quarterly dividend and allocated approximately $43,000,000,000 towards the proposed During the Q2, Pfizer successfully completed a $31,000,000,000 unsecured debt offering The net proceeds of this debt offering will be used to substantially fund the CGen acquisition. The new debt carries a weighted average yield of 4.93 percent and a weighted average maturity of 16.3 years, consistent with our On a full year run rate basis, the annual financing costs associated with the acquisition is expected to be nearly $2,000,000,000 With the completion now of this debt offering, the company is positioned to close the Seagen acquisition immediately upon post regulatory approvals.

Speaker 3

While we plan to continue investing in our business, we expect to delever our capital structure following the closing of Seagen transaction. As we delever, it is our expectation to return to a more balanced capital allocation strategy, inclusive of share Now with that, let me briefly cover a few highlights of our quarterly financial performance. As Albert said, our Q2 results were solid and in line with our from both the top and a bottom line perspective, albeit slightly better than EPS consensus. As expected in our guidance, our overall Q2 revenues declined 53% operationally. The contraction in revenue was driven by the anticipated decline in both PAXLOVID and Comerity sales.

Speaker 3

We expect these products to transition to a commercial market in the Our operational revenue growth excluding our COVID products was in line with expectations at 5% versus Q2 of LY With strong contributions from the inclusion of both Nurtec and Arxpridep as well as the continued growth from the Findacal During Q2, adjusted SIA expenses were $3,400,000,000 and grew 20% operationally versus LY. We continue to invest in support of our upcoming launches and grow our recently acquired products. While it's Clear that these near term investments are dampening our current profitability levels, we are laser focused on maximizing the longer term performance of these products. Now moving to the bottom line, reported diluted earnings per share this quarter declined by 77% to $0.41 While adjusted diluted earnings per share of $0.67 declined 65% on an operational basis. Earnings compressed at a greater rate than revenues, primarily due to the steep and anticipated contraction in Paxlovid sales during the quarter.

Speaker 3

Once again, foreign exchange movements continue to unfavorably impact our results, reducing share by $0.05 or 2% compared to last year. Now that we are at the halfway point of our 2023 financial plan, I'd like to take a moment to reflect on how we are executing across our business, while navigating within an incredibly unique and dynamic environment. As a management team, we remain committed to transparency ensuring our assessment of the evolving marketplace given the magnitude of launches, The ongoing shifting nature of the COVID landscape and the continued integration of acquired assets. Let me begin by elaborating $67,000,000,000 $70,000,000,000 and maintaining guidance for adjusted diluted earnings per share of $3.25 to $3.45 for the full year. For our more durable and predictable non COVID revenues, remains materially unchanged.

Speaker 3

As a company, we always strive to achieve the highest revenue level possible while maintaining A realistic view of the key inputs that inform our outlook. Regarding RSV for older adults, the shared decision making recommendation by ACIP is likely to slow its near term uptake in the U. S. In addition, the recent approval of Talzenia In the U. S.

Speaker 3

Results in a more narrow patient population than originally planned. These factors coupled with the impact of the damaged Rocky Mount Manufacturing facility presents near term revenue challenges. However, we expect positive revenue momentum as we Exit 2023 and head into 2024. And importantly, the long term outlook for our non COVID business remains intact relative to our 2,030 ambitions. Turning now to our less predictable and more variable COVID portfolio.

Speaker 3

Year to date, we have booked slightly over 40% of the $21,500,000,000 full year revenue forecast for both Comirnaty and Paxlovid, With the important fall vaccination and respiratory infection season ahead of us, we are acutely aware that COVID demand depends on many evolving market variables, making the range of potential revenue outcomes increasingly large and difficult to predict These variables include the overall level of vaccination and infection rates, the speed of drawdown of government inventory levels and the mutating nature of the virus itself, just to name a few. In the interest of public health and with the important fall season ahead of us, We are maintaining our COVID revenue outlook for the year, while continuing to invest largely on a variable expense basis Our COVID products in 2023. These variable investments are important to support our efforts to reach as many patients as possible, helping to ensure that the most at risk individuals are both vaccinated and treated while maintaining our leading market share. We are proud of what we have achieved through the COVID portfolio and this has allowed the company to invest in support of its growth agenda for the back half of this decade.

Speaker 3

Our visibility into future COVID revenues and demands should improve throughout the remainder of 2023 as we gain clarity on a more typical annual run rate. We are well aware that our 2023 profit Fall's performance of our COVID-nineteen products to help us more effectively forecast future sales performance. To that end, if our COVID-nineteen revenues are less than what we have assumed, we are prepared to launch an enterprise wide cost improvement program with aligned with the longer term revenue projections for our business. This program will be designed to support our objective of growing Our operating profit margin and we expect to begin to yield results in 2024. And we look forward to sharing the specific details of this program In closing, this is an extraordinary time for Pfizer.

Speaker 3

Our confidence and our commitment to our strategy and to achieving our

Speaker 4

2,030 goals is unwavering. We will

Speaker 3

continue to focus our efforts And with that, let me now turn it over to Michael.

Speaker 5

Thank you, Dave. Today, I will provide updates from a few different therapeutic The focus areas, starting with breast cancer. We are working to deliver the next wave of innovative therapies for SQN Receptor Positive Breast The pillars of this strategy are threefold: establishing our investigational CDK4 inhibitor As a next generation cell cycle therapy backbone, establishing bevdecastrant As a next generation endocrine therapy backbone and establishing novel mechanisms like our investigational CDK2 inhibitor and Our clinical strategy entails, 1st, developing assets for the metastatic setting in which Ibrance This is currently the leader in unmet need of time, followed by an opportunity to expand to earlier stage breast cancer, including the CDK4six naive population and adjuvant or new adjuvant settings. Data presented at ASCO from 3 key investigational medicines from our NextGen portfolio demonstrated antitumor activity In heavily pretreated populations of patients with breast cancer, as a reminder, the majority of hormone receptor positive breast cancers express low CDK While CDK4 is likely to be a major sales cycle driver, we have seen that CDK4six inhibition can lead to neutropenia, which requires more frequent blood test monitoring, mostly driven by CDK6 inhibition. Across the CDK4six inhibitor class, Approximately 30% to 60% of patients experienced severe neutropenia.

Speaker 5

On the left, In our Phase I dose escalation study in patients with hormone receptor positive HER2 negative breast cancer, all Of whom had previously received a CDK4six inhibitor, treatment with our CDK4 inhibitor in combination with endocrine resulted in a confirmed objective response rate of 29%, clinical benefit response rate of 52% And median progression free survival of nearly 25 weeks. The combination was well tolerated, which may enable maximal CDK We are actively planning a Phase III randomized study. In addition, I'd like to highlight encouraging data from the Phase This escalation study of our novel CDK2 inhibitor, which showed monotherapy activity, including confirmed partial responses in breast cancer patients who had previously received a CK4six inhibitor. Also durable Clinative responses were observed in a Phase I trial of our novel CAT6 inhibitor as a monotherapy and in combination with endocrine therapy In heavily pretreated patients with breast cancer. Turning now to blood cancers.

Speaker 5

Elrexvio, also known as elvinatamab, Subject to regulatory approval is expected to be the anchor of an anticipated multibillion dollar franchise, A FDA decision for the potential first indication in the triple class relapsed or refractory multiple myeloma population It's expected this year, and we continue to advance the Magneti's clinical programs to expand into earlier lines of treatment. In addition, development of makluparcept, also known as TTi-six twenty two, is underway, including in combination with Lrexview to support potential indications in myeloma and acute myeloid leukemia. Here we show elrexview data presented at EHA from the Menelisys M3 trial In patients with triple class refractory multiple myeloma, we have no prior exposure to BCMA direct therapy. On the left, we observed ILE meaningful survival with LREXIO monotherapy with a 50 months of growth survival of 57 patients. In patients who achieved a complete response, 15 months survival was remarkably 93%, Underscoring the potential for deep and durable responses, we can see evidence of broad activity in multiple myeloma on the right With a graph showing a single agent complete response rate of 35%, which rises to 46% in a subset of patients with 2 to 3 pyrolysis therapy.

Speaker 5

Our ongoing randomized trials are in less pretreated to newly diagnosed populations. Subject to approval, elrexu may have key differentiators such as 50% lower hospitalization time June, the step up dosing protocol and an extended dosing interval that moves from once weekly to once every other week Dosing beyond week 24. Turning now to hemophilia A and B, the pivotal trial of maztasumab met its primary endpoint With statistically significant and clinically meaningful effect on annualized bleeding rate or ABR, there was a 35 percent reduction in ABR compared to pro selected factory replacement and 92% reduction in ABR If approved, it has the potential to be the first once weekly subcutemophilia B treatment for patients without inhibitors and the first hemophilia A or B treatment administered in a patient friendly pen as a flat dose. Regulatory submission is expected in the second half of twenty twenty three. Next, LITFULO, also known as viprasitinab, It's the 1st medicine to receive FDA approval to treat severe alopecia areata in both adults and adolescents 12 years and older.

Speaker 5

It also recently received a positive opinion from the European Medicines Agency's CHMP recommending body, But it's not yet proved. It has the potential to redefine the standard of care for alopecia areata. LIFULO is the first of its kind of kinase inhibitor with a unique mechanism that inhibits both the kinase family And trends in the X3 pathways that have been implicated in the analgesia areata pathophysiology. In addition, we're exploring how Unique mechanism inspection could potentially be applied across immune disorders, including vitiligo in which a Phase III study is ongoing and other potential indications. Finally, we're making excellent progress on the milestones we had set out through the first half of 'twenty four.

Speaker 5

As Albert noted, we recently received FDA approval for Prevnar20 in the pediatric population. We have robust strategies in place to potentially improve the protection provided by current pneumococcal vaccines. I look forward to sharing more about this in the coming quarters. In addition, we recently published Phase 2 data in New England Journal of Medicine Showing our Group B streptococcus maternal vaccine candidate was generally well tolerated and generated robust antibody levels. The journal also published a natural history study, which was used to determine protective antibody levels at birth.

Speaker 5

These two studies indicated that the vaccine candidate may offer meaningful protection to infants born to immunized mothers. We were highly encouraged that Doctor. Carol Baker, an infectious disease expert from the University of Texas Health Science Center, Ruth's independent New England editorial highlighted the important future prospects of our GVX The progress of the GBS vaccine candidate dovetails nicely with the positive results and anticipated upcoming regulatory decisions for our RSV vaccine abrisfu for administration to pregnant women. ABRISW recently received a positive opinion from European Medicines Agency, CHMP, for both older adults and maternal In addition, we remain excited to see the Phase II data from Danagliopro by end of 'twenty three, which we expect will enable us to finalize our Phase III plans. Finally, I'll pull out the Phase III Thank you.

Speaker 5

Let me turn it over to Chris to start the Q and A session.

Speaker 1

Thank you, Michael. Kelsey, if you could please queue up the callers. We have at least 30 minutes for our Q and A session now.

Operator

Yes, sir. Our first question will come from Robyn Karnauskas with Truist Securities. Your line is open.

Speaker 6

Hi, good morning. This is Nicole on for Bob. Just a quick question for us. On RSV, Can you share what you expect the share decision making to slow the uptake in U. S.

Speaker 6

Would be and What we want to know if they can elaborate if you guys can elaborate on why you think this is the case and if peak annual sales is lower than previously expected? And how do you think ex U. S. Sales might be impacted, if at all, given the E SIP decision?

Speaker 2

Maybe, Anders, I can answer, but the question was, do you expect the share decision to have a big impact On RSV and also do we expect in the U. S. And also do we expect any impact in the U. S.

Speaker 6

Sure. So first

Speaker 7

of all, we're really excited about the approval for our RSV older adult vaccine. And the way I would see the shared clinical decision making It's just that it is a step towards the full routine recommendation that we So I think that there is the way to look at it is that it's a short term effect. We do expect that with more data that We'll be emerging out of our clinical program that we'll have an additional opportunity to go back to the ACIP and actually get the routine So over the next year or so as we collect and finalize our data that is really the anticipation of it. So it doesn't change The full opportunity for this particular vaccine doesn't change the peak. It just means that it takes us a little bit longer to get to Because of the shared clinical decision making that work that extra step that we have to take right now.

Speaker 2

And what about ex U. S?

Speaker 7

Ex U. S, actually, we had a different filing. We were able to get both maternal and older adult So I think you see slightly different dynamics there in that here in the U. S, our maternal vaccine will be launching later, But in ex U. S.

Speaker 7

And in Europe, they'll be launching at the same time. And those vaccine technical committees have not Opined yet on those recommendations, in particular in terms of the utilization, and so we'll await that. But I think what you have that's different and that's really a great upside is the fact that we have both indications at once.

Speaker 2

Thank you very much, Angela. I hope we gave you what you asked, Robin. Operator, the next

Operator

Next, we have Umer Raffat with Evercore. Your line is open.

Speaker 8

Hi, guys. Thanks for taking my question. I know I heard 2 different things on the cost cut just now. One was that it would be enterprise wide, while Albert, I think you used the word within the COVID cost So I was just trying to reconcile the 2. And also on Danugliferon, is it reasonable to expect that if it's below mid teens weight loss, you wouldn't move forward?

Speaker 8

Thank you very much.

Speaker 2

Let me clarify. Of course, we'll be enterprise wide, but what I said it is that the COVID part is going to be the biggest part. Right now, you need to know that R and D and S and A cost of COVID is billions. It's not a small amount. So there's a lot over there.

Speaker 2

Michael, Can you speak a little bit about the prospects to move ahead, Danum?

Speaker 5

Well, we really look forward to get the data. And As you know, we have in parallel developed activities also for modified release. I think we really need to look at The totality of data, its performance on important metabolic parameters in diabetes, its ability to deliver weight loss, as you alluded to, and also, of course, its tolerability in general. These three implicate how well the drug can perform. And I remain optimistic that oral drugs in this class can have a profound effect On weight loss, of course, one needs to be maybe a little bit caution to drive weight loss too far as you have seen Also some concerns in public media about side effects that may arise from that.

Speaker 5

So we will really integrate all of that data

Operator

Our next question will come from Evan Seigerman with BMO. Your line is open.

Speaker 9

Hi all. Thank you for taking my questions. And kind of a follow-up from Umer is I want to focus on the GLP-one franchise. Can you talk about the competitive profile of Danubecliffon in its current form considering safety, twice daily dosing and efficacy? And maybe remind us on the timelines to potentially get more on a once daily formulation of this asset.

Speaker 9

Thank you.

Speaker 5

Michael? Yes. As I said in my prepared remarks, we expect data at the later part of this year. We are absolutely encouraged and confident that it has a different profile when it comes to Adverse event as the rivolotigly from that we stopped. So we don't see that as an issue.

Speaker 5

And I have spoke to that we will put together the totality of data to pending readout prepare A potential Phase III program. And it's a very big sector, diabetes and obesity. We have considerable expertise in treating cardiometabolic patients. So really look forward to sharing more Same time, more plans with you as we move to further quarter. Thank you for your great interest in this important space.

Speaker 2

Thank you very much, Michael. Maybe we'll move to the next question, please.

Operator

Next, we have Terence Flynn with Morgan Stanley. Your line is open.

Speaker 10

Great. Thanks so much for taking the questions. Maybe 2 for me. Dave, I was just wondering how we should think about Steady state operating margin here. Looking back pre COVID, the company was around mid to high 30% range.

Speaker 10

So Is that how we should think about this, when you gave us some of the parameters, but just maybe how to think about steady state? And then on the messenger A Phase 3 seasonal flu vaccine program, it looks like that trial was upsized based on clinicaltrials.gov. So just wondering, Michael, if you can talk through timing of data and help frame expectations there. Thank you.

Speaker 2

Thank you, Darrin. Let's start with Dave.

Speaker 3

Yes. So, great question. As we think about our operating margin long term, clearly, our objective is to expand that over time. Clearly, it is our expectation To get back to at a minimum pre COVID levels with one caveat is that we as we go forward, we do have A different mix of products within our portfolio, particularly the vaccine related to COVID. As you know, the vaccine, given the Cost share that we have or profit share that we have with our partner does dilute that product from an operating margin perspective.

Speaker 3

So a mix adjusted, you See us back to those levels over time. But obviously, as we cycle into 'twenty four, we'll give you a lot more clarity on all the puts and takes as we integrate CGen, As we roll forward from a COVID franchise perspective, how that looks and as well as all the developments that we have coming out of the pipeline

Speaker 2

Thank you, David. Michael, mRNA should look.

Speaker 5

Yes. First, the totality of experience we have With mRNA for flu makes me very encouraged that this will be a new modality as it was For COVID, but now for flu that engages 2 mechanisms, the T cells and the T cell that we should aspire for Having better efficacy than what we have seen with our old flu. We are continuing with the study because we just wanted to have more events And particularly have additional fluvie type of events, which were scarce in the You as part of the trial. And we look forward to update you, hopefully, be able to conclude the study later this year, but we're also putting mitigations Adding immunoicity studies that can be supplementary for getting a total good data package of activity against Flu A and Flu B. But as I said, I remain very optimistic that the M and A is going to be the next important

Operator

Next, we have Chris Shibutani with Goldman Sachs. Your line is open.

Speaker 11

Thank you. Two questions, if I may. On the potential enterprise wide cost program, you would have some opportunity outside of the COVID programs To consider, can you help us with the relative weighting potentially of R and D versus SG and A or some other component of that? And I ask that in part because you've announced some changes, for instance, in kind of the structure at the top tier amendment of the R and D with the anticipation of the And then secondly, if I could, on the Lockheed Martin facility, it's reassuring to hear in terms of your own staff. But I think Folks are looking to get a sense for the scale of the damage and perhaps what potential gating factors for getting more information on timing.

Speaker 11

I know that you guys have Communicated with some of your hospital based customers, but any additional insights in terms of magnitude of impact And timing of the recovery and what that could look like from a progress standpoint would be helpful. Thank you.

Speaker 2

Let me say a few words about the Rocky Mountain and I will ask David to answer the question about the cost adjustment Program in case we have a significant reduction on our revenues because of the COVID. The Rocky Mount, it was severe the damage The hurricane, but the damage was mainly concentrated on the warehouse, which means that we lost a lot of inventory that was About to be sent to the market. The facilities per se, the production facilities were not impacted by the hurricane. So The buildings are standing there. However, because the utilities were discontinued, the facilities had to stop operating.

Speaker 2

And in this Highly sensitive sterile environment, when you are losing power, it's not easy to switch on and switch So it takes time and a lot of processes so that you can start it. And the additional challenge will be some of the inventories of materials But we're also destroyed, particularly glass and other stuff that we need to make sure that we'll replace in time. So what I want to say is that we feel very confident that the whole thing will go back To live, but still we are assessing how long that will take, and we are doing everything we can to make sure that we'll Minimize the shortages in the marketplace because of that. Now let's move to some more A color on the cost adjustment probably.

Speaker 3

Yes. So thank you for the question. Clearly, as we develop this program in the back We look forward to sharing a lot more details as we cycle into 'twenty four and give you a lot of, I'll say, milestones as you think about both our Cost and investment structure going forward. Importantly, as you know, we're extremely excited about the Seaton acquisition that's upcoming here. Upon approval, this will allow the company to refocus its efforts and investments to make sure that we're squarely focused on battling Cancer going forward and we think there's a big opportunity as we align our resources against that franchise in that battle to fight cancer and An opportunity long term for Pfizer.

Speaker 3

Having said that, we will be informed in the back half of the year of our revenue performance specifically as

Speaker 2

it relates to COVID. That will inform

Speaker 3

us the level of That will inform us the level of opportunity we have to expand our margins into 'twenty four and 'twenty five and beyond. That will allow us to step back and make sure that all of our costs and all our investments are aligned with those Cgen objectives as well as aligned to maximizing the performance of our in line portfolio as well as the launches that are occurring as we speak in the back half This year. So again, we look forward to sharing a lot more to this from this. This will be balanced as you well know between SI and A and R and D

Operator

Next, we have Louise Chen with Cantor. Your line is open.

Speaker 6

Hi, thanks for taking my questions here. Wanted to ask you first on these COVID scenarios that you think could unfold in the second half twenty twenty three, any way you could share some of the big ones that you anticipate could potentially happen? And then secondly, seeing a lot of headlines in the ATTR CIM space and just curious if you anticipate any potential

Speaker 2

So on the COVID, I would say a few words and then I will ask Angela to comment on both. Look, the COVID scenario depends what are the uncertainties. I think I articulated, let's start with the vaccine. The biggest uncertainty is vaccination rates. I think market share is pretty much, I think, Well established vaccination rates is what we're going to see in the fall that is coming.

Speaker 2

So that will be a big uncertainty. Another uncertainty was The time of commercialization of the year is because, of course, you go with new inventories, new sales to the market and with higher prices. That has been resolved. We know that it's very likely that we will launch in September because FDA and CDC, they asked us to change The inventories basically by creating a new vaccine. So that will happen.

Speaker 2

And also, the other uncertainty that existed about The COVID vaccine was the European contract. That was a very long contract, very big contract. And now we have a certainty that has been negotiated, a little bit less For the year, because it's spread over 4 years, but let's say, renegotiated. So all of that are the key assumptions. Of course, there is how much Japan, Latin America and other Countries, we're not the only ones, but let's say those are the fundamentals.

Speaker 2

And we will know pretty much the trend in the Q3, And we will know pretty much quite accurate what is the situation in the end of the year. That I think It will be a very predictor of what we should expect going forward with the only upside if we have a combined vaccine with flu Or with RSV, but that will increase the vaccination rates. On paxlovid, a little bit more uncertainty because,

Speaker 12

Of course,

Speaker 2

we are having the uncertainty of treatment rates and infection rates, And we don't know how that will behave. We don't have any benchmarks to see how that goes. We know that the treatment rates are falling very closely, the infection rates, And the infection rates are rising right now, but remains to be seen how that will go. Of course, also the same to fluctuate arising as we see the market, the scripts on a weekly basis As always do when the infection rates are going up. But we have some more uncertainties over there, which is the timing of loans, which will depend on how we will agree for the interest of public health to transition these loans with the U.

Speaker 2

S. Government. So all of that remains to be seen and these are the scenarios that we see for COVID and the key message it is, the uncertainty We will know what COVID will contribute on a stable basis in Pfizer's revenue and we will go from there. Now Angela, Maybe if you want anything related to that and also about the next question, the other question.

Speaker 7

Louise, I think when you talk about VINDAMAKS or VINDICAL, The biggest and our biggest differentiator that we're extremely confident about is just the totality of our data, really along four dimensions And whether that's clinical data or real world data, we have all cause mortality and CV related hospitalization data. Our data are also relevant in both hereditary and wild type ATTR Centimeters, so that's unique. We've also demonstrated significant survival benefit 5 years for our real world data. So whichever way you look at it, and if you compare that with any competitor program, I

Speaker 2

Thank you, Angela. May we have the next question please?

Operator

Next, we have Mohit Bansal with Wells Fargo. Your line is open.

Speaker 13

Great. Thank you very much. And maybe a follow-up to this one a little bit. So thank you for all the transparency by the way. So is it fair to say that, I mean, COVID trends that you have seen so far, at least sales trend that have been below your expectations And you want to see one more quarter before you adjust the expectations?

Speaker 13

I'm asking this because if I look at the it seems like You still expect 88,000,000 or so vaccinations in the second half of the year in the U. S. And the number was actually By our calculation, dollars 44,000,000 or so in terms of administration, dollars 111,000,000 in terms of shipment. So just trying to understand, is it like Is it something where we could get better update in the Q3 on the COVID numbers? Thank you.

Speaker 2

Yes, I think thank you for the question. I think the answer is yes, we should get way better feeling. It's not that we just want to see another quarter. We want to see the big quarter of today's respiratory season. COVID, we always said, and everybody, I think, thinks that, that is a common sense, That will follow going forward, the seasonality of the other respiratory vaccines.

Speaker 2

That's becoming more and more and more clear, right? And The majority of these vaccinations are happening in the 3rd Q4 for the year. So it's not that we are just another quarter. We are awaiting the main quarter. If COVID vaccinations go anywhere close to the flu vaccination rate, then we have a very big beat of what we expect to If they are a small fraction of what will happen for flu, then of course, we'll have a mix.

Speaker 2

So that's why we are going To see how that will evolve. So it's a very, very important quarter. The rest, although for The first half of the year, we had quite significant contribution towards the total gold. So we don't need Not much of inventory if we have the utilization over there to make sure that we know how big the Corvid franchise will become. And as I said, in the EU, we have adjusted very well.

Speaker 2

We have high certainty. Paxlovidos, China is a very, very good market. We don't know how in the next wave, the Paxlovid will be used. We have the rest of the world, but the inventories, they were also last year. So we are now expecting that products will start being going either expiring or Product will start more reordering from many more countries.

Speaker 2

So that's why the infection rates on the back of it will be extremely And all of that are happening now. So once we know then, we can predict way more

Operator

Next, we have Trung Nguyen with Credit Suisse. Your line is open.

Speaker 14

Hi, guys. Thanks for taking my question. You commented the long The outlook for your non COVID business remains intact relative to the 2,030 ambitions. How are you thinking about the midterm 2025 guide? Because if you assume the midpoint of your ex COVID-twenty three guidance 7% in order to achieve the 6 2020 to 2025 guidance ex COVID.

Speaker 14

On our calculations, you need to do high single digit growth That base business for 2024 and 2025, that looks tough, especially as you'll have more LOEs. So do you remain confident in that midterm guide?

Speaker 2

Yes. Thank you. The LOEs are coming basically from year 'twenty six, right? So all the way to 'twenty five, I think the impact will not be that high. Also, the guidance that we gave was at 6%.

Speaker 2

And I'm guessing we're still quite confident that we will be there. So we'll continue, and we are at 6% right All these years, right, year to date. So yes, the non COVID business, I think, clearly, the success of the launches is very important. So we'll see a lot of things coming ahead of us, but it is way better predictable. And I think we are there, so I don't think there will be Thank you for the question, by the way.

Speaker 2

Let's go to the next question, please.

Operator

Next, we have Colin Bristow with UBS. Your line is open.

Speaker 15

Hey, good morning and thanks for taking the questions. Another follow-up from Daniel

Speaker 10

I don't know

Speaker 15

if I had the answer in terms of when we'll hear about the once daily formulation. And I'd just like to understand your level of confidence here that you can make this a once daily formulation without negatively impacting the AE profile, Presumably given an increase in Cmax. And then more broadly, can you just talk more about how you're going to compete here given I think as previously referenced, you're behind the competition, the clinical differentiation, the Potentially less convenient dosing and essentially a therapeutic category in which you don't have a major presence. And then just maybe one other quick one on a pipeline item on BMD gene therapy. This is a late stage asset that doesn't seem to get much airtime.

Speaker 15

Is your enthusiasm waning on Program or is it just the others are sort of a bigger priority? Thanks.

Speaker 2

Yes. Thank you. So, Mike, again, Clearly, the obesity market and the size of it is creating a lot of interest in tanegliplirone. And so the question was about the one day formulation. And then also tell us a little bit, Brett, where we are with DMD?

Speaker 5

I hear your interest in our once daily Product and I would say I don't see any technical barrier for us in creating that. We have Tremendous experience in modified release formulations. And our early data, as we now have initiated a while ago, It tells us we should be encouraged that when it relates to once a day modified release for dalaglifron, I believe We will have such a formulation in a reasonable future in our hand. When could it come

Speaker 2

to the

Speaker 5

market if the drug Continues and makes a great Phase III. Well, I think we can have it at launch or shortly after launch. So I wouldn't worry about that, but I agree with you that once daily modified release can sometimes actually improve The tolerability profile by smoothen the variability in exposure, which typically Reduced GI side effects that have been seen as limiting with this drug. So that's why I can see a potential Twofold advantage of MR goes from twice a day to once a day and may also help uniquely to create A full ability profile within these drugs or a glimpse. D and D gene therapy, I'm encouraged that the FDA Took a very positive angle on that drug when it comes to its urgency to get into the market.

Speaker 5

Chris, you and I have worked very closely on that, and we expect to be able Relatively soon to conclude the trial. I'll also ask Chris to pitch in on it.

Speaker 12

Thank you, Michael. So the DMD program is obviously very important Not just for the importance of gene therapy, but for patients and families with this absolutely devastating disease. We do have an interim analysis later this year for the CIPIO trial. The CIPIO trial, all patients have now been enrolled in the study. The interim analysis will be based not on a surrogate biomarker endpoint, but on truly functional endpoints.

Speaker 12

So we believe that's the best Way to measure the benefit of gene therapy in this disease is with a functional endpoint, and that should come later this year, and we'll update you with the final analysis for

Speaker 5

the study That was terrific. I just wanted to add that we have, like you heard, Sarepta, ample Biomarket Day that look very robust in our hand, but as Chris said, we want to provide patients with even more experience about Potential, very good. Thank you both.

Speaker 2

May I have the next question, please?

Operator

Next, we have Carey Holford with Berenberg. Your line is open.

Speaker 4

Thank you. A couple of questions. It's Clear that demand for your COVID assets will influence whether or not you go down this route. But given the potential you've highlighted previously for a I'm interested to understand whether the upcoming Phase III data And your mRNA flu vaccine trial will influence your decisions on that cost saving program in any way? And then secondly, on hemophilia, your anti TSPI, you're filing second half of the year for noninhibitor Should we assume you would seek to launch in that patient group only next year?

Speaker 4

Or would you wait for the data in the inhibitor Great. Before you proceed, I'll get and perhaps you can just discuss here how big an opportunity you see in that drug. Thank you.

Speaker 2

Let me start with the COVID and then Michael also can comment. But look at that, for example, we are very excited about the combination, Right. But and the combinations will be flu and COVID and then hopefully also flu COVID and RSV. And we are working on that. And We believe actually that the fact that if we have a combination with the non mRNA included over there, we'll have likely That we expect to have the benefit of better safety profile because you don't have to load 3 products RNA Into a single injection, but we will be using only 2 COVID and flu and then we'll use protein based vaccine, which is very denial All of that are working very well.

Speaker 2

Now the question is, what will happen if the COVID market is seen To be very as monovalent is very, very low. I think that will break your role in our decision about controlling the Because if it is very, very low, although we expect an upside in the combination, we will assume At this stage, the medical need for COVID is not that high. And as a result, we will reduce our investments in the area and also Our expectations for sales. And then the combinations come and we are way more successful, that's a beautiful story. You want to also what's the second question?

Speaker 2

Yes, about the mastasumab. Michael?

Speaker 5

I'm very excited about mastasumab. I've followed this project for a long time. And as you know, we reported out very encouraging data. We had 92% reduction in annual bleeding rate versus on demand. We had really no safety events As had been associated with other products, including HENLIBRA, it's active against both team A and B.

Speaker 5

It's administrated with a pre full pen. I think it can be, from a medical point of view, a very large product, A single option for hemophilia A and B. Of course, when I think about how AMLIVRA has It's such a promise for EMA patients and I see this profile that looks so good. I'm optimistic that it can do well in both segments.

Speaker 2

Thank you very much. Let's move to the next question, please. And we are a little bit the time is flying, so a lot of interest. So let's try to be more one question, please, each one.

Operator

Our next question will come from Geoff Meacham with Bank of America. Your line is open.

Speaker 9

Morning, guys. Thanks so much for the question. Just had 2 real quick ones. Angela, on Trebnar, what does long term growth look like? Clearly, You may have a tougher competitive environment.

Speaker 9

Just if you lose share, what do you think the TAM growth could look like to offset that? And then Michael, you talked a little bit about next gen CDKs. I know it's super early in development, but is there a Risk benefit hurdle you have in mind, I'm just thinking about cost benefit post the Ibrance LOE and also considering the competitive landscape.

Speaker 2

So Angela, how concerned you are with the competitive environment? I know we respect all competitors, but we have some realities that maybe you want to discuss. And also I will ask you actually pretty possible to answer the question of CDK4 since we have him here in his new capacity. Angela?

Speaker 7

Well, I mean, I want to begin by just saying how incredibly proud we are of the performance of the entire Prevnar franchise. If you look at The adult indication, we have grown not only have we grown 23% since last year this time, we are doing all of this growth So the fact that we've been able to bring these vaccinations forward tell us a lot About the work that we've done in pneumococcal disease, how well appreciated it is, but also how well our machinery is working, not to mention the fact that we have 96% Care of the adult indication. In Peds also, of course, being that we went from being 100% of the market, Today, we share some of that market share with PCV15. But I just want to remind everyone that that is to be expected And we are exactly where we thought we would be. And so from that perspective, we're also really proud of How Prevnar 13 has competed with Prevnar PCB15.

Speaker 7

I think the important thing here to realize Given the ACIP recommendation that we just got for Prevnar Peds, what we are beginning to see now is a sort of reversal Of that decline and the reclaiming of market share. And so we have the fact that we've seen some accounts Purchasing PCV20 pees now. We've seen some accounts switching from PCV15 to our own Prevnar20. The fact that our federal contracts had added Prevnar20 to their register, which means that public vaccinations can begin. And then maybe the one thing I will mention about Prevnar piece, which is unique compared to any other pneumococcal vaccine, which is that We were given the recommendation to vaccinate kids 2 to 18 Immunocompromised.

Speaker 7

So that is a whole new population that we've never had before. So when you kind of bring all of this together and you factor that This quarter alone, Prevnar franchise generated $1,300,000,000 in revenue just this 1 quarter. I think that order of magnitude gives you a sense of the scale and the competitiveness of our portfolio, and we're really excited about what Prevnar can do over the next

Speaker 2

And that is under the competition of ECB15, which I think was around €150,000,000 if I'm not mistaken. Chris, can you please speak about the CDK4 and different size in general over there? Yes.

Speaker 12

Thank you for the question. So as you know, ER positive breast It's the most common cancer globally for women, and we're very proud that we can build on our leadership in cell cycle inhibition with Ibrance. With 3 1st in class potential assets, CDK4 specific inhibitor, CDK2 specific inhibitor and a CAT specific inhibitor, all three with significant potential to transform treatment in the future for ER positive breast cancer. For CDK4, we have seen more complete and continuous CDK4 target coverage and potentially improved tolerability due to And as Michael has pointed out, CDK6 leads to the hematological vulnerability. We know that epithelial cells specifically Highly expressed CDK4 and that's why it's so important to specifically target CDK4.

Speaker 12

And what we've seen, as Michael pointed out, is a grade 3 of 15% with our CDK4 inhibitor and that's versus 60% as expected with other CDK4 Inhibitors. We've also not noted any Grade 3 diarrhea. And again, that's very different from what you know from some of the other CDK So silicate 4six, where we've recently shown 30% overall response rate in a heavy treated population, And we're also starting combinations with CDK4 plus CDK2 as well as CDK4 with our potential next generation backbone ARV-four seventy one or vevedigastran, which we are codeveloping with Arbenas.

Speaker 2

Thank you very much. Let's get the next question, please.

Operator

Right. Next, we have Tim Anderson with Wolfe Research. Your line is open.

Speaker 16

Thank you. If I could go back to the COVID guidance, investors have been cautious not only on the level of your prior Guidance for 2023, but also the shape of the future revenue curves beyond 2023. So my question is on the latter, The shape of the future curve, are you confident still in saying that 2023 should be the trough and then you'll rebound To some higher level of sales in 2024 and beyond and see kind of continued growth from that point forward? Or is that I'm now more uncertain too. Thank you.

Speaker 2

Yes. Thank you. Yes, I think that this year's utilization at The marketplace will form the basis that we can predict reliably for the next years. I don't think we'll be any much Because there will be no different categories in the marketplace. Vaccination rates will settle and then the treatment and infection rates also will be After a new year indicative of what we should expect periodically.

Speaker 2

Clearly, we will have There were some inventories movements, and this year was a transitioning year because we are going to give prices and we are going to absorption of inventories, etcetera, so far, Should be for the accurate number for 'twenty four and beyond, but should be the base. And like this should be higher than what we should see This year, but that provided that we have reasonable vaccination and treatment rates of Opaxlovid. So that's why I say that Let's wait to see what would be the actual in this year. And clearly, what would be the utilization, as I said, because next year, all these inventories and price adjustment

Operator

Our next question will come from Carter Gould with Barclays. Your line is open.

Speaker 17

Good morning and thanks for Plenty of great questions asked this morning. I guess I wanted didn't get addressed is, you out licensed your TL1A late last year, your partner Then turns around and sells it for quite substantially more. I guess so to be a bit provocative, Albert, were Pfizer shareholders well served By this course of events, we'd love to give you the opportunity to address that publicly. Thank you.

Speaker 2

No. Thank you, Calvin, for giving us this opportunity. And also thank you for recognizing the transparency. I think that's very important, particularly when there's uncertainty. We should all know what are the Now let's go to PL-1A and let's see What is the situation, Amir?

Speaker 2

Have we served the shareholders the best performance or not?

Speaker 18

Thanks for the question, Carter. And Obviously, I'm not going to comment on the rumors and speculation or the potential prices attached to different transactions. What I will say is we're very pleased with our TL1A Televent partnership with Roybant, and we do think shareholders were well served. So as a reminder, why we entered this? We entered this as an R and D portfolio prioritization decision.

Speaker 18

So from time to time, We make decisions as part of our disciplined process to auto partner R and D programs where we think it is better to share the risk or the cost with And in this case, Televance covers all of the R and D costs going forward. And that frees up significant R and D capacity for We still retain value in this program in 3 different ways. We had a 25% equity stake in Taliban. We have full ex U. S.

Speaker 18

And ex Japan rights, and we earn royalties on the U. S. And Japan sales. So taken together, This collaboration allows us to keep more than 50% of the total value of TL1a with 0 incremental R and D spend. And for a Phase 2 program, we feel this is a very sound move for Pfizer shareholders.

Speaker 5

Yes, Michael, anything to add here? Amir said it so well. And I just wanted to punctuate among the very many options, we have a Strong platform in bispecific in meningotoxicase including in And we do have a CLIA, Q40 antibody that would be very interesting Where we own even greater share, we have triple specific that are going into atopic dermatitis. So this just punctuates. And even in the Very same therapeutic area.

Speaker 5

We have so many things going on. And near term, we expect soon Approval for etrasimod and another readout for CRON. So a lot of stuff there.

Speaker 2

Thank you, Michael. Don't tip competition

Operator

Next, we have Steve Scala with Cowen. Your line is open.

Speaker 19

Thank you very much. I just have an observation then a question, but the observation is that it's still not clear what Change in your long term COVID expectations versus when you first gave the $30,000,000,000 guidance 6 months ago, Since in the prior 6 months, nothing really has changed other than FDA action, which doesn't impact the long term. So that's just an observation. But my question is on Vandaquil. Vandaquil has become a very important franchise yet its exclusivity It's not long in either the U.

Speaker 19

S. Or the EU. Are there any strategies to get around the LOEs or is it simply similar to Eliquis where post LOE's Pfizer will move on to other products? Thank you.

Speaker 2

Yes. So why don't you take the question,

Speaker 7

Well, it is, as you say, an incredibly important product, and we're just so proud of the fact that it's still growing 40 something percent This quarter, I think when it comes to Eloise, just from the perspective of how we lead it, our composition of matter of patent expires in 2024, But we have patent term extensions that get us to December of 2028. In the EU, it's 2026. In Japan, it goes right up to 20 So actually I feel like we still have a good runway as it pertains to this product, more diagnoses that we need to do and more patients that we can Capture on to Vindicao, especially with the incredibly competitive and differentiated profile that we have. As you say, we're always working with Amir, looking at opportunities as to what might be It fits into what might fit well into this franchise in this portfolio. But I guess from my perspective with or without it, we see an incredibly Strong opportunity for us to continue to capture growth.

Speaker 2

Thank you very much, Angela. Maybe go to the next question.

Operator

Next question comes from David Risinger with Leerink Partners, your line is open.

Speaker 9

Yes, thanks very much. So my question is on Pfizer's mRNA flu vaccine candidate, please. And Sanofi had stated at its recent Vaccines Analyst Day that first generation mRNAs Against flu will not deliver sufficient strain B efficacy given mRNA technical issues In targeting strain B, so could you just comment on that and your expectations for your vaccines Southern Hemisphere strain B efficacy results later this year. I know that there wasn't The emergence of Strain B in the Northern Hemisphere, but I'm curious about your expectations for Demonstrating that strain B efficacy in the Southern Hemisphere. And then in addition, if you could just comment on your expected reactogenicity Profile for mRNA flu versus comorbidities reactogenicity profile.

Speaker 9

Thank you very much.

Speaker 2

Thank you very much, David. Very good questions. Michael, so are the technical issues that Sanofi is having, are we experiencing them as well?

Speaker 5

Well, I think there are difference between maybe the pioneering mRNA companies, Pfizer, and of course, there is Moderna that have worked in this technology many years. We have Ourself been 5 years into it and make ample improvement across the entire M and A chain. And I think it just gives us a big leg up and all the experience we had with COVID vaccines. So I can't really comment on the Issues that Sanofi are facing, I share a much more positive I have a much more positive outlook That we have in our capability to design mRNA vaccines that will be powerful against FluA And also against FluB. And let's wait as we accumulate data and see the outcome, but I'm Optimistic about that and realize it's a field that requires a lot of capability to enter.

Speaker 5

What about the reactogenicity? The flu reactinicity has actually been moderate, been really good. So that's not an issue at all At end of the doses that we have been testing in young or older patients.

Speaker 2

Thank you for clarifying, Michael. Let's go to the next question, please.

Operator

Next, we have Andrew Baum with Citi. Your line is open.

Speaker 11

Thank Could you talk about the impact of price negotiation under the IRA? Expressly, could you talk to whether You'll be able to collapse the rebate for PBM as an order to offset the impact of, let's say, Eliquis price reduction Following the price negotiations and therefore protect your earnings? Or do you think you'll have to still pay the PBMs that pound the flesh even though they're being able to buy the drug at a much reduced And then separately for Michael, given the recent acquisition of Cgen, To what extent or planned acquisition of CEGEN, to what extent do you believe that there is potential to review your existing pipeline in order Make room to further optimize your R and D spend to put behind CGN's additional assets.

Speaker 2

Yes. So why don't we go first to answer about What IRA will mean in terms of change in the rebates, etcetera, which it's quite a new situation. So we'll have to see how it plays, but if you want to speak a little bit about Angela?

Speaker 7

Yes, sure. So that's exactly right, Albert. I think there's just it's a new policy and lots to understand in terms of how it's going As you say, there will be price negotiations. But at the same time, I think that what we also have to remember, Andrew, is that there's a mitigating factor of the fact that more patients likely will be able to get on Eliquis because Of the co pay threshold and that sort of cap, we're going to have as a function of IRA. And so I think it's a dynamic situation.

Speaker 7

There's lots for us to consider as it Pertains to pricing, rebates, but also patient utilization of the drug and all of this will play out. I guess as it pertains specifically also to Eliquis, just to remind everyone that though it's obviously one of our largest drugs, Its LOE will be around that 2026 timeframe. So whatever the impact is, will not be long on our portfolio because it's losing patent anyway around that time.

Speaker 2

Thank you very much, Angela. It's a revolving environment, so we Also, Andrew, very quickly on the pipeline issue. We have made very clear that the season acquisition will mean nothing to the pipeline assets. So no pipeline assets will be eliminated or reduced or increased as a result of actual would be increases because we do combinations, but will not be any Reductions on pipeline assets as a result of this acquisition. Can you have the next question please?

Operator

Next, we have Chris Schott with JPMorgan. Your line is open.

Speaker 20

Great. Thanks very much. Just a 2 parter on Cominarty. Can you just help me a little bit in terms of, I guess with the updated vaccine being commercialized in September, how much of your remaining COVID revenue Should we think about in 3Q versus 4Q? I'm just trying to get my sense of when we get this 3Q update, would that be based on the sales we're seeing in the quarter or more your interpretation of the And the second part was on the EU contract renegotiation.

Speaker 20

Just any additional color you can provide on how Different, I guess, the terms end up being for 2023 relative to what was reflected in the 2023 guidance. Thank you.

Speaker 2

Yes. Thank you very much. I can take it very quickly. Look, if you see, we will have basically July, August, September in Q3. So the vaccinations with the new will start in September, hopefully, of course.

Speaker 2

What we expect is that we will have approval By the end of the August, we are ready with product already now. So we have so production will So normally, we should have also in Q3, most of it in Q4. But what really will clarify us at the end of Q3 Plus also the amount that takes after Q3 until we give that our deal. We present our Q3 results. It is really the vaccination rates, right?

Speaker 2

That is what And the net price, right, because everything after all, we will know way better what the net price. So very big part of this uncertainty For Commernati, we'll go away. On the EU contract renegotiation, I don't know if you noticed, I did say that When we gave our guidance, we were expecting that we will have incorporated assumptions that we will renegotiate the new contract And our assumption, we're assuming that we will do over 3 years. Now we did over 4 years, which that creates a pressure To our guidance, but then we had some contracts that we didn't expect guidance in Latin America particularly that offset very big part of that. So that's why there's no That by itself is not the reason to change guidance one way or another.

Speaker 2

Really, as I said, vaccination rates, it is what will Define what is the potential of these vaccines for the years to come. Thank you very much, Chris. And then let's go to the next question, please.

Operator

Next, we have Rajesh Kumar with HSBC. Your line is open.

Speaker 21

Hi, good morning. Thanks for taking the question. Just one for me. You're doing a lot of acquisitions. You've done a large one, Si Jin, recently, it's not completed.

Speaker 21

But as we look forward, how do you think the What are the sort of integration challenges you see both on the execution commercial side, but also On the scientific side, what are the things that get you excited versus worried?

Speaker 2

For the season acquisition, right? Yes. Yes. Let me

Speaker 21

start with But you've got multiple acquisitions before that as well. So just you've got Multi integrations going on sort of. Exactly. That's why I'm asking

Speaker 2

the question. Yes. So let me start with what excites us with Cizem. And I think there's a science Behind this company, the ATCs are playing a key role right now more and more In our research and in our fight against cancer and the season has one of the 2 leading Platforms and we believe it's actually a better one. So I think that excites me a lot.

Speaker 2

Also what excites me a lot it That Cision was able to achieve all this greatness with limited resources relative to compared to what we are bringing on the table. And what we are bringing on the table on the research front, of course, is not only the capital, but also a significant expertise on designing the molecules. And Particularly in the small molecules, we are very, very, very good. So when it speaks about payloads, I think we can contribute significantly into that. Secondly, We are thinking that there is such a nice way of being able to commercialize those products So for Cizem, but already the market will come because first of all, we have global presence that Cizem is lacking.

Speaker 2

And also in the U. S, we will almost triple our resources once the whole thing is integrated. So there is a lot of things to be excited. Now as you rightly pointed out, things happen in integrations that you need to be well aware. And not only we and we have our 1st share of things that we did wrong in the past, and we have our 1st share of things that we did right in the past.

Speaker 2

So I know, but what is extremely, extremely important is to make sure that, first of all, there will be no cultural clash as we are putting together with the organization. To that end, we are very, very lucky because oncology companies tend to have very, very similar cultures, irrelevant, they're They are oncology companies, and that was evident in the chemistry of our scientists compared to the precision scientists. Actually, what it is really evident, it is how many All the great scientists of CGM raised their hand to join Chris' leadership team as we are going forward. And those scientists who have published this information Who will be coming from Cision? Actually, many of them will lead the global oncology business, not only APOS acquisition, not only the Pfizer one, but they will lead The global, not only the season 1, but the global, which is season plus The second thing that we need to be very careful, it is that we don't slow down things and we don't increase cost This is something that we have seen when big companies are acquiring small, but many times cost goes double and the time lines goes also double.

Speaker 2

So That's something that we must avoid. And in order to avoid, we are doing tremendous pre integration planning to make sure that innovation We'll be enhanced dramatically after we are putting the 2 together. And I have full trust On, of course, Chris that is leading this integration and this planning for months now. And last but not least, Many times, when you have an integration, it could go wrong and it's good if the CEO, which is the one who can resolve conflicts In a corporation and make decisions fast has very high visibility in what is happening. So I think very fast, this is our biggest investment For many decades, that's clearly the biggest investment under my watch.

Speaker 2

And we take it very seriously as one of the most potential Exciting opportunities to grow, but also we are very cognizant that we should make sure that nothing goes wrong. So I'm personally on it and Cesar is going to be one of our biggest bets as you can see going forward. So we are using all our experience and the best I'm very, very pleased because chemistry of the 2 teams is unbeatable right now and they are working like 1 And they are all coming to see the new SITREN Pfizer Oncology portfolio growing faster than when we were alone. And with that, we will move to our last question.

Operator

Our last question will come from Michelle Rivera with Inthout Research. Your line is

Speaker 6

open. Good morning. Thank you for taking my question. What's the status of the DMD gene therapy program? Have you finalized dosing patients?

Speaker 6

I read a statement at a recent conference that I read a statement at a recent conference that you finalized screening patients. So I wasn't sure whether that meant that the trial had been paused. Just some clarity around that and when we should expect data would be helpful. Thank you.

Speaker 2

Yes. Chris, you were running DMD You recently now do, of course, provide it to Michael the responsibility. So can you give us

Speaker 12

a little bit very quickly what is the status of Yes. Thank you. So the as I mentioned earlier, the clinical trial has now completed enrollment. As you pointed out, we We will go ahead and have the interim analysis later this year based on a functional endpoint, which will be substituted also or Which will be yes, with the biomarker data. We'll have both functional data as well as biomarker data later this year.

Speaker 12

And then the final analysis for the full study In 2024. We've also fully enrolled now the earlier age group, patients between the ages of 23 years old, 10 patients enrolled in that trial. So we are looking forward to share the data later this year for you.

Speaker 2

Thank you very much. In summary, I think we had a solid quarter continuing to invest to support our unprecedented 'nineteen potential launches in an 18 month period. These are doing very well. The plan is executed as per the time lines In our pipeline and in value creating revenue generating business development opportunities like Ciesem, which as I articulated just in the question before that, It is clearly our big bet and our very, very big opportunity moving forward. Over the next 3 months, we look forward to moving beyond the current uncertainty Related to our COVID-nineteen related revenues, we have better clarity.

Speaker 2

And by the end of the year, we have there are certain that we'll be removed almost the class. To that extent that any adjustments are made to our cost base for 'twenty four and beyond, we are ready to make. I want to emphasize that the biggest uncertainty In terms of the long term, it is vaccination already. Some short term uncertainties like when commercialization will be, I think it's just a question The vaccination and treatment rates that we are going to see, I think we'll inform what is what we should expect for the years to come With only upside if we had a combination of our change. Putting all these factors together, we remain confident in our ability to deliver robust operational growth and deliver Meaningful shareholder value through the end of the decade and beyond.

Speaker 2

And now we will bring our call to a close. Thank you for joining us, and have a great rest

Operator

Thank you, ladies and gentlemen. This does conclude Pfizer's 2nd quarter 23 earnings conference call. We appreciate your participation and you may disconnect at any time.

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Earnings Conference Call
Pfizer Q2 2023
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