Pfizer Q2 2021 Earnings Call Transcript

Quartr
Provided by Quartr
July 28, 2021

Key Takeaways

  • Pfizer generated $7.8 billion in Q2 revenues from the BioNTech COVID-19 vaccine and anticipates producing 3 billion doses in 2021, with over 1 billion doses supplied at non-profit or income-adjusted prices to low- and middle-income countries.
  • The company raised its full-year 2021 guidance to $78–80 billion in total revenue and $3.95–4.05 adjusted EPS, reflecting stronger vaccine volumes and a projected 50/50 gross profit split with BioNTech.
  • Major R&D milestones include initiation of a Phase 2/3 trial for an oral COVID-19 protease inhibitor (targeting a 4Q 2021 EUA), a first-in-human mRNA flu vaccine in Q3, and RSV adult vaccine data showing 100% efficacy in a challenge study.
  • Xeljanz biosimilar revenues declined 9% operationally in Q2 (US down 15%), driven by an unfavorable channel mix, increased patient assistance enrollment and an ongoing FDA safety review of tofacitinib’s post-marketing data.
  • Pfizer will submit data in August for a third booster dose of its existing COVID-19 vaccine after lab results showed up to a 100-fold rise in neutralizing antibodies compared to pre-boost levels, including against the Delta variant.
AI Generated. May Contain Errors.
Earnings Conference Call
Pfizer Q2 2021
00:00 / 00:00

There are 15 speakers on the call.

Operator

Good day, everyone, and welcome to Pfizer's Second Quarter 2021 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 Investment Relations Officer. Please go ahead, sir.

Speaker 1

Thank you, Sylvia. Good morning. It's my pleasure to be welcoming you to Pfizer's 2nd quarter earnings call for the first time as the Head of Investor Relations at Pfizer. I'm joined today by Doctor. Albert Bourla, our Chairman and CEO Frank D'Amelio, our CFO Michael Dolsten, President of Worldwide Research and Development and Medical Angela Huang, Group President, Pfizer Biopharmaceuticals Group John Young, our Chief Business Officer and Doug Lankler, General Counsel.

Speaker 1

We'll begin the call with remarks by Albert, followed by a pipeline update from Michael, and Frank will then give you his thoughts on the numbers and our updated guidance Finally, Albert will come back for concluding comments. We expect this call to last 90 minutes. The materials for this call as well as all the other earnings related materials have been posted to the Investor Relations section of fizer.com. As you can see on Slide 3, we will be making forward looking statements during the call regarding, amongst other topics, Our anticipated future operating and financial performance, business plans and prospects and expectations for our product pipeline and marketed products, which are subject to risks and uncertainties as well as the use of non GAAP financial information. Additional information regarding forward looking statements And our non GAAP financial measures is available in our earnings release, including under the disclosure notice section And under Risk Factors in our SEC Forms 10 ks and 10 Q.

Speaker 1

Forward looking statements on the call speak only as of the call's original date, And we undertake no obligation to update or revise any of the statements. With that, I will turn over the call to Doctor. Borla. Albert, please go ahead.

Speaker 2

Thank you, Chris. And I think there was a problem with your line at the last second, so you can have a look on that. Welcome to your first Pfizer earnings call as our new Chief Investor Relations Officer. Hello, everyone. I'm proud to say that Pfizer delivered an outstanding second quarter.

Speaker 2

Most notably, We delivered extremely strong financial results even excluding direct lines even excluding direct sales and alliance revenue provided by our Codman We generated 10% operational revenue growth compared to the prior year quarter. And I would note that the year ago quarter was also very strong, delivering 6% operational growth for the comparable business. At the same time, we continue to accelerate the production and delivery of the Pfizer BioNTech COVID-nineteen vaccine and in collaboration with BioNTech Prior to the pandemic, Pfizer produced approximately 200,000,000 doses annually across our entire OXINS portfolio. Let me start with a commentary on some of our biggest growth drivers in the quarter. The Pfizer BioNTech COVID-nineteen vaccine contributed 7,800,000,000 In global revenues during the Q2 and we continue to sign agreements with governments around the world.

Speaker 2

Just last week, we announced that the U. S. Government has purchased an additional 200,000,000 doses of the vaccine, bringing the total number of doses This is in addition The 500,000,000 doses that we agreed to provide to the U. S. Government at a non for profit price We anticipate that the significant amount of the remaining 2021 vaccine manufacturing capacity Will be delivered to middle and low income countries where we price in line with income levels Or at a non for profit price.

Speaker 2

In fact, we are on track to deliver on our commitment to provide this year more than 1,000,000,000 dose More than 1,000,000,000 doses or approximately 40% of our total production to middle and low income countries And another $1,000,000,000 in 2022. Vinteco and Vintamax revenues were up 77% To 501,000,000 globally, our disease educational efforts in the U. S. Continue to support increases in appropriate diagnosis, while the main driver of growth in Japan has been the successful establishment of several Referral networks in select areas resulting in new patient starts. We anticipate these efforts We'll continue to support a strong trajectory for the franchise.

Speaker 2

Eliquis continued its strong performance With revenues up 13% operationally to $1,500,000,000 This was led by growth in the U. S. And Emerging Markets, Driven primarily by strength of the clinical profile, ease of use for both patients and clinicians, Continued increased adoption in nonvalvular atrial fibrillation and overall oral anticoagulant market share gains. Prevnar 13 in the U. S.

Speaker 2

Was up 34% overall to 642,000,000. This growth was due primarily to higher levels of healthcare activity and wellness visits compared with the prior year quarter, Which was heavily impacted by COVID-nineteen related mobility restrictions and limitations. Growth in the pediatric indication was also due Year over year government purchasing patterns and was partially offset by lower year over year birth rates. Growth in the adult indication was partially offset by the continued impact of the lower remaining eligible unvaccinated population. During the quarter, the U.

Speaker 2

S. Food and Drug Administration approved Prevnar20 for adults ages 18 and over For the prevention of both invasive disease and pneumonia caused by the 20 pneumococcal serotypes in the vaccine. I would note that a 15 valine vaccine also recently received FDA approval in adults. However, That approval did not include the pneumonia indication. We believe the only way to add that indication to the 15 valent vaccine in the U.

Speaker 2

S. Will be to conduct a post licensure efficacy effectiveness trial, which we believe means that for the foreseeable future, PREGNOR-twenty likely will be the only vaccine with an indication against vaccine type pneumonia for the 20 serotypes. For Ibrance, we continue to be pleased by the double digit growth in international markets And encouraged by signs of recovery in several key markets. In the U. S, Ibrance continues to be the leading CDK4six 6 inhibitor with 83% total patient share and 73% share of first line metastatic new patient starts.

Speaker 2

While total prescription volume was stable in the Q2, paid demand for Ibrance was down due to increased enrollment in our patient system program, which we referenced last quarter. This resulted in a second quarter revenue decline in the U. S. Of 7% compared

Speaker 1

With a year ago quarter.

Speaker 2

In Leitos, global revenues were up 29% operationally to 257,000,000 Primarily reflecting increased adoption in the U. S. And Developed Europe of combinations of certain immune checkpoint inhibitors and in line. Expanding the U. S.

Speaker 2

Was up 14% to $303,000,000 driven by strong demand across all approved indications. Our global biosimilars revenue grew 88% operationally to $559,000,000 driven by Several recent oncology biosimilar launches. As you can see, biosimilars have become a meaningful part of our business while delivering Now let me share 2 brief updates From our ZAK inhibitor portfolio. We continue to remain confident in the importance of the ZAK inhibitor class For appropriate patients with inflammatory diseases given the role of JAK pathways in inflammatory processes. In addition, we have taken a targeted approach to developing selective JAK inhibitors based upon our extensive knowledge of JAK biology, Coupled with our medical chemistry capabilities that suggest the best target for a specific indication.

Speaker 2

And we continue to monitor all compounds in our portfolio to identify signals both in development as well as after regulatory approval. Global SalesLabs revenue were down 9% operational in the quarter to $286,000,000 driven primarily By a 15% decline in the U. S, while prescription volume increased 2%. This revenue decline reflects an unfavorable change in channel mix toward lower priced channels and continued investments To improve formulary positioning and unlock access to additional patients' lives. Also a negative impact New patient starts resulting from an ongoing review by the FDA of safety data from the post Marketing oral surveillance study of Xeljanz in subject with rheumatoid arthritis who were 50 years of age older and had at least one additional cardiovascular risk factor.

Speaker 2

International developed markets achieved 11% operational growth The FDA recently notified Pfizer that it would not meet the prescription drug user fee at The PDUFA goal date for this supplemental new drug applications for Xeljanz, XR For the treatment of adults with active ankylosing spondylitis. No revised PDUFA goal date has been set for this MDx, supplementary MDx. The FDA also recently notified Pfizer that it could not meet the PDUFA goal date for the new drug application For a proceeding for the treatment of adults and adolescents with moderate to severe atopic dermatitis. The FDA cited its ongoing review of Pfizer's Post marketing safety study, oral surveillance evaluating tofacitinib in patients with rheumatoid arthritis As a factor in the extension, no revised PDUFA gov has been said by this NDA Now I want to touch on the Biden administration's recent executive order on promoting companies. While I believe there may be better alternatives that some of these policies put forward in the executive order, We can agree that fostering competition and lowering costs for patients should be the focus of any regulatory or legislative action.

Speaker 2

We continue to support more affordable options for patients like biosimilars, improving the Medicare program to cut out of pocket costs And also lower cost sharing for seniors and making insurance work by requiring that patients serve In prepaid savings at the pharmacy count, we believe these meaningful solutions would have an immediate impact for patients without Overall, I believe the second quarter was a Clear and part of demonstration of the capabilities of the new Pfizer. Looking forward, we intend to build upon these successes by continuing to follow the science, Trust in our people and remain focused on delivering breakthroughs for the patients we serve. As such, we continue to expect a revenue CAGR of at least 6% on a risk adjusted basis through the end of 2025 and double digit growth in the bottom line. I would note that these projections do not include any potential impact from our COVID-nineteen vaccine, Recent or subsequent business development activities or potential future mRNA programs. We remain very confident in our ability to achieve these growth rates because of the strength of both our current product portfolio and our R and D pipeline.

Speaker 2

At the same time, we will continue to pursue business development opportunities with the potential to further enhance our long term growth prospects. Just last week, we announced a global collaboration with Arvinas to develop and commercialize 471, an investigational oral product, estrogen receptor protein degrader. The estrogen receptor It's a well known disease driver in most breast cancers and we are excited to work with ARIMAS on the first potential product For breast cancer, which with its encouraging early clinical data has the potential to become a novel hormonal therapy backbone Now I will turn it over to Michael to speak more about our R and D efforts. And then of course, Frank will provide financial details on the quarter and our outlook for the remainder of 2021.

Speaker 3

Thank you, Albert. I'm delighted to share some highlights from Pfizer's R and D pipeline, Which continues to be one of our greatest strength. Today, I will share updates on 8 select programs in which we are pursuing 1st in class breakthrough science and which have estimated approvals before 2,030 and the potential to have profound impact on millions of patients. Last week, we announced a global collaboration with Arbenas to develop and commercialize ARV-four seventy one, Potentially the first PROTECT or fertilizes targeting Chimera, estrogen receptor protein degrader. 471 represents breakthrough drug design technology.

Speaker 3

ProTech protein degraders efficiently eliminate Rather than inhibit disease causing proteins, to our knowledge, 471, which was designed to be an oral High potency SGN receptor degrader with a favorable safety profile is the only ER targeting PROTECT degrader In clinical development and has a distinct mechanism action from the many search in development. In the future, novel assets like 471 have the potential to be the new endocrine therapy backbone, Either alone or in combination with CDK inhibitors such as Ibrance, other targeted therapies and or therapies with novel mechanism of action. Early clinical data show 471 has the potential to be an endocrine therapy of choice cross treatment settings in breast cancer. 471 is being evaluated as a treatment for metastatic breast cancer in a Phase 1 dose escalation study, a Phase 1b combination study with Ibrance And the Phase 2 monotherapy dose expansion study. Starting in 2022, we expect to initiate Phase 3 studies Across lines of therapy in metastatic breast cancer, including in combination with Ibrance, followed by Pivotal studies in the early breast cancer setting.

Speaker 3

Let me share some of the preclinical data that has us excited. The chart on the left shows 471 demonstrated impressive antitumor activity in combination with Ibrance, palbociclib in preclinical studies. In the Phase 1 interim analysis of 21 patients, 471 demonstrated a compelling efficacy signal in heavily pretreated patients, The majority with prior fulvestrant treatment and all with prior CDK4six inhibition treatment. The images on the right Sure. 1 patients on 471 monotherapy who had a confirmed partial response after 4 cycles With a 51% reduction in target lesion size as indicated by the arrows, 2 patients had unconfirmed partial responses and one patient demonstrated stable disease with more than 50% target lesion shrinkage.

Speaker 3

5 pad tumor biopsies demonstrated ER degradation up to 90% with an average of 62%. The next program is ROBOT-two, details of which we have not shared previously. No disease specific treatment Are currently available for focal segmental glomerulosclerosis or FSGS for short. We have developed in collaboration with Boston University and Boston Medical Center a potentially novel and first in class disease modifying biological therapy Comprising a SLP2 ligand antibody Fc trap that lowers activation of the RoB2 receptor for treating FSGS As well as adjacent renal glomerulopathies. Preliminary results from interim analysis of our ongoing Phase IIa study in adult patients with steroid resistant FCS demonstrated promising data With a statistically significant and clinically meaningful reduction in urine protein to creatinine ratio or UPCR, We are advancing the program to potentially demonstrate proof of concept in 2022 and preparing for pivotal studies.

Speaker 3

This chart shows the change in UPCR, a marker of renal function from baseline in Diorate treatment resistant patient in a Phase IIa study. There was a favorable reduction in proteinuria at certain weeks Based on data from approximately half of the first dose cohort of the study, Please note, after stopping the treatment as per study protocol, the UPCR deteriorated indicating the need for continuous Treatment every 2 weeks was well tolerated with no significant safety signals today. Next, let's turn to our gene therapy programs in hemophilia A and B and Duchenne muscular dystrophy. Pfizer continues to advance the broadest late stage gene therapy portfolio of potentially transformational treatment. We expect Phase 3 interim analysis for all 3 programs in 2022.

Speaker 3

In a Phase onetwo Hemophilia A study, we have seen durable expression of Factor VIII through 78 weeks with an annual bleed rate In the 1st 52 weeks of Xero, in a Phase III hemophilia B study, we have sustained expression of Factor IX activity into year 4 of the Phase III long term follow-up study With an annual bleed rate of less than 1, in a Phase Ib Duchenne muscular dystrophy study, Statistically significant expression of minidistrophin and a 3.5.3 in the Northstar Ambulatory assessment score have been observed. Now we'll turn to our Lyme disease vaccine, the only Active Lyme vaccine candidate in clinical development today being co developed with Valneva, the ongoing Phase 2 study, which completed recruitment of adult and pediatric participants last week, will evaluate the optimal vaccination schedule for use in Phase 3. We expect potential proof of concept in January 2022 and a Phase 3 study in the first half of twenty twenty two. This chart shows that more than 90% of subjects seroconverted to all sick serotypes With a 3 dose vaccination schedule at 0, 2 6 months in the Phase 2b study demonstrating a favorable immune response. Our respiratory syncytial virus vaccine is the most advanced bivalent Protein based vaccine with Phase 2 data published showing high neutralization tithes against both or the A and B subtypes, Which has not been demonstrated in clinical development by a monovalent pre fusion F vaccine.

Speaker 3

We have been advancing these Asset for both adults through direct vaccination and infants through maternal immunization. Today, I will focus on adults. In 2020, we initiated a Phase 2a study to evaluate the safety, immunogenicity and efficacy of the recombinant RSV pre fusion vaccine in a virus challenge model in healthy adults 18 to 50 years of age. I will show you data on the next slide, which we plan to submit for peer reviewed publication soon. Results From a Phase 2 challenge study of 62 subjects, should a vaccine was 100% effective Against mild to moderate symptomatic infection and most participants in the study experienced minimal to no side effects.

Speaker 3

As a performance benchmark, the AD26 RSV PreF vaccine showed 52% observed efficacy In the same human challenge model, in this slide, we show very stable protective changes of the vaccine on viral load, left side, And in reducing drastically RSV disease severity right side, based on these overwhelmingly positive data, We will accelerate the development of our RSV vaccine in adults. We plan to initiate a global Phase 3 trial in the 3rd quarter And hope to conclude the study swiftly in part due to the recent spike in RSV infection Reported by CDC. The swift delivery of the world's first mRNA based vaccine May the scientific opportunity of mRNA technology clear, our strategy to advance and unlock The full potential of mRNA is focused in 3 core areas. We're strengthening the core COVID-nineteen vaccine franchise, Growing an infectious disease vaccine pipeline and exploring therapeutic areas like rare disease and oncology With the strongest potential. Let's start with the mRNA flu vaccine, which we began working on with BioNTech in 2018.

Speaker 3

Having a flu vaccine with much better efficacy, better T cell and innate immune responses and more timely manufacture Soon after strains unknown could dramatically change trajectory of disease. We are projected to start 1st in human trials for a modified RNA omodo RNA flu vaccine in the 3rd quarter subject to regulatory approval. Preclinical studies were performed with a 1st generation Modified mRNA testrivalent flu vaccine and the data were compared to data from a marketed flu ad vaccine. Immunoecity in mice for 1st generation modRNA flu candidate across the 20 eighteen-nineteen northern hemisphere strain We're higher or as high as the trivalent adjuvanted subunit vaccine. We are encouraged by these data and look forward to progressing this program.

Speaker 3

We now turn to our COVID-nineteen vaccine program in collaboration with BioNTech. The Delta variant, which is the most transmissible we have yet seen, is expanding rapidly We have yet seen is expanding rapidly worldwide and now represent approximately 83% 12 months after full vaccination to maintain the highest level of protection and studies are underway To evaluate the safety and immunity of a third dose, we are in ongoing discussion with regulatory agencies Regarding a potential 3rd dose booster of current vaccine and assuming positive results, anticipate an emergency use authorization submission As early as August, pending regulatory approval, we also plan to start an immunoicity and safety study in August To evaluate an updated version of our vaccine specifically designed to target the delta variant. Here we show initial data from a small number of patients receiving a 3rd dose of the existing vaccine. We observed a significant boost in utilizing antibodies following a third dose of the current vaccine For both wild type and the beta variant, at 8 months post those 2 antibody levels start to decline from earlier peak. In our initial analysis, a 3rd dose, even more than 6 months after the second dose elicited neutralizing antibodies, which are more than 5 times higher than the wild type and more than 10 times higher against the beta variant than of the 2 primary doses.

Speaker 3

The 3rd dose elevates the neutralizing antibodies in our laboratory studies up to 100 times higher levels Post23 compared to pre dose 3. Just as we saw in the analysis of neutralizing antibodies From those in the original Phase 3 trials, the levels in the older population were comparable to the younger population. Here we show New breaking data from a small number of participants that the 3rd dose boost with the current vaccine elicited neutralizing titers That when tested against the delta variant, we're more than 5 fold post dose 2 in younger people and more than 11 fold post Those 2 in older people receiving a third dose more than 6 months after vaccination when protection may be beginning to wane was Estimated to potentially boost the neutralizing antibody titers in participants in this study to up to 100 times Higher post dose 3 compared to pre dose 3. These preliminary data are very encouraging as delta continues to spread. Finally, let's turn to our potentially first in class COVID-nineteen antiviral protease inhibitor.

Speaker 3

If successful, Our protease inhibitor has the potential to provide patients infected with COVID-nineteen with a new oral therapy that could be prescribed For a 5 day treatment course at the first sign of infection before patients are hospitalized or in critical care. For patients who are in close contact with someone who contracts COVID-nineteen, we will study both 5 10 day Post exposure prophylaxis courses. The goal is to reduce SARS-twelve-two viral load, Thereby hopefully decreasing or preventing symptoms of COVID-nineteen and minimizing the risk of hospitalization. In July, we initiated a Phase twothree trial to evaluate efficacy, safety and tolerability of the orally Administrated protest inhibitors in participant with COVID-nineteen. If successful, we project a potential U.

Speaker 3

S. Emergency Use Authorization submission in the 4th quarter. Our protease inhibitor exhibit potent Selected in vitro antiviral activity against SARS CoV-two and other coronaviruses and potentially All currently known COVID-nineteen variants, it also has demonstrated a robust preclinical antiviral infect And in SARS CoV-two infected animals enabled by selectivity that is more than 100 times higher for coronavirus real proteases than human proteases. The chart on the left shows robust dose dependent reductions in disease, microscopical scores in mice. In Phase 1 human studies today, We have seen desirable drug exposure, good tolerability and no safety findings up to a dose of 500 milligram twice a day Over 10 days in healthy volunteers.

Speaker 3

The chart on the right of the Phase 1 pharmacokinetic study shows High drug exposure over the entire treatment period exceeding greater than 5 times The exposure predicted to inhibit SARS CoV-two viral replication. This concludes our review of 8 selected Breakthrough programs among many more to come this decade. Now, let me turn it over to Frank.

Speaker 4

Thanks, Michael. I know you've seen our release, so let me provide a few highlights regarding the financials. The COVID-nineteen vaccine Again, had a dramatic positive impact on our quarterly results and Albert has already addressed the key points on the COVID-nineteen landscape. Looking at the income statement, revenue and adjusted cost of sales was significantly impacted by COVID-nineteen vaccine sales And the associated 50% gross profit split with BioNTech, which we recognize on the cost of sales line. Revenue increased 86% operationally in the Q2 of 2021, driven by COVID-nineteen vaccine sales and solid performance from a number of our other key growth drivers.

Speaker 4

And looking at the revenue growth excluding the COVID-nineteen vaccine contribution from direct sales and Alliance revenues, I want to reiterate what Albert said in that we saw a continuation of solid performance from the business again this quarter, delivering 10% operational growth despite A negative 4% impact from price. This nicely supports our projected revenue CAGR of at least 6% through the end of 2025. Of course, there will be some variability in quarterly growth rates due to a variety of factors, but we continue to expect at least 6% through 2025. There was no impact from the number of selling days in the quarter as compared to the year ago period like we saw in our Q1 Well, we had more selling days compared to the year ago period. I'd remind you that the offset to this imbalance will be seen in the 4th quarter results Where we have fewer selling days as compared to the year ago quarter.

Speaker 4

For the full year, this results in essentially the same number of selling days in 2021 is 2020. The adjusted cost of sales increase shown here reduced this quarter's gross margin by 19 percentage points compared to the Q2 of 2020, which primarily reflects the impact of the COVID-nineteen vaccine, gross profit split and applicable royalty expenses in addition So much smaller impacts from foreign exchange product mix. Adjusted SI and A expenses increased owing to a more normalized level of promotional and sales force activity along with some impact from foreign exchange. The increase in adjusted R and D expense this quarter Was driven by increased investments in the COVID-nineteen vaccine and antiviral programs as well as other programs within our pipeline. Given the tax effect of increased COVID-nineteen vaccine revenue, our tax rate Which will impact our guidance, which I will speak to in a minute.

Speaker 4

Reported diluted EPS for the quarter was up 58% Compared to the year ago quarter, while adjusted diluted EPS grew 73% for the quarter. Foreign exchange movements resulted in a 6% benefit to revenue as well as a 6% benefit or $0.03 to adjusted diluted EPS. Now let's move to our revised 2021 guidance. We've again provided total company guidance, which includes the business with the COVID-nineteen vaccine. Then we provided some additional sub budget detail on our assumptions regarding the projected COVID-nineteen vaccine contribution, so So you can also see our projection for the business without the COVID-nineteen vaccine.

Speaker 4

Our revenue projection has increased and we now expect it to be in a range of 78 to $80,000,000,000 with the COVID-nineteen vaccine revenue for the year being projected to be approximately $33,500,000,000 based on contracts Signed through mid July. I note that this projection does not include the doses with our contract with the U. S. Government announced last week. For adjusted cost of sales, the range has increased to between 39% to 40%, which incorporates the incremental anticipated COVID-nineteen vaccine revenue, Which has a significantly higher cost of sales due to the gross profit split with BioNTech as compared to the rest of the business.

Speaker 4

The projected COVID-nineteen vaccine revenue as a percentage of total company revenue at the midpoints has increased to 42% as compared to 36% and our previous 2021 guidance. On adjusted SI and A, we have made a small increase to the projection and now expect $11,500,000,000 to 12,500,000,000 In addition, we increased our adjusted R and D guidance range to $10,000,000,000 to $10,500,000,000 to incorporate anticipated spending on incremental COVID-nineteen related programs And other mRNA based projects that are not part of the BioNTech collaboration. Given the tax effect of increased COVID-nineteen vaccine revenues, we are increasing Our projected tax rate for the full year to approximately 16%. This yields an increased adjusted diluted EPS range of $3.95 The $4.05 or 77 percent growth at the midpoint compared to 2020 including an expected 4% benefit from foreign exchange. Let me quickly remind you of some assumptions and context on the projected COVID-nineteen vaccine contribution and our collaboration agreement.

Speaker 4

As discussed earlier, the Pfizer BioNTech COVID-nineteen vaccine collaboration construct is a fifty-fifty gross profit split. Pfizer books the vast majority of the global collaboration revenue except for Germany and Turkey where we receive a profit share from BioNTech We do not participate in the China region. We now expect that we can manufacture up to 3,000,000,000 doses in 2021 subject to continuous process improvements, Expansion in current facilities and adding new suppliers and contract manufacturers. As of mid July, we have contracted Approximately 2,100,000,000 vaccine doses for delivery in 2021, which drove our projection of approximately 33,500,000,000 And revenue for the year. Our cost of sales for the COVID-nineteen vaccine revenue continues to include manufacturing and distribution cost, Applicable royalty expense as well as the payment to BioNTech representing the 50% gross profit split.

Speaker 4

We continue to expect that the adjusted income before tax margin for the COVID-nineteen vaccine contribution to be in the high 20s as a percentage of revenue. This margin level also includes the anticipated spending on additional mRNA programs. Let me add that if we contract for delivery of additional doses during the year, We will provide a guidance update in our subsequent earnings releases. If we remove the projected COVID-nineteen vaccine contribution From both periods, you will see that we slightly increased the 2021 revenue range to $45,000,000,000 to $47,000,000,000 Representing approximately 7% operational revenue growth at the midpoint. In terms of adjusted diluted EPS, Without the contribution from the COVID-nineteen vaccine, we have increased the range to be between 255 265 For the year, which represents approximately 11% operational growth at the midpoint.

Speaker 4

These growth rates are all consistent with How we've been publicly positioning the business post the Upjohn separation. And going forward, we will continue to maintain a prudent stance toward our capital allocation activities with the opportunities for deployment shown here on this slide. In summary, a strong quarter and first half of the year And we have increased our revenue and EPS guidance for the remainder of the year. In addition, we've had pipeline advances and just completed a very promising Business Development Agreement with Arvenus. I'll now turn it over to Chris to start the Q and A session.

Speaker 1

Thank you, Frank. Operator, if we could have the first question, please?

Operator

Your first question comes from the line of Carey Holford from Berenberg.

Speaker 5

Thank you. A few questions on the COVID vaccine, please. Certainly a point of clarification, can I just check the upgraded 2021 sales guidance for the vaccine reflects only the doses you expect to deliver this year And not for those contracted to delivery in 2022? As you stand today, could you talk directionally about how you see 2022 Showing back to yourselves relative to this new guidance figure for 2021. Do the more recent dose orders you've secured Require delivery of the new updated version of vaccine you referenced that covers the delta variant.

Speaker 5

And then Finally, can we assume the price per dose in the most recent order from the U. S. Government is equivalent to prior U. S. Orders?

Speaker 5

And how does that pricing compare any ex U. S. Contracts that you've more recently signed? Thank you.

Speaker 2

Thank you very much, Kerry. Maybe I can give you an answer to that. As Frank said In his remarks in 2021, we provided guidance for approximately €2,100,000,000 doses. These are confirmed orders contract Fine. We have said repeatedly that we expect to have a 3,000,000,000 doses manufacturing this year.

Speaker 2

And we are, of course, We're discussing about those doses and most of them are in various discussions. So I believe that We will eventually allocate all doses. Now keep in mind that in the second half, as we said, The very big number of doses will go to middle income countries where the price is very, very different, almost half and To low income countries and lower and low middle level countries where we provide the doses on a non for profit base. So you need to take that into consideration. The second thing that you need to take into consideration, it is that Our financial calendar is not the exact like the political calendar, which means that December sales will not be going to 2021 if it is international.

Speaker 2

It's going to go to 2022. This is how our financial calendar works. Only the U. S. Sales of December will be accounted in This year, there will be significant number of doses that will be allocated in December as part of the $3,000,000,000 dose.

Speaker 2

How the 2022 looks like? It's very early to speak. We have multiple countries that they have already Accomplished agreements for 20222023 like Europe, for example, Israel, Canada, Canada actually, They have also been going all the way to 2024. U. S.

Speaker 2

Just got an additional 200,000,000 doses and virtually every country in the world right now is Discussing with us for additional doses, our total expected capacity for 2022, it is 4,000,000,000 doses. And I believe given the needs that likely will be allocated to the entire world. You asked a question about the Delta variant and maybe I will ask Michael to provide

Speaker 3

Thank you, Albert. As you noted in the presentation, all data Right now, point to that, the current vaccine is highly effective against delta variant. There may be waning over time as often is seen with the vaccine. And that's why we shared today that If you do give a 3rd dose boost for the current vaccine, you seem to regain very high Utilizing antibody against Delta, we are also producing a Delta variant specific vaccine, Mainly to make sure we cover all options of the future, but we remain highly confident in that the current vaccine, When used appropriately, will be effective against Delta, and we are in dialogues with regulatory agencies about This potential of a surge dose of a vaccine pending epidemiology of They are vaccinated over time. Thank you.

Speaker 2

Thank you very much, Michael. And Kerry also on the price per dose, We do not discuss prices with each individual country, but we have given our overall policy, which says that the high income countries, they have comparable Prices that they vary only because based on we give discounts to these prices based on the volumes that are committed. Middle income countries, they have approximately half of that price. And for the lower, middle and low

Speaker 1

Thank you, Albert. Next question please, operator. Sorry.

Operator

Your next question comes from Matthew Harrison from Morgan Stanley.

Speaker 6

Great. Good morning. Thanks for taking the questions. A few, if I may. First, on the regulatory outlook for the JAK.

Speaker 6

Do you have any idea on how long the FDA may continue to review the file or when we might expect to see some response And then second on the mRNA flu vaccine, can you comment on the potential regulatory Do you think you may be able to get that approved just based on titers or do you think you'll have to actually run a head to head study versus the existing flu vaccines?

Speaker 2

Michael, I think you could take those two questions and then if Angela wants to add something on the tax.

Speaker 3

Yes. Thank you. Well, as you know, FDA and other agencies are Reviewing both existing and new JAKs, in FDA, we are waiting for them to conclude final assessment And during that period, they have passed PDUFA Time lines for both us and other that developed NewJak. We certainly hope as the workload from COVID may Attenuate that the agency will have soon been able to review all available data as we do consider That JAKKS have a really meaningful and important role in management of RA, properly used in the right patients And also new indications where there are fewer alternatives such as atopic dermatitis, alopecia, vitiligo and so on. So we cannot give any firm timelines, but we certainly hope it will be relatively soon.

Speaker 3

For the mRNA flu vaccines, we plan to start our 1st in human studies shortly Based on some of the encouraging data we showed from preclinical studies, we will both run Immuno ununiversity study as well as head to head study. Given the high potency of the mRNA, We are optimistic and we believe there is a good opportunity that one can create a premier vaccine With superior efficacy versus existing flu vaccine, that's why we think Not only to demonstrate high titers, but also demonstrate superior efficacy would be very valuable And we are gearing up using all our experience to run trial fast to look at the time schedule For both immunoicity and head to head event trial.

Speaker 2

Angela, do you have anything to add?

Speaker 7

I think Michael covered all the key Just to reassure everyone that we are in constant communication with the FDA And they're just doing their risk benefit analysis like as they would with any and all molecule. And so we're very confident that There is a role that our JAKs do play and we just we are waiting eagerly for the response from the FDA. So thank you.

Speaker 2

Thanks.

Speaker 1

Operator, go ahead with the next question please.

Operator

Your next question comes from Daniel Busby from RBC Capital.

Speaker 8

Hi, thanks for the questions. I've got 2. First, on the COVID-nineteen vaccine, I think it's fair to say that Pfizer has been a bit more outspoken about the likely need for recurring booster doses than If CDC and FDA, at least at this point in time, can you provide any additional color about why that's the case? Is this simply a matter of letting the data catch up to what you view As a likely eventuality or is it a function of Pfizer and regulatory agencies interpreting the data that we have today perhaps differently. And second, with respect to Prevnar20, can you talk a little bit about your expectations for October's ACIP meeting And what you would characterize as a good outcome for the adult use vote?

Speaker 2

Maybe I can give you the answer to the COVID and then Angela I can take the PREVIENOR-twenty. I don't think that there is different interpretation of data between us and regulatory authorities around the world actually. There is extremely good collaboration and same interpretation. I think what we have said is not I mean, for months I'm saying that we believe based on the data that we've received holistically that we will need a booster 8 to 12 months and From the 2nd dose and we have seen that with the delta that might be needed a little bit earlier, particularly for some parts of the population. But we haven't submitted data yet.

Speaker 2

So I don't think that FDA or CDC can speak Because they have very different authority when they speak, it's extremely they have very different considerations. So we will submit those data By August 16, they are aware of them and the FDA needs to review them And then provide or not their approval. And then once it is approved, the 3rd Then CDC needs to understand the situation in the country at that particular period of time And they will have to make a recommendation about the rules. So the same happens in different countries and Depends on what percentage of the population have been vaccinated earlier in the year or later in the year, they may have very different sense of urgency. Clearly, countries that the big percentage of their population in the January, February timeframe, they have very different urgency Because the time is the clock is ticking.

Speaker 2

And with that, I will go to Angela about the prevalent trend And ACIP.

Speaker 7

Yes. Thanks, Albert. Well, you heard Albert talk about The very differentiated label that we do have with Prevnar-twenty in his opening comments. And just to reinforce that The 20 serotypes and the coverage that the broad coverage that provides, but also the fact that our label contains Indication for both IPD as well as pneumonia is really unique. And I think that this pneumonia indication It's a true strength of the Prevnar family, being that we're the only company that had The 80,000 capital trial where this pneumonia indication was based.

Speaker 7

And so with this, what we anticipate coming up in October are policy questions that will be addressed for both PCV-twenty as well as the MERV-fifteen. And we have an early read into this already because at the At ACIP meeting, different policy questions were posed for both products. For Prevnar-twenty, There's a question around vaccinations of 65 plus as well as 50 plus In addition to the 18 to 49 or 18 to 59 immunocompromised, for MERV15, The age range and the policy question posed there was 65 plus. So when you look at what's different, the only Prevnar 20 was being looked at for the 50 plus. So we'll have to see how all this ends up and we're looking forward to having a robust discussion at the October ACIP.

Speaker 7

But I think that the setup of these policy Give us a good view into what the discussions will look like and what the outcomes might be. So thanks for the question.

Speaker 1

Thank you, Angela. Next question please, operator.

Operator

Your next question comes from Chris Schott from JPMorgan.

Speaker 9

Great. Thanks so much for the questions. Just coming back to the COVID-nineteen booster, Would you envision this as an annual booster? Or with these levels of antibody titers, would you envision that 3rd dose could give more Sustained protection against COVID, I was thinking about just kind of how the market evolves over time. And then my second question was just coming back This is Jacks.

Speaker 9

And just two more detailed questions is first, any change in thinking as we think about abrocitinib, the 100 milligram versus the 102 100 milligram approvals. I don't see anything you've learned with regulatory interactions, etcetera, that's changed your view there. And then maybe second question on the JAKs is just with Xeljanz, what would an EMEA like label revision Mean for Xeljanz as we think about the U. S. Commercial opportunity?

Speaker 9

Thanks so

Speaker 2

much. Yes. Michael, I think you can take The booster in terms of is it a 3rd dose done you think or is going to be an annual revaccinations? And then Angela, we move to you for the Jackson Zeljens.

Speaker 3

Thank you. Well, Albert spoke earlier To the importance of both following vaccine efficacy in different regions of the world and entry of new strains. Right now, we have a surge in the delta strain. It's the most infectious strain ever seen and it puts Pressure on vaccinated individuals. The data we showed today indicate at 6 to 8 months, we can boost Up to 100 fold antibody titer after the dose compared to pre dose.

Speaker 3

At the same time, we hear reports from various parts of the world, real world evidence that they do see some breakthrough cases Of the delta variant in vaccinated. So this type of data is a typical package we will put together In this case, for August submission, as Albert alluded to, for a 3rd dose, we will continue to monitor And generate data on the impact of a side dose, which we do have ongoing in our Phase 3 and Possibly soon also in real world evidence. We expect the 3rd dose to be potent and somewhat maybe more long lasting Then the second, but we also recognize that the virus constantly evolve and you all start to notice about Delta Plus variance. Hence, while I cannot predict with certainty the future, I would not be surprised if similar to flu That we would need with Interwall to boost our vaccine against COVID, Whether this will be on an annual or based on simple diagnostic that allow you to be boost at the right time Before you risk for infecting ISI, we need to monitor. But all in all, we believe that Similar to a flu business, it may be likely for the COVID business, but we are gathering data to validate And we'll constantly work with key opinion leaders and regulators in interpreting the data.

Speaker 2

Angela?

Speaker 7

Great. I'll start with Abo. The conversations and the discussions that we're having with the FDA as it pertains to Abo have been consistent. And at this point as we've discussed earlier, we're just waiting and waiting to hear from them as to their sort of their points of view. But both doses And still in discussion.

Speaker 7

And I think ultimately, where you might be going with your question is What happens if we only get one or the other? And I just want to reinforce that we are very confident in the potential of ABRO whether it's for both doses All for 1. And the reason is that we come back to just the size of the market. We've discussed this before that there is A very, very large market with huge unmet need. There are 60 patients, 12 and up with atopic dermatitis, only 4,000,000 of those I'll be treated today with any systemic therapy.

Speaker 7

And because this is such a heterogeneous disease, patients really need different options. And so we're really looking forward to hearing back from the FDA, but we believe that the risk benefit profile of is going to have a role in the treatment of atopic dermatitis patients and it will be a welcomed addition And an additional option that patients really need. And then coming back to Xeljanz, You had a question around our EU label. So actually the changes to the EU label were posted in June, although we're still waiting for Final SPMC SMPC, excuse me. And there, the label is really looking at a cautionary note.

Speaker 7

Consider alternative therapies prior to using Xeljanz. And so, I think this is pretty consistent with how Xeljanz is being used today. If you look at where the utilization is, more than half of our business is in third line treatment, which is after The utilization of other treatments like biologics. So again, I think we'll wait to see how this plays out. But The fact that it is being recommended for 3rd line is very consistent with how it's being used today.

Speaker 2

Thank you.

Speaker 3

Sylvia, next question please.

Operator

Your next question comes from Ronny Gal from Bernstein.

Speaker 10

Good morning and thank you for taking my questions. The first one will also be in the boosters. I fully understand this point around The 3rd dose increasing antibody started significantly. The counterpoint that has been raised is that The 3rd dose is not needed because while antibodies wane, immunity against severe disease is not or at least have not So far weighing over time. Can you discuss a little bit how you see the waning of immunity in the large public and the elderly as you're seeing it For your vaccine, even if antibody dose comes down.

Speaker 10

The second question is around biosimilar business. This is something you highlighted. We are not really seeing a lot in the pipeline or the clinically available pipeline for your biosimilar business beyond the Humira biosimilars. Can you discuss your plans for that business? Are you is this still the emphasis for Fisor?

Speaker 10

Are you deemphasizing this?

Speaker 2

Thank you, Roni. Michael, again, I think I will ask you to make comments on If we see waning of immunity also in severe disease or in hospitalizations and We have seen data about that. Michael?

Speaker 3

Yes. Thank you, Alper. It's very good question. So first, We do see more of the 6 to 8 months, more rapid waning concerning infections and mild to moderate Symptoms. Those are likely entirely or to a large degree dependent on antibodies And the drop in tighter that we alluded to, if you raise it, may have a good probability to reverse that waning.

Speaker 3

Fortunately, the protection against severe disease, hospitalization and fatal outcomes Remains pretty high, but we do see some lowering, Particularly in real world evidence studies from Israel, we see some lowering in that protection in risk groups Such as older adults immunocompromised. That's likely because in addition to antibodies, T cells Help out in keeping up strong defense against severe disease, which is later in the infection process And particularly when antibodies have waned, but the slow, but still noticeable Gradual decline in protection also against severe disease is something that's on our eyes. And certainly, we believe that by boosting, you may strengthen antibodies and T cells. And you have an early warning signals whether to do that with some modest waning in hospitalization given its Risk of severe outcome or weight in your interpretation of that. All in all, I think a third Those would strongly improve protection against infection, mild moderate disease And reduce the spread of the virus, but also give you some extra muscle and reverse the slower Decline against severe disease.

Speaker 3

So this is how we're looking at it from multiple angles In order to describe the full opportunity with Boost.

Speaker 2

Thank you, Michael. Angela?

Speaker 7

Thanks for the question on the BioSymes. And certainly, we've been so pleased With the tremendous growth that we've seen in this area and the deep utilization of our biosimilars, I will say that for our biosimilar portfolio and where we see it today, since we've made this pivot To a pure play sort of innovation focus in our pipeline, we are really now looking at that biosimilar But I would say at this point, it's going to be more opportunistic and that we're really looking at our investments in our development program To be competitive and to make sure that we have the ability to focus on breakthrough therapies. So I'd say that going forward, we'll be more opportunistic because we're just weighing and trading off so many incredible Programs on the innovative side that we could also be doing.

Speaker 2

Thank you, Angela. And also you need to take into consideration Roni that we have right now so much Substrate in our R and D pipeline and so much opportunity to invest. But right now, we are clearly focusing on 1st in class and particularly best in class, 1st in class and there are so many, right? So that's why R and D budget is increasing. So thank you very much.

Speaker 2

Back to you, Chris.

Speaker 1

Thank you, Albert. Operator, next question please.

Operator

Your next question comes from Geoff Meacham from Bank of America.

Speaker 11

Good morning, guys. Thanks for the question. Just have 2. For Michael, on COVID boosters, when you look at the new cases of the Delta variant, The protection varies quite a bit in vaccinated individuals really depending on geographies around the world. So are there common themes that you've identified that could And what can you say about the T cell dynamics from the vaccine over time?

Speaker 11

And then second question For Albert or for Frank, just given the guidance hike from the COVID vaccine, does this change Pfizer's urgency or size of your capital allocation decisions? I would think that this would I would think that this would give you maybe more deal capacity to get over the LOE period at the end of the decade. Thank you.

Speaker 2

Thank you very much. Let me start with Adam Suro, Frank, who said the same, the second one. We always have this hardness and This extra cash inflows do not think neither our strategy is in the direction, not materially our ability to perform this deal. It give us Better flexibility and we plan to allocate capital to develop the business with a very Makes sense of urgency. Now on the COVID boosters and your question about why we see differences around Geographies, in fact, actually, as Michael will explain in a moment, the data from all geographies Consistent if you take into consideration the time element.

Speaker 2

But Michael, please take it.

Speaker 3

Yes. You said it very well, Albert. We first get the glimpse from real world evidence in Israel, given the very rapid massive vaccination they did Over basically January to March. And January started with older adults And those more vulnerable, they are now 6 to 8 months, and I have a large number of them. So that's why they see The vaccine waning and that's why they also communicate about our consideration for a SARS dose.

Speaker 3

Other countries that started later and amping up their rollout slower We'll and are starting to see similar trends representing what Israel saw In June, and we are getting those reports, which tells us we are increasingly Certain that what we have learned from Israel is likely to be a similar direction in many other places, Of course, we need to get all of that data in order to be fully clear about this, but the trends look similar. Finally, There is also an element that some countries, particularly UK, extended the interval between dose 12 To a longer interval, likely they will get a bit more long lasting protection And their data may come a few months later. The disadvantage of extending the range between dose 12 Is that you expose off the dose 1 many individuals to a high risk of reinfection, but you do gain likely somewhat Standard protection. So these are two examples. When you started to vaccinate, the time difference between dose 12.

Speaker 3

And finally, there may be, of course, some difference in care of this type of Diseases in different countries, but all in all, we expect it to look somewhat similar in its direction.

Speaker 2

And just to clarify when Michael says extended because the spread the first between the second is not that they would get more after the second, it is that The real protection starts later from the second dose. And this is the case that most of the data in the UK, For example, our 1 to 3 months and most of the data in Israel when we see it is in 3 to 6 months And most of the cases are happening there and we have also visibility to other data including some data that are forming here in the U. S, But the trend is the same. It's pointing to the same direction. But you have very good protection in the beginning, then there's a waning When you come closer to the 6 months, which is even more profound with Delta and waning, it is mainly for is more Profound for mild cases, but there is a clear waning also for hospitalizations and severe diseases.

Speaker 2

What Used to be 100% in the 1st month, now it's coming to the low 90s and in cases to the 80s. So that's the difference Between the different geographies, the time element, you will see very actually impressive consistence. Okay. Chris, back to you.

Speaker 1

Thank you, Albert. Sylvia, next question please.

Operator

Your next question comes from Andrew Baum from Citi.

Speaker 12

Many thanks. Firstly, in relation to Prevnar20, could you talk to how you expect ACIP to address The current recommendation for Pneumovax, has that dropped given the serotypes which you are now addressing with Prabhna20? 2nd, You commented on a number of your other vaccines. You didn't comment on your C. Difficile candidate where the primary endpoint is Rapidly approaching.

Speaker 12

Could you just comment on your relative degree of optimism or not for that vaccine? And then finally, in relation to the patient assistance program Ibrance, just looking at the script trends for Vazenio versus Ibrance, there's clearly a disconnect there. It could be due to the patient assistance programs, but it would be helpful to know the magnitude of which the PAP contributes and how that has changed Over the last 6 months or so. Many thanks.

Speaker 2

Thank you. Michael, do you want to take first this question you didn't speak about? I think it was Sidesh that you referred to.

Speaker 3

Yes. Yes.

Speaker 2

Are you still confident why you did that?

Speaker 3

Well, we had such a rich pipeline and we thought that we wanted to allow you to have question too and not Too much ourselves. We selected 8 assets where we thought you we wanted you to hear some update. If we continue with the trial, we passed one review that had 30 cases, And we're coming now to case numbers that are more sizable that you would expect to be able To relatively soon, have an opportunity to determine if vaccine efficacy is robust, And you will be able to have a readout. We are expecting this fall to have Another readout in that trial, pending events, but certainly, I Continue to believe it's a very well designed vaccine. There is precedent with antibodies if you utilize those toxins.

Speaker 3

So I continue to say, be patient. We continue to mature the study, And I do hope it will have an encouraging readout. But like in any clinical study, you can never be Fully certain about the outcome, but I remain very encouraged and optimistic myself.

Speaker 2

So thank you, Michael and Andrey. Just to clarify, no, it's not that there was something behind it. It is that we had to select Few assets that we could present new data. Angela, please take the question about the pneumovax, What do you think ACIP will do and the program of Ibrance, the path program?

Speaker 7

Sure. Well, the question of Pneumovax is something that we can refer to in the ACIP discussion that was had recently. Again, comes back to the policy questions that were posed. And clearly there, just to reinforce what I said earlier, which was that There were different policy questions posed for both PCV20 as well as MERV15. The question of whether 50 plus We'd be vaccinated with post only for PCV20.

Speaker 7

And specifically, your question about Pneumovax, That is being evaluated only with MERC15, not with PCV20 or with any PCV. So again, different policy questions and very specific to each pneumococcal vaccine. And then going to your question about the PAP usage, we are seeing this Clearly as a trend that is very much aligned with the economic hardships that we're seeing as a result of COVID and the pandemic. The Ibrance patient is a younger population. And so, and because they're on commercial insurance, Their economic status is very much then aligned to employment.

Speaker 7

And what we've seen throughout the pandemic Two things. 1 is the slowdown in new patient starts, which actually is one of the reasons for this So the negative growth that you saw in Ibrance in the U. S. And the second and more prominent one this quarter is the PAP. So I think what you're seeing here is very consistent with what we're seeing on the in the environment generally as it pertains to economic hardship.

Speaker 7

And so that is definitely one explanation. And then the other explanation would be a slowdown in the new patient starts

Speaker 1

Sylvain, next question please.

Operator

Your next question comes from Carter Gould from Barclays.

Speaker 9

Good morning. Thanks for taking all the questions and I appreciate all the color on the pipeline from Michael. A couple from us. First, give us a pretty comprehensive set of updates, but in terms of expectations on timing from the pediatric study, I don't believe I saw that reference and Just wanted to confirm that the recent asks from FDA haven't pushed timelines back there. And then, as we think about the oral proteasome inhibitor, Clearly, you've moved very fast there.

Speaker 9

Can you comment just around your ability to supply the market in bulk sort of out of the gate, assuming The timelines are tracking kind of how you're messaging. And then, apologies if you guys addressed this already, but it seems like one of the things you guys do control is On the JAK side is the potential presentation of the JAK oral surveillance data. Any color on when we might see that presented at a medical meeting? Thank you.

Speaker 2

Yes. Let me take quickly the first two and then for the Jack or Michael, maybe you can see. The pediatric study, We are as you said, as we have said, we are projecting in the September timeframe, immediately after But FDA has asked some requirements and we are looking at them. But our intention is to try Even with these requirements to try to come in the same timeframe. So we are not changing right now our expectations as to when the study can recruit.

Speaker 2

We just If we need to do more in less time, we will try to accommodate that. So that's the first one. On the oral supply on the oral And the supply, as you know, this is not a compound that we have Seeing clinical efficacy data yet, so the risk is clearly higher than anything else. But of course, the disease is moving. So I have authorized our team to invest in manufacturing at risk significant quantities Of the oral, so that if we are successful, we will have Quantities for the world as much as possible.

Speaker 2

That's a significant investment that we are doing. At risk, it could go all the way to $2,000,000,000 including some of the research work that is happening. So but I think it is the right thing to do and I gave them This is not the thinking about cost right now. This is the thinking about success of the oral program. And then for the ZAC, Michael, any do you know when the study will be published or the results?

Speaker 3

We have focused to share all the data of the study obtained this far with regulators. And as you know, conclusions have already been posted about the data From both European, like the PRAC Committee and U. S. So while there isn't a date yet when the study will be Published, regulators have had access to it and have made updates. So I think the most critical element is for the U.

Speaker 3

S. European regulator finalize things. And Like Angela spoke to, that will give clarity to the class of JAK and to CELIANS and which patients with treatment lines that benefit And as you know, in addition to the study, we have years, 10 years of surveillance, And we continue to share all of that data as the study was mainly in a subset of patients With increased age in cardiovascular risks, well, of course, our surveillance carries all CELIENS patients, And we have continued to share those robust data.

Speaker 2

Thank you.

Speaker 1

Thank you, Albert. Operator, next question please.

Operator

Your next question comes from Geoffrey Porges from SVB Leerink.

Speaker 13

Thank you very much for taking the question. Michael, one for you. You mentioned the delta plus variant, Which of course has picked up the K417N mutation. How concerned are you about Delta Plus? And then is there the possibility But of course, it will pick up E484 ks and then be even more resistant to vaccine induced immunity.

Speaker 13

And relative to that, Do you have a view yet as to whether the best booster strategy is the original Wuhan strain, the beta strain, the delta strain, Delta plus strain. And then lastly, have you contemplated, heterologous boosting With your vaccine after, for example, the challenge vaccine or vice versa, is that something you're studying?

Speaker 2

Michael?

Speaker 3

Yes. Starting with Delta Plus. So right now, Delta is a very fit Virus and continue to infect and dominate. It's too early to know whether end of the current delta plus We'll have transmission sufficiently to outcompete Delta. So when we say plus, it means just Continue to monitor into the future, at some time point, whether 6 to 12 months, There are likely going to be strains that pick up additional mutations, but stay also fit.

Speaker 3

Meanwhile, what we have seen with the wild type vaccine is that we see for each dose Not just a higher magnitude of antibody, but breadth. The repertoire of different cells producing antibodies grows and grows. So you seem to cover with increasing dose more variant. If you go back and look at the slides, we use the beta variant as an example. There was somewhat of a difference of the dose 2, harder to neutralize the beta variant.

Speaker 3

After dose 2, 3 easier to neutralize the beta variants. So that's why we, this far, find the wild type 2 very useful For existing and new variants, now as Albert has said before, we always want to be prepared for the unexpected, And we continue to prepare Delta and Delta Plus strength. But right now, we do think that wild type of It's going to be very efficient, but we always want to be ahead of the curve. I think the way to win this game is to keep up high reduced amount of virus, and that's why we do both We will study BOOST with existing and are prepared, if ever needed, to have an updated if the virus can be fit And breakthrough immunity. Finally, on the heterologous boost, there are trials coming out performed, for example, in UK That showed favorable outcome for those that vaccinated with AstraZeneca on getting an mRNA Boost such as with the Pfizer BioNTech, which they use, those are data that you should review, and I'm sure patients and physicians will involve their own conclusion.

Speaker 3

I know there is in U. S. Similar studies to benefit from that mRNA vaccines can be given repeatedly, While adenovirus delivered vaccine has limitation for repeat use.

Speaker 2

Thank you, Michael. And again, Jeff, I want to make to emphasize that our strategy when it comes to that we take no chance This is too serious to risk. So when we have a variant that it is of concern, Always, we make immediately a vaccine to try. We first time we had that with Beva, that was Seem very aggressive. So we start doing the vaccine and we have a vaccine right now.

Speaker 2

We are going to submit it to the FDA. Eventually, we don't need it. It was very clear because after we did that, we got data for immunogenicity, but also we got the South African study, but we have 100% Efficacy in the better or smaller numbers, but 100% efficacy. So we know we don't need it, but we try. The same we do now with Delta.

Speaker 2

Looks like we will not need it. We have everything that we see so far, but we are developing 1 in the Backstage, so in case something goes wrong because biology is sometimes unpredictable, we would not have to wait 3 months because this is our time right now from Today, we assign a variant as a variant of concern in our own interpretations, we take 95 days To be able to have a vaccine. So that's why we always try to be ahead of the curve. That's too serious Thank

Speaker 1

you, Alper. Sylvia, next question please.

Operator

Your next question comes from Louise Chen from Cantor.

Speaker 14

Hi, thanks for taking my questions. So first question I have for you is do you think a full BLA approval would actually increase vaccination rates? And do you think you might see that as early as this year? And then secondly, how receptive do you think U. S.

Speaker 14

Regulators are to a booster shot? We see a lot of conflicting headlines, so just curious what your discussions have sounded like there. And then lastly, your RSV vaccine, you showed 100% efficacy rate. So just curious if you could elaborate more on that market opportunity for you and how big that market is in terms of

Speaker 2

Yes. On the vaccination rates, Luis, From what I see and what we see with the different calls from people that they are reluctant, it seems that this will play a role. Some people will change their reluctancy to willingness to get vaccinated if the vaccine gets full approval. And In terms of the timelines, again, I leave it with the A. I know that they proceed are multi priority.

Speaker 2

The second, how receptive regulators are on a third dose? I think regulators are receptive or not to date. And they need to see the full package of data. Once they see it, they have to speak. So I don't want to make Comments about that.

Speaker 2

And RSV, which is clearly a very, very large opportunity, It's growing even more because of the we see that the immunology of the disease is getting more and more hot. I will ask Michael to give us some color here.

Speaker 3

Yes. We are very excited about the data And opportunity for an RSV adult vaccine. There are 100,000 of cases and per year in the U. S. And they are particular, of course, difficult for older adults above 60 or Adults that have underlying conditions, whether chronic lung diseases or immune compromise, Now there are actually up to 15,000 deaths just in the U.

Speaker 3

S. Annually. So it's not just about a difficult disease or a fatal outcome. So we think there is a very large opportunity. Now with our vaccine, to the best of our knowledge, it's the only vaccine In late clinical trials that target RSV A and B subgroup.

Speaker 3

Please recall that The A and B subgroup variants are likely of similar quantities circulating. Some years, one is larger than the other, So we cover all of the available RSV protection by a bivalent vaccine if shown In the final studies, also I wanted to make it clear that When you look at the data in our 3 challenge study of the very prominent 100% protection, There are benchmarks published, and please have a look, from the adenovirus that is also now In advanced clinical trials, we showed in the very same model pursued by the very same UK Institute, Half of the response, around 50%. So we think we have a potent vaccine. We have a well tolerated and the unique Covering both strains, you have some cross reactivity between the strains, but not a strong protection unless you have both Parts for the A and the B strain. Angela, anything you want to shed light on how you commercially see this?

Speaker 7

Yes. Thanks, Michael. And maybe just to reinforce what Michael said, which is that there are 100 of 1000 of older adults that are hospitalized And tens of thousands of deaths each year. In fact, this is the 2nd leading cause of respiratory illness following flu. So we think that we have a great opportunity to in fact develop this market because it is quite under diagnosed today and underreported.

Speaker 7

And frankly, it's really in the sweet spot of what we do with adult vaccinations and also seasonal vaccinations, which go well with our Prevnar franchise. So all in all, a tremendous and exciting commercial opportunity.

Speaker 2

Thank you to both. As you can see, there is a lot of excitement To both Angela and Michael, and I share the same both for the size of the unmet medical need right now, But also for the capabilities of what looks like a very effective vaccine remain to be Proven with a Phase 3 study that we are going to execute with the same speed as we are doing lately our vaccine studies. Back to you, Chris.

Speaker 1

Thank you, Albert. Sylvia, we're just over time, but maybe we could do one very brief question, please.

Operator

Your next question comes from the line of Terence Flynn from Goldman Sachs.

Speaker 9

Hi. Thanks for taking the question. Maybe I just had a 2 parter. First, just wondering if you can provide the latest point estimate on your vaccine efficacy From the Phase 3 trial, I think you gave us that number back in April, it was around 91%. And just wondering if there have been any severe cases in the vaccinated cohort?

Speaker 9

And then on Prevnar 20, how are you thinking about that in the context of your long term guidance? Can that actually grow your Prevnar franchise significantly? And Lian, any more detail you can provide there? Thank you so much.

Speaker 2

Michael, it was I think 92%. Can you comment on the latest estimate and if you have seen any breakthrough?

Speaker 3

Yes. This is the Phase 3 trial that will be very soon published on medRxiv and it will appear in a top Peer reviewed journal. Please check-in on medRxiv to get details. It may be up any day this week. It's covered up to 6 months.

Speaker 3

1st 2 months, 96% protection, Then above 90s between months 24 and then about 83% to 84% Months 4 to 6, we have retained during that period very high protection against severe disease and hospitalization.

Speaker 2

Thank you, Angela. Michael, excuse me, Angela, about the Prevnar, Do you think you can draw it? I'm asking you to do it. What do you think?

Speaker 7

Well, I think again, it comes back to the policy There are 2 questions being posed that are different, to what we have with prednought13 today, which is number 1, The ability should we or should we not be vaccinating those that are 50 plus and then secondly those that are immunocompromised 18 to 49 or 18 to 59. Both of those populations are different to what we have with 13. So we are engaging and we will be engaging at the ACIP, of course, Discussing our data with the relevant decision makers and stakeholders and sharing our information. And we hope to have We need to have a robust scientific discussion to really understand what these opportunities are.

Speaker 2

Okay, Angela. We will give you some time To grow it. So with that, I think we've come to the end. Thank you for joining us today for your continued engagement with Pfizer. We really We learn a lot from this engagement.

Speaker 2

Our experience with the COVID-nineteen vaccines have taught us a great deal about what is possible And what is impossible and most things are possible. So most notably, it has told us that we can drive step changes at Pfizer, not just incremental change. To keep you updated on the progress we are making in R and D, we will host our next focused investor update later this year. A date will be announced soon. For this event, the Pfizer vaccine teams will provide an update on our vaccine pipeline progress, including our plans To continue advancing our cutting edge science in such areas as mRNA programs for COVID-nineteen And flu as well as the RSV research programs for both maternal and adult indications and other mRNA vaccines that we are working on.

Speaker 2

Before we close, I want to once again thank Chuck Tran. Chuck for his many contributions to Pfizer and for successfully elevating Our Investor Relations function, we are best in class. Chuck, you are a pro. And on behalf of all Pfizer colleagues, I wish you and your family all the best in the next chapter of your life. Chuck is leaving behind some big shoes to fill, Which is why you are thrilled that Chris Stivo has decided to join the Pfizer team.

Speaker 2

Chris joins us from the Alexion Pharmaceuticals In Boston, where he was Vice President and Head of Investor Relations, he brings a wealth of experience as a buy side analyst And portfolio manager as well as a strong network of relationships across the investment community. His deep knowledge of the healthcare industry Would be a great asset as we continue to advance our innovative pipeline to deliver breakthrough therapies and vaccines to patients and long term value

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