Pfizer Q2 2022 Earnings Call Transcript

Quartr
Provided by Quartr
July 27, 2022

There are 19 speakers on the call.

Operator

Good day, everyone, and welcome to Pfizer's Second Quarter 2022 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,

Speaker 2

Chelsea. Good morning, everyone. Welcome to Pfizer's 2nd quarter earnings call. We anticipate that this call will last 90 minutes. I'm joined today by Doctor.

Speaker 2

Gord Borla, our Chairman and CEO Dave Fenton, our CFO and Michael Dolson, President of Worldwide Research and Development and Medical. Joining for the Q and A session, we will also have Angela Huang, Group President, Pfizer Biopharmaceuticals Group Amir Malik, our Chief Business Innovation Officer William Powell, our Chief Development Officer and Doug Lankler, our General Counsel. Materials for this call and other earnings related materials are on the Investor Relations section of fizer.com. Please see our forward looking statements disclaimer on Slide 3 and additional information regarding these statements and our non GAAP financial measures is available in our earnings statements. With that, I will turn the call over to Albert.

Speaker 3

Thank you, Chris. Hello, everyone. I'm proud to say that Pfizer continued to deliver strong operational performance in the Q2 and has increased its full year 2022 operational financial forecast for revenue and adjusted diluted earnings per share, all while operating in a challenging foreign exchange environment. Compared with the Q2 of 2021, Global revenues were up 53 percent operationally to $27,700,000,000 and adjusted diluted EPS increased 100% operationally to 2.04. Both results exceeded consensus analyst expectations and the quarterly revenue figure represented the largest in Pfizer's history.

Speaker 3

Key growth drivers for the quarter included PAXCLOVID, Comirnaty, Eliquis and Vintacal Vintamax globally and our Prevnar family of products in the U. S. Year to date, we have reached an estimated 845,000,000 patients around the world with our innovative medicines and vaccines, which represents a 77% increase from the prior year period. And we did all of this while also taking steps to help address broader issues impacting Global health, including climate change, equitable access and the war in Ukraine. So where we go from here?

Speaker 3

After 2.5 long years, like everyone else, we would hope that this global health crisis will be over soon. But as much as hope is important, hope is not science. And science is telling us that COVID-nineteen likely will remain a major global health care concern for years to come. We believe that Pfizer is well positioned not only to maintain, but to grow both our commercial and scientific leadership in the battle against COVID-nineteen. In terms of our commercial leadership, we believe Pfizer's skills are even better suited For operated in open markets than they are for government contracting markets and will be even more competitive when this transition happens.

Speaker 3

Recently, Angela announced a new commercial structure that prepares us to provide even better support for the ongoing Comirnaty and In terms of our scientific leadership, we expect to further enhance our position through the continued introduction of new innovations, Including preparation of new variants of concern and potentially improving the durability of PROTEXX, so far we have Fortunate that most of the variants have led to less severe illness, but there remains the possibility that the future variant could emerge that combines Omicron's contagiousness With the original virus severity, this is a scenario no one wants to imagine, but one for which we need to be prepared to why we're doing all these That's why also it is critical that Pfizer continues to invest in the research and development of COVID-nineteen vaccines and treatments. With this context as a backdrop, let me provide an update on our current COVID-nineteen offerings and then continue with other products. I will start with Commernert. Today, we have shipped more than 36,000,000,000 doses of our vaccine to 180 countries and territories around the world. Comirnaty remains the most utilized COVID-nineteen vaccine in the markets in which we operate that report market share date.

Speaker 3

Pfizer's cumulative share of doses administered in these markets have increased from 52% in January of this year to 63% in July of this year. In developed markets, our share has increased from 59% to 68 Next, I would like to briefly touch on the topic of vaccine boosters for the fall. Outside the U. S, Global regulators have issued guidance to advance an omicron adapted bivalent vaccine candidate to help address the continued evolution of the virus. As such, Pfizer and BioNTech have submitted data to the European Medicines Agency on the safety, tolerability and immunogenicity of the company's bivalent omicron BA.

Speaker 3

1 adopted vaccine candidate. We also continue to work with health authorities around the globe on regulatory submission. The U. S. Food and Drug Administration recently asked biopharmaceutical companies, including Pfizer, to develop a certified vaccine containing an omicron BA-four, BA-five component, and we begin clinical trials with these vaccines candidates.

Speaker 3

Pfizer is currently Proceeding with development of a COVID-nineteen bivalent, Omicron BA. 4, BA. 5 booster vaccine candidate and is targeting this fall for rollout in the U. S, subject of course to regulatory authorization. Pfizer is well positioned to satisfy its current contractual obligations and potential demand within production capacity through the end of the year.

Speaker 3

Because of our robust manufacturing capabilities, we are planning to deliver both variant vaccines in the fall Turning to Paxlovid. We continue to be very pleased with how things are progressing in the U. S. As we are seeing several initiatives supporting increased access for eligible patients. First, the number of facilities with paxclo optic supply continue to increase with more than 41,000 sites live as of July 15, an increase of more than 7,000 sites since early May.

Speaker 3

We are pleased with the FDA July 6 revision of the emergency use authorization for paxlovid that authorized state licensed pharmacists Prescribe the treatment under certain conditions, thereby expanding access for patients. As you can see on this slide, We have seen a nearly fivefold increase in paxlovid utilizations since the Q1. We also continued to retain greater than 90% market Oral COVID-nineteen treatments in the U. S. And are taking a state by state approach to engaging key government officials to discuss Their access strategies.

Speaker 3

We are also continuing to work with states to educate consumers, healthcare providers and pharmacists about the importance of treating all appropriate high risk patients rather than limiting treatment to the severely In spite of the strong growth we have seen in PAXCOVID uptake in the U. S, due to our and our governance efforts, We estimate that a significant amount of eligible patients outside the U. S. Are not yet being treated with the drug and may not know They are at high risk of progressive to severe disease. So we believe there remains substantial opportunity to grow paxlovin utilization.

Speaker 3

For international developing markets, we are seeing significant increases in usage across many markets, reflecting the recent wave of BA. 4five and resulting increases in hospitalization, ICU admissions and deaths. For example, over the month from June 24 to July 24, Average daily deaths in Europe almost doubled from a low of 0.6 per 1,000,000 people to 1.15 per 1,000,000. In Japan, they almost tripled from 0.12 per 1,000,000 people to 0.34 per 1,000,000 people. And in Australia, they increased from 178 per 1,000,000 people to 259 per 1,000,000.

Speaker 3

While we have less precise numbers on market shares Outside the U. S, our internal estimates indicate that we saw an estimated 116% increase in usage between June 24 July 15 across international developed markets where we have supply agreements. So we believe there is a significant opportunity to continue the growth outside the U. S. As physicians become more knowledgeable about PAXLOVID and treat appropriate patients.

Speaker 3

While COVID-nineteen remains top of mind for many people, we are seeing We are very pleased with the success of our U. S. Launch of Prevnar20 for adults. 2nd quarter U. S.

Speaker 3

Revenues For our Prevnar family, vaccines for adults were up 3 37 percent operational compared with the prior year quarter to $431,000,000 with Prevnar to ENDYRA presenting more than 3 quarters of the total adult revenue. The great majority of U. S. Healthcare networks, IDNs and retailers who have made formula decisions have chosen Prevnar20 alone has the higher valency pneumococcal vaccine of choice to help protect adults. This has resulted in PREMIER20 having a 97% market share.

Speaker 3

This is also the first time that has been a routine recommendation for partner for people in the 19 to 64 age Group with underlying medical conditions. This group has an increased risk for contracting pneumococcal pneumonia And unfortunately, has historically been the hardest to activate. Lastly, we believe the simplicity of PREDAR-two N being the only vaccine that can help protect patients Quarterly revenues for Ibrance grew 1% in the U. S. Compared with the same quarter last year, despite a continued increase in the proportion of patient This marks the 1st quarterly revenue uptick in the U.

Speaker 3

S. Since the Q4 of 2020, which is an encouraging sign. Total volume in the U. S. Increased 3% compared with a year ago quarter.

Speaker 3

Before I turn it over to Michael, I want to touch on some actions we have taken recently to further demonstrate our commitment to environmental, social and Governance, ESG principles. We recently announced an accord for a healthier world. Under this accord, we are offering all of our patent High quality products that are available in the U. S. Or the EU on a not for profit basis for 1,200,000,000 people living in 45 lower income countries.

Speaker 3

This includes all future Pfizer products as well. I'm thrilled to say that the first product under this accord has arrived in Rwanda with more on the way. Pfizer experts also held a session with 100 random medical professionals to discuss efficacy and dosing of this milestone. This is just the first step of Accor's implementation, but an important one that will impact many lives. We also recently announced our commitment to The net zero standard across our value chain by year 2,040.

Speaker 3

This is 10 years ahead of a new voluntary external standard. This includes aiming to reduce our company emissions by 95% and value chain emissions by 90% with the next roughly 18 years. In response to the war in Ukraine, we are donating the equivalent of all profits from sales in Russia to causes that provide direct humanitarian to the people of Ukraine. Our first down payment of $5,000,000 is going to 8 global and local NGOs to support humanitarian relief and the support's efforts, And we will continue to channel these profits to the Ukrainian people until peace is achieved. I'm also very proud to share with you that In a recently published report from MSCI, Pfizer's annual ESG rating increased 3 notches Compared with June 2021, going from B to A, this is just the latest The external recognition we have received for our commitment to sustainable and ethical business practices.

Speaker 3

I couldn't be prouder for our colleagues' commitment to good governance practices, quality and integrity. With that, I will turn it over to Michael to update you on our R and D efforts. After Michael, Dave will provide financial details on the Q2 and our outlook for the remaining of 2022.

Speaker 4

Thank you, Albert. I'd like to start by highlighting 2 recent leadership appointments. I've appointed Annalise Anderson to lead Vaccine Research and Development, succeeding Katherine Janssen, who previously announced her retirement. With more than 2 decades of biopharma and knee experience, Lisa most recently served as CSO for Over the last 2 years, she has led a team of infectious disease biologists that designed and delivered PAXLOVID to an emergency user authorization. Under her leadership, we also advanced several bacterial vaccine programs into clinical development and approval.

Speaker 4

I've also named Charlotte Allaton, CSO for Anti Infective, a new research unit. Creating this new research unit allows us to spend our focus beyond medicines that typically are used in hospitals. Charlotte is an esteemed scientist who will broaden our antivirus strategies With additional efforts in antibacterial and antifungal science and medicines. Charlotte has been our Head of Medicine Design, most notably Co leading the discovery and development of PAXLOVID and will continue in that role as well. I have had the privilege to work closely with Liza and Charlotte for more than 10 years and We're continuously impressed by them as world class scientists in their respective fields of expertise.

Speaker 4

Both I've demonstrated good product hunting skills and a sound business mindset. I'm looking forward to working with them in their new roles. Let's begin with COVID-nineteen. The pandemic continues to evolve into a disease, which is causing significant disease burden, including high rates of acute disease, medical care utilization, hospitalization and death during the entire year. A growing number of patients affected by acute COVID infections are developing chronic disease and suffering from long COVID symptoms affecting multiple organs such as the lung, heart, kidney, brain and the vascular system.

Speaker 4

We have seen major waves So variants of concern emerge quickly, become dominant, then be superseded by the next variant. Omicron And its sub lineages are the most antigenically distinct compared to prior variants of concern, most more transmissible And show evident of partial immune escape from existing vaccines. As the composition of SARS CoV-two changes, It is essential we have launched new approaches to extend the level of protection that Cominarty originally conveyed. In a clinical trial, we evaluated the safety, tolerability and immunogenicity of mono- and bivalent omicron BA. 1 modified vaccines Administered as a 4th dose in more than 1900 participants over age 55.

Speaker 4

We're also evaluating different doses of bivalent PO1 in participants 18 to 55 years of age, while we saw promising responses to both mono and bivalent In the over 55 population, we move forward with bivalent following guidance from regulators. The VA1 vaccine candidate elicited a superior immune response for VA1 compared to the current version of the vaccine. A zero response rate, which exceeded non yield priority and utilization activity, which increased substantially. The BA. 1 vaccine utilized wild type and delta similarly to the current version of the vaccine, suggesting that omicron modified version maintained response for the ancestral and other viral variants.

Speaker 4

Based on these states and following guidance from regulators, We have completed regulatory submissions in Europe, U. K. And Canada for the 30 microgram bivalent vaccine in individuals 12 and older And planned submissions in other markets soon. The data also show this vaccine candidate neutralized Omicron DF-four and five, Though to a lesser extent in BA1, this suggested a need to develop both a BA1 modified vaccine and a VF45 modified vaccine. We studied VF45 monovalent and bivalent booster candidates in mice and found a substantial increase in utilization responses to all omicron variants of concern.

Speaker 4

Neutralizing titers against BR4-five These data were shared at the recent FDA Advisory Committee meeting as a potential surrogate to help We plan to submit the BF45 bivalent vaccine candidate for emergency use in the U. S. In preparation for the fall booster campaign. To adapt more rapidly, we've agreed with FDA that this submission will be based Safety and immunoicity data generated in adults with an omicron modified BL-one vaccine and supported by BF4five bivalent preclinical data and VF-five bivalent chemistry manufacturing and controls data. This strategy is bolstered by previous experience showing that overall responses have been similar between human clinical and mouse data, Our clinical experience with beta and Omicron modified vaccine candidates and by leveraging our mRNA platform and manufacturing experience For the current vaccine, to support future potential U.

Speaker 4

S. Licensure and global registration, We plan to initiate a clinical study to evaluate the DF-four bivalent vaccine. The clinical study design is under discussion with FDA. We aspire to continue leading with the science and are working to identify vaccines that will help provide strong and durable As new SARS CoV-two variants emerge, we aim to deliver a next generation COVID-nineteen vaccine that can provide durable Antibody and T cell immune protection against severe disease and hospitalization for at least 1 year. We plan to take a stepwise approach by designing and testing different candidates that engage multiple arms The immune system including antibodies and T cells.

Speaker 4

First, yesterday, we announced the start of a Phase II study evaluating The bivalent modRNA vaccine candidate, which consists of RNA encoding novel enhanced pre fusion spike protein for the SARS CoV-two And Cestran strain and an Oncon variant. The ENHANZE spike protein encoded from the mRNA has been modified with the aim of increasing The magnitude and breadth of antibody neutralization response that could better protect against COVID-nineteen, we project Delivering key clinical data this fall. 2nd, we plan to initiate a proof of concept study with a potential And SARS CoV-two vaccine candidate by the end of the year. This combines the super stabilized spike sequences with a T cell enhancing construct aiming to extend durability of protection against severe disease and new emerging SARS CoV-two viral Now turning to Paxlovid. Last month, we submitted a new drug application to U.

Speaker 4

S. FDA Seeking approval for the treatment of COVID-nineteen in both vaccinated and unvaccinated adults and pediatric patients 12 years and over Weighing at least 40 kilograms and at high risk for progression for severe illness. We anticipate PDUFA date in the Q1 for 2023. We plan to generate further data in those who are immunocompromised, hospitalized with severe COVID-nineteen and at increased risk for poor outcome due to the disease or who are pregnant. We also are considering multiple collaborative studies to evaluate Potential treatment for long COVID.

Speaker 4

Finally, we are working with FDA to finalize a protocol to study patients We believe the occurrence of COVID-nineteen rebound is uncommon and not uniquely associated with any specific treatment. At this time, cases are being reported at a rate consistent with the EPIC HR trial. Turning now to flu. We know that currently available vaccines are not optimal in addressing the unmet need As each year many people are infected, hospitalized and die, resulting in tremendous public health and economic impact. In part, this is because the flu vaccine development cycle is inefficient and even when the current seasonal vaccine strains match circulating strains well, They typically confer only 40% to 60% protection.

Speaker 4

Potential advantages of the mRNA platform include Shortened timeline to enable a quicker response each season, improved strain matching, faster and more reliable manufacturing and broader immune response for These responses appear to be critical for the protection against severe disease and hospitalization in infectious viral disease. Here we show Phase II T cell data for our quadrivalent mod mRNA flu vaccine candidates In subject 65 and older, we believe this is the first evidence of a flu vaccine candidate inducing substantial responses for both CD4 and CD8 T cells. On the left, at day 7, the CD4 T cell response was more than 2 fold for all 4 flu strains for our vaccine compared to a current high dose vaccine our recommended in the U. S. For adults 60 Over half the cohort receiving our vaccine candidate had a more than 2 fold response.

Speaker 4

On the right at day 7, the CD18's response And responder rates were greater for all four strains for our vaccine candidate versus the comparator. Our belief is that these encouraging T cell responses combined with higher seroconversion rates for flu Based on these data, we plan to initiate a Phase III efficacy study this year. We are excited And 1 on our once daily candidate known as 1532 have been accepted for the European Association For Study of Diabetes conference in September. These investigational medicines were designed in house by Pfizer's innovative In a Phase I study in adults with Type II diabetes, after only 6 weeks of treatment, 1532 drug robustly reduced mean daily glucose to almost near normal levels. Participants also experienced weight loss of up to 5 kilograms compared with 2 kilograms Similar changes in body weight were observed in participants with nondiabetic obesity.

Speaker 4

1532 is characterized by fable once daily pharmacokinetics, low risk for drug drug interaction, Robust efficacy across multiple metabolic endpoints in GLP-one receptor agonist class like tolerability, which overall encourage us Thanks for our Phase II study to pick the winning candidate prior to a potential Phase III study start. These development programs may lead to potential indications in type 2 diabetes, obesity NASH and cardiovascular risk reduction in Type 2 diabetes and obesity patients. Over the 12 past months, we have built a strong inflammation and immunology portfolio was approved for atopic dermatitis in adults and last week received priority review designation in U. S. For adolescents 12 to 18 years.

Speaker 4

We are nearing a regulatory submission for etrasimod in ulcerative colitis. We have submitted regulatory application in U. S, Europe U. K. For ritglasitinib for the PCA areata and are awaiting acceptances.

Speaker 4

We also plan to start Phase III study of ritrasitinib in vitiligo this year. We are pleased to now share promising new updated data from our Anti interferon beta monoclonal antibody in specialized rheumatology. Patients with amatomyocytes show Elevated type 1 interferon gene signature in blood, skin and muscle correlating with disease activity in skin. As we continue our development of this candidate, a potential breakthrough therapy for hard to treat thrombocytosis, which affects skin and muscles, We believe it may have the ability to address a broad effect of inflammatory autoimmune diseases, possibly including polyneurocytes and lupus. On our Q3 2021 call, I shared data from our ongoing Phase II dermatomyositis study focused on skin inflammation and showing significant reduction in disease activity when compared with placebo in just 3 months of treatment.

Speaker 4

Now both doses met the primary efficacy endpoint in skin predominant disease. The disease also manifests with progressively debilitating muscle weakness and fatigue. Early data suggest that in a small cohort, Patients with muscle predominant disease, our candidates resulted in numerically better efficacy score across all key muscle endpoints, including patient reported outcomes after 3 weeks. We plan to submit the data for presentation once the study completes. Now a promising update on elvranatumab, our investigational B cell maturation antigen CD3 targeted by specific antibody.

Speaker 4

At ASCO, we presented data from a Phase I trial in people with relapsed refractory multiple myeloma whose disease is refracted to at least one agent In each of the 3 major classes of medications approved for the disease, we saw a confirmed overall response rate 64% and 35% of patients achieved stringent complete response or complete response. More than half who received prior VSMA directed therapies such as antibody drug conjugate or chimeric antigen receptor T cell We achieved a response. Responders' probability of being event free at 9 months was 77%. Elbrunatumumel elicited durable minimal residual disease or MRD negativity, meaning no disease was Detector of the treatment in all evaluable patients who experienced a complete response or stringent complete response. Molecular responses were durable as well with 60% 62% of those complete responded documented to have MRD negativity It was a broader program with potential real estateian enabling studies, MAGNETTISM5 in patients with double class exposed multiple myeloma And MEGATIVE M7 in newly diagnosed post transplant patients with multiple myeloma.

Speaker 4

There is potential for deep and durable results that can be broadly accessible to patients due to off the shelf, subcutaneous and convenient dosing. The efficacy and safety profile we've seen today for this year showing healthy progress in the pipeline. It was an important quarter for COVID execution, and we look forward to sharing

Speaker 5

Thank you, Michael, and good morning to everyone. As this is my first call as CFO, I thought I would set the stage for the next chapter of Pfizer and our relentless focus on creating long term shareholder value. Over the past few years, Pfizer's cash generation capabilities have expanded significantly And the efficient deployment of this capital is more critical than ever. It's clear to me the company is uniquely positioned for both growth and at the same time enhancing financial returns. And as we look to the future of the company, we are focused on 3 Primary areas to drive significant shareholder value.

Speaker 5

1st and foremost is our continued emphasis and investment in science and innovation. We are investing internally and externally to create breakthrough medicines, deploying more than $50,000,000,000 in this area in Over this period, we recognize that our dividend represents an important component of returns for our investors. And finally, from time to time, we will return capital to shareholders through value enhancing share repurchases. Over the past 3 years, the company has allocated nearly $9,000,000,000 in this area. Clearly, maximizing shareholder value will be a major focus, And I believe that all three areas will contribute to our success.

Speaker 5

More recently and year to date, we've deployed more than $12,000,000,000 in innovation, paid dividends of $4,500,000,000 and repurchased $2,000,000,000 worth of our shares. This demonstrates an ongoing commitment to our robust capital deployment framework. With that, Now let me briefly review our financial results for the quarter. I will confine my remarks largely to adjusted and operational growth figures. Turning to the income statements.

Speaker 5

Revenues increased 53% operationally in the Q2 of 2022. These results were driven by momentum in PAXLOVID sales, strong sales of the COVID-nineteen vaccine and underlying strength from a number of our key products. Excluding Paxlovid and Comirnaty, biopharma product revenues grew operationally by 2% compared to the prior year. In line products, Xyngens and Chantex were impacted by labeling changes and a global pause in shipments, respectively. While Ibrance continued to transition into a new COVID normal market environment, PC1, our contract manufacturing business grew 89% operationally in the Q2 of 2021 and therefore faced a tough comparison versus last year with PC1 declining by 25% operationally.

Speaker 5

And now bringing that all together, Pfizer's non COVID related revenues grew by 1% operationally in the 2nd quarter. Adjusted cost of sales dollars grew more slowly than revenue, resulting in gross margin rate expansion of 5 70 basis points versus the Q2 of LY. This improvement in gross margin is largely due to the impact of higher margin paxlovid sales, partially offset by higher COVID-nineteen vax sales Vaccine sales and the impact of a $450,000,000 write off of COVID related inventory that had expired or is expected to Given the unpredictable nature of the virus, we chose to manufacture and hold excess stock to ensure we can meet any global health demand for products if an extreme need were to arise. Adjusted SI and A expenses in the 2nd quarter grew by 7% operationally. The increase was primarily driven by spending for PAXLOVID in Comirnaty and higher healthcare reform fees.

Speaker 5

The 27% operational increase in adjusted R and D expense in Q2 was primarily driven by investments in multiple late stage clinical programs, including programs to both prevent and treat COVID-nineteen and cost to develop recently acquired programs. The effective tax rate on adjusted income in the quarter 15.4% declined by 170 basis points versus last year, driven by a favorable jurisdictional mix of earnings. And as a result, reported diluted earnings per share of $1.73 grew by 77%, While adjusted diluted earnings per share of $2.04 grew 92%, and on an operational basis, adjusted diluted earnings Share grew 100% in the quarter. Foreign exchange movements continued to dampen our results, negatively impacting revenues and adjusted earnings per share by 7% and $0.08 per share. So with that, let's move on to our Unfortunately, given additional U.

Speaker 5

S. Dollar strengthening since we last updated guidance in early May, Foreign exchange negatively impacts revenues by approximately $2,000,000,000 leaving our reported revenue guidance range unchanged at $98,000,000,000 to $102,000,000,000 This represents an operational growth rate of 29% at the midpoint compared to 2021, a 200 basis point improvement over prior expectations. The improvement in our operational adjusted diluted earnings per by $0.19 The net impact of these crosscurrents allows the company to raise the low end of its adjusted earnings per share outlook 5% operational growth at the midpoint compared to 2021. Regarding our COVID-nineteen related revenues, We continue to expect the vaccine revenue for the year to be approximately $32,000,000,000 unchanged compared to the prior guidance provided on May 3, despite the impact of approximately $1,000,000,000 of incremental negative foreign exchange. For PAXLOVID, We expect sales of approximately $22,000,000,000 keeping the guidance unchanged, again, despite an incremental $300,000,000 headwind due to FX.

Speaker 5

Our non COVID related revenues are absorbing approximately $700,000,000 of impact from negative foreign exchange. Now given the seasonality that we expect, I'd also like to give you some color on the expected cadence of these COVID related revenues Based on current guidance for Comirnaty, we expect approximately 25% of 2nd half sales in Q3 and 75 percent of sales in Q4, driven by expected deliveries of Omicron Adapted vaccines in Q4, again subject to regulatory approval. Conversely, for PAXLOVID, we expect approximately So with that, let me give you some detail on changes in our cost and expense guidance. We are decreasing our expected adjusted SI and A spend by $300,000,000 across the range to 12.2 to $13,200,000,000 Additionally, we are also increasing our guidance for adjusted R and D expense by $500,000,000 At the low end only, with the new range of $11,500,000,000 to $12,000,000,000 reflecting incremental investments in multiple programs, including mRNA vaccine programs outside of COVID-nineteen and other programs. We are also slightly reducing our expected effective tax rate on adjusted income by 50 basis points to approximately 15.5%.

Speaker 5

2022 guidance once again assumes no incremental share repurchases beyond the $2,000,000,000 of share repurchases that we completed in March of 2022. So in closing, it's an exciting time in the history of Pfizer. We believe that our strong financial performance in the quarter and our improving operational outlook for the year sets the stage for long term shareholder value creation. And so with that, I'll now turn it over to Chris and start the Q and A session.

Speaker 1

Thanks, Dave.

Speaker 2

At this time, let's start the Q and A session. Please limit yourself to one question per caller. And if you have additional questions, we ask you to please get back in the queue and we'll address as many questions as we have time to do so. And if you have any remaining questions afterwards, the R and D team will be available to answer those questions for you as well. Chelsea, if you could queue up the callers, please.

Operator

We will pause a moment to compile the Q and A roster. Your first questions come from the line of Carter Gould from Barclays.

Speaker 6

Great. Good morning. I appreciate all the disclosures there at the end. But I wanted to follow-up on the Combinati guide again. Obviously, you had some contracts that got signed since the last time you gave guidance, you highlighted sort of the FX headwind.

Speaker 6

So I guess trying to tease out exactly kind of explicitly kind of what you're assuming around Potentially, I guess, EU doses getting pushed into 2023, and just some additional color there, if you can, please? Thank you.

Speaker 5

Carter, this is Dave. Thank you for the question. Let me walk you the guidance for this year from a vaccine perspective. As you well know, we had a guidance of $32,000,000,000 to begin with as we entered come out of Q1. There's really 3 moving parts as I think about our guidance for the year.

Speaker 5

1 is we do have an incremental contract from the USG for 105,000,000 doses This year, which is an uptick to that guidance. Secondly, we're experiencing headwinds from an FX perspective to the tune of $1,000,000,000 It's Q1, but for the year, really $2,000,000,000 in that product alone. And then 3rd, as I just articulated, the Cadence of deliveries in the back half is really skewed to Q4. And with that, some ex U. S.

Speaker 5

Deliveries Could move from November into December of the calendar year. And if that were to occur, given our 1 month Lag from a reporting perspective, that would fall those revenues would fall into Q1 of 2023. I do not know whether that's going to happen, but I'm Planning that it might happen, so therefore I'd be probably being conservative in my approach and my outlook to the revenue guide for that Specific medicine.

Operator

Your next questions come from the line of Robin Karnauskas with Truist Securities.

Speaker 7

Hi, guys. Thanks for taking my question and all the color on the call today. I guess mine is on Pexelovid. And maybe you could talk a little bit about, I know there while you said there's low rate in line with clinical trials for rebounding, maybe that's underreported and you outlined your plan for new trials. What are you doing to potentially decrease potential for rebounding in the new studies?

Speaker 7

Are you extending and doubling the dose? And maybe some trends, can you help us give us some more color on some trends that you're seeing on tax loaded? I know you mentioned Globally, we're hearing in some states it's more limited versus others. Maybe just give us more color there on trends you're seeing on access? Thank you.

Speaker 3

Yes. William, why don't you speak a little bit about the program that we haven't rebounding? And then Angela, you speak a little bit about the trend of the Revenues and the update.

Speaker 8

Sure. Thanks, Albert, and thanks for the question. So as we reported earlier in the EPIC HR study, we did see Single agent percent potential rebound, but we also saw it in the placebo arm with a very similar And internally, we also have data from real world data as well as pharmacovigilance data showing again that it's a very similar low percentage rate of recurrence. That said though, we are working with the FDA to finalized plans for a trial in which we would treat such patients, and we're still deciding on the final outline of that. As Michael outlined, we'll be looking at other cohorts of patients, for example, immunocompromised patients who have a large unmet medical need.

Speaker 8

And in that setting, we will be looking at, for example, 5, 10, 15 days of dosing to determine the optimum dose regimen for those patients.

Speaker 3

Thank you, William. I need to say that we are very serious about Paxlovid and we are looking very diligently All the anecdotal reports that are coming, but all the data, I repeat all the data, our internal data that we are detecting rebounds By proactively checking viral loads or the external data that have been reported through pharmacovigilance to us All through studies that have been performed by 3rd parties, very reputable, 3rd parties like Casaubon and or Mayo We are consistently that this is low single digit, actually less than 1% in the external studies. And it was, as we repeated, around 2% in the methodology we use in ours. And very consistent with the numbers of the placebo. So although we try to see If there is a need to do something about it, seriously, we can't find any data set other than anecdotal reports.

Speaker 3

Also, I want to emphasize that even the anecdotal reports, they are all indicating that it is a mild. So We don't have any rebound that it is more serious, right? And clearly, we haven't identified any single case that we have resistance So, we are looking into it and William said that we are going to run also some studies we are discussing now protocols with FDA To see if retreatment of those cases could help, but so far, our conclusion, although we are looking a lot, it is very small percentage, Similar to COVID, placebo or COVID other antivirals and with very mild symptoms. Angela, what about the trends internationally and in the U. S.

Speaker 3

Region?

Speaker 9

So globally, I think that we're doing really well and we're making excellent progress. We have made and manufactured 30 And we delivered 23.5 of those doses. So I think that the contracting is going Well, the demand and expectations for the need for PAXLOVID is definitely up there. But maybe let me use some U. S.

Speaker 9

Examples Where we have a little bit more data and where things I think are going particularly well. The U. S. Actually contracted 10,800,000 doses with us so far And 7,400,000 doses of all of those have already been allocated to all the states. So I think that gives you a sense of how much demand is coming in from all of the states.

Speaker 9

And then every single week our utilization OpEx loaded has also increased. In fact, most recently We hit an all time high of 389,000 doses or doses of PAXLOVID that were used in just in 1 week. So that gives you a sense of sort of the increase and the momentum. What's really driving this is obviously Education and the familiarity and the experience now of physicians as well as patients, but also the excellent work that is being done at the federal as well as At the state level in terms of education and utilization. And I want to call out in particular the Test to Treat program that I think has been particularly Effective and very positive.

Speaker 9

To date, more than 41,000 pharmacies are now And that means that that just gives access to a tremendous amount of the population to be able Access Paxlovid and also recently pharmacists are now able to prescribe Paxlovid within certain limitations. And over and above whatever states and the federal government are doing, Pfizer is also aggressively and assertively Supporting education. So actually we have leveraged the entire Pfizer field force to provide education. We're running webinars. And to date, we've reached over 300,000 healthcare professionals as well as 80,000 pharmacists, Just to give you a sense of the extent and the breadth of reach that we have accomplished.

Speaker 9

And then all of that Also complemented by public service announcements about driving awareness of the treatment, but also the individual risk that each patient could carry And making them aware that they could be potential candidates for Paxlovid. So I think with all of these First that have gone on and that we're continuing, we feel really good about the momentum of PAXLOVID, the utilization of PAXLOVID and the benefit That Paxlovid can bring particularly in a time when there are surges going on around the entire world.

Speaker 3

Thank you.

Speaker 2

Thank you, Robin. Next

Operator

Your next questions come from the line of Terence Flynn with Morgan Stanley.

Speaker 10

Hi. Thanks for taking the question. I had a 2 part one on your mRNA seasonal flu vaccine program. I was just wondering if you had any HAI titer data that you can share from the trial. We saw the CD the T cell data, but again, I'm wondering if there's any tighter data you can share.

Speaker 10

And then anything on the safety tolerability there? Is it fair to assume that the profile is similar to Comirnaty? Or are there any

Speaker 4

conference, but I can just give a little bit more color. As you know, the highest medical burden and hospitalization In the 65 plus where the A strains are the most dominant, we had very strong titers Against the Astrans and exceeding what you would see with the current recommended vaccines. So we are very Bullish about our ability with mRNA to induce both strong antibody response and CD4-sixty eight T cells, which are not in use by current standard of care, and this is the reason why we are Sharing today that we're announcing to Phase III study.

Speaker 2

Thank you, Terence. Next question, please.

Speaker 4

Tolerability, sorry. I Tollability of this 30 microgram sorry, Terence, I didn't note that first. Tollability is, of course, Supported by our 1,000,000,000 of doses of the platform in COVID and on top of that, In older adults, the Xeljanz micrograms have a very good acceptance to the main patient group. And

Speaker 3

The B strains in the immuno Zenix results. They were similar to the current high dose of QEDRAVALLA.

Speaker 4

Yes. I didn't mention the B strains. We note that in general, lower response to B strains with both standard of care And we edged on the lower side with our vaccine. That's why I was so encouraged to see the unique T cell response against the B cell strain. And the totality of that data make us encouraged that we will have a strong product for both A and B.

Speaker 3

And I think how confident we It is that although the regulatory pathway, it is just demonstrate non inferiority in immunogenicity, we are going for an efficacy So the trial that is we announced yesterday is going to measure real efficacy in flu, which we believe that we expect, Of course, science is unpredictable, but we expect to win with flying colors. Let's go to the next one.

Operator

Your next question comes from the line of Umer Raffat with Evercore ISI.

Speaker 11

Hi, guys. Thanks for taking my question. I had a question and a clarification. The question is on tephalopid. I know the test to treat program And my question is, how would the demand dynamics change when we transition to a commercial Purchasing model and let's say the test and treat is still in place, would there be any change or not?

Speaker 11

And my clarification is, Michael, I think some comments you might have made at a recent Across the Phase 2a and Phase 2b, could you please clarify that? Thank you very much. And I'm referring to the interim analysis that happened recently.

Speaker 3

Yes. Angela, what do you think? If we go to open commercial market, do you think that we will be better or worse off Paxlovid?

Speaker 9

So I think that there are elements that we will be able to implement in the commercial market that currently that we don't. So for sure, you've just heard me share comments about the efforts that we've put into Paxlovid already here in the U. S. And ex U. S, right?

Speaker 9

The execution and the Support of education, support of our entire field forces, support of retail, support Patients through education again and PSAs, all that will continue. But I think what happens in a full commercial A full commercial launch is that you will have multiple distributors and multiple points of distribution throughout the entire country. You will have stocking by every pharmacist, pharmacy and pharmacist, and various points of use. And so I think that in a commercial setting actually you'll be able to reach a much broader set of channels that we currently Even due today. So I think that's one difference.

Speaker 9

I think the second difference is that what you can do from a commercial It will also look different. Remember today, we're under an EUA and while we could do a lot of education, key things like Sampling cannot be done in an EUA. So that's going to be an example of another difference that will happen Post EUA. And then I think finally, even if you think about consumer education, today, we really limited ourselves to Unbranded and sort of disease awareness education, but again, in a commercial setting, you could support through branded education and talk a lot more About the product. And all of these are things that actually Pfizer does and the commercial organization of Pfizer does really well.

Speaker 9

This is our sweet spot. So I think that we look forward to building on top of what the government has been doing, which has been really excellent, and building on top of that

Speaker 3

Thank you, Angela. What about PL1A, Michael?

Speaker 4

Briefly, this is our internally discovered antibody against TL1AG, a member of the TNF superfamily that is associated with inflammatory Yes, we have consistent robust efficacy for all comer UC patients and very strong Efficacy consistent across the trial for prospectively defined precision biomarker. Solubility It was very good. Now this is induction data, and later this year, we will have maintenance data. And as we get those data set, we decide about next step.

Speaker 3

Thank you very much. Let's go to the next call.

Operator

Your next question comes from the line of Mohit Bansal with Wells Fargo.

Speaker 12

Great. Thank you for taking my question. And on the early oral GLP, one data is My question is how much incremental data we are going to see in September The one you presented today? And also how soon can you move this into bigger trials? And how do you see the biggest differentiation versus the oral semaglutide effect?

Speaker 12

Thank you.

Speaker 3

Michael, maybe also you could take that question.

Speaker 4

Yes. We are very excited about this new data set 1532 that You will see at the EASD meeting in Stockholm in September, there will be additional data, and I think you will find B1C, very encouraging, although this was a short study. I think compared to oral semaglutide, the differentiation is substantial. This is a 2 small molecule that can be given as a once a day, it's completely Higher effects on both glucose as well as on weight reduction. As I reported now, we were almost at 100 mg per deciliter reduction over 4 to 6 week and 5 kilogram.

Speaker 4

And we haven't yet optimized the titration to even higher doses. So We are very encouraged of what we see. We're going to share with regulators soon our next trial set And move swiftly to allow us to pick the winner and the regimen for a potential Phase III study to come after the Phase

Speaker 3

And also to add that this is for us clearly a high priority project. We have a designation within the company that we call the light speed project, Project of significant value to patients and as a result also significant economic value where we give this designation and we move them With the speed of light and we overinvest to make sure that we derisk We move fast and I review personally on a biweekly, on the bimonthly basis the progress of this program. So that is going to be one of them. Thank you very much. Next question please.

Operator

Your next question comes from the line of Evan Fiegerman with BMO Capital Markets.

Speaker 6

I would love for your perspective on the provision for Medicare to negotiate directly with manufacturers as part of the now coined inflation reduction that we have press reports reporting a deal between Manchin and Schumer. And what kind of what's the potential long term impact on your R and D and innovation?

Speaker 11

Thank you.

Speaker 3

Thank you. I'm disappointed with what I'm reading in the newspapers. Of course, we can't know exactly what will happen because we have seen that situation is very volatile, but everything that they are reporting, they are going to demand a price setting. In reality, this is not a price negotiation because they are forcing their will by implementing a 95% tax equivalent to previous Guidance that will cost the industry significant. We estimate to €70 1,000,000,000 over 10 years.

Speaker 3

There is a positive provision there, but they are reducing the out of pocket Cost for the patients, that's a significant one, but it's too little and too late. They could do way more Because that will cost them 10% of the €370,000,000,000 that they're going to collect. They are basically not doing that to eliminate Patients, of course, because they could give all the money and then make significant, significant difference to the patient. They're just giving a part of that And they won't even to start if I understood well from year 2025. So although that out of pocket is a very positive provision, The rest one is a provision that I think will force the industry to reduce R and D if it goes the way that They are suggesting.

Speaker 3

So other than that, I don't have anything to add. We will wait to see how the What exactly in reality that means and we'll go from there. And also I want to say it is very disappointing that they are choosing to Single out one industry. Everything in this bill from what I understand, tax, all of that is affecting everyone. But then there are specific measures to affect only the pharma industry, particularly when we are out of a pandemic or this industry has proven The value that brings to Public Health and to the global economy, we would be in a very different point in this global economy if we didn't have The investments in the thriving life sciences sector and they are choosing to single out this industry.

Speaker 3

I think it's wrong And I hope that the reason will prevail when this discussion goes to Congress. Let's move to the Question please.

Operator

Your next questions come from the line of Louise Chen with Cantor Fitzgerald. Gerald?

Speaker 13

Hi, thanks for taking my question here. Just curious if some of the setbacks that we have seen in the CD47 space change your view on the market opportunity for your Trillium assets? Thank you.

Speaker 3

Yes. Why don't we go to William?

Speaker 8

Yes, sure. So thanks for the question, Louise. So we saw the news the other day. Internally, we remain confident in our program with Trillium and we proceed with the programs that we are planning and we'll let the data speak for itself when they come out.

Speaker 3

Thank you. Next question please.

Operator

Thank you. Your next question comes from the line of David Risinger with SVB Securities.

Speaker 14

Yes. Thanks very much and congratulations on the performance. I wanted to ask a little bit about VINDAQUEL and VINDAMAX. The performance was below our end Consensus expectations, if you could speak to that and also talk about the sequential prospects going forward, I. E.

Speaker 14

Has the product peaked out in the U. S? And how should we think about future prospects relative to the sales that you booked? Thank you very much.

Speaker 3

Thank you, David. Angela, what do you think?

Speaker 9

Well, we continue to be really pleased with how Vindacal If you look at just from a diagnosis perspective, quarter over quarter, year over year, we continue To do a really great job of effectively finding and identifying who the ACT or RCM patients are, diagnosing them And then bringing them on to therapies. So in this quarter, we have reached an all time high over 40% diagnosis rate. And I think that this is well beyond what we thought we would be able to do in the time frame that we have So we continue to believe in the growth that this product has. The real world data that has been generated now and the overall Benefits, I think, speaks well to how we'll continue to be able to build in this market Despite competition that will arise, I think what you're referring to in terms of the impact And the expectations really is a one time effect in and it was in Japan. And this was a very specific price decrease That was planned and driven by regulation.

Speaker 9

When Vindacel was launched in Japan, again based on pricing regulation in the country Specific to the country, it was at much higher price than any other country we had. And so by regulation, again, it's the 75 The price decrease that we're seeing is a function of that. But the underlying growth of Vindacal in Japan is really strong. We had just in the first half of twenty twenty two, 69% volume growth. We had 30 2% year over year of new patient starts.

Speaker 9

So hopefully this gives you a sense that the net revenue impacts you See, in fact, not a reflection of the demand and the true underlying demand, whether it's in the U. S. Or ex U. S.

Speaker 3

Thank you. Thank you, Angela. Thank you, David. Let's go to the next question, please.

Operator

Your next question comes from the line of Tim Anderson with Wolfe Research.

Speaker 15

Thank you. A question on your RSV vaccine. There doesn't seem to be anything but a brief mention of the program in Press release or the slides and really nothing in prepared remarks that we have Phase 3 data results coming out very soon. So I'm wondering why. Really my main question is why you recently changed the primary endpoint in the Phase 3 trial, including downsizing of the trial That comes on top of the delay in readout as announced earlier this year.

Speaker 15

And if I can slip one in on your

Speaker 3

Thank you, Michael. Both questions go together. I think the first question I think was for RSV, right? Yes.

Speaker 4

Yes. We have made great progress in the RSV adult trial. As No, we ran it through 2 different seasons in the Northern and Southern Hemisphere to make sure we had good patient And Casey is seeing so looking good for a readout that will come soon. I remain very Positive about RSGRADOL based on our Phase 2 challenge data that was stellar and the role this particular antigen that we're targeting play. And as you know, we're the only one that are targeting the 2 forms of this pre fusion.

Speaker 4

You also asked about mood mRNA flu. Yes, as Albert mentioned, we are Going big here with an efficacy study, we are encouraged about the data we're seeing. We think it's a unique data set, And we plan to soon embark on a Phase III after proper dialogue with regulators. Of course, this is an event trial, but if the season is robust, which you can never know, we would expect the Phase III to read out next year.

Speaker 3

And also, I'm sorry if we gave the impression that RSV is not important to us. It's extremely important. There is no better good news. This is why we didn't mention it much, but still remains the very good news. But the previous studies were extremely strong and that the current studies are progressing very well.

Speaker 3

So we have very confidence absent a surprise that we will launch next year a very robust product, both in adults and In maternal, the maternal breast, both studies are progressing very well. Thank you very much. Let's go to the next question.

Operator

Your next questions come from the line of Geoff Meacham from Bank of America.

Speaker 16

Hey guys. Thanks so much for taking the question. Just had a couple on Can you give us an update on the number of countries you're in contract discussions with? I'm just thinking relative to the start of the year. And then related, what's been the biggest contributor of supply expansion in 2Q?

Speaker 16

And when do you think you guys will be fully, fully normalized? Thank you.

Speaker 3

Let's go to Angela for the number of countries and where we are with that.

Speaker 9

Yes. So we are in contract with a significant number of countries at this point. Maybe I can talk about it from a dose perspective. So more than 35,000,000 treatment courses have already been contracted with a Because either the country didn't want us to disclose them publicly or we're in the middle of negotiations with them. So think to answer your question since we last left off, we have made progress with our contracting.

Speaker 9

I think what's maybe what's more important To clarify is just that the approach that countries are taking to contract with us is just really different to where we were in In Commernity, they were interested in securing large amounts of doses upfront, but that's in fact not the case here in And the reason being that number 1, they're being prudent with how they are ordering and they're able to do that They know that we have the manufacturing capacity and that we can pivot as we need. The countries are also trying to manage inventory and not to have Too much aged product lying around. And so I think that this is what's driving the more smaller, more frequent contracting rather than Big, big contracts that like you saw in Comority. The other thing I will also say is and the reason why I'm talking of doses rather than specific countries is because We're also working with supernational organizations who are acting on behalf of multiple countries. So think Global Fund, think UNICEF.

Speaker 9

These are, in addition to the bilaterals, are also important organizations who are helping us to supply And bring doses into the countries. So I think all in all, great progress and I think you should expect to see that this is one of these things that

Speaker 3

Because you had also question on supplier ramp up, we have done tremendous, tremendous progress on that field. Actually, we have been able It reduced dramatically the lead time, so to how much time it's needed for manufacturing and we have improved dramatically our yields. So supply is not an issue. Actually, we moved almost everything in house now in terms of API and finished product. Thank you very much.

Operator

Your next questions come from the line of Chris Schott with JPMorgan.

Speaker 16

Great. Thanks so much for the questions. Just one follow-up on the paxlovid comments. As we move, I guess, from some of these large Government orders that we saw with the U. S.

Speaker 16

Etcetera earlier this year to maybe these more kind of on demand smaller contracts. How do we think about what The impact that has on pricings, I think that you were getting some volume based discounts before. Just help us, I guess, to think about kind of 2023 and beyond what pricing does for that And then kind of the bigger question I had was just on Ibrance dynamics. I think you mentioned in the prepared remarks you're seeing signs of a recovery for your business there. I'm just And how you kind of see the balance of just overall market dynamics relative to the competitive landscape with obviously competitors with the Naturvant indication.

Speaker 16

Thank

Speaker 3

you. Thank you very much. Chris, we do not provide, let's say, forward looking Projections on pricing and particularly every time I speak about pricing, it's become a big news. So I wanted to make sure that we respect that. I know what you are I can give a very high level answer.

Speaker 3

Clearly, we are providing special pricing when we are Contracting very, very big quantities with governments. That's also the incentive for the government to buy big quantities because the price is really, really very attractive. If we move to normal market, the prices would reflect both in vaccines and in antivirals, The prices of similar value, similar technology products that they are out Pierre, also when you move to private commercial markets, the complexities are getting way, way higher. We will need to go to single dose in the vaccines where manufacturing complexes are very higher. We need to have distribution to small Distribution centers, including physician offices, so all of that creates a very big complexity, But also could be taken into consideration as we price our products to that time.

Speaker 3

And I want to emphasize that Also, those present significant opportunities for us because the open market, it is way more complex, Way more diverse to have millions of customers rather than 1 or 2. And this plays to our strengths In terms of having global presence or within the U. S, dramatic presence in every single territory of the country with thousands of people that we are calling, physicians, hospitals, Accounts in payers' accounts, etcetera, etcetera. So it's something that if we see a turn into As you get to items, Angela?

Speaker 9

Well, as you say, the metastatic breast cancer CDK4six market is incredibly competitive yet. I will emphasize that Ibrance continues to be the leading CDK4six In fact, we have a 74% market share across all patients in first line therapy. So, and I think that this number has been pretty consistent because we talk about it every quarter. And I think it demonstrates just the tremendous Experience that physicians and patients have and the confidence they have inibrance despite new competition. The patient experience, the fact that we have real world clinical evidence, all of this really adds The confidence that we have in this brand.

Speaker 9

And even though Ibrance is a mature brand, we do continue to see growth. And where the growth will come from, from the following places. You're going to see growth from the CDK class. You're going to see growth from the recovery of new which as you know, has not recovered to the levels of prior to the pandemic, as well as stabilization of the PAP When economic conditions improve. And I actually want to make a special point of this class growth because therein lies, I think, a tremendous Today, well, last year this time, the CDK class was 48% In first line metastatic breast cancer use, this quarter, it was 54%.

Speaker 9

So even though it's grown, it still means that the majority of the CDKs are not being used. And I think we've all of us in this class really need to focus on this as the leading priority

Operator

Your next questions come from the line of Chris Shibutani with Goldman Sachs.

Speaker 17

Thank you very much. First, a quick word of welcome and appreciation to David for your proactive commentary on the phasing of revenues. It really mirrors what your predecessor It's very helpful to get insights on near term factors that are generating pushpulls on those numbers. My question is on business development, however, and I'm not sure that Amir has joined us, but perhaps if you could update us on your latest thoughts, the team, in terms of How you're feeling about areas of focus, particularly in view of recent broader commentary, for instance, from the FTC, taking a look at competitive dynamics And then secondly, as you reflect upon the overall ecosystem and the receptivity, given things like lowered, relatively speaking, back to valuations, Are you sensing any shifts or trends or changes in the mindset of potential targets, partners, acquirers? Thank you.

Speaker 3

Thank you very much. Amir is here and he will be happy to speak about it. Amir?

Speaker 1

Chris, thank you for the question. Let me just start with your specific FTC point. We've demonstrated a very strong track record of shepherding our transactions to date through the regulatory process and that's been largely built on having just a Close, successful, constructive and collaborative relationships with regulatory bodies globally. In addition, our business development focus, and I'll recap our priorities in It's focused on how do we use our unique abilities to translate emerging science into breakthrough medicine. So most of the deals that we do Our pro patient and their pro innovation.

Speaker 1

So we are confident that we can continue to advance our BD strategies in a successful way. We've been very clear that our goal is to add $25,000,000,000 of risk adjusted revenue by 2,030. And I think we are making very good Against that, this year you saw our transaction with Reviral and subsequently with Biohaven, which respectively we believe Have the potential to add $1,500,000,000 $6,000,000,000 in peak sales to our business and this is on the back of a very active And going forward, we're leaving very few stones unturned when we look at opportunities and our focus is going to be consistent. It's on scientific substrate That has a potential breakthrough for patients, deals that accelerate our top line growth in the back half of the decade, And then opportunities where we can add substantial value, whether that's through our scientific chops and or our commercial capabilities. And we're going to be very open to deal structures and we've said before, we're also going to be agnostic to size.

Speaker 1

We've been clear about the fact that cost synergy driven deals Not where our focus is going to be and we're going to be extremely disciplined. I think we're very excited about the opportunities that are ahead of us and the flexibility that our balance sheet gives us to Pursue those. And on your question on valuation fluctuations, those market valuation fluctuations are not

Speaker 3

And it's very important when we are aiming very high to also be able at the same time to be disciplined, disciplined in vivoring the science and paying the right price For the right science, so that the capital that we will dispose will be maximized in producing value for Haitians and the shareholders. So We go very big, €25,000,000,000 but as we are proving, we are very, very disciplined in how we are allocating our capital and we will continue doing that. With that, let's go to the next

Operator

Your next questions come from the line of Andrew Baum with Citi.

Speaker 18

Thank you. A 2 part question, please. Your former Head of Vaccines is now your competitor GSK. When he top line the recent positive Phase III data for the RSV vaccine in Canada, which is adjuvantated. Observation he made was he stressed the same level of efficacy in the older patient cohort than In the younger patient cohorts, it's possible to imagine that this may be uniquely related to the adjuvant that they have given the In essence of the aging population of T cells, given your vaccine does not have an adjuvant, and given background, is that a concern, particularly over Follow long years follow-up.

Speaker 18

And then second, just following up on the question on Ibrance. Could you think talk to your ARV 471. We come up with market shares which are materially lower than yours. But whatever the number is, it's clearly reducing quite significantly Competition builds momentum in the market. How are you thinking about as you transition this drug into Phase III both what combinations you're going to run

Speaker 3

Thank you, Andrew. Just to make a correction, it was not the Head of our Vaccines that joined. He was another member of the vaccines team, but by no means Perfect. Let's move to Michael.

Speaker 4

Yes. I am very optimistic about Our RSV vaccine construct, we have seen high immune titer That are critical for the vaccine across all ages. In fact, we are the only one that have showed For strain A and B, for RSV, the very high Which differ between all the vaccines, including the one that you mentioned, because they mainly measure cross reactivity from A to B strain. So that was supported also by our challenge data that looks formidable. So while nobody can predict exact outcome of studies And comparing one study to another, we remain very bullish that our bivalent vaccine should stand out in performance And in probability, please note some of the arguments, including the one that you referred to, often associated with somewhat unpleasant side effects.

Speaker 4

That was one part of our differentiation to achieve with the bivalent very high data this far And we invest in cost reliability.

Speaker 3

And what about Ibrance?

Speaker 4

The ARB-four seventy one, I can only speak about the science here that We see that drug being active in several lines as by itself best in class Estrine Receptor PROTECT, and we are going to set up our studies in a patient population, which contains many estrogen receptor mutants, which often are poorly managed by the current available And we think this is a unique opportunity. And number 2, the drug seem to combine very well with our own CDK4six drugs, And we think it could advance into early metastatic lines and possibly over time even to early breast cancer, maybe there combined with our So we have very high hopes for that cause of drugs, ARV-four seventy one combined with our pipeline.

Speaker 3

Anything to add, William?

Speaker 8

Yes. I would just add, as you mentioned, Michael, the preclinical data shows that the AR degradation could be superior to

Speaker 3

Thank you from your lips to Gus' ears. Also, I want to add on the RSV because it's the second question that came and maybe gave the impression that we are not Very hot on it. We are extremely hot on it. Clearly, a very important product for us. Clearly, a very important product for GSK.

Speaker 3

So there will be a lot of speculation. Maybe the adjuvant will do that or maybe the other thing will do this. I think data will speak on themselves. With the totality of data available so far that I have seen, We have high reasons to believe we are better, but you never know before the end of the trials. But right now, with all We are waiting a lot with a lot of excitement to unblind the data and see the realities and then, of course, The best will win.

Speaker 3

So let's move now to Steve.

Operator

Your next question comes from Steve Scala with Cowen.

Speaker 17

Thank you so much. I would just like to understand more deeply Pfizer's thinking on Factor XI, I could think of 3 possibilities. First, Pfizer believes there is simply no room to improve upon Eliquis. 2nd, Pfizer believes Factor XI could be very useful, but you haven't found the ideal candidate. Or 3rd, Pfizer is not sure, the jury is still out.

Speaker 17

Any thoughts?

Speaker 3

I think we have answered it before and maybe Mike also give some color because it's a very, very good question. But bottom line is we are looking for science that it could provide hope that we can have something better than Eliquis And we haven't found yet. So that's the reality. According to our opinion, there is not much maturity right now to overcome the brilliant, the very good profile of Heliquis. Michael, anything to add?

Speaker 3

What's interesting about that?

Speaker 4

I think you said it very well. In the ATL field, platelet inhibitor and ASI are or are going to be genericized. Eliquis and rivaroxaban, great drugs, Eliquis being a market leader, Factor X inhibitor or by the time Factor X comes to market close 2 or already genericized. So the room for an expensive drug in an area with this many great treatments That requires tremendously high R and D expense coming off the patients who have consumed multiple other great drugs. For us, Doesn't look like the best area to deploy capital.

Speaker 4

We always wish other good luck for the benefit of patients. Yes.

Speaker 3

Thank you. Let's go to the next question.

Operator

Your final question will come from the line of Elliot Bosco with UBS.

Speaker 10

Hi. This is Elliot Vasco from UBS on for Collin Bristow. Thanks for taking our questions. Just a few on You mentioned countries needing to manage older supply. Do you think that current paxlovid use trends will result in excess inventory versus what has been contractually purchased?

Speaker 10

And additionally, could you comment on the recent Codexis retainer arrangement and how we should think about that With regard to 2023 Paxlovid demand? Thank you.

Speaker 3

Angela?

Speaker 9

Sure. No, I think that the way we are manufacturing PAXLOVID with, of course, great knowledge From our prior experiences with Commerity, but also in terms of our negotiations and discussions with countries is actually allowing us to do Supply planning very well. So we are manufacturing as we need and according to the contracts and according to the demand that the countries are providing us. So I think we're doing that on a in a very prudent and in a very prudent I didn't we didn't your second question?

Speaker 3

Yes. What was the second question? I'm not sure.

Speaker 2

Codexis, the enzyme supplier for

Speaker 3

Yes. It was the you want to I didn't refer to it, but maybe also you can Reiterate it, David.

Speaker 5

Yes. I think Albert indicated this earlier in his remarks is that, in fact, over the last several quarters, we've improved our manufacturing process, Reduce the cycle time and importantly improve the yield from an output perspective. So therefore, we don't need as much Raw materials and API to produce the same amount of finished goods. And then finally, we've actually invested in our network to make sure that we can actually produce some API as well. So we're in good shape.

Speaker 3

What I said before, we are moving most of it now because We could weigh faster than what we anticipated, move it inside. So that creates some cancellations of raw materials To some external suppliers, I'm sorry about that. I think that was the last question. Let me close with a few takeaways. The first one, as you see, we continue to deliver strong operational performance.

Speaker 3

We increased our full year 'twenty two operational financial forecast, while Maintaining a challenging foreign exchange environment. So I think few companies likely will be able to do that. We believe We are well positioned not only to maintain, but also to grow both our commercial and scientific leadership In the battle against COVID-nineteen, it will be for us very important focus, and we believe that The medical need will be there for the years to come. That's why we're investing so heavily. We continue to focus on driving long term shareholder returns by remaining very disciplined both on our operations and our incremental capital deployment.

Speaker 3

You saw even in this quarter, but even more, we are squeezing our administrative expenses. So SG and A is going down and then we reinvest in R and D because we have That we are starting that we feel is a very good return on investment. And we continue to advance our internal Scientific pipeline, while executing against our previously announced plans to potentially add at least €25,000,000,000 of risk adjusted revenues through Just I want very quickly to see that These results in R and D are yielding results these efforts in R and D are yielding results. Just to mention a few of the Approvals and launches that we are going to have in the next few months. See bingo, we expect to launch The adolescents in next year and of course next year will be the real first year where we expect to have full access for this drug.

Speaker 3

We expect to launch next RSV maternal, we expect to launch next year, IV adults. We expect to launch next year, preRAB2MD for pediatrics. We expect to launch next year erlanatumab for triple plus refractory myeloma. We expect to launch next year We expect next year, we expect to next year, Talapros for prostate The metastatic castration patients, we expect to launch we did already myfibrin for endometriosis. And then a little bit later, we expect maybe this in 'twenty three or beginning of 'twenty four, DMD and through mRNA.

Speaker 3

So it is this is the organic. I'm not referring to the Bioheaven, Nurtec that is coming and to other Mollikus, I'm referring mainly to the organic and developed pipeline assets. I don't think that Much of that has been factored into what some of the analysts are projecting. That's why I'm emphasizing them so that they Those are very high probability of success, the ones that I mentioned. They are not In the pocket, clearly, all of them.

Speaker 3

And some clearly might not make it to the gross line, but we believe they are seriously derisked all of that. So with that in mind, I'm really looking forward to have a 6% CAGR By 25% in our business, as we promised in 2019, in fact, year to date, we are at 6%, Excluding BD and excluding COVID, and I think we will do that by 2025. We will maintain this 6% CAGR And we will do more by big deal that we are right now implementing. So I think we have a very good growth prospects, and we will maintain our leadership Thank you very, very much for your interest. And for those that didn't have summer vacations yet, Enjoy your summer vacation.

Operator

Ladies and gentlemen, this concludes Pfizer's 2nd Quarter 2022 Earnings Conference Call. You may now disconnect.

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Earnings Conference Call
Pfizer Q2 2022
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