Q4 2020 Pfizer Inc Earnings Call

Okay.

Good day, everyone and welcome to Pfizer's fourth quarter 2020 earnings Conference call today's call is being recorded.

Operator: Good day, everyone, and welcome to Pfizer's fourth quarter 2020 earnings conference call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Chuck Triano, Senior Vice President of Investor Relations. Please go ahead, sir.

At this time I would like to turn the call over to Mr. Chuck Triano Senior Vice President of Investor Relations. Please go ahead Sir.

Unknown Executive: Thank you, Operator. Good morning, everyone, and thanks for joining us today to review Pfizer's fourth quarter and full year 2020 financial results, our 2021 financial guidance, as well as other relevant business topics. I'm joined today, as usual, by our Chairman and CEO, Dr. Albert Borla, Frank D'Amelio, our CFO, Michael Dolsten, President of Worldwide Research, Development, and Medical, Angela Wong, Group President, Biopharmaceuticals Group; John Young, our Chief Business Officer, and Doug Leinkler, General Counsel.

Thank you operator all good.

Morning, everyone and thanks for joining us today to review Pfizer's fourth quarter and full year 2020 financial results.

Our 2021 financial guidance as well as other relevant business topics.

I'm joined today as usual by our chairman and CEO, Dr. Robert boiler.

The Emilia our CFO.

Michael Goldstein President of worldwide Research development in medical Angela Hwang Group, President Biopharmaceutical group John.

John Young our Chief business Officer, and Doug <unk> General Counsel.

Unknown Executive: The slides that will be presented on this call were posted to our website earlier this morning and are available at Pfizer.com forward slash invest. You'll see on slide three our disclaimer regarding forward-looking statements we will make during this call regarding, among other topics, our anticipated future operating and financial performance, business plans and prospects, and expectations for our product pipeline and inline products, which are, of course, subject to risks and uncertainties. In addition, we'll be using non-GAAP financial information. Additional information regarding forward-looking statements and our non-GAAP financial measures is available in our earnings release, including in the disclosure notice section and under risk factors in our SEC Forms 10-K and 10-Q. The forward-looking statements on this call speak only as of the original date of this call, and we undertake no obligation to update or revise any of the statements. Albert and Frank will now make prepared remarks, and then we'll move to a question and answer session. With that, I'll now turn the call over to Albert Bourla. Albert.

<unk> will be presented on this call were posted to our website earlier. This morning and are available at Pfizer dotcom forward slash investors.

You'll see here on slide three our disclaimer regarding forward looking statements we will make during this call regarding among other topics, our anticipated future operating and financial performance business plans and prospects and expectations for our product pipeline and inline products, which of course are subject to risks and uncertainties.

In addition, we'll be using a non-GAAP financial information.

All information regarding forward looking statements and our non-GAAP financial measures is available in our earnings release, including other under the disclosure notice section and under risk factors in our SEC forms 10-K and 10-Q.

The forward looking statements on this call speak only as of the original date of this call and we undertake no obligation to update or revise any of these statements.

Albert and Frank will now make prepared remarks, and then we will move to a question and answer session.

With that I'll now turn the call over to Albert boiler Albert.

Thank you talked and good morning, everyone.

Albert Bourla: Thank you Chuck and good morning everyone. 2020 was a year like none other in Pfizer's history. With the separation of Abgen complete, we saw the culmination of Pfizer's decade-long conversion into a pure-play, science-innovation-focused company. Through our collaboration with BioNTech, we delivered the world's first breakthrough COVID-19 vaccine in less than a year. And by harnessing the power of a variety of digital capabilities, we made sure that despite the lockdowns and travel restrictions, we continue to serve patients around the world who rely on our medicines and vaccines. Despite this challenging environment and the incredible amount of resources we devoted to developing a safe and effective COVID-19 vaccine, we generated 8% operational revenue growth for the year from our core biopharmaceutical product portfolio, excluding the revenue impact from consumer healthcare and excluding $154 million in sales of the Pfizer-BioNTech COVID-19 vaccine that were recorded in the first quarter.

Blended to Andy was a year like none other than Pfizer's history.

With the separation of John complete we sold the combination with Pfizer decade long conversion into a pure play science innovation focused company.

Through our collaboration with bio <unk>, we delivered the world's first breakthrough COVID-19 vaccine.

And then a year and by harnessing the power of a variety of digital capabilities. We made sure that despite the lockdowns and travel restrictions will continue to serve patients around the world who rely on our medicines and vaccines.

Despite this challenging environment and the incredibly thank you Greg.

Greg will amount of resources, we devoted to develop a safe and effective COVID-19 vaccine, we generated 8% operational revenue growth for the year from all core biopharmaceutical product portfolio, excluding the revenue impact from consumer healthcare and excluding Congress 54 million in sales.

All of the Pfizer volume take COVID-19, vaccines look very carefully in the first quarter.

Albert Bourla: Keep in mind that this 8% operation growth includes a negative 2% impact due to the slowdown in macroeconomic and healthcare activity resulting from the pandemic. This operational growth was driven primarily by continued strong performances from Vintagel Vintamax, Eliquis, Oncology by Similars, Ibrance, Prevnar-13 outside the US, Inlita, Xeljanz, and Xtandi. So basically, all the growth drivers contributed. Full year adjusted diluted EPS was 2.22, up 20% operationally from 2019. I would like to point out that revenues and expenses associated with the Abzon business have been re-categorized as discontinued operations and excluded from our adjusted results.

Keep in mind that this 8% operation growth.

And negative 2% impact due to the slowdown in macroeconomic and have good activity, resulting from the pandemic.

This operational growth was driven primarily by continued strong performances from Greenbrier winter months and weeks oncology by stimulus I brands revenue instead of being outside the U S. In light zone and expense. So basically all the growth drivers to contribute significant.

Full year adjusted diluted EPS was two point 22 up to and the parser all progression moving from 2019.

I would like to point out that the revenues and the expenses associated with the Amazon business have been re categorized as discontinued operations and excluded from adjusted results.

Albert Bourla: So overall, we had a strong year which positions us well as we begin to operate as one global focused biopharmaceutical company, which I have envisioned for the past several years. Let me start with a discussion of some of our key growth drivers. Vindical and Vindamax generated revenues of $1.3 billion in 2020, up 170% from the previous year. Our disease education efforts continue to support appropriate diagnosis, increasing the diagnosis rate to move to 21% at the end of the fourth quarter, as compared with approximately 2% before we lost, from 2 to 21. As of December 31st, more than 20,500 patients have been diagnosed, more than 40,500 patients have received prescriptions, and more than 8,500 patients have received the drug, including patients who receive the drug at no cost through our patient assistance programs.

All of these had a strong year, which positions us well as we begin to operate as one global focused biopharmaceutical company, which I have envisioned for the past several years.

Let me start with a discussion of some of our key growth drivers.

Linda <unk> and Linda amongst generated revenues of $1 $3 billion in 2020.

170% operationally our disease education efforts continue to support the appropriate diagnosis increase in diagnosis rate to move that.

21% at the end of the fourth quarter as compared with approximately 2% before we launch from 'twenty to 'twenty one.

On December 31st more than 20500 patients have been diagnosed more than 40500 patients.

C prescription and more than 8500 patients who have received the drugs, including patients who received the drug at no cost through our patient assistant programs. We continue to see a recovery in new diagnosis since Q3, and the gradual rebound in new patient starts with a current reserve the resurgence.

Albert Bourla: We continue to see a recovery in new diagnosis since Q3 and a gradual rebound in new patient starts. With the current resurgence of COVID-19, however, we are seeing varying levels of original lockdowns that could impact this recovery. Eliquis delivered another strong performance in 2020 with revenues up 18% operationally to $4.9 billion for the year. However, in the U.S., strong volume growth was partially offset by a lower net price due to an increased number of lives in the Medicare coverage gap and the expansion of that gap as well as an unfavorable channel.

COVID-19, however, we are seeing varying levels of regional lockdowns.

The impact of this recovery.

<unk> delivered another strong performance in 2020 with revenues up 18% operationally for $9 billion for the year in the U S. Strong volume growth was partially offset by a lower net price due to an increased number of lives in the Medicare coverage.

And the expansion of Africa, as well as unfavorable channel mix.

Revenues from all global Biosimilar us product portfolio grew 68% operationally and totaled approximately $1 $5 billion for the full year of 2020, making them a meaningful contributor to our growth.

Albert Bourla: Revenues from our global biosimilars product portfolio grew 68% operationally and totaled approximately $1.5 billion for the full year 2020, making them a meaningful contributor to our growth. This was driven primarily by our oncology biosimilars, which grew 203% operationally, generating revenue of $866 million. Global Ibrance revenues increased 9% operationally to $5.4 billion in 2020. Ibrance continues to be a leader in the CDK4-6 inhibitor class for metastatic breast cancer.

This was driven primarily by our oncology Biosimilars, which grew 203% operationally generating revenue of $866 million.

Global <unk> revenue increased 9% operationally to five $4 billion in 2020, I brands continues to be a leader in the CDK four six inhibitor class for metastatic breast cancer. In fact, eight out of 10 first line HR positive <unk> negative metastatic.

Albert Bourla: In fact, eight out of 10 first-line HR-positive, HER2-negative metastatic breast cancer patients in the U.S. who are prescribed a CDK4-6 inhibitor receive Ibrance. This is testament to the continued benefit Ibrance delivers to patients, with its compelling safety and efficacy, based on the continued strong prescribing pattern. With Ibrance's compelling safety and efficacy profile and more than five years of using it in everyday clinical practice with continued positive patient and physician experiences, we remain confident in its future performance in the metastatic. Global Prevnar-13 revenues were up 1% operationally to $5.9 billion in 2020. Revenues outside the U.S. grew 13% operationally in 2020, driven primarily by increased adult uptake in certain international markets, resulting from greater vaccine awareness arising from the COVID-19 pandemic. However, I should note that Prevnar-13 is indicated for the prevention of pneumonia resulting from pneumococcal bacteria, not SARS-CoV-2. Strong pediatric uptake in China also contributed to this growth. In live, I had a strong 2020 performance, growing revenues by 66% operation. For the full year 2020, Global Xeljanz revenue grew 9% operationally to $2.4 billion.

In breast cancer patients in the US who are prescribed CDK four six inhibitor all received eyebrows.

It is a testament to the continued benefit delivers the basin with its compelling safety and efficacy profile.

Based on the continued strong prescribing patterns.

<unk> compelling safety and efficacy profile and more than five years from usually every day clinical practice with continued positive patient and physician experiences we remain confident in its future performance over the limit us about the setting.

Global <unk> revenues were up 1% operationally to $5 $9 billion in 2020 revenues outside the U S grew 13% operationally and trying to drive it.

Driven primarily by increased adult uptake in certain international markets, resulting from greater market awareness arising from the COVID-19 pandemic, although I should note, but revenue so as Dennis indicated for the prevention of pneumonia, resulting from pneumococcal bacteria not.

Sars Cov two.

Drunk with the other day uptake in China also contributed to this growth.

All right behind the strong trends in 'twenty performance growing revenue 66%.

Shneur.

For the full year 2020 global zone as revenue grew 9% operationally due to $4 billion the underlying prescription demand in the U S grew 12% in 2020 compared with 2019.

Albert Bourla: The underlying prescription demand in the U.S. grew 12% in 2020 compared with 2019, outpacing the advanced therapy market by 9%. We have invested in formulary access in the U.S., which plays a vital role in enabling this volume growth. Last week, we reported top-line data from a post-marketing safety study that did not meet the non-inferiority criteria for the co-primary endpoint of MACE and MagnicNet, excluding non-melanoma skin cancer, versus PNF2. We are continuing to analyze the secondary endpoints of the study, and we'll discuss the full data set as well as the potential implications for labeling with a regulatory agent. At this point, it is premature to make an assessment as to what impact this data may have on Xeljanz.

Outpacing the advanced therapy market.

9%, we have invested in formulary access in the U S, which played a vital role in enabling this volume growth.

Last week.

We reported topline data from a post marketing safety study, which did not meet non inferiority criteria for the co primary endpoint of mace and <unk>, excluding non melanoma skin cancer vessels UNFI.

We are continuing to analyze the secondary endpoints in the study and we'll discuss the full dataset as well as the potential implications to labeling.

The regulatory agency.

Point it is pretty much you can make an assessment as to what the impact of these data and make us xeljanz.

Albert Bourla: But, of course, patient safety remains our priority. For Xtandi, Alliance revenues for the U.S. were up 22% for the year, and when combined with our royalty income from U.S. sales, totaled $1.4 billion. Xtandi new patient starts were 12%, bolstered by the successful launch of the metastatic castration-sensitive indication, which is helping patients earlier in their disease who will benefit from a longer duration of therapy. Of course, the biggest story of 2020 for Pfizer was our work with BioNTech to develop and deliver the world's first COVID-19 vaccine authorized for use in development. It took us just 248 days to get from the day we announced our plans to collaborate with BioNTech to the day we submitted to the FDA for emergency use authorization, and I couldn't be more proud of how our colleagues stepped up when the world needed us the most. And our ability to move at such extraordinary speed.

Of course patient safety remains our priority.

For <unk> all lines of revenue for the U S were up 22% for the year and when combined with our all your own fee income from ex U S sales.

One $4 billion.

Extending new patient starts grew 12%.

Also by the successful launch of the metastatic castration sensitive indication, which is helping patients earlier in their disease, who would benefit from a longer duration of therapy.

Of course, the biggest story of 'twenty 'twenty four Pfizer was our work with biotech to develop and deliver the world's first COVID-19 vaccine authorized for us in developed markets.

It took us just 248 days to get from the day, we announced our plans to collaborate with biotech to the day, we submitted to the FDA for emergency use authorization and I couldn't be more proud of how.

All our colleagues stepped up one day will need us the most.

Our ability to move at extraordinary speed, while always maintaining our focus on quality and safety was the first powerful display of what the new Pfizer capable.

Albert Bourla: While always maintaining our focus on quality and safety, this was the first powerful display of what the new Pfizer is capable of. While we never imagined a pandemic of this magnitude, every action we have taken over the past several years has been to transform Pfizer into an agile scientific powerhouse capable of addressing the world's most devastating diseases like the one that happened. The manufacturing and distribution of our COVID-19 vaccine went very well as well. Not only did we achieve our commitment for 2020, but as of January 31st, we had supplied 65 million doses globally, of which 29 million doses were supplied to the U.S. government. We are continuing to work closely with the U.S. government on our production, release, and shipping schedules to help states ensure Americans receive their first and second doses of the vaccine on time. We have provided the government with a specific forward-looking schedule so they can plan accordingly.

While we never any margin a pandemic of this magnitude.

Every action we have taken over the past several years has been to transform Pfizer, Inc, and Azad and scientific powerhouse capable of addressing the worlds most devastating diseases like the one other company.

The manufacturing and distribution of all COVID-19 vaccine have gone very well as well.

Not only did we achieve our commitment for 2020, but as of January 31st we had supplied 65 million doses globally with 29 million doses were supplied to the U S government.

We are continuing to work closely with the U S government, all our production release and shipping schedules.

States ensure Americans receive their first and second doses to the vaccine on time.

We have provided the government with a specific forward looking schedule. So they can plan accordingly, we foresee no issues with delivering the commitments, we have made and expect to deliver 200 million doses to the U S. By the end of May.

Albert Bourla: We foresee no issues with delivering the commitments we have made and expect to deliver 200 million doses to the U.S. by the end of May, two months earlier than our contractual obligations because of the dire need to vaccinate more people. We have explored innovative plans to increase the number of doses we are able to produce globally by the end of 2021. As a result, we now believe that we can potentially deliver at least two billion doses in total by the end of 2021. This is based on the updated six-dose label, continuous progress improvements and expansion at our current facilities, and Condit and Afcon adding more suppliers as well as contract manufacturers. We are now approaching a year since the beginning of the pandemic, and based on what we have seen so far, we believe it is becoming increasingly light.

Two months earlier than our contractual obligations.

Because of the dire need to vaccinate no peoples.

Explore innovative plunged Greek increase the number of doses, we are able to produce globally by the end of 'twenty 'twenty one.

As a result, we now believe that we can potentially deliver at least.

Moving on doses in total by the end of 'twenty to 'twenty one.

Based on the updated six those label continuous progress improvements and expansion at our current facilities and funded on a phone.

Adding more suppliers as well as contract manufacturers.

We are now approaching a year since the beginning of the pandemic.

Based on what we have seen so far.

Believe it is increasingly likely but durable COVID-19 vaccine revenue stream.

Albert Bourla: But a durable COVID-19 vaccine revenue stream, like what is happening in flu, is a potential out, for a couple of reasons. First, there likely will be a need to boost regularly to maintain high levels of vaccine-elicited immune responses. Second, and maybe more important,

Like is happening in flu is a potential outcome for a couple of reasons.

First there likely will be a need to boost the regularly to maintain high levels of vaccine elicited an immune response.

Second and maybe more important we may need to boost count all the threads of emerging new constraints, we have seen with variations in the spike receptor binding domain site.

Albert Bourla: We may need to boost to counter the threat of the emerging mutant strains we have seen with variations in the spike receptor binding domain. Genetic mutations occur naturally during virus replication and transmission. We recently announced results of in vitro studies that show that sera from people who have received our COVID-19 vaccine effectively neutralizes the virus bearing the SARS-CoV-2 UK variant spike and also neutralizes engineered SARS-CoV-2s with key mutations from South Africa variant and UK variant spike. We are encouraged by these early in-vitro study findings and will continue to monitor our vaccine's effectiveness in preventing COVID-19 caused by We are awaiting data on neutralization of an engineered SARS-CoV-2 with a full set of mutations from the spike of the South African variant.

The net of mutations occur naturally during virus replication and sprint.

We recently announced the results of in vitro studies, that's all about.

Sarah from people, who have received our COVID-19 vaccine effectively neutralize the virus bearing the SaaS Cove to U K volume Spike and thoughtful neutralized engineer saw us cope with.

With key mutations from South Africa, and U K volume spikes.

We are encouraged by these early read prescribed the findings and all continued to monitor our <unk> effectiveness in preventing COVID-19 caused by the virus strains in circulation.

We are awaiting data on neutralization of an engineered <unk> with a full set of new patients from the spike of the South Africa volumes.

That said there is an increasingly probable scenario.

Albert Bourla: That said, there is an increasingly probable scenario when it could become necessary within the next few years to boost COVID-19 vaccinated patients with a vaccine encoding a spike variant. One of the reasons Pfizer and BioNTech chose to utilize an mRNA platform is because of the potential for the flexibility of the technology in comparison to traditional vaccine technology. This flexibility includes the ability to alter the RNA sequence in the vaccine to potentially address new strains of the virus if one, if ever, were to emerge. But it is not covered by the current vaccine.

When it could become necessary within the next few years to boost COVID-19, vaccinated basins with the vaccine and clothing to Spike Varian.

One of the reasons Pfizer in biotech chose to utilize an mrna platform is because all of the potential for the flexibility of the technology in comparison to traditional vaccine technology.

This flexibility includes the ability to alter the air on the RNA sequencing the vaccine to potentially address new strengths of their items.

One develop if one ive ever worked with <unk>, but it is not covered by the Karen vaccine.

Of course, this requires additional development work and regulatory submissions and approvals Pfizer and bought a big part of preparing for such a possible scenario by working closely with the regulatory agencies as well as a relevant scientific bodies to enable vaccine technical committees to review the data and make appropriate updates to recommendation.

Albert Bourla: Of course, this requires additional development work and regulatory submissions and approval. Pfizer and BioNTech are preparing for such a possible scenario by working closely with regulatory agencies as well as relevant scientific bodies to enable vaccine technical committees to review data and make appropriate updates to recommendations. Regarding other applications of the mRNA platform, we are advancing plans to deploy this technology for the flu vaccine and may explore other opportunities to work on other viral diseases and other therapeutic applications outside infectious diseases. Turning now to our 2021 guidance, I want to share just a few posts, as Frank will go into more detail. The midpoint of our 2020 revenue guidance range reflects 6% operational growth compared to 2020 if you exclude completely the impact of our COVID-19 vaccine.

Regarding other applications of the mrna platform, we are advancing plans to deploy this technology for flu vaccines and may explore other opportunities to work on other viral diseases and other therapeutic applications outside infectious diseases.

Turning now to all of 'twenty 'twenty, one guidance I want to serves us the few holes, it's Frank will go into more detail.

The midpoint of our 2020 revenue guidance range reflects 6% operational growth compared to 2020, if you exclude completely the impact of our COVID-19 vaccine.

While there are signs that COVID-19 may be here for some time, which could result, as I said in a more recurring revenue stream. We are carving out of the COVID-19 vaccines revenue for now.

Albert Bourla: While there are signs that COVID-19 may be here for some time, which could result, as I said, in a more recurring revenue stream, we are carving out the COVID-19 vaccine's revenue for now. Frank will provide some context on both our anticipated COVID-19 revenue and margins in his remarks, while the COVID-19 vaccine has created a new cash flow stream. There is no change in our capital allocation priority. We remain focused on the growth initiatives and the growing dividend. Vote at the slower rate.

John will provide some context on both our anticipated COVID-19 revenue and margins in his remarks.

While the COVID-19 vaccine has created a new cash flow stream there.

There is no change in our capital allocation priorities, we remain focused on growth initiatives and the growing dividend.

Although at a slower rate.

Now, let's turn to the pipeline, which is the engine for the new Pfizer and continues to be one of our great strengths.

As discussed during last September Investor day meetings, we still see underappreciated potential in our pipeline.

Albert Bourla: Now let's turn to the pipeline, which is the engine of the new Pfizer and continues to be one of our great strengths. As discussed during last September's Investor Day meetings, we still see unappreciated potential in our pipeline, particularly in our rare disease, vaccine, and internal medicines R&D portfolio. I would like to start by highlighting the incredible improvements we have driven in our clinical success rates and how they compare with industry benchmarks between 2015 and 2020. Our Phase II success rates on a 5-year rolling average more than tripled from 15% to 52%, which is almost double the 2019 industry benchmark of 29%. Significantly, most of these successes are either first-in-class assets of innovations built on established mechanisms with novel scientific design, or face 3 success rates on a 5-year earning average.

I think all in all.

<unk> disease vaccine and internal medicines R&D portfolios.

I would like to start with highlighting the incredible improvements we have driven in our clinical success rates and how they compare with industry benchmarks.

Between 2015 and 2020.

All are faced with success rates on a five year rolling average more than tripled from 15% to 52%.

It's almost double the 2019 industry benchmark of.

29%.

Significant read most of these successes are either first in class assets of innovations built on establishing mechanics with novel scientific designs.

Our phase III success rate on a five year owning ovens improved from 70% to 85% 13 points higher than the 2019 interest in benchmark of 72%.

And our end to end success rate more than quadrupled from 5% to 21% all of them.

Most triple the 2019 industry benchmark of 8%.

Albert Bourla: Improved from 70% to 85%! 13 points higher than the 2019 Interesting Benchmark of 72%, and our end-to-end success rate more than quadrupled from 5% to 21%, almost tripled the 2019 Industry Benchmark of 8. I would also point out that while our Phase 1 success rates on a three-year rolling average stayed flat at 48%, this is eight points higher than the 2019 industry benchmark. We believe these metrics demonstrate that, through our science, we are selecting assets to move through the research and development process that have the best chance of benefiting patients. This did not happen by accident but was a result of a purposeful R&D turnaround strategy that we began in 2011. We aim to sustain these success rates, which we believe clearly demonstrate the value of our pipeline.

I would also point out that while our facial and success rates on a three year Rolling average stayed flat at 48%. This is eight points higher than the 2019 industry benchmark.

We believe these metrics demonstrate that through our science, we're selecting assets to move through the research and development process, but the best tons of <unk>.

Benefiting patients.

This did not happen by accident.

That was a result of a third pursue RMB turnaround strategy that we began in 2011.

We aim to sustain the success rates, which we believe clearly demonstrates the value of our pipeline.

In rare diseases, we have two phase III starting to start since our last earnings call.

On November 21st we announced the first participants has been dosed in the phase III basis study.

My Star Sigma.

And Andy tissue factor pathway inhibitor being evaluated for the treatment of people with severe and more familiar a or b.

Albert Bourla: In rare diseases, we achieved 2 Phase 3 Study Starts since our last earnings call. On November 23rd, we announced the third participant has been dosed in the phase three basis study of marstazimab, an anti-tissue factor pathway inhibitor being evaluated for the treatment of people with severe hemophilia A or B. On January 7, we announced we had closed and dosed the first participant in our Phase 3 Duchenne muscular dystrophy gene therapy program. The CIFREO trial is expected to enroll 99 ambulatory male patients ages 4-7 across 55 clinical trial sites in 15 countries. Our DMD program is the first gene therapy to start a Phase III trial with the potential first and best in-class profile. Inflammation, is unique. RetroCitinib, the JAK3 text selector

On January seven we announced we had closed we can dose the first participant in our phase III to saying muscular dystrophy zoom therapy program.

The <unk> trial is expected to enroll 99, I'm beautiful ambulatory made patients ages four to seven.

Those 55 clinical trial sites in 15 countries.

Our BMT program is the first gene therapy to start the phase II trial with a potential first and best in class profile.

In inflammation.

Our unique.

Read through of Sydney.

Three tech selective oral small molecule <unk> reported positive top line results in two phase two studies, one for Vicki legal and one demonstrating strong clinical remission rates in ulcerative colitis.

Albert Bourla: The oral small molecule has reported positive top-line results in two Phase II studies, one for vitiligo, and one demonstrating strong clinical remission rates in ulcerative colitis. Data from both studies will be presented at scientific congresses later this year. Last October, we announced FDA and EMA filing acceptance of our applications for abracitamide in patients with moderate to severe atopic dermatitis with a priority review PDUVA date for the FDA in April. There is a large unmet medical need here. Many of the 60 million patients are not well controlled on current therapy or are simply untreated, and we see an attractive opportunity to capture much of the space. In other words, we are not just looking to convert existing patients from other therapies. Invex, The FDA has accepted for priority review the biologic license application for our investigational 20-valent pneumococcal conjugate vaccine for adults 18 years of age and older, with a PEDUVA date expected in June.

Data from both studies will be presented in scientific Congresses later this year.

Last October we announced FDA and EMA filing acceptance of our applications for our precision in patients with moderate to severe atopic dermatitis with a priority review Paducah date for the FDA in April.

There is a large unmet medical need here.

Many of the 60 million patients are not well controlled on current therapy, all are simply on Threep and.

And we see an attractive opportunity to capture many of these patients and other.

We are not just looking to convert existing patients from other firms.

In vaccines.

EBITDA had accepted for priority review the biologic license application for our investigational 20, valent pneumococcal conjugate vaccine for adults 18 years of age and older with have been doing a day is expected in June.

If approved we believe the vaccine could provide the most comprehensive coverage against the pneumococcal disease.

Albert Bourla: If approved, we believe the vaccine could provide the most comprehensive coverage against pneumococcal disease in adults compared with the standard of care and other pneumococcal conjugate vaccines in late stage clinical trials. In internal medicine, we are progressing potentially novel treatments that address underlying causes of metabolic diseases and cardiovascular risk. We initiated a Phase 2B clinical trial to evaluate... buprenorphine for the potential to reduce cardiovascular risk and treat severe hypertriglyceremia. Our phase 2 diabetes trial for our oral GLP-1 drug is enrolling rapidly, and we expect to initiate a phase 2 trial for obesity shortly. We expect a proof-of-concept readout in the third quarter of this year, which will inform the next step, the potential pivotal phase three program In Oncology, we recorded robust response rates for BRAFTOVI in the Phase 2 Anchor First Line Colorectal Cancer Study and have initiated a Phase 3 Pivotal Trial.

Compared with the standard of care and other pneumococcal conjugate vaccines into late stage clinical development.

In internal medicine.

We are progressing potentially novel treatments that address the underlying causes of metabolic diseases and cardiovascular risk.

We initiated a phase two b clinical trial gave us to evaluate.

Financing for the potential to reduce cardiovascular risk.

Severe hybrid Surya.

Our phase two diabetes trial for all oral deal.

He is enrolling rapidly and we expect to initiate.

To initiate.

Phase II trial for obesity sharply.

We expect the proof of concept readout in the third quarter, all this year, which will inform the next day.

Nancy all pivotal phase III program.

You didn't call US we recorded robust response rates for but us closely in the phase II Amcor first of all I in colorectal cancer study and have initiated a phase III pivotal trial.

Albert Bourla: We also achieved a positive readout for talazoparid in DDR plus metastatic castrate-resistant prostate cancer in the phase two TALA-PRO1 trial, which gives us increased confidence for a potential positive outcome of the pivotal phase three TALA-PRO2 trial, which has an expected readout for all comers in 2021 and subsequently for the DDR plus subset. We are very excited about Elranathanabut. Our investigation, BCMA-CD3 targeted by a specific antibody for the treatment of multiple myeloma. In December, we presented encouraging data from our ongoing Phase I trial that demonstrated high response rates and manageable safety in patients with relapsed or refractory multiple myeloma, including a few patients who relapsed on or progressed after prior BCMA-targeted therapy. In late January... Elranatamalt received FASTRAG designation for treatment of patients with multiple myeloma who are refractory to at least one proteasome inhibitor, one immunomodulatory drug, and one anti-CD38 antibody. We recently initiated a potentially registration-enabling phase two trial of Erlanatamab monotherapy in triple class refractory multiple myeloma. And we anticipate the first patient to be dosed this month. But, as you can see, tremendous, tremendous activity. Before I close...

We also achieved a positive readout for pellets operating DDR plasma does start with castrate resistant prostate cancer in the phase two dollar per one trial, which gives us increased confidence for a potential positive outcome of the pivotal phase III <unk>.

Trial with an expected readout for all comers in 'twenty 'twenty, one and subsequently for the DDR plus a subset of patients.

We are very excited about.

And nothing on our investigational BC amaze CD three targeted bispecific antibody for the treatment of multiple Neale all.

In December we presented encouraging data from our ongoing phase one trial that demonstrated high response rates and manageable safety in patients with relapse or refractory multiple myeloma <unk>.

Including a few patients who relapsed on all progressed after prior bcm made targeted service.

In late January.

However, I'm not received fast track designation for treatment of patients with multiple near alone who are.

Refractory to at least one proteasome inhibitor.

One immuno.

Immuno modulator drunk and one anti CD 38 antibody.

We recently initiated the potential.

The potentially registration, enabling phase II trial of Atlanta by month mono therapy in Triple class refractory multiple myeloma and we anticipate the first but it does seem to be dosed.

Months, whereas you can see tremendous tremendous activity.

Before I close.

I want to say a few words about affordability.

Albert Bourla: I want to say a few words about affordability. As we have said, our breakthrough medicines and vaccines won't do anyone any good if people can't afford them. We believe the industry has generated a great deal of goodwill with Congress and public opinion through our COVID-19 treatment and vaccine efforts, and we hope we can build on this goodwill by working together on a solution, including making a contribution as an industry through legislation or executive action that results in lower out-of-pocket costs for patients. The status quo simply won't cut it.

As we have said all breakthrough medicines and vaccines one do anyone any good if people can affordably X system.

We believe the industry has generated a great deal of goodwill with Congress and public opinion through our COVID-19 treatment and vaccine Netherlands.

We hope we can build on this good week by working together on a solution, including making a contribution is an interest in it through legislation all executive action that results in lower out of pocket cost to patients.

The status of all simply one conflict and we look forward to working with them by them administration and members of Congress from both sides of the aisle to help ensure our breakthroughs are accessible to all.

Albert Bourla: And we look forward to working with the Biden administration and members of Congress from both sides of the aisle to help ensure our breakthroughs are accessible to all. In summer 2020... In summary, 2020 was a transformational and very successful year for our company, and we look forward to sustaining this momentum in 2021 and beyond. We remain focused on being nimble and investing in our R&D organization so we can build on the strong improvement in key metrics we have seen over the past five years. 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 on the bottom line. However, I would note that these projections do not include any potential impact from our COVID-19 vaccine.

In summary blended Ramsey.

In summer 'twenty 'twenty was a transformational and very successful year for our company.

And we look forward to sustaining this momentum in 'twenty 'twenty, one and beyond.

We remain focused on being nimble and investing in our R&D organization. So we can build on the strong improvement in key metrics, we have seen over the past five years.

We continue to expect a revenue CAGR of at least 6% on a risk adjusted.

Since the end of 2025.

And double digit growth on the bottom line.

I would note that these projections do not include any potential impact from our COVID-19 vaccine.

We remain very confident in our ability to achieve this growth rates because of the strength of both our current product portfolio and R&D pipeline.

Albert Bourla: 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&D pipeline. At the same time, we will continue to pursue business development opportunities with the potential to enhance our long-term growth prospects post-2025. We will focus mainly on smaller deals that fit within our current therapeutic areas. And, as always, we are focused on value creation for Pfizer shareholders, not those of potential acquisition targets. Now I will turn it over to Frank to provide details on the quarter and our outlook for the remainder of 2021.

At the same time, we will continue to pursue business development opportunities with the potential to enhance our long term growth prospects post 'twenty 'twenty five.

We will focus mainly on smaller deals that fit within our current therapeutic areas and as always we are focused on volume generation for Pfizer shareholders not vault of potential acquisition targets.

Now I will turn it over to Frank to provide details on the quarter and are all for the remainder of 'twenty 'twenty one from.

Frank: Thanks, Albert. Good day, everyone.

Thanks, Albert Good day, everyone I know you've seen all really so let me provide a few highlights regarding the financials.

Frank: I know you've seen our release, so let me provide a few highlights regarding the financials. We again saw very solid revenue growth for the business in the quarter and the year, which continues to support our projected 6% plus revenue CAGR through the end of 2025. As a reminder, this growth projection excludes any contribution from COVID-19. In terms of the price and volume mix for the year, if I go off of the 8% operational growth we posted, excluding consumer healthcare and the COVID vaccine, our underlying biopharmaceuticals portfolio generated 10% volume offset by a negative 2% price impact, so continued very strong volume overall. Foreign exchange had a slightly positive impact on revenue in the quarter with a So 1% positive for the quarter, 1% negative. Now, moving down the income...

We again saw a very solid revenue growth for the business in the quarter and the year, which continues to support all.

6% plus revenue CAGR through the end of 2025.

As a reminder, this growth projection excludes any contribution from the Covid vaccine.

In terms of the price and volume mix for the year that go off of the 8% operational growth with postpaid excluding consumer health care and the Covid vaccine all underlying biopharmaceutical portfolio generated 10% volume growth offset by a negative 2% price impact.

<unk> had very strong volume overall.

Foreign exchange had a slightly positive impact on revenue in the quarter with a 1% benefit for the full year.

For the full year, we saw an overall negative impact of 1%.

So 1% positive for the quarter, 1% negative for the full year now moving down the income statement adjusted gross margins were lower in the quarter, mainly due to the negative impact of foreign exchange product mix and unfavorable year over year impact of cash flow hedging on inventory and COVID-19 related expenses.

Frank: Adjusted gross margins were lower in the quarter, mainly due to the negative impact of foreign exchange, product mix, an unfavorable year-over-year impact of cash flow hedging on inventory, and COVID-related expenses. However, it's important to note that on an annual basis, adjusted gross margin for 2020 was within 90 basis points of 2019, at around 80%. Adjusted SINA expenses in the quarter were lowered by 2% on an operational basis and lowered by 10% on an annual basis. However, there remain two main factors that drive the decrease for the year.

However, it is important to note that net on annual basis adjusted gross margin for 2020 was within 90 basis points of 2019 at around 80%.

Adjusted SG&A expenses in the quarter were lower by 2% on an operational basis and lower by 10% on an annual basis and remained two main factors that drive the decrease for the year, the exclusion of consumer health and lower selling expenses due to COVID-19 and to a lesser extent.

Frank: The exclusion of consumer health and lower selling expenses due to COVID, to a lesser extent. The early implementation of a planned reduction in spending associated with our corporate enabling function. Adjusted R&D expenses grew 24% in the quarter and 15% for the year on an operational basis. This growth was primarily driven by our investment in developing the COVID-19 vaccine. Reported diluted EPS for the quarter was up significantly compared to the prior year quarter, mainly driven by lower acid impairment charges compared to the year ago quarter. For the year, reported earnings will be lower mainly due to the non-recurrence of the gain on the consumer joint venture formation in 2019, and adjusted diluted EPS grew 17% for the quarter and 20% for the year on an operational basis.

You're all the implementation of plant of a planned reduction in spending associated with our corporate enabling functions.

Adjusted R&D expenses grew 24% in the quarter and 15% for the year on an operational basis.

This growth was primarily driven by our investments in developing the COVID-19 vaccine.

Reported diluted EPS for the quarter was up significantly compared to the prior year quarter, mainly driven by lower asset impairment charges compared to the year ago quarter.

For the year reported earnings were lower mainly due to the non recurrence of the gain on the consumer joint venture formation in 2019.

And adjusted diluted EPS grew 17% for the quarter and 20% for the year on an operational basis.

I'd add that our full year adjusted diluted EPS was $2 22.

Which is below the range of $2 28 to $2 38, we had given in terms of new Pfizer financials on a full year basis.

To remind you that we had indicated on last quarter's earnings call that our actual reported numbers would be lower than the guidance because the guidance assume all year of operating without up John as well as upon assuming a full year benefit of transitional service agreement recoveries and lower interest expenses from the deployment of the 12 billion in proceeds.

Frank: I'd add that our full year adjusted diluted EPS was $2.22, which is below the range of $2.28 to $2.38 we had given in terms of new Pfizer financials on a full year basis. I just want to remind you that on last quarter's earnings call, we had indicated that our actual reported numbers would be lower than the guidance because the guidance assumed a full year of operating without Upjohn as well as assuming a full year benefit of transitional service agreement recoveries and lower interest expenses from the deployment of the $12 billion in proceeds to pay down debt. So with the deal not closing until November, we only had a small benefit from these factors in our reported 2020 financial year. Now, let's move to our 2021 guide.

To pay down debt.

So with the deal not closing until November we only had a small benefit from these factors in our reported 2020 financials.

Now, let's move to our 2021 guidance with.

We provide a total company guidance, which includes the Covid vaccine and then we provided some additional sub ledger detail our assumptions regarding the projected Culver vaccine contribution. So you can also get a read on the business.

In terms of revenue, we are projecting a range of 59, 4% to $61 4 billion.

Which includes a foreign exchange benefit of approximately $1 4 billion.

And if the guidance range midpoint represents operational growth of 41% from 2020.

Adjusted cost of goods the range is 32% to 33% as a percentage of revenue, which incorporates the COVID-19 vaccine gross profit share payment to biotech as well as some other related items I will speak to in a moment.

Frank: We've provided total company guidance, which includes the COVID vaccine, and then we've provided some additional subledger detail on our assumptions regarding the projected COVID vaccine contribution, so you can also get a read on the business balance. In terms of revenue, we are projecting a range of $59.4 to $61.4 billion, which includes a foreign exchange benefit of approximately $1.4 billion, and at the guidance range midpoint represents operational growth of 41% For adjusted cost of goods, the range is 32-33% as a percentage of revenue, which incorporates the COVID vaccine, the gross profit share payment to BioNTech, as well as some other related items I will speak to in. On a side A, what we see is the impact of increased sales and marketing behind key growth brands, as well as for expected product launches.

On our side and what we see us the impact of increased sales and marketing expense behind key growth brands as well as for expected product launches.

We are enabling function cost savings.

In addition, we see growth in R&D, which follows along with our pipeline development and I note, even though all clinical trial success metrics Alfred referenced.

It's about making sound R&D investments.

Adjusted other income and deductions is projected at just over $2 billion of income.

Ian to the usual items included here remind you for modeling purpose that three larger items in terms of income all right GSK consumer healthcare joint venture equity income dividend income and transition service agreement recoveries, primarily related to the interest.

Working this through with our projected 15% tax rate yields an adjusted diluted EPS range of 310 to 320 or 38% operational growth at the midpoint.

This range is a bit higher than what we discussed three weeks ago and was driven mainly by an increase in all COVID-19 vaccine sales projections since then.

Let me offer some assumptions and context on the projected coffee vaccine financial contribution and our collaboration agreement.

The Pfizer biotech vaccine collaboration construct is a 50 50 gross profit split.

These are all booked the vast majority of the global collaboration revenue, except for Germany, and Turkey, and we do not participate in China.

We continue to expect that we can manufacture up to 2 billion doses in 2021. However, given it is still early in the year. We are not projecting that we will sell all those doses ultimately we may contract all the doses, but for the purposes for our initial guidance. We primarily included doses that are covered by strong supply agreements with various governments.

Frank: Our enabling function costs. In addition, we see growth in R&D, which follows along with our pipeline development cadence. And I note, given our clinical trial success metrics Albert referenced, we're confident about making sound R&D investments. Adjusted Other Income and Deductions is projected at just over $2 billion in revenue. In addition to the usual items included here, remind you for modeling purposes that three larger items in terms of income are our GSK Consumer Healthcare Joint Venture Equity Income, VIV Dividend,

Sure.

Tom This we currently forecast approximately $15 billion and Covid vaccine revenue, which is what you see here.

We remain in negotiations for additional contracts, we are not providing the number of doses behind the revenues.

Our cost of sales of the Covid vaccine revenue will include manufacturing and distribution costs are royalty payments allowance as well as the payment to biotech representing a 50% gross profit split.

All in the heels and anticipated income before tax Covid vaccine in the high 20% range net.

Let me add that if we contract for additional if we contract with the delivery of additional doses during the year, we will provide a guidance update and our subsequent earnings releases.

Frank: and Income, and Transition Service Agreement recoveries, primarily related to VIA. Working this through with our projected 15% tax rate yields an adjusted limited EPS range of $310 to $320, with 38% operational growth at the mid-term. This range is a bit higher than what we discussed three weeks ago and was driven mainly by an increase in our COVID vaccine sales projections since then. Let me offer some assumptions and context on the projected COVID vaccine financial contribution and our collaboration. The Pfizer-BioNTech vaccine collaboration construct is a 50-50 gross profit split. Pfizer will book the vast majority of the global collaboration revenue except for Germany and Turkey, and we do not participate in China. We continue to expect that we can manufacture up to 2 billion doses in 2021. However, given it is still early in the year, we are not projecting that we will sell all of those.

If we remove the projected COVID-19 vaccine contribution and related impacts on revenue that results in our business, having 2021 projected annual revenue between $44 four and $46 6 billion.

6% operational revenue growth at the midpoint about 8%. If we include the current favorable impact of foreign exchange compared to last year.

In terms of adjusted cost of goods net of the Covid vaccine, we see a range between 21 and 22% as a percentage of revenues for adjusted diluted EPS, we see a range of $2 50 to $2 60, which represents 11% operational growth at the midpoint.

These growth rates are all consistent with how we've been publicly positioning the business subsequent to the upjohn separation.

In terms of reporting our quarterly earnings we are not going to report two sets of financials, when with Covid and one without but I think the context in terms of the vaccine margins will be helpful. In calculating a good estimate of the July the adjusted diluted EPS impact based on the Covid vaccine revenue were reported in future earnings releases.

Let me speak for a moment about our dividend going forward and how it will initially be linked to the interest dividend. Once it is declared to make it simple lets start with pfizer's current annualized dividend rate of $1 56 per share.

A pfizer shareholder owning 100 shares just prior to the spin off with now still on their 100 shares of Pfizer and also 12 shares if the interest assuming they have continued to all dmitry shares.

The 100 shares of Pfizer would generate $156 an annual dividend income and currently the 12 shares of interest did not generate any dividend dividend income.

$156, an annual dividend income is what we will preserve.

Once the interest declares its dividend we will calculate the annual income generated by the 12 shares of interest and then adjust the Pfizer dividend since the combined annual income generated from the 100 shares of Pfizer and 12 shares of interest told us at least at $156 in 2021.

Frank: Ultimately, we make contracts for all the doses, but for the purposes of our initial guidance, we primarily included doses that are covered by strong supply agreements with various governments. Upon this, we currently forecast approximately $15 billion in COVID vaccine revenue, which is what you see here. However, if you remain in negotiations for additional contracts, we are not providing the number of doses behind the record.

This is for the foreseeable future, we expect our board to continue to support annual dividend increases and approximately in this year's level. Obviously, we have no say us towards the interest is what its future dividend. All. This example is helpful and.

In summary, we had a strong 2020.

Separation of Upjohn is behind US the business is on track for solid top and bottom line growth and we are highly focused on advancing our pipeline supporting our market brands and looking to deploy capital responsibly with a focus on initiatives that can solidify our long term revenue and earnings growth.

Frank: Our cost of sales for the COVID-19 vaccine revenue will include manufacturing and distribution costs, a royalty payment allowance, as well as a payment to BioNTech, representing the 50% gross profit. All in, this yields an anticipated income before tax of COVID-19 vaccine in the high 20%. Let me add that if we contract for the delivery of additional doses during the year, we will provide a guidance update and our subsequent earnings report. If we remove the projected COVID-19 vaccine contribution and related impacts on revenue, that results in our business having 2021 projected annual revenue between $44.4 and $46.6 billion. So 6% operational revenue growth at the midpoint and about 8% if we include the current favorable impact of foreign exchange compared to less.

With that I'll turn it back to Chuck.

Great. Thank you Frank and Albert for the prepared remarks, operator at this point can we please poll for questions. Thank you.

Ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad.

Your first question comes from the line of David Risinger from Morgan Stanley.

Yes.

Thanks very much.

No.

First of all congrats on the phenomenal vaccine progress and a.

Our benefits that Pfizer is driving for a society that's much.

Much appreciated.

By everyone on this call and beyond.

My two questions relate to vaccine prospects and Xeljanz. So first could you just speak to.

How you are projecting the vaccine sales for 'twenty.

Tom.

Yes.

Frank: In terms of adjusted cost of goods, net of the COVID vaccine, we see a range between 21 and 22% as a percentage of revenue. For adjusted diluted EPS, we see a range of 250 to 260, which represents 11% operational growth. These growth rates are all consistent with how we've been publicly positioning the business subsequent to the Upjohn September. In terms of reporting our quarterly earnings, we are not going to report two sets of financials, one with COVID and one without, but I think the context in terms of the vaccine margins will be helpful in calculating a good estimate of the adjusted diluted EPS impact based on the COVID vaccine revenue we will report in future earnings releases.

Okay.

All right.

David Unfortunately.

Cutting often back thank you.

Can you repeat the question all the vaccine from the beginning.

The question is.

With respect to the vaccine.

Okay.

Okay.

Sure.

All right.

Good day.

Unfortunately, the line is not good David we can't hear you.

Maybe David can come back in operator can we move to the next question.

Next question comes from the line of Steve Scala from Cowen Inc.

Thank you I have two questions in what scenarios would you not sell all 2 billion doses of Covid vaccine Pfizer can manufacturer in 2021, some competitors have an exactly exceeded expectations and only a small fraction of global demand has been satisfied to date. So it seems as though you are.

Frank: Let me speak for a moment about our dividend going forward and how it will initially be linked to the Beatrice dividend once it is. To make it simple, let's start with Pfizer's current annualized dividend rate of $1.56 per share. Pfizer shareholders owning 100 shares just prior to the spinoff would now still own their 100 shares of Pfizer and also 12 shares of Viatris, assuming they have continued to hold the Viatris. The 100 shares of Pfizer would generate $156 in annual dividend income, and currently, the 12 shares of Viatris do not generate any dividend income. This $156 in annual dividend income is what we will... Once Viatris declares its dividend, we will calculate the annual income generated by the 12 shares of Viatris and then adjust the Pfizer dividend so the combined annual income generated from the 100 shares of Pfizer and 12 shares of Viatris totals at least $156. For the foreseeable future, we expect our board to continue to support annual dividend increases at approximately this year's level.

So every dose you make and that the current guidance is going to be way low.

Second question is on the Xeljanz CV study should we assume D V. T tracked similarly to mace and given that Pfizer has other jacks and development.

What do you believe are the long term implications for JAK class.

For the JAK class overall, given this recent Xeljanz CV study.

Thank you our fingers, but we think that all with one and then I'll ask Michael to comment on the sales on our spot.

On the implications on commercial.

Steve we try not to give you a low expectation we've tried to give a responsible.

It used to be all asking if there is a commodity that we will sell everything yes. There is also I would tell you about the east of US. It was an open market, which means the physicians and citizens and they have.

The ability to choose which vaccine.

Well received.

I would feel very comfortable.

All we can rely on market share because we are first.

And as you haven't clearly indicate and we have great.

Frank: Obviously, we have no say as to what Viatris does with its future. I hope this example is helpful. In summary, we had a strong 2020, the separation of Upjohn is behind us, the business is on track for solid top and bottom line growth, and we are highly focused on advancing our pipeline, supporting in-market brands, and looking to deploy capital responsibly with a focus on initiatives that can solidify our long-term revenue growth. With that, I'll turn it back to Chuck.

Operations basically every country in the world, but this is not an open market at least for this year. This year. It is a market that is controlled by governments appropriately because I think we are in a crisis as you know and also it is <unk>.

Market rates and local political pressure, so not always but the season saw some solid.

Uh huh.

Avoiding amit so with us in mind, when we have a formula, but we tried to implement in our research.

Possible way, but takes into consideration.

The contract is up ahead.

The potential for future contracts, but also takes into consideration the strength over the contract patients with duration.

Unknown Executive: Great. Thank you, Frank and Albert, for the prepared remarks. Operator, at this point, can we please poll for questions? Thank you.

The potential for <unk>.

For all other vaccines to present data and then part of the reason why we changed all revenue per injection was resolved it in in July.

Which resulted in 10 improvement in all bottom line excuse me going through deep have more news from us.

Operator: Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad. Your first question comes from the line of David Reisinger from Morgan Stanley.

The astrazeneca registration underway, but it is perceived in Europe. We've had the news from the same day that are reported data we have much better visibility now in the last two weeks on their manufacturing capabilities all of US all resulted in us increasing our projections.

David Risinger: Thanks very much. First of all, congratulations on the phenomenal vaccine progress and the benefits that Pfizer is driving for society. That's much appreciated by everyone on this call and beyond. My two questions relate to vaccine prospects and Xeljanz. So first, could you speak to how you are projecting vaccine sales for 2020?

And look this is a multi dimension zone and let's say challenged to have operating projections and clearly we all are having.

Having dynamic changes, which we will follow into update all all wrong estimates as time comes but in all honesty got good them responsibly.

David Risinger: David, unfortunately, you are cutting off, and I couldn't hear you. Can you repeat the question about the vaccine from the beginning?

All right everyone.

To sell everything we can make billions.

Billions when we actually have all of this dynamic situation, but because of volume.

Now why don't we move to.

David Risinger: All right, guys. Unfortunately, the line is not good, David. We can't hear you.

To Michael to talk a little bit about the amaze on Xeljanz and then I'm done.

On this revenue expectation.

Unknown Executive: Maybe, Dave, you can come back in. Operator, can we move to the next question?

Thank you all but then Steve for the question as you know the 11th restart their foot Saturday on what's up.

Operator: You're next, from the line delivered by Steve Scala from Cowell. Thank you.

All other.

Unique population with increased risk.

Steve Scala: I have two questions. In what scenarios would you not sell all two billion doses of COVID vaccine that Pfizer can manufacture in 2021? Some competitors haven't exactly exceeded expectations, and only a small fraction of global demand has been satisfied to date. So it seems as though you'll sell every dose you make, because the current guidance is going to be way low. The second question is, on the Xeljanz CV study, should we assume DVT tracked similarly to MACE? And given that Pfizer has other JAKs in development, what do you believe are the long-term implications for the JAK class? for the JAK class overall given this recent Xeljanz CV study.

Yeah, it's an interesting.

Numerous.

Clinical trial and.

In the market, where the large population of US you know a more general alright population or in which to us colitis.

And in those populations. It has had a very robust.

Efficacy to us.

Safety profile.

I think already by itself has more see the liabilities standup alright patients and this was a very specific subset.

Now going to other JAK inhibitors. The next generation of JAK inhibitors, such as Symphony and registration for us.

Topic dermatitis or other reported.

Reported rip lets say it didnt have which you said you need Jeff.

<unk> to your ticket.

Each JAK inhibitor differ by itself.

And we think both of these two that I mentioned had.

Right.

Encouraging benefit to risk profile.

Albert Bourla: Thank you, thank you Steve. Let me take the COVID one, and then I will ask Michael to comment on the first part of the Xeljanz trial and then Angela on the implications for commercial. Steve, we try not to give a low expectation; we try to give a realistic expectation. If you are asking if there is a scenario where we will sell everything, yes, there is. Also, I would tell you that if that was an open market, which means that physicians and citizens have the ability to choose which vaccine they will receive, I would feel very comfortable that we will have the lion's share, sir, because we are first and we are the best, as you have clearly indicated, and we have great operations in basically every country in the world.

And while our regulatory agencies.

In some instances and fraud.

General class label cost, Yes, I think the experience will tell that upwards since the neighbor for atopic dermatitis.

<unk> has a very compelling efficacy.

And risk profile.

<unk> written a symphony.

For alopecia, that's reading out later this year or for vitiligo, and all Cisco licenses, where we have very encouraging phase two data again, that's all.

Net unique profile. So I don't think that we should extend 11 33 two.

Other <unk> and I think we'll also need to look at cellular having have ever robust profile in populations.

Was not the smaller.

Bush and of the 11 33 studies, thank you very much.

Thanks, Michael and then just building off of what Michael just said.

And you know we have.

Dataset that has been built.

Albert Bourla: But this is not an open market, at least for this year. This year, it is a market that is controlled by governments appropriately because I think we are in a crisis, as you know, and also it is a market that creates a lot of political pressure, so decisions are not always sound, solid, and avoid panic. So with that in mind, we have a formula that we try to implement in a responsible way that takes into consideration the contracts that we have, the potential for future contracts but also takes into consideration the strength of the contracts, takes into consideration the potential for other vaccines to present data, and, in fact, the reason why we changed, which resulted in a 10 cent improvement in our bottom line.

For.

Seven years.

<unk> clinic different clinical trials 260000 patients that are currently Dan and I'll call. It you know.

Very robust real world.

We all will dataset that goes along with these 260000 patients. So I think based on all of this and together with the fact.

Early on in all.

I'm, just adding up 11 33 data as it pertains to Xeljanz.

We feel confident that xeljanz.

An important part.

The treatment paradigm for patients and for patients with Us Psa.

P S.

And it has a it has an appropriate and favorable benefit risk profile.

Albert Bourla: It is because we did have more news about the AstraZeneca registration and the way that it is perceived in Europe. We also had news from J&J that reported data. We have much better visibility now in the last two weeks on their manufacturing capabilities, and all of that has resulted in us increasing our projections. Clearly, there are a lot. This is a multidimensional and, let's say, challenging problem to have accurate projections. And clearly, we are having dynamic changes, which we will follow, and we will update our estimates as time comes. But in all honesty, I couldn't responsibly just say right out, we are going to sell everything we can make, the two billions, when we have this dynamic situation that is evolving. Now, why don't we move to Michael to talk a little bit about the MACE on Xeljanz and then Angela on this revenue.

For this patient population.

Of course, we will see other data with you.

We continue to learn all about the study but for now that's how we see.

And then I think you have.

One more question in terms of how do we think about it all types of impasse.

All other Jack and as Michael said scientifically.

Each one of these molecules are very different.

They're all being designed.

With a different benefit risk profile to match.

The different disease condition as well as a different patient types.

So I think.

As a result, we continue to be very confident about our JAK portfolio.

Lynn.

Each one of these.

We will be able to deliver all differentiated profile that will be appropriate and fit for purpose for that condition.

Yeah.

Thanks, all right.

Thanks for the responses.

Next question please operator.

Your next question comes from the line of Gregg Gilbert from <unk> Securities.

Michael Dolsten: Yeah, thank you Albert and Steve for the question. As you know, the 1133 study for Xeljanz

Thank you Albert it seems pretty clear that Pfizer the stock anyway, it's not getting a whole lot of credit for the COVID-19 vaccine and whether or not you agree that that's fair I'm curious how you expect to leverage the expertise we've built in this area.

Michael Dolsten: What's up?

Michael Dolsten: a rather unique population with increased CV research. Now, Xeljanz has been studied in numerous clinical trials and in the market where a large population has used it in a more general RA population or in ulcerative colitis. And in those populations, it has had a very robust.

Into areas that investors might view is contributing more to long term franchise value regardless of what happens to the COVID-19 part of the story and then a second vaccine related question, perhaps for Angela Theres been a lot of focus on your vaccine and others about logistics and supply and covered your variance but.

Michael Dolsten: Efficacy to Safety Profile. I think RA by itself has more CV liabilities than standard RA patients, and this was a very specific subset. Now going to other JAK inhibitors, the next generation of JAK inhibitors such as Abucitinib in registration for atopic dermatitis or, as Albert reported, Ritlacitinib which is a unique JAK3 tech inhibitor. Each JAK inhibitor differs by itself. And we think both of these two that I mentioned have very encouraging benefit-to-risk profiles. And while regulatory agencies have, in some instances, inferred a general class label, CROSSJACS, I think the experience will tell that abracitinib for atopic dermatitis has a very compelling efficacy and risk profile, and rib leucitinib for alopecia, which is reading out later this year So I don't think that we should, you know, extend 1133 to..., and I think we also need to look at Xeljanz having a very robust profile in populations that were not the smaller version of the 1133 study. Thank you very much.

It seems to me that at some point a key metric if not the most important metric will be how many people want to get a vaccine. So I'm curious what your work tells you on that front and whether you plan to get involved as a company and helping drive awareness in demand at some point or is that not really pfizer's role to play. Thank you.

Greg. Thank you very much I fully agree with you.

We are assuming all other credit nothing of vaccines right not when you're assuming some price, but mainly part of our basic business and pipeline. This is Jeff.

Our business is growing 6% and double digit bottom line, excluding any COVID-19.

And clearly deserves a much much higher multiple in this industry.

The same comps even more when you speak about all the COVID-19 vaccine.

I think.

Clearly people shouldn't see much margin move up. So your question was how do we plan to use strategic all of these platforms I believe of the RMA and technology has been improving unit growth.

Anyway, but we won't have an impact in treating diseases and preventing diseases in multiple applications.

Applications and I believe Pfizer has accumulated expertise and knowledge of a decade into one year and postal Pfizer has.

Please at the infrastructural investments, but it will take five years again in one year. So clearly we belonged to US. This expertise so that we will be able to benefit more and more patients I made some comments about the within the Covid vaccine I believe us.

Angela Hwang: And then just building off of what Michael said, as you know, we have a very robust data set that has been built around Xeljanz for over seven years, 50 different clinical trials, you know, 260,000 patients that are currently on Xeljanz, and of course, a very robust real world, real world data set that goes along with these 260,000 patients. So I think based on all of this, and together with the fact that we're still so early on in our understanding of the 1133 data as it pertains to Xeljanz, we feel confident that Xeljanz will remain an important part of the treatment paradigm for RA patients and for patients with PSA and UC as well, and that it has an appropriate and favorable benefit-risk profile for this sort of patient population.

Along with us.

The dynamics in the Covid more and more indicators of potential, but we will have a clear view repeated business.

The reasons for box or a multiple well, let me start by saying in the beginning we were waiting to see if.

Immunity will be durable now.

We still don't have David about the unit growth all of excuse me because it is early but we do see the people vote.

Have the disease more and more publications, indicating that government of several months.

And then just one goes down so David I need to boost also with at all.

Papers have been published.

But if the case even for the new volumes.

If you have very high levels of immune responses you all are.

Sure.

Protecting against those volume seen much higher level of any of us from lower levels of the Sunday broadly, so nothing indicating that they need to bolster that you maintained much higher levels. It was there and last but not least it is clear with us.

The scenario.

The.

The volumes are.

Angela Hwang: And so, you know, of course, we will share the data with you as we continue to learn more about the study, but for now, that's how we see it. And then I think you had one more question in terms of how we think about this in terms of impact on our other JACs. And as Michael said, scientifically, each one of these molecules is very different, and they're all being designed with a different benefit-risk profile to match the different disease conditions as well as the different patients. And so I think, as a result, we continue to be very confident about our JAC portfolio and the investments that we're making in each one of these. And we think that what we will be able to deliver are differentiated profiles that will be appropriate and fit for purpose for that condition. Thank you.

Well developed in such a way that they may be an escape and very effective protection from the current box, Inc, which is not the case right now for us.

Then we.

It will be early preparing ourselves so that we will.

Produce.

In a very speedy time I made barbecue.

The statement, but needs to be done end to end and less than 100 days to provide.

New booster vaccines that will protect us against the new volume, so so not us like vulcan's even in scenarios.

But.

The.

Colby will move from a pandemic into more of a normal volume pulse of oxygenation.

<unk> business. It is very clear that Pfizer will have a key advantage not only because all this clinical data, but also because we can develop the <unk>.

The brand equity and trust with the people and when it comes to their choice we have.

Angela Hwang: Thanks for the responses. Next question, please, operator.

Infrastructure and expertise that will help us.

RNA, he's not going to provide us only called US 19 vaccines, we are accelerating our work force loop right now and we see every day.

Operator: In the light of Greg Gilbert from Truist Securities. Thank you.

Greg Gilbert: Albert, it seems pretty clear that Pfizer, the stock anyway, is not getting a whole lot of credit for the COVID-19 vaccine. And whether or not you agree that that's fair, I'm curious how you expect to leverage the expertise you've built in this area into areas that investors might view as contributing more to long-term franchise value, regardless of what happens to the COVID-19 part of the story. And then a second vaccine-related question, perhaps for Angela, there's been a lot of focus on your vaccine and others about logistics and supply and coverage of variants, but it seems to me that at some point, a key metric, if not the most important metric, will be how many people want to get a vaccine. So curious what your work tells you on that front and whether you plan to get involved as a company in helping Thank you.

Investigating multiple.

All other applications in other vaccines for these targeted technology all subgroups.

Hey, Gary.

So I believe us.

Our business, excluding Covid is very robust with robust pipeline, but I think all of it.

Sounds good.

Good complimentary for us.

As for the revenue and earnings trajectory of this business or something from them.

And without.

Ask Angela to comment on the question about again, I think coffee sourcing and zone.

Thanks for the question.

Thank you.

Youre talking about.

Vaccine confidence, which clearly has been.

A big topic since the us.

The vaccine was introduced.

I'm actually really encouraged by data that we're receiving.

On average.

Teen basis that is demonstrating that vaccine confidence building.

Ian.

A month ago.

Significant interest.

And willingness of the public to get vaccinated.

And I think a lot of this is driven obviously by.

Albert Bourla: Greg, thank you very much. I fully agree with you that I don't think we are receiving a lot of credit, not for the vaccines right now when you see the stock price, but mainly for our basic business and pipeline. This is a business that is growing 6% and double digits, the bottom line excluding any COVID, and clearly deserves a much, much higher multiple in this industry. The same holds even more when you speak about the COVID-19 vaccine, which I think clearly people should see much more into. So to your question, how do we plan to use this platform strategically?

Experienced by many people who are now getting the vaccine and having good experiences with them.

So I think that this will continue.

Your question about what is it that we're doing to drive awareness and demand.

I think first of all we have to understand that right now we all in a period, where we are operating in.

The emergency approval, so theres guardrails as it pertains to that and and what it is that.

We can do.

For sure we have worked very diligently with many many many.

Medical and public health.

Albert Bourla: I believe that RNA technology has been proven in a glorious way that will have an impact on treating diseases and preventing diseases in multiple applications. And I believe Pfizer has accumulated expertise and knowledge of a decade into one year. And also, Pfizer has completed infrastructure investments that will take five years again into one year. So clearly, we plan to use this expertise so that we will be able to benefit more and more patients. I made some comments that within the COVID vaccine, I believe that the dynamics of COVID more and more indicate the potential that we will have a clearly repeated business. The reasons for that are multiple.

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And institutions to ensure that we are supporting education.

Across the entire country.

They have recently with even a public service announcement that was launched.

It had all support in conjunction with.

A number of all patient advocacy groups to really educate and to create confidence all the public around this vaccine.

In addition to that at a more specific level Pfizer uniquely has.

The healthcare professional community and its vaccinations by providing.

A lot of training a lot of support to ensure that.

Confidence has gained access vaccinated.

Actually just to share that over 3000 Hcp's has been trained by Pfizer alone.

Albert Bourla: Let me start by saying in the beginning, we were waiting to see if the immunity would be durable. Now, we still don't have data about the immunity of our vaccines because it is early. But we do see that the people that have the disease, more and more publications indicate that after several months, their immune responses go down.

Yeah, Michael so.

To be able to confidently vaccinate.

Vaccinate.

People and I think that that's all helping to create content.

But of course.

We can get most involved and we'll be able to do even more is once we receive.

Albert Bourla: So there is the need to boost. Also, there are a lot of papers that have been published that indicate even for the new variants that if you have very high levels of immune responses, you are, you are, you are protecting against those viruses at a much higher level than if you have lower levels of this antibody. So that indicates that the need to boost so that you maintain much higher levels is there.

And so we're working towards that.

And we will build on the education initiative that we already have in place that we'll be able to amplify that even more once we have a full label.

Thank you.

Thanks, Angela and good point on the BLA opening up more opportunities.

Next question please operator.

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

Great. Thanks, so much for taking the question.

Albert Bourla: And last but not least, it is clear that the scenario that the variants will develop in such a way that they may be escaping very effective protection from the current vaccine, which is not the case right now for us. Then we will clearly prepare ourselves so that we will produce in a very speedy time. I made a public statement that needs to be done end-to-end in less than 100 days to provide new booster vaccines that will protect against the new variants. So in scenarios like that, and even in scenarios where COVID will move from a pandemic into more of a normal type of vaccination business, it is very clear that Pfizer will have a key advantage not only because of the strength of the data but also because we have developed significant brand equity and trust with people when it comes to their choice.

Thank you for all the work Youre doing again on the Covid vaccine.

I was just wondering is there an integrated system, that's been set up by either the government or governments or Pfizer to monitor instances of vaccine breakthroughs in conductor sequencing and then what factors and who will ultimately dictate when a change in.

Potential the vaccine is needed to cover an emerging varian.

Does the consensus emerge on that question. Thank you.

Yes, Michael would you like to take this question. Please.

Yeah, they're all.

All are different.

Organized at the government level.

Airports in the U S.

Depositional sequences, both attract new strains like South Africa and Brazil.

Albert Bourla: We have infrastructure and expertise that will help. RNA is not only going to provide COVID-19 vaccines. We are accelerating our work for the flu right now, and we are clearly investigating multiple other applications in other vaccines for this RNA technology or therapeutic areas. So, I believe that our business, excluding COVID, is very robust, with a robust pipeline, but I think COVID has a very good chance of completelytransforming the revenue and earnings trajectory of this business, starting from now. And with that, I will ask Angela to comment on the question about, again, COVID.

As well.

And vaccinate then in vaccinated all deposits even certain database there is one initiative in UK.

And then of course, Pfizer has a unique collaboration and real world evidence with the Israeli.

Ministers of health.

Which will allow us to track first real world evidence for our vaccine in the population and as you May know, we all done number one to have such data that shows 92% to 95% real world evidence vaccine efficacy primarily seen initially in an older population that is all the normal.

Get the stunning data and it also showed a very low 125 about four.

Both of us.

Hunter poor in 2006 for us in the second injection of adverse events, so really well performing dogs.

Albert Bourla: And I think a lot of this is driven by, obviously.

Angela Hwang: I think this is a real world experience for many people who are now getting the vaccine and having good experiences with them. So I think that this will continue. To your question about, you know, what we're doing to drive awareness and demand, I think, first of all, we have to understand that right now we are in a period where we are operating under an EUA, the Emergency Approval. So there are guardrails as it pertains to that.

Large population of millions of individuals.

And of course, they will all support our breakthrough.

In pictures now in.

In General I think it has been claimed that the South Africa, and Brazil bargains are more difficult to treat and vaccines that have lower antibody levels will have much more breakthroughs given that the mrna vaccines have other high end deposit levels and that's what's I think implied in Albert's answer.

Angela Hwang: And what it is that, you know, we can do. For sure, we have worked very diligently with many, many, many, you know, medical and public health societies and institutions to ensure that we are supporting education across the entire country. There recently was even a public service announcement that was launched where we had our support in conjunction with a number of patient advocacy groups to really educate and create confidence in the public around this vaccine, a lot of training, a lot of support to ensure that you know confidence is gained at the vaccinated site, and actually just to share that over 30,000 healthcare professionals have been trained by Pfizer alone in the recent month or so to be able to confidently And so we're working towards that, and we will build on the education initiatives that we already have in place, but we'll be able to amplify that even more once we have a full label. Thank you.

We expect them to be much more resistant to breakthroughs for longer time.

And I think data from several lab shows that if you maintain with mrna vaccines high antibody level, you will actually protect our very well even against those very young and that suggests and we are just embarking on such studies that you could boost with the current vaccine a further time and void.

Some of these breakthrough Inc. Pictures that were reported.

Recently in some vaccine studies that would be our aspiration to demonstrate that by keeping it.

Individuals with very high Titers, you can read.

Impact and that can be recorded as you'll us in both systems.

Systems that are now in place in many countries and that could be a very important way too.

Translate into a more sustained protection sustained business models, where the monitoring allowing us to plan.

When the next boost should have them.

All right.

All right.

Thank you Michael next question. Please operator.

Angela Hwang: Thanks, Angela, and good point on the BLA opening up more opportunities. Next question, please, operator.

Next question comes from the line of Louise Chen from Cantor.

Hi, Thanks for taking my questions. So my first question is if the Covid vaccine becomes routine how do you think governments and physicians will choose amongst these different vaccines that have received emergency use authorization.

Operator: Your next question comes from the line of Terrence Flynn with Goldman Sachs. Great. Thanks so much for taking that question.

Terence Flynn: And thank you for all the work you're doing again on the COVID vaccine. I was just wondering, is there an integrated system that's being set up by either the government or governments or Pfizer to monitor instances of vaccine breakthroughs and conduct sequencing? And then what factors and who will ultimately dictate when a change in the potential the vaccine is needed to cover an emerging variant? How does a consensus emerge on

Then how do you think about that 95% efficacy rate in light of mutations and then last question us on your P. C V. 'twenty. If it's approved what do you expect the Asa recommendation to be or what would you ideally like it to be and do you think there'll be any upgrade for those 65 plus do the additional serotypes. Thank you.

Michael Dolsten: Yes, Michael, would you like to...

Michael Dolsten: Yeah, there are different. Organized at the government level efforts in the U.S., the position of sequences both to track new strains like the South African and Brazil, as well as among unvaccinated and vaccinated or deposited in certain databases. There is one initiative in the U.K. And then, of course, Pfizer has a unique collaboration in real-world evidence with the Israeli and Israeli Ministers of Health, which will allow us to track first real-world evidence for our vaccine in the population. And as you may know, we are the number one to have such data that shows 92 to 95% real-world evidence of vaccine efficacy, primarily seen initially in an older population that's And it also showed a very low 0.25 about for both 24 and 26 for first and second injection of adverse events.

Thank you.

Wild dunes, we started with PCB trend in Angola, and then we can come back to to Covid Angela.

Sure.

So in terms of PCV 20, I mean, what we believe our value. There is it is the additional serotypes and that India. Adults. These additional serotypes are meaningful because it will give us 33% more protection against strains clothing.

Adult.

42% more protection against strains clothing IBD for pediatrics. So we feel that this is very value creating.

It provides us the opportunity to really bring in important option into the market that is an upgrade compared to what it is that we have today and then to your question about the IP.

Michael Dolsten: So really well performing in a large population of millions of individuals, and of course they will also track if there are breakthrough infections. In general, I think it has been claimed that the South African and Brazil variants are more difficult to treat, and vaccines that have lower antibody levels, will have much more breakthroughs given that the mRNA vaccines have a high antibody level. And that was, I think, implied in Albert's answer. We expect them to be much more resistant to breakthroughs for longer time, and I think data from several labs shows that if you maintain with mRNA vaccines high antibody levels you will actually protect very well even against those variants and that suggests and we are just embarking on such studies that you could boost with the current vaccine a further time and avoid some of these breakthrough infections that were reported, Recently, in some vaccine studies, that would be our aspiration to demonstrate that by keeping individuals with very high titers, you can really impact and that can be recorded as yours in various systems that are now in place in many countries, and that could be a very important way to transit into a more sustained protection, sustained business model where the monitoring allows you to plan when the next boost should happen.

And of course, we're working closely with the FDA for approval and with the CDC at the right moment in time to get the right recommendation, we believe that.

Recommendation will be will be positive as it pertains to.

'twenty and we look forward to working with them.

You bet.

Thank you now as regards the how people consume or physicians could soon.

These are routine I believe that if this is a routine the decision will come with all our other vaccines and medicines the strength of the data.

I think that this is why I made before the comments that given that we are first which means us.

Flexing, adding a lot of.

People right now with different doses given that.

We have a sense us through.

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Yes.

Open it's always.

Situation, we will get us amongst most of the majority of it.

Over the share of choices.

Tom.

But I think common.

Common reality likely after in 2022, when the governments do their whole loan originations scheme and also in the year and they will be.

I believe the capacity.

So volume will not be the case, even if everyone wants to get to one vaccine I think will be not to make this one vaccine.

Michael Dolsten: Great

Michael Dolsten: Thank you, Michael. Next question, please, operator.

What about the 95% efficacy in terms of volumes I think we answer Michael maybe you want to reiterate once more why.

Operator: Your next question comes from Louise Chen from Kansas. Hi, thanks for taking my questions. So my first question is, if the COVID vaccine becomes routine, how do you think governments and physicians will react?

The higher the efficacy of the better is not only for the economy, but also for the volumes.

Yes very brief.

Clear from convalescent plasma studies now the last couple of weeks been all.

And also from plasma from vaccine.

Louise Chen: Transcripts provided by Transcription Outsourcing, LLC.

The recipient higher antibody levels seems to protect all variance in the preclinical studies from patients. So I think it will project into the.

Albert Bourla: Emergency Use Authorization, and then

Albert Bourla: And how do you think about that?

Albert Bourla: That 95% efficacy rate in light of mutations. And the last question is on your PCV20, if it's approved.

The vaccines with high antibody levels and T cell immunity, which are an additional protection mechanism will do very well against varian and keep boosting them.

Albert Bourla: back what the ACIP recommendation should be, or what would you ideally like it to be?

Angela Hwang: and Do you think there will be any upgrade for those 65 plus any additional serotypes? Thank you.

Keep the violence of the population for a longer time before there's any need to shoot to ovarian selective. So I think that data will have with mrna vaccine put them really in a unique category having the.

Albert Bourla: Thank you. Why don't we start with PCV20 and Angela, and then we can come back to COVID. Angela?

Strong immune response, the ability to boost and the ability to if needed reconfigure.

Angela Hwang: Sure. So in terms of PCV20, I mean, what we believe our value there is the additional serotypes, and that in adults, these additional serotypes are meaningful because they will give us 33% more protection against strains causing IPD in adults and 42% more protection against strains causing IPD in pediatrics. So we feel that this is very value-creating and, you know, provides us with the opportunity to really bring an important option into the market that is an upgrade compared to what we have today. And then to your question about ACIP. Of course, we're working closely with the FDA for approval and with the CDC at the right moments in time to get the right recommendation. We believe that the recommendation will be positive as it relates to PCV20, and we look forward to working with them to achieve that.

Alright, Thanks, Michael next question. Please operator.

Your next question comes from the line of Nomura.

Evercore.

Hi, guys. Thanks, so much for taking my question I want to hit up on two different topics one.

As we think about possible new vaccine for the new variance do you.

They have plans in place are you working on it right now should we anticipate some sort of phase one data by at some point this early summer.

And has there been a consideration to allocate some of this $2 billion in doses capacity to a new version of the vaccine.

And separately going back to the phase III you reported it's been a few weeks and.

One other questions I've had is all the patients that tested positive on the vaccine post dose to what did we learn about.

Albert Bourla: Thank you. Now, as regards how people could choose or physicians could choose if that is a routine vaccine, I believe that if this is a routine vaccine, the decision will come, as with all other vaccines and medicines, on the strength of the data. I think that this is why I made the comments before that given that we are first, which means that we are vaccinating a lot of people right now with the first doses, given that we have such a strong Safety and Efficacy Database in an open choice situation, we will get the vast majority of the share of choices. But that, I think, will come a reality, likely, in 2022, when governments do their whole vaccination scheme. And also, in that year, there will be unbearable capacity, so volume will not be an issue.

What mutation those patients had on deep sequencing, what did we learn about their nab titers and T cells and I Wonder if there's anything we can draw on correlated protection. Thank you.

Yes.

Very very good excellent questions. Michael do you want to take the last one and also the first one and then I can speak other than.

Later on the manufacturing issues.

Yeah.

With variance we are embarking on a study.

Which will give a boost after six months and possibly also compared with a 12 months when compared to wild type the currency.

With a variant vaccine likely based on the four eight before I mean, that's it from Brazil, and South Africa.

I think that given the data is so strong with all of us we.

We alluded to it may very well be that.

Albert Bourla: Even if everyone wants to get one vaccine, I think it will be enough to make this one vaccine. What about the 95% efficacy in terms of variants? I think we already answered that. Michael, maybe you want to reiterate once more why the higher the efficacy, the better it is, not only for the current but also for the variants.

The third boost at the appropriate time point is sufficient and you continue to monitor ovarian, but we would be prepared if needed.

With data as you said around the summer quality protection is something we are working with a lot of science is not just looking at data in our trial, but in public consortium with NIH looking at data across mandatory all.

Michael Dolsten: Yeah, very brief. It's clear from convalescent plasma studies that now, the last couple of weeks have been out, and also from plasma from vaccine recipients. Higher antibody levels seem to protect from variants in preclinical studies from patients, so I think it will project into The vaccines with high antibody levels and T-cell immunity, which are an additional protection mechanism, will do very well against variants and keep boosting them, keeping the variants off the population for a longer time before there's any need to shift to a variant selective vaccine. So I think that the data we have with the mRNA vaccine puts them really in a unique category, having the... strong immune response, the ability to boost, and the ability to, if needed, reconfigure.

And we will see the outcome I expect again I antibody levels plus T cell immunity will provide the best your ability and that makes us very optimistic about the unique profile of mrna vaccine.

Thank you, Michael and 2 billion doses, all the Michigan about EPS.

Hey, Andy for this current vaccine and clearly also we are working to see if we can improve that even further but right now we are at all.

Our commitment of 2 billion doses, but the reason why we had selective mrna in the first place.

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[music] ability with this technology to build a new construct of us.

<unk> vaccine by just changing the RNA medicines.

RNA within this vaccine.

So really very very simple process in terms of manufacturing and in terms of margin developing it.

Michael Dolsten: Great. Thanks, Michael. Next question, please, operator.

Nothing is simple in biology, when you speak about hi, Hi.

Operator: and a line from Umer Raffat from Evergreen. Hi guys, thanks so much for taking my question. I want to touch on two different topics. One, as we think about possible new vaccines for the new variants, do you guys have plans in place? Are you working on it right now? Should we expect some sort of phase one data by at some point in this early summer? And separately, going back to the phase three you reported, it's been a few weeks. And one of the questions I've had is, of the patients that tested positive for the vaccine post-dose two, what did we learn about what mutations those patients had on deep sequencing? What did we learn about their NAB titers and T-cells? And I wonder if there's anything we can draw on correlative protection. Thank you.

Complicated process, but we're looking to Glenn the other technology, which is very simple so I wouldn't say, but I would anticipate that made us or if we have to growth with twin.

New vaccines.

So kind of shake up.

Our manufacturing capacity I think although all at 2 billion doses could be maybe a little bit less if we started producing new vaccine replace altogether the new volumes.

Altogether, the cumulative venue and if there is a need to do.

Alright, Thanks Albert.

We'll take our next question please.

Our next question comes from the line of Geoffrey Porges from SBB Leerink.

Thank you very much and I. Unfortunately will continue a little bit on this thing.

Could you give us a sense of whether you think the.

So called South African and Brazilian variants that have similar mutations represent terminal on the terminal adaptations of the virus or do you think that.

We'll see sort of almost recurring.

Adaptations.

Umer Raffat: Umer, very good, excellent questions. Michael, if you want to take the last one, and also the first one, and then I can speak later on the manufacturing piece.

Do you have to contemplate adapting.

Seems too.

Then secondly.

Have you contemplated giving a single.

Does the vaccine to those who previously been infected given what's probably 20% to 25%.

Michael Dolsten: Yeah, you know, with variants. We are embarking on a study which will give a boost after six months and possibly also compare with a 12-month boost. We'll compare the wild-type, the current vaccine, with a variant vaccine, likely based on the 484 amino acid from Brazil and South Africa. I think that given the data are so strong with our vaccine, as we alluded to, it may very well be that a third boost at the proper time point is sufficient, and you continue to monitor variants, but we will be prepared if needed. We date, as you said, around early summer.

Andy body positivity in the U S population at all.

Lastly, could you a nextgen variant vaccine be refrigerated stable.

Michael.

Yeah.

Yeah, you know the first the strains like do you can strain was maintenance selected foot transmissibility its a spread quickly as day.

Previously infected people in South Africa, and Brazil.

The new strengths have been selected for immune escape, which is before a poor I mean us duties to most important.

Hi, antibody titers as alluded to before from our vaccine seems still to be able to read quite nicely with that Spain, all but somewhat more moderate production and we think keeping high tide dropping patients will be a very good reported approach until there is need for us.

Michael Dolsten: Quality protection is something we're working on. A lot of scientists, not just looking at data in our trial, but in a public consortium with NIH, looking at data across many trials, and we will see the outcome. I expect, again, high antibody levels plus T cell immunity will provide the best durability. And that makes us very optimistic about the unique profile of mRNA vaccines.

Strained shapes.

Now with that concept team up high antibody titer, you should immunized, whether you have had.

Slides that gives your maximum tighter and allowing us to fight all but.

Albert Bourla: Thank you, Michael. And the two billion doses that we're speaking about, it is all clearly for this current vaccine. And clearly, we are also working to see if we can improve that even further. But right now, we are at our commitment of two billion doses. But the reason why we had selected mRNA in the first place was because it greatly simplifies this type of... our ability with this technology to build a new construct of the same vaccine by just changing the RNA messenger RNA within this vaccine. It is really a very, very simple process in terms of manufacturing and in terms of actually developing it. Now, nothing is simple in biology when you speak about highly complicated processes, but relatively to any other technology, this is very simple

Variant strains for as long time as possible before you may need to boost or all.

After some time that there may be any reason to varian vaccine as Albert alluded to and we all currently initiating study to understand when a.

Immunization would be helpful for us.

Participants and we will be studying six to 12 months as the new sales assumptions.

And of course, we continue to make efforts to make refrigerate debate.

That includes localization or possible lequan.

The stabilized.

Product and we think end of this year all over the next day it will have such a product.

Excellent.

Next question please operator.

Your next question is from from meal demand from Mizuho.

Albert Bourla: So I wouldn't say that I would anticipate a major shake-up in our manufacturing capacity if we have to go to a new vaccine. I think overall, two billion doses could be maybe a little bit less if we start producing a new vaccine, replace altogether the new variant. All together cumulative, the new and the old if there is a need to do the new.

Yes.

Great. Thanks, so much for taking the questions.

Just shifting gears a little bit helps the vaccine.

Somewhat tied to other vaccine.

Sales of a different angle here in terms of capital allocation.

Albert I think you had mentioned that.

Changed your strategy.

The vaccine all that he is going to give you a boost to your sales and cash flow at least in the near term here. So I'm just wondering should we expect pfizer to be any more active and completed more transactions in the coming months is to try and boost your pipeline than you otherwise might have been or not I guess.

Albert Bourla: Great. Thanks, Albert. We'll take our next question, please.

Operator: Your next question comes from the line of Jeffrey Porges from SVB LaRinke. Thank you. Thank you very much.

David you sort of comment on your kind of thoughts around cash flow and what you might look to do there.

Jeffrey Porges: And I unfortunately will continue a little bit on this theme. Michael, could you give us a sense of whether you think the so-called South African and Brazilian variants that have similar mutations represent terminal or near terminal adaptations of the virus? Or do you think that we will see sort of recurring and infinite adaptations that we may have to contemplate adapting vaccines to? And then, secondly, have you contemplated giving a single dose of vaccine to those who've previously been infected, given what's probably 20 to 25% antibody positivity in the U.S. population? And lastly, could your next-gen variant vaccine be refrigerator-stable?

And my second question is on bid day, Max where it looks like you are having pretty good traction there maybe better than we thought given the pandemic.

Just wondering if you could maybe comment so where this product is now relative to where maybe you would've expected a year ago sort of pre pandemic I'm trying to get a sense.

There are really sort of a bolus of patients.

You could maybe make more traction without dependent is it all right you're already doing quite well in terms of.

Gaining penetration into those patients now.

So as you sort of expect the same sort of.

Uptake going forward.

Any thoughts would be helpful. Thank you.

Thank you have a meal in Saint Joseph who are asking something outside Congress left us.

It just makes us very interesting so you're right the capital allocation.

Michael Dolsten: Michael?

Michael Dolsten: Yeah, thank you. Yeah, you know, the first strains, like the UK strain, were mainly selected for transmissibility, to spread quickly. As there were previously infected people in South Africa and Brazil, the new strains have been selected for immune escape, which is the 484 amino acid is the most important. High antibody titers, as alluded to before, from our vaccine seems still to be able to react quite nicely with that strain, although it's a somewhat more moderate reduction. And we think keeping a high antibody titer up in patients will be a very straightforward approach until there is a need for a strain change. Now with that concept, keep up a high antibody titer, you should immunize whether you have had an infection or not twice. That gives you maximum titer and allows you to fight off variant strains for as long as possible before you may need a boost or after some time that there may be any reason for a variant vaccine, as Albert alluded to. And we are currently initiating a study to understand when a third immunization would be helpful for participants, and we will be studying six to twelve months as an initial assumption. And, of course, we continue to make efforts to make refrigerator-based vaccines that include lyophilization or possible liquid.

It is the result of our strategy and if anything with COVID-19.

He is a proven our strategy.

It is I think a demonstration, but we do have a.

Research from a simple because the resources of a big Biopharma and the agility of a small biotech.

Things like many people with beds that Pfizer would be the first one to complete something like that but this is what we are building in the last few years and this is a demonstration of working over.

So our capital allocation.

Never say never.

But right now the.

The dividend will be maintained front was very clear about is a growing dividend. It is.

The important thing.

Part of our investment thesis and so we will continue.

But anytime soon.

Our recent us to try to bring in phase II phase III.

Dominantly.

Programs.

Through all R&D machine very quickly and very successfully can become.

Tom.

Medicines and vaccines that could generate revenues that will fuel the GAAP, but.

From the 6% so we can sustain the 6% beyond 2025.

Nothing changes also we do have higher flexibility in terms of caution squamous Jeremy.

Michael Dolsten: with a stabilizer, and we think by the end of this year or early next year we'll have such a product.

It is not that we were lacking touched before.

We couldnt do basically of things as we wanted it to do them all but makes it even more comfortable to do that still I don't thing because you have this comfort level, we will do things.

Operator: Excellent. Next question, please, operator.

Vamil Kishore Divan: Your next question is from Vamil Devon from Mizzou. Great, thanks so much for taking the questions. Maybe I'll just shift gears a little bit off the vaccine. I guess it is somewhat tied to the vaccine, but a little different angle here. In terms of capital allocation, Alvaro, I think you were mentioning that no change to your strategy, that the vaccine is going to give you a boost to your sales and cashflow, at least in the near term. So I'm just wondering, should we expect Pfizer to be maybe more active and complete more transactions in the coming months to try and boost your pipeline than it otherwise might have been? Or if not, I guess, just anything you sort of comment on your kind of thoughts around this added cashflow and what you might look to do there.

Do not want to respect.

The fact that these all shareholders money. So we will investment very prudently we are not going to spend the bumps. We are clearly ready to take risks when needed and all.

Also clearly ready to pay at full price.

For things that we really want.

And as I said before we've never seen them.

So.

How do you see in Pemex evolving.

Is there a bolus is that something that you can see you growing what is your use all of them.

Yes.

So we have been really pleased with what we've seen with us.

Okay.

The patients that we have been.

Cable to diagnose.

I think this has gone better than we thought actually even with the pandemic.

Currently this quarter, we were able to diagnose 21%.

The population with <unk> and so the increase that we've seen.

Quarter over quarter keeps us a lot of confidence.

Our ability to diagnose and imaging techniques that all use the non invasive techniques all working really well.

Vamil Kishore Divan: And then my second question is on Bindemax, where it looks like you are having pretty good traction there, maybe better than we thought, given the pandemic. And I'm just wondering if you can maybe comment on where this product is now relative to where maybe you would have expected a year ago, sort of pre-pandemic. I'm trying to get a sense, you know, of the real sort of bolus patients that you could maybe make more traction with as the pandemic eases, or are you already doing quite well in terms of gaining penetration into those patients now, so we should sort of expect the same sort of state of uptake going forward. So any thoughts would be helpful. Thank you.

I would say the bolus is gone you know that.

That was maybe in the index.

First half.

From the first half of the year, when we launched and I think where we are now is in a pretty good cadence of using our suspect and detective techniques as well as the.

The ability to refer to imaging centers to get the diagnosis and I think that our success rate in diagnosis is evidence of it and so I think we will continue to see payments like this but of course, there's still a massive opportunity.

80% more patients.

Diagnosed and so we're really focused now on using technologies and different techniques to heighten and to us.

Look at the screen.

All effective people patients because once we know that once we can find them. They couldn't get diagnosed so that's where all focus is going to continue to be.

Albert Bourla: Thank you, Vamil, and thank you also for asking something outside COVID, which at least makes it very interesting. So you're right about the capital allocation.

'twenty 'twenty one.

Thank you Angela and Albert for those responses all let's move to the next question. Please.

Your next question comes from Tim Anderson from Wolfe Research.

Albert Bourla: It is the result of a strategy, and, if anything, COVID-19 has proven our strategy correct. It is, I think, a demonstration that we do have a research machine that has the resources of a big biopharma and the agility of a small biotech. I don't think that many people would bet that Pfizer would be the first one to complete something like that, but this is what we have been building for the last few years, and this is the demonstration that we are launching.

Thank you a couple of questions.

On the mrna platform, you talked about leveraging that technology and outside in areas outside of a COVID-19 vaccine and I think he mentioned something like seasonal flu.

I'm guessing timelines for any of those types of opportunities would be more normal.

Albert Bourla: So our capital allocation, we never say never, but right now, the dividend will be maintained. Frank was very clear about it, a growing dividend. It is an important thing, part of our investment thesis, and we will continue at very intense rhythms to try to bring in phase two, phase three, predominantly programs that, through our R&D machine, very quickly and very successfully, can become medicines and vaccines that could generate revenues that will fill the gap from the 6% so we can sustain the 6% beyond 2025. Nothing changes also; we do have higher flexibility in terms of cash with COVID, clearly, but And now that it makes it even more comfortable to do that.

I'm, hoping you can kind of give us some idea.

Just a rough timeline on when Pfizer and bio and tech might launch a non COVID-19 mrna vaccine product.

Totally unrelated to COVID-19, I'm guessing that would be something like five years away at a minimum but maybe you can shed.

Shed some light on that.

And then second question just on guidance for 2021, and the other income line, a big number $2 2 billion very much above the normal run rate for that line item you mentioned, the consumer JV and vive and the address all going into that totally brand new piece. There is my address.

Albert Bourla: Still, I don't think because we have this comfort level, we will do things that do not respect the fact that this is shareholders' money, so we will invest it very prudently. We are not going to spend it, but we are clearly ready to take risks when needed and also clearly ready to pay a full price for things that we really want. And as I said before, we never say no. So, Angela, how do you see Vintamax evolving? Was there a bonus? Is it something that you will continue growing? What are your views on that?

Can you just give us more details why that number go so high in 2021 and importantly, what's the run rate for that line item beyond 2021.

Thank you very much.

Obviously, Frank will answer the second one and Michael the first one let me also just make us.

To your comment before I guess, Michael just thinking about true I believe the Covid has created a new normal I don't see Inc.

All right.

We are a supplier to hearing Pfizer to go back in the old normal of development time lines. Even if we were as we saw before at the top of all the industry benchmarks right. So if COVID-19 why notwithstanding counselors COVID-19, whereas most of the fruit.

Angela Hwang: So we have been really pleased with what we've seen with Vindicaar, Vindimax, and the patients that we've been able to diagnose. And I think this has gone better than we thought, actually, even with the pandemic.

And I think that the.

Clearly with Covid, there was the collaboration of regulators, but to me.

Angela Hwang: Currently, this last quarter, we were able to diagnose 21% of the population with ATTRCM. And so this increase that we've seen quarter over quarter gives us a lot of confidence that our ability to diagnose and the imaging techniques that are being used, the non-invasive techniques, are working really well. I would say the bolus is gone.

Thought possible, but it was in lots of other things that we've tested.

And we did differently than before so all.

Exploration is that these learnings will be clearly apply to everything in all.

Volume in our pipeline not with us Michael tell us a little bit hard to see.

Angela Hwang: That was something that was maybe in the first half of the year when we launched. And I think where we are now is in a pretty good rhythm of using our suspect and detect techniques, as well as the ability to refer to imaging centers to get the diagnosis. And I think that our success rate in diagnosis is evidence of this. And so I think we'll continue to see patterns like this.

Timelines, where are we with the <unk>.

Yeah. Thank you Albert and I think you said it well that the type of lightspeed approaches with our mrna platform.

Of course, the projected into other areas as well as flu.

Angela Hwang: But, of course, there's still a massive opportunity, 80% more patients still to be diagnosed. And so we're really focused now on using technologies and different techniques to help and to look and to screen more effectively for patients. Because once we know that, once we can find them, they can get diagnosed. So that's where our focus is going to continue.

So Tim you mentioned 20 to 25.

I think that it would be more.

Conservative and Andy.

Traditionally a realistic goal.

And we all looking at ways to bring it as a <unk>.

Potential.

All right for approval.

Earlier than 2025.

Of course, it depends on whether there are.

Good flu season.

Angela Hwang: Thank you, Angela, and Albert, for those responses.

With the cases coming out and how long or or not.

Albert Bourla: Thank you, Angela.

And.

Thank you.

Operator: Your next question comes from Tim Anderson from Wolf Research. Thank you. I have a couple of questions.

Yes.

Life continues with vaccinated folks flu will pick up new momentum. So our aim is ahead of 2025.

Tim Anderson: On the mRNA platform, you talk about leveraging that technology outside, in areas outside of a COVID vaccine. And I think you mentioned something like seasonal flu. I'm guessing timelines for any of those types of opportunities would be more normal, and I'm hoping you can kind of give us some idea. Just a rough timeline on when Pfizer and BioNTech might launch a non-COVID mRNA vaccine product, totally unrelated to COVID-19. I'm guessing that would be something like five years away at a minimum, but maybe you can shed some light on that. And then, second question just on guidance for 2021 and the other income line, a big number 2.2 billion, very much above the normal run rate for that line item. You mentioned the Consumer JV and VEVE and Viatris all going into that. The only brand new piece there is Viatris. So can you just give us more details about why that number goes so high in 2021? And importantly, what's the run rate for that line item beyond 2021?

Terrific.

Net Albert I'll answer on the other income and other.

Other income which is yet.

Tim Let me run the numbers first and then I'll answer the question. So you know.

You talked about the absolute size of the number in 2021 guidance remember in 2020, our other income was about $1 5 billion and adjusted results. So it's going from about $1 5 billion to the guidance, we gave which was about $2 2 billion.

The major elements and the increase are really a transition service agreement recoveries and that's primarily now as a result of closing the interest transaction higher joint venture income than.

And then we had some pension expense benefits as well those are the pieces that really get us from the call a billion and a half and 2020 to the $2 2 billion of guidance in 2021, and then you asked about beyond 'twenty. One I think the way to think about beyond 'twenty. One just in terms of the cadence and the rhythm of that number is the watch item for us will be what happens with.

The consumer joint venture relative to what J S. With GSK decides to do with their portion of that venture and we own 32% of that venture. So we'll have to see what GSK doesn't obviously, depending on what they do that could impact our other income number going forward beyond that so that's kind of a I'll call. It a watch item for us.

Line item.

Alright, Thanks Frank.

Michael Dolsten: Thank you very much, Tim. Obviously, Frank will answer the second one, and Michael will answer the first one.

Next question please.

Your next question comes from the line of Jeff Meacham from Bank of America.

Albert Bourla: Let me also just make an introductory comment before I ask Michael to speak about the flu. I believe the COVID thing has created a new normal. But I don't think I will.

Good morning, everyone. This is Jason on for Jeff Real quickly I am sorry to go back to Covid, but Frank if you could talk a little bit about the vaccine at least at a high level about how the marginal contribution will change over time as the manufacturing scales just wanted to get a better sense of the intermediate to longer term if co.

Albert Bourla: We are aspiring here at Pfizer to go back to the old normal of developing timelines, even if we were, as you saw before, at the top of the industry benchmark. So if COVID works for cancer, why not with flu? And I think that clearly, with COVID, there was the collaboration of regulators that made that also possible, but there were a lot of other things that we tested and did differently than before. So our aspiration is that these learnings will be clearly applied to everything in our portfolio and in our pipeline. Now with that, Michael, tell us a little bit how you see the timelines. Where are we with the flu?

If it does ultimately transition to more of an endemic versus the pandemic and then secondly, we wanted to ask about next steps for <unk>. After the recent safety data is the assumption here that the label will include these new data. Thanks, so much.

Thank you very much Trump.

Sure.

So let me.

Jason Let me do it this way, let me talk about kind of how the current margins work and then I'll pivot to how they can work going forward. So in terms of the current margins I always start with we're in a pandemic pricing environment. So you know the one price that we published is the price with the us of $19 50 per dose obviously, that's not a normal price like we typically get from a vaccine.

Michael Dolsten: Yeah, thank you, Albert. And I think you said it well that the type of light speed approaches with the M1A platform should, of course, be projected into other areas as well. So, Tim, you mentioned 2025. I think that it would be a more conservative and, you know, traditionally realistic goal. And we are looking at ways to bring it as a potential product for approval earlier than 2025. Of course, it depends on whether there are good flu seasons with cases coming along or not, and I think as life continues with vaccinated folks, flu will take up new momentum, so our aim is ahead of 2025.

150 $175 per dose so pandemic pricing then what are the takeaways from that obviously there is the direct material and the labor other factory overhead shipping distribution, then obviously royalty assumptions we've made it in the 50% gross profit payment that we paid all our partner biotech then you layer in on top of that <unk>.

Marketing and sales expense of medical expense R&D expense and you come out with the high Twenty's in terms of that as a percentage of revenue what we got into that kind of the existing financials for the for the vaccine and let's go beyond a pandemic pricing environment because the environment. We're currently in obviously, we're going to get more on price.

And clearly to your point the more volume, we put through our factories to lower unit cost will become so clearly there is a significant opportunity for those margins to improve once we get beyond the pandemic environment that we're in.

Frank: And then I'll, but I'll answer on the other...

Frank: [inaudible]

Frank: Which is, Tim, let me run the numbers first and then I'll answer the question. So, you know, you talked about the absolute size of the number in 2021 guidance. Remember, in 2020, our other income was about 1.5 billion in adjusted results, so it's going from about 1.5 billion to the guidance we gave, which was about 2.2 billion. You know, the major elements in the increase are really transition service agreement recoveries. And that's primarily now as a result of closing the Vietras transaction, higher joint venturing, and then we had some pension expense benefits as well. Those are the pieces that really get us from the call it a billion and a half in 2020 to the 2.2 billion of guidance in 2021.

Thank you very much.

And then.

Would you like to take all of them.

<unk>.

Sure.

So as it pertains to the label for Us.

And this is something that you know we don't have Andy we don't have any sense of yet. This is a big study 11 33, it was a big step.

Yeah.

500 people, we only have the co primary endpoints that we've shared with you. We still have a lot of work to do in terms of secondary endpoint subpopulations and bringing all of this together.

Discuss this with regulators so I'm I think we're still a ways off.

Understanding what impact they will be to our label.

We will keep you posted.

All right. Thank you.

Thanks Angela.

Operator.

Let's take another question please.

Your next question comes from the line of Ronny Gal from Bernstein.

Good morning, everybody congratulations on a very impressive progress on Covid and I've got two questions and they're both of them you have to.

Frank: And then you asked about beyond 21. I think the way to think about beyond 21, just in terms of the cadence or the rhythm of that number, is that the watch item for us will be what happens with the consumer joint venture relative to what GSK decides to do with their portion of that venture. Remember, we own 32% of that venture, so we'll have to see what GSK does. And obviously, depending on what they do, that could impact our other income numbers going forward beyond that. So that's kind of a call to watch item for us in that line item.

The first one is the development of Jack.

Obviously, you've done a really versatile platform for developing Jack and especially with an eye to the thousands that issue.

Interesting it should be interesting for you to consider second generation Jack.

That core largest ini market, so any thoughts about development Darren any scenarios, what will be the requirements fee.

Your line is about PD one approaches you are participating.

Participating that market somewhat tangential to put it that way.

Frank: Great. Thanks, Frank. Next question, please.

We've seen a couple of other large pharma companies like Lilly and Novartis are bringing in PD, one simply as a base platform for combinations or maybe as a low cost alternative to the current market have you considered that approach and where do you come out on that issue.

Operator: Your next question comes from the line of Jeff Meacham from Bank of America. Good morning, everyone. This is Jason on behalf of Jeff.

Geoff Meacham: Real quickly, sorry to move back to COVID. But Frank, if you could talk a little bit about the vaccine, at least at a high level, about how the marginal contributions will change over time as manufacturing scales. I just want to get a better sense of the intermediate to longer term if COVID does ultimately transition to more of an endemic versus a pandemic. And then, secondly, we wanted to ask about next steps for Xeljanz. After the recent safety data, is the assumption here that the label will include these new data? Thanks so much.

Yeah, I think Michael and John can provide some insights here. So Michael why don't you just talk a little bit more scientific.

Information and then John if you can summarize our strategy for docs and the PD, one as a local or something else.

Yeah. Thank you.

Our retail assistant which is a completely unique JAK <unk> inhibitor.

Actually interface to all Ray did deliver really interest in profile, we have a study ongoing without the face to replace at the name.

Frank: Thank you very much, Frank.

Frank: Jason, let me do it this way. Let me talk about the kind of how.

By itself and combined with our second molecule Iraq for to see if we can do with a step change improvement in or a piece.

Frank: and I'll pivot to how they can work going forward. So in terms of the current margins, I always start with, we're in a pandemic pricing environment. So, you know, the price that we published is the price in the US of 1950 per dose. Obviously, that's not a normal price like we typically get for a vaccine, you know, 150, $175 per dose. So, pandemic pricing. Then what are the takeaways from that? Obviously, there's the direct material, the labor, the factory overhead, shipping, and distribution. Then there are obviously royalty assumptions we've made and then the 50% gross profit payment that we pay to our partner BioNTech.

Recall also that we just communicated us it's Anthony a pad.

Really strong data in all source code, so that product could grow very strongly in the IBD.

An option, but we'll continue all right I'll say just something on our own PD, one and then maybe John can add to.

Additional things we do.

Globally.

We have a very nice.

Kind of best in class PD, one platform so suddenly mob.

That was developed in Pfizer that the soup containers and have delivered very nice response rates across multiple solid tumors.

And we actually.

Starting a phase III with us one bladder cancer, combining with BCG in order to improve outcomes for those patients. Thank you.

Frank: and you layer in on top of that some marketing and sales.

Frank: medical expense, some R&D expense, and you come out with the high 20s in terms of that as a percentage of revenue. That's kind of the existing financials for the vaccine. Now let's go beyond a pandemic pricing environment or the environment we're currently in. Obviously, we're going to get more on price. And clearly, to your point, the more volume we put through our factories, the lower the unit cost will become.

Thank you very much other question Ronny I think Michael sort of touched on the key points I think we'd really just sort of highlight that obviously, where we have our existing partnership.

NCR PD L. One.

I think you saw in our release that we confirmed the recent approval in Europe for us really interesting indication that could be very valuable for patients.

Michael just said additionally to that with our own internal program, which is a PD one PDL one thats, a PD, one societal them up and down.

In fact, we initiated the study that Michael just mentioned that I think the thing that we are very excited about in terms of its potential for us to sign them up.

Frank: So, clearly,

Frank: There is a significant opportunity for those margins to improve once we get beyond the pandemic environment that we are in.

It's a subcutaneous PD one.

The marketplace for more convenient PD ones is actually still to be developed.

Frank: Thank you very much, Frank. And then, Angela, would you like to take the Xeljanz too?

Mainly PD ones given their efficacy data across a whole range of tumors have enormous potential to be a backfill in for the long term. So we think that as that market evolves.

Angela Hwang: Sure. So as it pertains to the label for Xeljanz, this is something that, you know, we don't have any sense of yet.

The opportunity for a PD, one has effectiveness, which is being proven across multiple other campaigns, but also combining significant convenience enhancements is actually a very significant. So we're very excited advice us on the lab and we will keep you updated with our progress.

Angela Hwang: This was a big study. 1133 was a big study. Five years. You know, 4,500 people.

Graham develops.

All right. Thanks, John.

Angela Hwang: We only have the co-primary endpoints that we've shared with you. We still have a lot of work to do in terms of secondary endpoints, subpopulations, and bringing all of this together to discuss this with regulators. So I think we're still a ways off in terms of really understanding what impact this will have on our label, and certainly, we'll keep you posted.

Next question please.

Your next question comes from the line of C. J.

From UBS.

Hi, Thanks, so much for taking the questions and.

Squeezing me in here, but a couple of questions for Frank and one for Michael If I may Frank just wondering if you. If there was any change in inventory in the U S are.

During between Q3 Q4 of 2021, I'm, sorry, 2020, and how does that compare to the change in inventory in the us.

Angela Hwang: Thank you very much.

Operator: Thanks, Angela. Operator, let's take another question, please.

Ronnie Gao: Your next question comes from the line of Ronnie Gao from Bernstein. Good morning, everybody.

Between Q3 and Q4 in 2019, and then separately Frank the high 20% margins.

Michael Dolsten: Congratulations on the very impressive progress on COVID. And I have two questions, and they're both on things that you haven't done. The first one is the development of jacks for RA. Obviously, you've got a really versatile platform then for developing jacks. And especially with an eye to the Xeljanz safety issue, it seems interesting, it should be interesting for you to consider a second generation jack in that core largest I&I market. So any thoughts about development there, and if there is, what will be the requirements? The second one is about PD-1 approaches. You are participating in that market somewhat tangentially, if I have to put it that way. We've seen a couple of other large pharma companies like Lely and Novartis bringing in PD-1 simply as a base platform for combinations or maybe as a low-cost alternative in the current market. Have you considered that approach? And, you know, where do you come out on this issue?

For the Covid vaccine suggests at 100% economics are closer to 50 days some.

Somewhere between 50% to 60% op margin, but wondering because I know, obviously, you're investing a ton into into R&D.

Moving forward into 2022.

Could we.

How much could we see that operating margin increase over time as R&D spend lowers.

And then for Michael Michael Obviously, a key question that everyone has a durability of efficacy which is in part affected by a new variance, but how exactly is the agency measuring durability of efficacy all requiring manufacturers of developers to measure durability of efficacy what specific try.

<unk>.

<unk> endpoints or.

How is that characterized please any any color would be helpful.

Michael Dolsten: I think Michael and John could provide some insights here. So, Michael, why don't you start with a little bit of more scientific information? And then, John, you can summarize our strategy for JAX and PD-1 as low-cost alternatives.

Frank.

So thanks for the questions Catherine so on the inventory approximately three weeks on hand at roughly the same as it was last year at the end of the year and in terms of Q3 to Q4, no major change in the rhythm of the inventory roughly approximately three weeks on hand, and then in terms of the the high twenties percentage <unk>.

Michael Dolsten: Thank you. Our Ritlacitinib, which is a completely unique JAK3 tech inhibitor, is actually in a Phase II RA, and it delivers a really interesting profile. We have a study ongoing with that, the Phase II Ritlacitinib, by itself and combined with a second molecule, IRAC4, to see if we can induce a step change improvement in RA. Please recall also that we just communicated at which lisetinib had really strong data in ulcerative colitis. So that product could grow very strongly in IBD as an option but will continue in RA. I'll say just something about our own PD-1, and maybe John can add to additional things we do globally there. We have a very nice, kind of best-in-class P-to-1 platform, so suddenly mob, that was developed by Pfizer and is subcutaneous and has delivered very nice response rates across multiple solid tumors, and we're actually starting phase three with that one in bladder cancer combined with BCG in order to improve outcomes for those patients. Thank you.

Interesting how you framed the question because the way I think about it is the R&D spend isn't the big is not the big driver of what's getting us to that <unk>, which is kind of how I. How I heard the question, it's really the Cox and it's like I said, it because primarily its the pandemic pricing and then there's different layers of the cause that I answered earlier on.

And the Q&A, that's really what's driving the growth.

The higher the lower <unk> as a percentage of margin. So I think you mentioned, 50% based on all of the current financials were lower significantly lower than 50% on the gross margin and then when you layer in the expenses you get into the <unk> now to your question beyond that once again, I think the big factor and it will be the pricing.

We'll continue to take the unit cost down as volumes improve the royalty is what the royalty is the profit share as the profit share us obviously, we're spending R&D, but you know what.

We will continue to manage the R&D spend to me the big ticket item there will be what we can do on pricing and then obviously the more volume we generate hello, and we will take the unit costs and those items will clearly dropped to the bottom line.

Right.

Frank and operator, if we could take our last question at this time.

Our final question comes from the line of Chris Schott from J P. Morgan.

John: Thank you very much for the question, Ronnie. I think Michael sort of touched on the key points.

Great. Thanks, so much for the question just two quick ones here, maybe on the CMA by specific can you just talk a little bit about how you see these agents fitting in the treatment paradigm and maybe as importantly, how you're seeing the competitive landscape shaping up so basically what differentiation do you see with your program versus others.

John: So I think we'd really just sort of highlight that obviously we have our existing partnership for Baventi or PTL1. I think you saw in our release that we confirmed recent approval in Europe for, you know, a really interesting indication that could be very valuable for patients. And as Michael just said, additionally to that, with our own internal program, which is PD-1, not PD-L1, it's PD-1 sasanlamab. In December, in fact, we initiated the study that Michael just mentioned.

And maybe just a follow up on capital allocation priorities post upjohn.

<unk> share repo as a company has been historically pretty active on that front should we think about less or less.

Less relevant role for share repo in the paradigm going forward as I guess, we think about maybe all the higher dividend payout ratio and then and then some of these priorities.

To bring in additional assets ahead of the 26 through 28 Ah Eloise cycles.

John: And I think the thing that we are very excited about in terms of its potential for sasanlamab is that it's a subcutaneous PD-1. We think that the marketplace for more convenient PD-1s is actually still to be developed. Plainly, PD-1s, given their efficacy data across a whole range of tumors, have enormous potential to be a backbone for the long term. So we think that as that market evolves, the opportunity for a PD-1 that has effectiveness, which has been proven across multiple other compounds, but also combines significant convenience enhancements, is actually very significant. So we're very excited about sasanlamab, and we will keep you updated with progress as that program develops.

Love to kind of hear how you see that fitting in.

Thanks, so much.

Yeah.

Sorry, I was muted Michael would you like to take the first question.

Yeah. This EMEA all right not the mob, we're very excited about that.

And it had at the high dose 1000 micron per kilogram, 83%.

The response rate in a heavily pre treated population and it has shown a significant number of new England or complete responses and its given us up to a very nice tolerability profile. So although it's a.

Field with several entrants I think we have an opportunity to aim for being absolutely.

US wave here and with a really nice best in class profiles.

We're moving with the.

Plus the opportunity we see for accelerated approval in triple refractory patients.

John: All right, thanks, John. Next question, please.

Neither have seen no prior <unk> treatment or have seen.

Prior BC make treatments such as ABC or car T. So we are at.

Operator: Your next question comes from the line of Naveen Jacob from UBS.

Naveen Jacob: Hi, thanks so much for taking the questions. I'm squeezing many here, but a couple questions for Frank and one for Michael, if I may. Frank, just wondering if there was any change in inventory in the U.S. between Q3 and Q4 of 2020, and how that compares to the change in inventory in the U.S. between Q3 and Q4 of 2019.

Planning such cohorts to start soon with a potential for registration.

And we're moving into second and third line in combination with political.

And.

All the other combination that are used in order to come.

Come to put us in second line opportunity, particularly with the Union.

Thank you very much.

Turning to increase as it regards to the stock repurchases.

Ever say never to anything right, because we don't want to leave any weapons.

Frank: And then for Michael, Michael, obviously, a key question that everyone has is durability of efficacy, which is in part affected by new variants. But how exactly is the agency measuring durability of efficacy or requiring manufacturers or developers to measure durability of efficacy? What specific trials and or endpoints, or how is that characterized? Please, any color would be helpful.

When we say, we never to us, but clearly the share repurchases calls bulk among other priorities right now.

Dividend is a clear commitment.

Of course, it was normal and we believe us tremendous opportunities right now to invest in the business as strong consensus when you have already amortization from the book size with any point to who to buy.

<unk> centre, and we could have enrollment ostler.

But this is not the priority derived Margaret priority. It is to make sure, but we keep investing through business development entry for us deduction. So for example, our COVID-19.

Frank: Prank?

Frank: So, thanks for the question, Ethan. On inventory, it's approximately three weeks on hand, and roughly the same as it was last year at the end of the year. And in terms of Q3 to Q4, no major change in the rhythm of the inventory.

Franchise will thrive over time, and our R&D machine will get many more programs from the external world once it can run through it.

Thank you very much.

Yeah.

Yes.

And Albert just some closing remarks.

Frank: And then in terms of the high 20s percentage, it's interesting how you frame the question, because the way I think about it is the R&D spend is not the big driver of what's getting us to that high 20s, which is kind of how I heard the question. It's really the cost. And it's like I said, because primarily it's the pandemic pricing and then the different layers of the cost that I answered earlier in the Q&A, that's really what's driving the lower IPT as a percentage of margin. So, I think you mentioned 50%. Based on all the current financials, we're lower, significantly lower than 50% on the gross margin. Then when you layer in the expenses, you get into the high 20s.

So one time flying schlemmer inherently my goodness. So thank you very much for joining us today and for your continued engagement with Pfizer.

All right.

The new Pfizer is all about two things science in basins.

The combination of the boat decades longer transformation from a diversified enterprise through more focused and innovative Biopharma company.

Uniting transformational technology in cutting edge science, we are pioneer in biopharmaceutical innovation to do more wins us through difficult diseases, I think we are curing and preventing them.

We believe our success in developing COVID-19 was just the beginning thanks to the incredible transformation, we have executed over the last 10 years Pfizer is now advancing one of the strongest pipelines in our Companys Houston.

Frank: Now, to your question. Beyond that, once again, I think the big factor in it will be the pricing. We'll continue to take the unit cost down as volumes improve. The royalty is what the royalty is. The profit share is what the profit share is. Obviously, we're spending on R&D, but we'll continue to manage the R&D spend. To me, the big ticket item there will be what we can do on pricing. And then obviously, the more volume we generate, the lower we'll take the unit cost, and those items will clearly drop to the bottom line.

We have 95, potentially all new therapies or indications in six therapeutic areas with nine programs in registration 24 in phase III clinical trials. This means 95 potential opportunities to change the lives of patients around the world and when patients when we all win.

The rest all your day.

Ladies and gentlemen, this does conclude Pfizer's fourth quarter 2020 earnings Conference call you may now disconnect.

Frank: Right, thanks Frank. And Operator, if we could take our last question at this time.

Operator: Your final question comes from the line of Chris Schott from J.P. Morgan. Great, thanks so much for the question. Just two quick ones here.

[music].

Chris Schott: Maybe on the BCMA specifically, can you just talk a little bit about how you see these agents fitting in the treatment paradigm and, maybe as importantly, how you're seeing the competitive landscape shaping up? So basically, what differentiation do you see with your program versus others? And maybe just then a follow-up on capital allocation priorities post-Upjohn. Share repo, the company's been historically pretty active on that front. Should we think about a less relevant role for share repo in the paradigm going forward as we think about maybe a little bit higher dividend payout ratio and then some of these priorities to bring in additional assets ahead of the 26 through 28 LOE cycles? Just would love to kind of hear how you see that fitting in the mix. Thanks so much.

Tom.

[music].

Okay.

[music].

Michael Dolsten: Thank you. Sorry, I was muted. Michael, would you like to take the first question?

Michael Dolsten: Yeah, BC Mayo and Renata Mob, we're very excited about that drug, and it had a high dose of 1000 mcg per kilogram 83% response rate in a heavy pre-treated population, and it showed a significant number of stringent or complete responses, and it's given subcutaneously, it has a very nice solubility profile. So although it's a...

Michael Dolsten: Although filled with several entrants, I think we have an opportunity to aim for being absolutely in the first wave here and with a really nice best-in-class profile. We're moving with the first opportunity we see for accelerated approval in triple refractory patients that either have seen no prior BCMA-based treatment or have seen prior BCMA treatment such as ADC or CAR-T. So we are planning such cohorts to start soon with a potential for registration, and we're moving into second and third line in combination with classical image and... and other combinations that are used in order to come up with first and second line opportunities, particularly with India. Thank you very much.

Okay.

All right.

[music].

Sure.

Yes.

No.

[music].

Albert Bourla: Right? We don't want to leave any weapons that we will say we'll never use. But clearly, the share repurchases fall at the bottom of the priorities right now. The dividend is a clear commitment that, of course, we will honor. And we believe there are tremendous opportunities right now to invest in the business. As Frank has said, we already have an authorization from the board that we could exercise at any point to buy back shares. And we could ask for a renewal at any moment, but this is not our priority right now. The priority is to make sure that we keep investing in business development and for infrastructure. So, for example, our COVID franchise will thrive over time. And our R&D machine will get many more programs from the external world that can run through it. Thank you very much.

Okay.

[music].

Yes.

Yeah.

Sure.

[music].

Albert Bourla: And Albert, did you have any closing remarks?

Albert Bourla: So, wow, time flies, 11.30, my god. So, thank you very much for joining us today and for your continuing engagement with Pfizer. The new Pfizer is all about two things, science and pace. I think it's the culmination of a bold, decade-long transformation from a diversified enterprise to a more focused and innovative biopharma company. By uniting transformational technology and cutting-edge science, we are pioneering biopharmaceutical innovations to do more than just treat difficult diseases; we are curing and preventing them. We believe our success in developing COVID-19 was just the beginning. Thanks to the incredible transformation we have executed over the last 10 years, Pfizer is now advancing one of the strongest pipelines in our company's history. We have 95 potential new therapies or indications in six therapeutic areas with nine programs in registration, and 24 in phase three clinical trials. This means 95 potential opportunities to change the lives of patients around the world. And when patients win, we all win. Have a great rest of your day.

Operator: Ladies and gentlemen, this does conclude... the Q2 2020 Earnings Conference Calls. You may now disconnect.

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