Q2 2025 Pfizer Inc Earnings Call

Good day everyone and welcome to faizur second quarter 2025 earnings conference call.

Today's call is being recorded.

Francesca Demartino: Pfizer's earnings call.

Albert Bourla: Hold on.

Francesca Demartino: Good morning and welcome to Pfizer's earnings call. I'm Francesca DeMartino, Chief Investor Relations Officer. On behalf of the Pfizer team, thank you for joining us. This call is being made available via audio webcast at Pfizer.com. Earlier this morning, we released our results for the second quarter of 2025 via a press release that is available on our website at Pfizer.com. I'm joined today by Dr. Albert Bourla, our Chairman and CEO, and Dave Denton, our CFO. Albert and Dave have some prepared remarks, and we will then open the call for questions. Members of our leadership team will be available for the Q&A session. Before we get started, I want to remind you that we will be making forward-looking statements and discussing certain non-GAAP financial measures.

Earlier this morning, we released our results for the second quarter of 2025 via a press release that is available on our website at fiser. Calm, I'm joined today by Dr. Albert borla, our chairman and CEO and Dave Denton our CFO.

Albert and Dave have some prepared remarks and we will then open the call for questions. Members of our leadership team will be available for the Q&A session.

Francesca Demartino: I encourage you to read the disclaimers in our slide presentation, the press release we issued this morning, and the disclosures in our SEC filings, which are all available on the IR website on Pfizer.com. Forward-looking statements on the call are subject to substantial risks and uncertainties, speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements. With that, I will turn the call over to Albert.

Before we get started, I want to remind you that we will be making for looking statements in discussing certain non-gaap Financial measures.

I encourage you to read the disclaimers in our slide presentation, the press release we issued this morning, and the disclosures in our SEC filings, which are all available on the IR website on Fiser Cam.

Albert Bourla: Thank you, Francesca. Good morning, everyone. Thank you for joining our call. Our business is performing well, and I'm pleased with the progress we achieved in the second quarter. We advanced and strengthened our R&D pipeline. We worked to maximize the value of our commercial portfolio and made further strides to expand our markets. We continue to be actively engaged with policymakers as we navigate a complicated and rapidly evolving geopolitical environment, while also remaining focused on advancing our business. With our strong year-to-date performance, we are raising our adjusted diluted EPS guidance for full year 2025 and remain committed to our dividends. Our progress to expand margins through focused technology and simplification are working very well. We are driving productivity gains by leveraging technologies such as AI and automation, and we are also realizing the benefit of continued streamlining across our company.

For looking statements on the call are subject to substantial risks and uncertainties to speak only as of the call's original date. We undertake no obligation to update or revise any of the statements. With that, I will turn the call over to Albert. Thank you, Francesca. Good morning, everyone. Thank you for joining our call. Our business is performing well, and I am pleased to share the progress we achieved in the second quarter.

We Advanced and strengthened our R&D pipeline. We worked to maximize the value of our commercial portfolio and made further strides to expand our markets.

We continue to be actively engaged with policy makers. As we navigate the complicated and rapidly evolving geopolitical environment while also remaining focused on advancing our business,

with our strong here today performance, we are raising our adjusted diluted EPS guidance for full year, 2025 and remain committed to our dividends

Our programs to expand. Margins through folk technology and simplification are working very well.

We are driving productivity gains by leveraging technology such as Ai and automation.

Albert Bourla: We believe Pfizer is well-positioned to continue creating meaningful value for patients and our shareholders. Our top strategic priority this year is, of course, improving R&D productivity. I'm proud of the outcomes we are driving and the meaningful milestones achieved during the quarter. Looking ahead, we believe key programs in our R&D portfolio offer significant opportunities to help address substantial patient needs and drive Pfizer's growth in the coming years. I will mention some highlights. Elrexfio is a medicine that is performing very well with rapid growth and encouraging progress in claiming leading class CER in new markets such as Japan, the United Kingdom, and Spain. The clinical data in Elrexfio, initially heavily treated, triple class exposed multiple myeloma indication, continue to be encouraging with median overall survival of greater than two years, which is more than double the historical median overall survival in this population.

And we are also realizing the benefit of continued streamlining across our company.

We believe fiser is well, positioned to continue creating meaningful value for patients and our Circle.

Our top strategic priority this year is, of course, improving R&D productivity.

I'm proud of the outcomes. You are driving and the meaningful Milestones achieve during the court.

Looking ahead. We Believe Key Programs in our R&D, portfolio offer significant opportunities to help address substantial, patient, need and drive faeces growth in the coming years.

I will mention some highlights.

Alex is a medicine that is performing very well with the rapid growth and encouraging progress in claiming leading plus sir in New Markets, such as Japan, United Kingdom and Spain.

the clinical data in our region, initially heavily treated

Albert Bourla: Moreover, the majority of responding patients are maintaining their response at 30 months. Elrexfio held the potential to be a leading standard of care with a differentiated clinical profile. It is a convenient subcutaneous fixed dosing regimen, the only one, that now includes a once every four week option for select patients. New data presented at the American Society of Clinical Oncology annual meeting in newly diagnosed patients demonstrate Elrexfio's potential to move to earlier multiple myeloma treatment settings. This data from part one of the MAGNETIS MM6 study showed a confirmed response rate greater than 97% and the manageable safety profile in combination with daratumumab and lalalinotinib. The randomized portion of this phase three study is now enrolling very well.

triple class exposed multiple myeloma. Indication continue to be encouraged with medium overall survival of greater than 2 years, which is more than double the historical, median overall survival in this population.

Moreover, the majority of responding patients are maintaining their response at 30 months.

The research has the potential to be a leading standard of care with a differentiated clinical profile.

it is a convenient subcutaneous 6 dozen regimen, the only 1

that now includes a 1 every 4 week option for select face.

These data from Part 1 of the Magnetics, MMM 6 study show a confirmed response rate greater than 97%.

And the manageable safety profile in combination with data to move up and lean. Not

Albert Bourla: By executing on MAGNETIS MM6 and Elrexfio's other ongoing phase three trials, we aim to achieve label expansion that, if approved, would collectively increase the addressable population approximately five fold in the growing multiple myeloma market, expected to reach approximately 44 billion by year 2023. The Votatec VDOT or SV is our first in class integrin peta 6 ADC that could be a driver of growth later this decade. We are executing a robust development program with this investigational compound in non-small cell lung cancer. This includes our fully enrolled phase three study of SV monotherapy versus docetaxel in previously treated non-squamous patients that we expect data from next year. In the second line plus population, we have observed a durable 31% confirmed response rate, which is favorable versus historical data with docetaxel monotherapy.

The randomized portion of this phase. 3 study is now enrolling very well.

By executing on magnetics mm6 and Alexus. Other ongoing face Australians, we aim to achieve label expansion that if approved would collectively increase. The addressable population, approximately 5 fold,

in the growing multiple markets, expected to reach approximately 44 billion by Year from

The volatile the dog or SV.

Is our first in class integral in beta 6 ABC. That could be a driver of growth later this decade

We are executing a robust development program with this investigational compound in non small cell, lung cancer.

This includes our fully enrolled phase 3 study of SV monotherapy versus the setup in previously, treated non-square. Most patients that we expect data from next year.

Albert Bourla: We are also enrolling a phase three study of SV in combination with a PD-L1 checkpoint inhibitor in first line non-small cell lung cancer with high PD-L1 expression based on encouraging phase one data for this combination recently presented at ASCO. These results show a 57% response rate and greater than 90% disease control, including responses in all patients in the tumor proportion score greater than 50% subjects, which compares favorably to historical PD and the PD-L1 monotherapy. These results support our ambition to change standards of care to conventional chemotherapy sparing regimens by leveraging the potential synergy between VDOT ADCs and PD-L1 checkpoint inhibitors. With our ongoing and planned trials in non-small cell lung cancer, SV has the potential to impact large patient populations with a non-small cell lung cancer market expected to reach over $60 billion by year 2027.

In the second-line plus population, we have observed a durable 31% confirmed response rate, which is favorable versus historical data with the setup of self-monotherapy.

We are also enrolling a phase 3 study of SB in combination with a pd1. Checkpoint inhibitor. In first line, non small cell lung cancer with high pdl1 expression based on encouraging Phase 1 data for this combination recently presented the task.

These results. So 57% response rate.

And greater than 90% with this control including responses in all patients in the tumor proportion, score greater than 50% subject.

Which compares favorably to historical PD and the pd1 monotherapy.

These results support an ambition to change standards of care to Conventional chemotherapy sparing residents by leveraging, the potential Synergy between the dotting ABCs and pd1 checkpoint inhibitor.

With our ongoing ongoing and plan trials in non small cell and cancer. As we have the potential to impact large patient population.

Albert Bourla: Our strategy is intended to deliver a first approval in previously treated patients before moving into the first line setting, which is a non-small cell lung cancer that includes more than half a million global patients. In hematology, we continue to promote the differentiated profile of HIM-positive. In the quarter, we saw positive top line data from the phase three base study evaluating HIM-positive for adults and adolescents with hemophilia A or B. The study's cohort of patients with inhibitors met its primary endpoints, demonstrating a statistically significant and clinically meaningful 93% reduction in annualized bleeding rate compared to on-demand treatment in patients 12 years or older, which compares favorably to recent approved products for hemophilia A and hemophilia B. These results further strengthen HIM-positive's differentiated profile as the first once weekly fixed dose subcutaneous treatment for hemophilia A or B administered in a convenient pre-filled autoinjector bag.

With a non small cell, lung cancer Market expected to reach over 6 billion, dollars per year 27.

Our strategy is intended to deliver a first approval in previously, treated patients before moving into the first line set.

Which is a non small cell, lung cancer includes more than half a million Global patients.

in emat, we continue to promote the differentiated profile of him, but

In the quarter, we start positive Top Line data from the phase 3 base study, evaluating sympathy, sympathy for adults and adolescents with emophilia a or b.

The status of work of patients with Inhibitors met, its primary employment demonstrating a s, a statistically significant, and clinically meaningful 93% reduction in annualized, bleeding rate compared to On Demand treatment in patients. 12 years of

Older.

which compares favorably to recent approved products for hemophilia a and

These results further strengthen.

Sympathies differentiated profile as the First Once We Fix those subcutaneous treatment for a moia, A or B.

Albert Bourla: They also support the potential to expand its label to patients with hemophilia who develop inhibitors to factor replacement as we continue to execute on its launch in the previously approved non-inhibitor population. We have seen considerable quarter-over-quarter growth, particularly in the hemophilia B market where subcutaneous treatments are only recently available. And following EU and Japan approvals at the end of last year, we are seeking reinvestment on pursuing early access pathways in other international markets as we grow our presence in the hemophilia market projected to reach nearly $10 billion by year 2030. Moving to our vaccine portfolio, we are enthusiastic about our potential to deliver the first approved vaccine for C. difficile infection. Our second generation investigational vaccine candidate builds upon encouraging results from the prior phase three global trial of our first generation candidate. This trial demonstrated 100% efficacy against medically attended C.

Administered in a convenient pre-filled auto injector.

They also support the potential to expand its label to patients with ailia who developed Inhibitors to factory replacement as we continue to execute on its loans in the previously approved non-inhibitor population.

We have seen considerable quarter-over-quarter growth.

Particularly in the Mia B market where subcutaneous treatments are only recently available.

On pursuing Early Access Pathways in other International markets as we grow our presence in the emophilia market projected to reach nearly 10 billion by year 2030.

Moving to our vaccine portfolio. We are enthusiastic about our potential to deliver the first approved vaccine for seed deficiency infection

Our second generation investigation or vaccine candidate,

Builds upon encouraging results from the prior phase 3, Global trial of our first generation candle.

Albert Bourla: diff infection despite not achieving the study's primary endpoint. With our second generation C. diff vaccine formulation, we have the potential to simplify the dosing schedule from three to two weeks. This candidate, now in phase two, increased the strength of the new response four fold compared to the first generation vaccine. Based on this newly announced phase two data, we are preparing for a phase three start before the end of this year. We will incorporate learnings from the previous global study to develop new primary endpoints focused on the prevention of severe disease outcomes rather than primary infection. If approved, the vaccine could significantly reduce the healthcare burden of the nearly 500,000 annual C. diff infections and approximately 30,000 annual deaths in the US alone.

these trials, demonstrated to 100% as against medically attended CES infection, despite not achieving the studies price and for

With our second generation. See? That vaccine formulation.

We have the potential to simplify those in schedule from 3 to 2 weeks.

This candidate. Now in Phase 2 increased. The strength of the new response for fall compared to the first generation vaccine.

Based on this newly announced Phase 2 data. We are preparing for a phase 3 start before the end of this year.

We will incorporate learnings from the previous Clover, study to develop new primary end points. Focused on the prevention of severe disease outcomes, rather than primary infections.

If approved the vaccine could significantly, reduce the healthcare burden of the nearly 500,000 annual CES infections and approximately 30,000, annual deaths in the us alone.

Albert Bourla: In another one of our phase two products, we finished dosing the last patient in our study of a vaccine candidate for Lyme disease. If successful, we expect to submit for approval next year. We also continue to strengthen our portfolio by harnessing external innovation through strategic business development. The recent closing of our global ex-China in-licensing agreement with 3S Bio grants us exclusive rights to develop, manufacture, and commercialize SGD707, a bispecific antibody targeting PD-L1 and VEXEV, has the potential to deliver breakthroughs for patients in the next wave in PD-L1 immunotherapy, which is an established $55 billion market. With compelling monotherapy data in advanced non-small cell lung cancer presented recently at ASCO, we view this promising cancer immunotherapy candidate as a seamless fit within Pfizer's oncology strategy, given our deep experience in the development of antibody therapeutics and our differentiated industry-leading portfolio of ADCs.

In another 1 of our Phase 10 products. We finished those in the last patient in our study of a vaccine candidate for Lyme disease.

is successful. We expect to submit for approval next year.

We also continue to strengthen our portfolio by harnessing external Innovation through strategic Business Development.

The recent closing of our Global X China licensing agreement with 3 Aspire of Grants grants us exclusive rights to develop, manufacture, and commercialize SSDs 707.

And by specific and development.

Targeting pd1. And better has the potential to deliver breakthroughs for patients in the next wave in pd1 immunotherapy, which is an established 55 billion month.

With compelling monotherapy data in advanced non-small cell lung cancer presented recently, at Pfizer, we view this promising cancer immunotherapy candidate as a seamless speed within our FISA oncology strategy.

Albert Bourla: We intend to serve detail later this year for our plans for a phase three program. With Pfizer's established presence and global reach, we believe 707 has the potential to become a backbone therapy for multiple solid tumor types where the PD-L1 VEX mechanism could have significant impact. Across our pipeline, we continue to sharpen our focus on programs where the strength of our capabilities gives us the greatest opportunities to address substantial patient needs. We look forward to sharing future updates about our progress. Now let's move to commercial. Our commercial strategy is unlocking higher productivity and performance across both our US and international divisions. With several of our established brands, we are pleased with our continued market leadership and growth. We deliver another solid quarter for our Vendigo family with 21% year-over-year operational growth.

Given our deep experience in the development of antibiotic Therapeutics and our differentiated industry-leading portfolio of adcs.

We intend to serve detail later this year for our plants for a phase 3 problem.

With fisa established presence and Global rates. We Believe 7007, has the potential to become a backbone therapy for multiple solid tumor types, where the PDN 1 beds mechanism could have significantly.

Across our pipeline, we continue to soften our focus on programs where the strength of our capabilities gives us the greatest opportunities to address.

Substantial things on me. We look forward to sharing.

Future updates about our problems.

Now, let's move to commercial.

A commercial strategy is unlocking higher productivity and performance across both our us and international divisions.

With several of our established brands, we are pleased with our continued market leadership and growth.

Albert Bourla: These products are the foundation of care for patients with a serious heart condition of ATTR cardiomyopathy, and we continue to see strong progress in diagnosing patients and providing broad access. While we continue to closely monitor the competitive impact of new entrants, we believe the Vendigo family is differentiated with a strong clinical profile contributing to continued volume growth. With Eliquis, we are the clear leader with robust demand in a growing anticoagulant market. Our international commercial teams are driving higher growth versus the market in our key countries with effective engagement with healthcare professionals to reinforce the favorable profile of this medicine. In the US, the BMS-Pfizer Alliance recently announced a new direct-to-patient option for purchasing Eliquis via the Alliance's patient resource, Eliquis 360 support. This option offers an underinsured or self-pay patient an opportunity to significantly lower out-of-pocket costs for Eliquis.

We deliver another solid quarter for our vintage family with 21% year-over-year operational growth.

These products are the foundation of care for patients with a serious heart condition of ATTR, Sano myopathy. We continue to see strong progress in diagnosing patients and providing broad access.

while we continue to close the monitor of the competitive impact of new entrance, we believe that ventricle family is differentiated with a strong clinical profile contributed to continued volume growth,

With L. We are the clear leader with robust demand in the growing and the coagulant Market.

This matters.

In the US, the BMS fiser Alliance. Recently announced a new direct to Pace option for purchasing a liquids via the alliance's patient resource.

And if with 360 support,

This option offers an insured underinsured or self-pay patient an opportunity to significantly lower out of pocket cost for Elegance.

Albert Bourla: Among some of our recently launched acquired brands, we are seeing strong underlying demand in competitive classes as we work to build expanded access and greater awareness and loyalty, of course, among healthcare professionals. With Nurtec, we continue driving strong commercial execution. We are pleased with the performance of new consumer campaigns and greater precision and effectiveness in sharing compelling clinical data with healthcare professionals. In the US, we achieved strong growth in total prescriptions and with 47% market share, maintaining leadership in the oral CGRP class, upset by pressures on net revenues from the impact of the IRA Medical Part D redesign and the 340B program. Unfortunately, internationally, we are achieving strong performance in several key markets where we already have access and are encouraged by the potential to unlock additional opportunities by continuing to expand access.

Among some of our recently launched acquired Brands, we are seeing strong, underlying demand in competitive classes as we work to build expanded access and greater awareness and loyalty, of course, among Health Care Professionals.

Would not. We continue driving. Strong commercial execution.

We are pleased with the performance of new consumer campaigns and greater precision and Effectiveness in Sharing compelling clinical data with Health Care professor.

In the US, we achieve strong growth in total prescriptions and with 47% market share maintain leadership in the oral cgrp class.

Offset by pressures on net revenues from the impact of the IRA medical part redesign and the 340b program. Unfortunately,

Albert Bourla: PACCI, a new key product in our oncology portfolio, is demonstrating strong performance and we see multiple avenues for future growth. Our ADC for the treatment of adult patients with locally advanced metastatic urothelial cancer, PACCI have achieved high year-over-year operational growth of 38% in the quarter with growing demand and the one-time favorable impact from a transition to a wholesaler distribution model for seasoned products. PACCI, in combination with pembrolizumab, has secured market share greater than 50% in first line LA metastatic UC and is the standard of care first line treatment. Additionally, we continue to anticipate phase three readouts of PACCI in muscle invasive bladder cancer in two ongoing studies. If successful and approved, we expect a significant expanded opportunity to treat patients with bladder cancer focused on the approximately 28,000 in the US with MIBC, approximately 80% of whom undergo cystectomy.

We are achieving strong performance in several key markets where we already have access and are encouraged by the potential to unlock additional opportunities by continuing to expand that.

A new, a key product in our College portfolio is the most trading strong performance and to see multiple avenues for future growth.

Our ADC for the treatment of adult patients with locally advanced diseases is experiencing static growth. Passive achievements have resulted in a high year-over-year operational growth of 38% in the quarter, driven by growing demand and the one-time impact from the transition to a wholesale distribution model for certain products.

Part 10 in combination with capitalism has secured markets and greater than 50% in first line. La when the study you see and is the standard of care first Library.

Additionally, we continue to anticipate phase, 3 readouts for pattern in muscle invasive, bladder, cancer. In 2 ongoing studies.

Albert Bourla: Sublingual had strong 46% year-over-year operational growth with a quarter driven by higher demand in the US and growth in key international markets where we have decided to focus. We believe there are additional market opportunities for sublingual in responding to the need among patients with atopic dermatitis. We are seeing the clear impact of recent positive data released for several of our oncology products. It has contributed to strong growth in helping to establish these products as standards of care. Lorbena achieved 48% year-over-year operational growth in the quarter and we expect continued strength through 2025. It has a compelling efficacy profile supported by the CRAM study where the median progression-free survival was not reached after five years of follow-up. Lorbena is emerging as a standard of care for patients with first line R positive metastatic non-small cell lactic cancer.

If successful and approved. We expect a significant expanded opportunity to treat patients with bladder cancer focused on the approximately 28,000 in the US with mibc Approximately 80% of whom undergo Spectrum.

The bingo.

Had strong, 46% year-over-year personal growth with a quarter driven by higher demand in the US and growth in international markets, where we have decided to focus.

We believe there is additional Market opportunities for sinko in responding to the need among patients with atopic dermatitis.

We are seeing the clear impact of recent positive data released for several of our oncology report.

It is contributed to strong growth in helping to establish these products as standards of care.

Your brand is in its 48th year, and we are seeing year-over-year national growth in the quarter, with expectations of continuous strength through 2025.

Because the compelling, as you can see profile, supported by the crown study where the median progression, free survival was not a risk. After 5 years of followup,

Albert Bourla: We saw continued momentum with BRAFTOVI and MEKTOVI with 23% year-over-year operational growth in the second quarter. Results for the phase three breakwater trial showed the BRAFTOVI combination regimen doubled median overall survival versus standard of care for treatment-naive patients with metastatic colorectal cancer with a BRAF-S V600E mutation. This represents a significant advancement of the approximately 4,000 patients diagnosed annually in the US with metastatic colorectal cancer with this mutation. They faced a more than two-fold greater mortality risk compared to patients with no known BRAF mutation. Xtandi contributed strong 14% operational growth during this quarter. Demand is growing for patients with castration-sensitive prostate cancer, and it is the top prescribed rounded androgen receptor pathway inhibitor.

Lorena is emerging as a standard of care for patients. With first line. Art positive metastatic non small cell like cancer

We saw continued momentum with ptoi and Meto with 23% year-over-year of rational growth in the second quarter.

Result for the phase 3, Breakwater trial. So the B combination regimen, double medium, overall survival versus standard care for treatment. Naive patients with metastatic colorectal cancer. With a brass. S v600e. Mutation.

This represents a significant advancement of the approximately 4,000 patients diagnosed annually in the US, with metastatic colorectal cancer. With this new pace,

They face a more than twofold greater mortality risk compared to patients with no no grafting taste.

Extended contributed, strong 14% overall growth during this quarter.

Separate pathway inhibit.

Albert Bourla: With the presentation of ASCO's long-term overall survival data from the ARVES trial, Xtandi is now the first and only androgen receptor pathway inhibitor to demonstrate an overall survival benefit at five years in men with metastatic hormone-sensitive prostate cancer. We also recently shared positive top line results from the phase three EMBARC study, making Xtandi the first and only androgen receptor inhibitor-based regimen to demonstrate overall survival benefit in non-metastatic hormone-sensitive prostate cancer with high-risk biochemical occurrence. This contributed to demand growth for Xtandi, and we achieved 27% share in new-to-brand prescriptions. This positive results indicate how we are continuing to invest and focus in areas where we have leadership and expertise contributing to ongoing progress with our oncology portfolio. A strong performance in the US and international divisions shows why we remain confident in the commercial strategy we refined more than a year ago.

With the presentation of ask for long-term overall survival data, from the artist trial extend is not the first and only hundreds of receptor pathway. Inhibitor to demonstrate an overall survival benefit at 5 years in men with metastatic hormone sensitive prostate cancer.

We also recently served positive Topline results from the phase 3, Embark study, making extended the first, and only 100% inhibitor based resume to demonstrate overall. Survival benefit in non metastatic hormone sensitive prostate cancer with high risk, biochemical occurrence,

This contributed to demand growth for extended and we achieved 27% sir in new to Brand prescriptions.

This positive re out indicate How We are continuing to invest and focus in areas where we have leadership and expertise continue contributing to ongoing progress with our own goals and portfolio.

Albert Bourla: In the quarter, for example, the key market and brand combination that we prioritized in our international divisions outperformed with strong mid to high single-digit growth across all regions. We will continue to advance this commercial strategy and expect to drive further progress through precision targeting engagement with patients and healthcare professionals. With that, I'll turn over to Dave, who will walk through our additional strategic priorities and progress with expanding margins and optimizing capital allocation. Dave.

The strong performance in the US and the international division. So why we remain confident in the commercial strategy, we refine more than a year ago.

In the quarter, for example, the key market and brand combination but we prioritize in our International divisions are outperforming with strong meet to high single-digit growth across all regions.

We will continue to advance this commercial strategy and expect to drive further progress through Precision targeting engagement with patients and Health Care Professionals.

Dave Denton: Thank you, Albert, and good morning. To begin this morning, let me emphasize that our solid financial results are a clear reflection of our disciplined execution and strategic priorities. We remain focused on improving patient outcomes and meeting our financial goals while managing the complexities of the external environment. Our cost improvement initiatives have contributed to greater organizational efficiencies, as demonstrated by our robust operating margins achieved this quarter. Going forward, we expect to improve our cash flow, reduce our debt leverage over time, and increase flexibility across our three capital allocation pillars. Our focus remains on creating long-term shareholder value. We will continue to invest in our business for the long term while prudently returning capital to our shareholders. Now, let me start with our second quarter results. Then I'll touch on our capital allocation priorities and then move to our cost improvement initiatives.

With that, I'll turn over to today. Who will work through our additional strategic priorities and progress with expanding margins and optimizing Capital, allocation stay. Thank You. Albert and good morning to begin this morning. Let me emphasize that our solid Financial results are a clear reflection of our disciplined execution, and strategic priorities. We remain focused on improving patient, outcomes and meeting our financial goals while managing the complexities of the external environment.

Our cost Improvement initiatives have contributed to Greater organizational efficiencies as demonstrated by our robust. Operating margins achieved this quarter,

Going forward. We expect to improve our cash flow. Reduce our debt leverage over time. And increase flexibility across our 3 Capital allocation pillars.

Our Focus remains on creating long-term shareholder value.

We will continue to invest in our business for the long term while prudently returning capital to our shareholders.

Now, let me start with our second quarter results.

Dave Denton: I'll finish with a few comments on the macro environment as well as our 2025 guidance. For the second quarter 2025, we recorded revenues of $14.7 billion, an increase of 10% operationally. This increase was largely due to overall growth both in the US and internationally. Partially offsetting the increase was an $825 million year-over-year unfavorable impact of higher manufacturer discounts resulting from the IRA Medicare Part D redesign, which took effect in the first quarter of '25 and overall is largely in line with our expectations. On the bottom line, second quarter 2025 reported diluted earnings per share was $0.51, and adjusted diluted earnings per share was $0.78, ahead of our expectations, primarily due to strong top line performance and our cost management execution. Our results demonstrate the effectiveness of our refined commercial strategy.

Then I'll touch on our Capital, allocation priorities and then move to our cost Improvement initiatives.

I'll finish with a few comments on the macro environment as well as our 2025 guidance.

For the second quarter 2025, we recorded Revenue so 14.7 billion and increase of 10% operationally.

This increase was largely due to overall growth, both in the US and International.

Partially offsetting the increase was an $825 million year-over-year unfavorable impact.

Of higher. Manufacturing discounts resulting from the IRA Medicare Part D redesign which took effect in the first quarter of 25 and overall is largely in line with our expectations.

On the bottom line. Second quarter, 2025 reported diluted earnings per share was 51 cents and adjusted diluted earnings per share with 78 cents ahead of our expectations. Primarily due to strong, Topline performance and our cost management execution.

Dave Denton: We remain committed to prioritizing key products and markets, optimizing the global allocation of our commercial field resources, and concentrating our marketing efforts on high priority areas. We saw strong contributions across our product portfolio, primarily driven by the Vendicle family, Comirady, Paxlovid, Patsev, and Eliquis, partially offset by declines in Ibrance. Also, I'd like to highlight a significant trend within our portfolio that we expect to fuel the company's top line for the next several years. Year to date, Pfizer's recently launched and acquired products delivered $4.7 billion in revenue while growing approximately 15% operationally versus last year. We plan to continue to invest behind these two product groups to drive their future performance and help enable the company to largely offset our LOEs over the next several years. Adjusted gross margin for the second quarter was approximately 76%, primarily reflecting the product mix within the quarter.

Our results demonstrate the effectiveness of our refined commercial strategy. We remain committed to prioritizing key products and markets.

Optimizing the global allocation of our commercial field resources and concentrating. Our marketing efforts on high priority areas.

We strong, we saw strong contributions across our Pro product portfolio, primarily driven by the vindic family. Comedy paxlovid patch Civ eloquest partially offset by decline in ibrands.

Also, I'd like to highlight a significant Trend within our portfolio that we expect to fuel the company's top line for the next several years.

Year to date fizer's recently launched an acquired products delivered 4.7 billion dollars in Revenue while growing approx approximately 15% operationally versus last year.

Our Eloise over the next several years.

Dave Denton: Looking at our adjusted gross margin performance over the last two years, we have largely achieved percentages in the mid to upper 70s when adjusting for Comirady, which, as you know, has a 50/50 gross profit split with our partner BioNTech. In addition, we believe the expected $1.5 billion savings from our phase one of our manufacturing optimization program by the end of '27 will help bolster gross margins as we transition through the LOE period. Maintaining a strong emphasis on cost management throughout our manufacturing network will continue to be a key priority. Total adjusted operating expenses were $5.8 billion for the second quarter, an 8% decline operationally versus last year. Now, looking at the components, adjusted SINA expenses decreased 8% operationally, primarily reflecting a decrease in marketing and promotional spend for various products as a result of our focused investments and ongoing productivity improvements.

Adjusted gross margin for the second quarter was approximately 76%, primarily reflecting the product mix within the quarter.

Looking at our adjusted gross margin performance over the last 2 years. We have largely achieved percentages in the mid to Upper 70s when adjusting for commodity which as you know, has a 50/50 gross profit split with our partner biontech.

In addition, we believe the expected 1.5 billion savings from our Phase. 1 of our manufacturing optimization program. By the end of 27 will help bolster gross margins as we transition through the LOE period.

Maintaining a strong emphasis on cost management throughout our manufacturing network will continue to be a key priority.

Total adjusted operating expenses were 5.8 billion dollars for the second quarter and 8% decline operationally versus last year.

Dave Denton: Adjusted R&D expenses decreased 9% operationally, driven primarily by a decline in spending due to pipeline optimization expected to be reinvested later this year and into next year. We continue to be disciplined with our operational expense management. Q2 reported diluted earnings per share was $0.51, and our adjusted diluted earnings per share was $0.78, which benefited from our efficient operating structure in addition to our effective tax rate, primarily driven by a favorable change in jurisdictional mix of earnings. Now, let me quickly touch on our capital allocation strategy, which is designed to enhance long-term shareholder value. Our strategy consists of maintaining and growing our dividend over time, reinvesting in our business in an appropriate level of financial return, and making value-enhancing share with purchases. In the first half of 2025, we returned $4.9 billion to shareholders via our quarterly dividend, and we invested $4.7 billion in internal R&D.

Now looking at the components adjusted S&A, expenses decreased 8%, operationally primarily reflecting a decrease in marketing and promotional spend for various products, as a result of our focused Investments and ongoing productivity improvements.

Adjusted R&D, expenses, decreased 9%, operationally driven, primarily by a decline in spending due to pipeline optimization. Expected to be reinvested later this year and into next year,

we continue to be disciplined with our operational expense management.

Q2 reported delivery diluted earnings per share was $0.51, and our adjusted diluted earnings per share was $0.78, which benefited from our efficient operating structure. In addition, our effective tax rate was primarily driven by a favorable change in jurisdictional mix of earnings.

Now let me quickly touch on our Capital allocation strategy which is designed to enhance long-term shareholder value. Our strategy consists of maintaining and growing our dividend over time.

We investing in our business and appropriate level of financial return.

And making value enhancing share with purchases.

and the first half of 2025, we returned, 4.9 billion dollars to shareholders via our quarterly dividend

Dave Denton: As previously mentioned, maintaining our gross leverage at an appropriate level is a key priority towards improving our capacity for business development. Our gross leverage at the end of the second quarter was approximately 2.7 times, which we are now setting as our new target, down from three and a quarter times. During Q2, we announced the licensing agreement with 3S Bio, which closed in July of 2025. Our business development capacity is now approximately $13 billion following the 3S Bio deal. Lastly, first half 2025 operating cash flows at $1.8 billion was tempered primarily by large expected payments in the second quarter, including an approximately $2.1 billion TCJA repeat-to-reach in tax payment and our payment to BioNTech for our gross profit split. We expect to see improved cash flows in the back half of this year.

And we invested $4.7 billion in internal R&D.

As previously mentioned maintaining our gross leverage in an appropriate. Level is a key priority towards improving our capacity for business development.

Our gross leverage at the end of the second quarter was approximately 2.7 times, which we are now setting as our new Target down from 3 and a quarter times.

During Q2, we announced the licensing agreement with 3S Bio, which closed in July of 2025.

Our business developed a capacity is now approximately 13 billion dollars. Following the 3s bio deal.

Lastly, first half 2025, operating cash flows. At 1.8 billion dollars was tempered primarily by large expected payments. In the second quarter, including an approximately 2.1 billion dollar tcja repatriation tax payment.

And our payment to biont tax for our gross profit split.

Dave Denton: Overall, we are focused on maintaining leverage at or below our new target to support a balanced allocation of capital between reinvestment and direct return to our shareholders. We continue to be disciplined with our operational expense management, progressing multiple improvement programs as we remain focused on driving operating margin expansion over the coming years. We expect to begin realizing initial savings from the phase one manufacturing optimization program in the latter part of this year. As part of our goal to return to pre-pandemic operating margins, we remain on track to deliver on our goal of at least $4.5 billion in cumulative net cost savings from our ongoing cost realignment program by the end of this year.

We expect to see improved cash flows in the back half of this year.

Overall, we are focused on maintaining leverage at, or below our new Target to support a balanced allocation of capital between reinvestment and direct return to our shareholders.

We continue to be disciplined with our operational expense management, progressing, multiple Improvement programs, as we remain focused on driving operating margin expansion over the coming years.

We expect to begin realizing initial savings from The Phase 1, manufacturing optimization program, and the latter part of this year.

Dave Denton: As a reminder, in total, we expect approximately $7.7 billion in savings by the end of '27 to drive operating efficiencies, strengthening our business with the potential of contributing significantly to our bottom line over the period. Of these savings, approximately $500 million identified in R&D will be reinvested in the pipeline, which we expect by the end of '26. Now, with that, let me turn to our full year '25 guidance. The pharmaceutical industry continues to navigate a complex global landscape influenced by rapidly changing proposed trade and tariff policies. Strategies to help mitigate the potential impact on our business in the short term have been implemented, and we continue to evaluate opportunities and develop plans which will help mitigate the potential long-term impact of tariffs on our business and our operations.

As part of our goal, goal to return to pre-pandemic operating margins. We remain on track to deliver on our goal of at least 4 and a half billion dollars in cumulative. Net cost savings from our ongoing cost realignment program by the end of this year.

As a reminder in total we expect approximately 7.7 billion dollars in savings by the end of 27 to drive operating efficiencies strengthening our business with a potential of contributing significantly to our bottom line over the period.

Of these savings, approximately $500 million identified in R&D will be reinvested in the pipeline, which we expect by the end of 2026.

Now, with that, let me turn to our full year: 25 guidelines.

The pharmaceutical industry continues to navigate a complex Global landscape influenced by rapidly changing proposed trade and tariff policies.

Mitigate the potential impact on our business in the short term have been implemented.

Dave Denton: That said, the company's guidance absorbs the impact of the currently imposed tariffs from China, Canada, and Mexico, as well as potential price changes this year based on the letter received on July 31st from President Trump. Our non-COVID revenues continue to perform very well operationally and ahead of our plan. In addition, our guidance assumes favorability to revenues due to foreign exchange rates. As a reminder, our plan assumes that a large majority of our COVID revenues are forecasted in both Q3 and Q4. Given this fact, we believe it is prudent to maintain our full-year revenue outlook as we enter the second half of the year. We continue to expect full year '25 revenues to be in the range of $61 to $64 billion.

And we continue to evaluate opportunities and develop plans, which will help mitigate the potential long-term impact of tariffs on our business, and our operations.

That said the company's guidance, absorbs the impact of the currently, imposed tariffs from China, Canada and Mexico, as well as potential price changes. This year, based on the letter received on July 31st from president Trump.

Our non-coed performed very well operationally and ahead of our plan.

In addition, our guidance assumes favorable favorability to to revenues due to foreign exchange rates.

as a reminder, our plan assumes that a large majority of our Co revenues are forecasted in both Q3 and Q4,

Given this fact, we believe it is prudent to maintain our full-year revenue outlook as we enter the second half of the year.

Dave Denton: In addition, we now expect adjusted SINA to be in the range of $13.1 to $14.1 billion, adjusted R&D to be in the range of $10.4 to $11.4 billion, and our adjusted effective tax rate of approximately 13%. Now, given our strong performance to date, as well as our outlook, including a favorable impact on foreign exchange, our more efficient cost structure, as well as improvements in our adjusted effective tax rate, we are raising our full year '25 adjusted diluted earnings per share guidance by $0.10. This includes absorbing a $0.20 charge for acquired in-process R&D associated with the upfront payment for the 3S Bio transaction. So just to clarify, without the 3S Bio deal, we would have raised our adjusted diluted earnings per share guidance by $0.30. Of this amount, approximately two-thirds is due to our strong operational performance and our outlook.

We continue to expect full year, 25 revenues to be in the range of 61 to 64 billion.

In addition, we now expect adjusted Sina to be the range of 13.1 to 14.1 billion.

Adjusted R&D to be in the range of 10.4 to 11.4 billion and our adjusted effective tax rate of approximately 13%.

Now, given our strong performance today, as well as our outlook, including a favorable impact on foreign exchange.

Our more efficient cost structure as well as improvements in our adjusted effective tax rate. We are raising our full year. 25 adjusted diluted earnings per share, guidance by 10 cents.

This includes absorbing a 20 cents charge for acquired in process, process R&D, associated with The Upfront payment for the 3s, bio transaction.

So, just to clarify, without the 3S Bio deal, we would have raised our adjusted diluted earnings per share guidance by $0.30.

Dave Denton: I will also point out that while we are raising our adjusted diluted earnings per share guidance, we are partially de-risking the expected COVID performance in the second half of this year. As a result, our revised full year '25 adjusted diluted earnings per share range is now $2.90 to $3.10 a share. In closing, we will continue to focus on maximizing our product portfolio's value and driving innovation to strengthen our pipeline. With a stronger balance sheet, we plan to deploy capital more effectively. We will focus on increasing our R&D productivity by deploying AI and digital capabilities, reinvest appropriately to accelerate high-value R&D programs, and pursue new growth opportunities through business development. Additionally, our cost improvement initiatives are beginning to expand operating margins through productivity gains and streamlined processes. And so with that, I thank you for your attention. I will now open it up for Q&A.

of this amount, approximately 2/3 is due to our strong operational performance, and our Outlook,

I will also point out that while we are raising our adjusted diluted earnings per share guidance. We are partially de-risking. The expected Co performance in the second half of this year.

As a result, the revised full-year adjusted diluted earnings per share range is now $2.90 to $3.10 per share.

In closing, we will continue to focus, on maximizing our product portfolio's value and driving Innovation to strengthen our pipeline.

With a stronger balance sheet. We plan to deploy Capital more effectively. We will focus on increasing our R&D productivity by deploying Ai and digital capabilities.

Albert Bourla: All candidates are please assemble the queue.

Reinvest appropriately to excel accelerate, high value R&D programs and pursue new growth opportunities through Business Development. Additionally, our cost Improvement initiatives are beginning to expand operating margins through productivity gains and streamline processes. And so with that I thank you for your attention. I will now uh open up for Q&A.

Operator. Please. Assemble the queue.

Operator: At this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, that is star one to ask a question. We'll take our first question from Trang Nguyen with UBS. Your line is open. Please go ahead.

at this time, if you would like to ask a question, please press star 1 on your telephone keypad,

You may remove yourself from the Queue at any time by pressing star 2.

Once again, that is star 1 to ask a question.

We'll take our first question from trong win with UBS. Your line is open. Please go ahead.

Albert Bourla: Hi, guys. Just there in your prepared remarks, you noted your guidance absorbs the potential price changes this year based on the letter you received from President Trump on July the 31st. That talks about impacting Medicaid with MFM. Does that imply you think something's going to happen this year? And if so, what's your broad assumption so we can kind of quantify that hit on your revenues and EPS? And then can you perhaps just give us your state of the union on the recent developments with MFM and tariffs? And then just on the CDC recommendations for the vaccines, there was a reduced recommendation in May that a payer pullback for broader adult COVID vaccinations. So just how are you sizing the '25 to '26 US fall season versus last year? And can you comment on any progress with state mandates or payer negotiations to stabilize that coverage?

Hi guys. Um uh just there in your prepared remarks. You um, you noted your guidance absorbs the potential price changes this year. Based on the letter you received from president Trump on July the 31st.

Uh that talks about impacting Medicaid with MFM does that imply? You think something's going to happen this year? And if so what's your broad assumption? So we can kind of quantify that hit on your revenues and EPs and then you perhaps just give us your State of the Union on the recent, developments with mfn and tariffs.

Albert Bourla: Thank you. Thank you, Trang. Let me start. I know many people would like to get clarity on the MFM situations, on the child situations. And I'm not in a position to provide much clarity, not because we are not discussing. Right now, we are in very active discussions. I discussed at the highest levels of this government. I discussed myself with the president after he sent the letter, me and all the others. We discussed a lot with the Secretary Kennedy. We discussed a lot with Dr. Oz, who is responsible for implementing a lot of these things. And I would say only that these discussions are extremely productive. I think we understand where the president comes from, and we are engaging in a productive way to find a solution.

Um, and then just on, um, the CDC recommendations for the vaccines, there was a reduced recommendation in May that a payer pull back for broader adult COVID vaccinations. So just how are you sizing the 2025 U.S. fall season versus, um, last year? And can you comment on any progress with state mandates or payer negotiations to stabilize that coverage? Thank you.

Albert Bourla: But because we are in active discussions, it's inappropriate for me to start providing more details because I don't want to say things while you're discussing with them. So I understand that many others may have questions about that. And I'm not sure I can give more information than what I just told you, that we had a letter that sets a pace of what the president wants. The letter asks a lot from us, but we are engaged in productive discussions with them. And in general, I'm happy the way that they listen to us and the way that we are trying collectively to find solutions that, from one hand, would make medicine affordable in the US. On the other hand, will make our industry even more competitive compared to China, which is progressing very rapidly to us. On the tariffs also, I don't have much news to add.

Many people would like to get clarity on the MSN, uh, situations of the Tariff situations. And, um, I'm not in a position to provide much Clarity. Not because we are not discussing right now, we are in very active discussions. Um, I discussed at the highest levels of this government. I disgust myself with the president, after he sent me the letter, me and all the other. Um, we discussed a lot with the secretary came in, with discuss a lot with Dr. Oh, who is responsible for implementing? A lot of these things. And um, I would say only that these discussions are extremely product. I think we understand where the president comes from and we are engaging in a productive way to find the solution. Uh, but because we are inactive discussions.

It's inappropriate for me to start providing more details because I don't want to say things while you're discussing with them.

So I understand that many others may have questions about that, and I'm not sure I can give more information than what I just told you. But we had a letter that outlines a base of what the president wants. The letter asks a lot from us, but we are engaged in productive discussions with them. In general, I'm happy with the way that they listen to us and how we are collectively trying to find solutions.

but from 1 hand, we

Met Medics affordable in the U.S., on the other hand, will make our industry even more competitive compared to China, which is progressing very rapidly to us.

Albert Bourla: We are waiting for the 232 report. And once we have that, we will see how these discussions again on the tariffs. I've had good discussions with Secretary Laknik, with the US Trade Representative, with Secretary Pesten, and of course, with the president that we have a special relationship through the times of COVID. So that's all I can say. I don't know if, Dave, you want to add something on what is included and how we think about it.

Um, on the tires. Also, I don't have much news to add. We are waiting the 232 report. And, um, once uh, we have that, we will see how this discussion. Again, on the tariffs, I had a good discussion with uh, secretary latne with the US. Trade representative was secretary besan and of course with the president but we have a special relation through the times of call.

Dave Denton: Yeah, I would just say that the underlying strength of our business is allowing us to raise our guidance in the back half of the year. And to Albert's point, with the work that's going on across the industry, we're able to come up with a range of scenarios, and we believe that those ranges of scenarios associated with potential timing of all this would allow us to absorb any impact this year based, again, on the underlying strength of our business today and performance today.

Albert Bourla: And maybe, Amir, you can comment on the CDC?

Um so that's all I can say. I don't know if Dave you want to add something on what is included and how we think about it? Yeah. I just I I would just say that the underlying strength of our business is allowing us to raise our guidance, in the back, half of the year and with to Albert's point with the work that's going on across the industry, we're able to come up with a range of scenarios. And we believe that those ranges of scenarios associated with, uh, potential timing of all, this would allow us to absorb, um, any impact this year based again on the underlying strength of our business today and performance today?

Aamir Malik: Yeah. So, Trang, I think your question was largely around Comirady. So I'll mention the quarter and then our expectations for the season. Comirady had a very strong quarter in Q2, and I think that's driven partially by growth and that favorability. We've just become much more efficient in managing inventory in the marketplace, and we also saw a continued increase in our market share in the quarter. So that's the quarter. Now, as it relates to the season, we don't have a crystal ball, but what we are planning for is we anticipate an indication for the 65-plus population, as well as those under 64 with underlying medical conditions. And that largely reflects the dynamic of how people vaccinate in the US today. We also don't anticipate any major changes in coverage by payers for this season.

And maybe, I mean, you can comment on the CBC. Yeah. Uh, so I think your question was largely around community, so, I'll mention the quarter. And then our expectations for the season Community had a very strong quarter in Q2. And I think that's driven, uh, partially by gross net favorability, we've just become much more efficient and managing inventory in the marketplace. And we also saw a continued increase in our market share in the quarter. So that's the quarter. Now as it relates to the season, uh, we don't have a crystal ball, but what we are planning for is we anticipate an indication for the 65 plus population as well as those under 64, with underlying medical conditions, and that largely reflects the dynamic of how people vaccinate in the US today.

Aamir Malik: So this could have a modest effect on our vaccination rates, but we anticipate having a very strong season. In addition, I think we're very ready to execute against that. We have our supply and distribution capabilities, which are genuinely unmatched. We have a very robust plan for both physician as well as patient activation, and we monitor sentiment very closely. We have not seen dramatic changes in intent to vaccinate. And we also have very strong contract positions, both in retail and non-retail. So we look forward to the Comirady season for the fall.

Um, we also don't uh, anticipate any major changes in coverage by payers for the season. So this could have a modest effect on our vaccination rates, but we anticipate having a very strong seat.

Albert Bourla: Thank you, Amir. Next question, please.

In addition, I think we're very ready to execute against that. We have our supply and distribution capabilities which are genuinely unmatched. We have a very robust plan for both Physicians, as well as patient activation. And we monitor sentiment, very closely we've not seen dramatic changes in intensive vaccinate. Um, and we also have very strong contract positions, both in retail and non- Retail. So, we look forward to the Community season for uh, for the fall.

Thank you, man. Next question, please.

Operator: We'll go next to Chris Schott with JPMorgan.

Chris Boshoff: Great. Thanks so much for the questions and congrats on the quarter. Just two for me. First on BD and capital allocation. Just what's driving the slightly lower target leverage for the company going forward? I think you lowered it by about a half turn or so. I just was looking for any color there. And just on the BD approach, is the approach here still to target a couple smaller deals with that $10 to $15 billion of capacity you've previously talked about, or is the thought maybe looking at one larger one? Last really quick one just to slip in was just the recent PD-1 VEGF deal. I know you're going to think about doing combos with some of your ADCs.

We'll go next to Chris shot with JP Morgan.

Chris Boshoff: Will we need to see the phase three data from those ADCs before you move forward, or should we start to think about Pfizer starting development of those programs prior to those readouts? Thank you.

Albert Bourla: Patricia, you've got an excellent question, but David can take the first two, and then I think Chris can talk about PD-1 VEGF.

Or is a thought maybe looking at 1 larger 1 uh last really quick 1 just to slip in was just the recent pd1 vegf deal. I know you're going to think about doing combos with some of your adcs. What we need to see the phase 3 data from those adcs before you move forward, or should we start to think about fiser, starting development of those programs prior to, those readouts, thank you.

Dave Denton: So, Chris, he asked we've actually improved our target from a leverage perspective down to 2.7 from three and a quarter times. That's largely because we've improved our cash generation capability over the last a little faster than we anticipated post-closing of the Seagen acquisition. So we're now sitting at 2.7 times. We will continue to deliver over time. If we were to do a BD transaction, we might tick back up over that 2.7 times, but our objective is to still get down and continue to deliver the balance sheet in the long term. Secondly, yes, most likely we would tend to do a, I'll say, a smaller deal given the fact that our capacity is in the $13 billion zip code at this moment. And so I would expect us more from a smaller perspective from a transaction.

Grace is usual. Excellent question. But David can take, uh, the first 2 and then I think the Chris can talk about video number. Yeah, so Chris. Yes, we've actually improved our Target from a, um, leverage perspective down to 2.7 from 3 and a quarter times that's largely because we've improved our cash generation capability over the last a little faster than we anticipated uh, post-closing to The Siege and acquisition. So we're now sitting at 2.7 times. We will continue to de-lever over time. Um, if we were to do a BD transaction, we might tick back up over that 2.7 times, but our objectives is still get down and continue to deliver the balance sheet in the long term.

Albert Bourla: Yeah. And it is $13.

Secondly, yes, most likely we would attend to do a, I'll say a smaller deal. Um, in the given the fact that our capacities in the 1300 zip, code at this moment. And so I would expect us more from a smaller perspective, uh, from a transaction. Um,

Dave Denton: It is $13 only because we have essentially allocated some of 3S Bio transaction funds against our BD target.

Albert Bourla: Thank you, Dave. And Chris, how do you think about developing the PD-1 VEGF that I know we closed and we are very rapidly executed on a plan even before we could close? And.

Yeah, and it is, it is 13. Only because we have essentially allocating some of 3s. Bio transaction funds against our bday Target. Thank you. Dave. And Chris, how do you think about developing the PDN 1 exam that I know we closed? And uh, we are very rapidly executed on a plan even before

Alexandre de Germay: Thank you very much. As you know, we do have ongoing programs with the ADCs, SV, PD-L1B, and Patsif all in phase three. We're not going to wait for readouts from these studies, and we'll start earlier with phase one, two combinations this year, in fact, with those ADCs in combination with 3S Bio 707. How we look at 707 is really to be a potential backbone to replace single-agent PD-1, PD-L1. It's got a unique structure, and the preclinical data suggests potential based on class regarding high affinity for PD-1 inhibition and also potentially increased anti-angiogenic activity. You've seen the overall response rate in the first line setting of 65%. We're confident in this molecule across the cancer areas or tumor areas where we have significant capability, including thoracic, GU, and GI. And we'll later this year announce a phase three program for 707.

Could close and thank you very much. As you know, we do have ongoing programs with the adc's SVP, l1v and passive oil, and phase 3. We're not going to wait for readout from these studies. Um,

Albert Bourla: Thank you, Chris. I really, my team got me very excited about this molecule, and they have presented to me a very aggressive development plan that they plan to execute starting this year. We will share more news about the plan when we are later in the year when we kick off the execution. Next question, please.

And we'll start earlier with Phase 1 2 combinations, this year. In fact um with those adcs in combination with um 3 by 707, how we look at 3. Um at 707, it's really to be a potential backbone to replace single agent pd1 pdl1. It's got a unique structure and the pre-clinical data suggests potential basing class regarding High affinity for pd1 inhibition, and also, um, potentially increase anti-angiogenic activity, and you've seen the overall response rate in the first 9 setting of 65%. We're confident in this molecule across the cancer areas or tumor areas that where we have significant capability, including thoracic, gu and ghee. And we'll later. This year announced the phase 3 program for 707.

Thank you, Chris. I'm I really my team got me very excited about this policy and they have presented to me a very aggressive development plan, but they plan to execute starting this year. We will share more news about the plan. Uh, when, uh, we are later the year when we kick off the execution. Next question, please.

Operator: We'll go next to Alex Hammond with Wolf Research.

We'll go next to Alex Hammond with Wolfe Research.

Andrew Baum: Thanks for taking our question. I guess one on MSN, just given your recently announced DTC patient option for purchasing Eliquis, how should we consider the applicability of this program to the remainder of your portfolio?

Thanks for taking our question. I guess. 1 on MSN just giving your recently announced DTC patient option for purchasing eloquest how do you consider the applicability of this program to the remainder of your portfolio?

Albert Bourla: Thank you, Alexandra. I think it will, if very much, will help. I can tell you that the direct-to-consumer was one of the four things that the letter President Trump requested from me and everybody else. We think it is a fantastic way to go ahead, so we will work collaboratively to do it. Clearly, Pfizer has a good experience from the Pfizer for All, where we have a direct-to-consumer website that has very, very high traffic. And also now we launched together with our partner BMS the Eliquis 360, which exactly does what basically President Trump is asking us to do, actually. And I'm sure you've noticed that he tweeted himself. He retweeted, actually, my tweet about the Eliquis. And also, we have serious discussions in the industry. So I have connected, of course, we had the board of all the CEOs that we discussed it, and also myself.

Thank you Alexander. Um, I think it will. It's a very much will help.

I, I can tell you that the direct to Consumer was 1 of the 4 things, but the letter of President Graham Trump requested from me from me. And everybody else, uh, we think it is a fantastic way to go ahead. So we will work collaboratively and to do it. Clearly fizer has a good experience from, uh, the fiser for all where we have a direct to Consumer website, that has a very, very high profit. Uh, and also now, we launched together with our partner BMS, the eloquest 360, which is exactly does work. Basically, with the president Trump is asking us to to do actually. I'm sure you've noticed

Albert Bourla: I'm connecting very often individually with all the major companies. And they are all ready to roll up the sleeves and execute something like that. So it remains to be seen. I don't want to speak more, as I said, because we are in active discussions.Next

Operator: question.

Next question.

David Brown Leiera: We'll go next to Mohit Bansal with Wells Fargo. Your line is open.

Operator: Dave, thank you very much for taking my question. Dave, I have a question regarding guidance. It does seem like, you had quite a good quarter this quarter. and, there is FX tailwind as well as operational reasons here. So wondering, what is driving the intake guidance, or even like not even like, upping it to the higher end of the range? I just would love to know your thought process in in setting this guidance at this point. Thank you.

Francesca Demartino: Yeah, thank you. I think as we looked at guidance, as I said, we are essentially raising bottom end by 30 cents and then absorbing the 20-cent charge for 3S Bio transaction. At the same time, we are looking at our future Q3 and Q4, and we're essentially de-risking some of that. So this underlying strength of our business would have us increasing guidance even further from a profit perspective. But we, at this point in time, given the volatility that's potentially ahead of us in COVID, we think it's prudent to wait, hold, see how Q3 and Q4 come about, and then, update, as appropriate from that perspective.

Operator: I got it. Next question.

David Brown Leiera: We'll go next to Courtney Breen with Bernstein.

We'll go next to Courtney Breen with Bernstein.

Albert Bourla: Hi. Well, thank you so much for taking the question. A couple from me. The first is on the efficiencies, that we're seeing kind of in your operating model, and particularly around SG&A. And it'd be great if you're able to kind of give us some extra context around kind of where you are kind of reallocating and investing versus where you're able to pull back and kind of some more context and detail and color around that, both within the US and ex-US. And then secondarily, you've given us some more detail in terms of M&A and the $13 billion range. But can you give us a little bit more, insight on the priorities? I know you've talked about kind of the obesity opportunity or cardiometabolic opportunity and immunology being areas of interest.

Albert Bourla: can you talk about kind of whether they still rank near the top, or how you're seeing kind of opportunities out there that you might be interested in? Thanks so much.

I will thank you so much for taking the question. Uh a couple from me. The first is on the efficiencies um that we're seeing kind of in your operating model and particularly around sgna. It'd be great if you're able to kind of give us some extra context around kind of where you are kind of reallocating and investing versus where you're able to pull back and and kind of some more context and detail and color around that both within the US and X us and then secondarily you've given us some more, uh, detail in terms of m&a. And, and the 1300 range of a little bit more, uh, Insight on the priorities. Um, I know you've talked about kind of the Obesity opportunity or cardio, metabolic opportunity, and Immunology, being areas of interest. Um, can you talk about kind of whether they still rank near the top um or how you're seeing kind of opportunities out there that that you might

Operator: No, thank you, Courtney. Let's start with Alexander to speak about the efficiency in international, and then Amir can sign in on the US.

Thanks so much.

Dave Denton: Thanks for the questions. You remember about 18 months ago when we started this journey at the international division, we said we will pick our growth driver both from an inline standpoint and the new product. And that combination will be different country by country based on the environment, the potential, and the population to treat. That's what we did. So we've identified in our top 16 market those combinations. And then we invested to win in the sense that we looked at the shareholders that we need, and then we reduced our investment everywhere else so that we can win in this area. And clearly, the growth that we are seeing coming out of that portfolio of assets where we focus is really remarkable because it's not just that we grew 6% at the international level overall, but it's also the quality of the growth.

No, thank you. Let's start with Alexander. We speak about the efficiency in international when Amir can sign in on the on the US. Thanks for the for the question, SKU about 18 months ago. When we started this journey at the international division, we said we will pick our growth driver, both from an, in lifetime point and the new product. And that combination will be different country by country based on the environment, the potentials and the population to treats.

Dave Denton: You see that we grew 9% in emerging markets, 9% in China, 7% in Europe. So it's kind of across the geography. And it's also across the different category areas, right? Specialty care grew 9% driven by Vinda. Primary care grew 4%, 6% excluding COVID, driven by Eliquis and our vaccines. And oncology grew 6% driven by Lorbena and others. So clearly, it's really how we reduce the costs around the non-core assets and the non-key countries that help us double down on the area where we wanted to grow.

That's what we did. So we we've identified our top 16 Market, those combinations, and then we invested to win in the in the sense that we looked at the shareholders that we need and then we reduce sign investment every everywhere else so that we can win in this area. And clearly the growth that we are we are seeing coming out of that portfolio of assets, where we focus is really remarkable because it's not just that we grew 6% at the international level of broad, but it's also the quality of the growth. You see that we grow 9% in Emerging Markets, 9% in China 7% in Europe. So it's kind of a cross the geography and it's also across the different category area, right? So Specialty Group 9% driven by vinda Primary Care, growth 4%, 6%, excluding Co prevented by adequate and our vaccines and we are oncology go 6% driven by Loren and others. So clearly is really how we reduce the cost. Uh,

Operator: Thank you, Alexander. Amir?

Aamir Malik: Courtney, I'll give you a couple of different examples. When we implemented our new commercial model at the beginning of last year, we put in place a few fundamentals. One was having everything in one place and the benefit of scale. So for instance, we consolidated to a single agency partner. And that drove major efficiencies across the business. The second thing is we undertook a major resource reallocation exercise, both in terms of the products where we're investing as well as the channels that we're investing into.

Aamir Malik: And thirdly, we've just embraced technology and the way that technology can drive efficiency across every aspect of our consumer campaigns, our physician targeting, and also Albert referred to our use of Pfizer for All and investment in the Pfizer brand, which, for instance, in the categories where we've deployed that, that model has resulted in about a 20% decrease in the cost per new MVRX. So these are just examples of how we're driving efficiency across the commercial.

Operator: And it is, I think, for me, what really pleased me about it is that we are able to reduce our cost and at the same time continue growing the top line, which is the key here. And the Pfizer was always good in commercial. I do think that we lost a little bit of a way during the COVID because the priorities, you can understand, were 100% devotion of the whole company to do something like that. But I'm very proud and pleased that we got up to our feet and we now have developed a commercial machine, but it is really honoring the Pfizer tradition and taking it to the next level. And I will finish with some questions from the M&A. You asked what will be the range in terms of priorities. And in terms of dollars, Dave, talk to you.

Consumer campaigns, our position targeting, and also Albert referred to our use of FISA for all, and investment in the Pfizer brand, which, for instance, in the categories where we've deployed that model, has resulted in about a 20% decrease in the cost per new NVX. So, these are just examples of how we're driving efficiency across the commercial.

Thank you and it is I think for me what really pleased me on that is that we are able to reduce our cost and the same time continue growing the Top Line.

Operator: Clearly, with those dollars, probably will be in fewer smaller transactions rather than one transaction or the remaining capital allocation. Clearly, it will be in the four areas that we are now active, which is the oncology, the vaccines, the internal medicine with cardiometabolic and obesity, and with the IMI. On obesity, which is your specific question, clearly, we have interest in this area because this is an area that it is very big. Science is breaking. A lot of new things are coming out. And we have tremendous development capabilities in the primary care type of business. And we have also tremendous commercial opportunities. And by the way, in obesity also, there is plenty of offering right now. I mean, in China, China is booming in terms of how many opportunities we have.

Which is the key here. And um, the fisa was always good in commercial. Uh, I do think that we locked a little bit our way during the co because the priorities, you can understand where 100% devotion of that whole company to do something like that. But I'm very proud and pleased that, uh, we got up to our feet and we now have developed a commercial machine, but it is all really honoring, the fiser a tradition and taking to the next level. Uh, and I will finish with, um, some questions from the m&a. If you asked what would be the range in terms of priorities and in terms of dollars a day, talk to you. Uh, clearly, with those dollars probably will be in fewer smaller, uh, uh, transactions, rather than 1 transaction or the remaining Capital allocation, uh, uh, clearly, it will be in the 4 are

Operator: Our chief strategy, Andrew Bomb, that is responsible for PD, just came back from a week-long trip to China. And the opportunities are really, really very big. So also, there are here opportunities in the US. So there is a good substrate that we can choose. But we will be very disciplined with our capital. We will not overpay. We will pay the real value that the asset deserves. With that, let's go to the next question.

What we are now active which is oncology the vaccines. The internal medicine with cardio metabolic and obesity and with the ini uh on Obesity which is your specific question. Clearly we have interest in this area because this is an area that it is very big. Science is breaking a lot of new things are coming out and uh, we have tremendous development capabilities in the primary care, type of business and we have also tremendous commercial opportunities. Uh, and by the way, you know, this also, there is plenty of offering right now. I mean, in China, uh, China. China is booming in terms of how many opportunities we have our, uh, safe strategy of the Andrew bomb. That is responsible for we did just came back from uh uh week long trip to to China and uh the opportunities are really, really very big. So also there are

Here opportunities in in the US. So there is, uh, a good substrate that we can choose, but we will be very disciplined with our company. We will not overstay, we will pay the real value. That the asset is there with that. Let's go to the next question.

David Brown Leiera: We'll go next to Dave Reisinger with Lyrinc.

We'll go next to Dave Risinger with lorinc.

Chris Boshoff: Yes, thanks very much. So Albert, thank you for helping lead discussions with the administration to ensure the future success of US biopharmaceutical innovation. Since you briefly mentioned competition from China, has Pfizer been helping the administration understand the very strong support that the Chinese government provides to local biotech companies based in China? I ask the question given significant pressures on biotech companies in the United States. Thank you.

Yes, thanks very much. Uh so Albert. Uh thank you for helping lead discussions with the administration to ensure the future success of uh us bio pharmaceutical Innovation. Uh since you briefly mentioned competition, from China, has fiser been helping the administration understand, the very strong support that the Chinese government provides to local biotech companies based in China. I asked the question given uh, significant pressures on biotech companies in the United States. Thank you.

Operator: Thank you, Dave, and also thank you for your kind words. I look, and I'm very vocal, and I speak at all levels, and not only in the administration, but also in the Senate and the House. This is something that unites, I would say, one of the very few things that unites both Democrats and Republicans is the concern about China's emerging superiority in several technological areas, but where it is very impressive is in the biotech. And I very clearly indicate that this is happening. It's real. I'll give you just some examples. In May, for the first time, Axios reported that the clinical studies in the world right now, China has the leading share; it surpassed the US. I did a research myself on publications that are happening from Chinese scientists right now.

Thank you, David also, thank you for your kind words. Um, I do and I'm very vocal and I speak at all levels and not only in the administration but also in uh the Senate and the house, this is something that uh unite I would say 1 of the very few things that unites both Democrats and Republicans is their concern about uh China uh emerging superiority in several Technologies, their areas, but where it is very impressive, it is in the biotech and I very clearly indicate that this is happening is real, I'll give you some examples in May for the first time axios reported that the clinical studies in the world right now.

The U.S., uh, I did research myself on publications that are happening.

Operator: And in CRISPR, for example, just to give one area, 42% of the global publications are coming from China. Actually, in structural biology, which always was the reform, 62% came from China. And to end that, they are not doing they're not filling patents. They have filed more patents than the US this year. And so they are protecting very well intellectual property, and they are enhancing access to their local markets. And they are giving tremendous support, monetary support to their biotech ecosystem, which encourages a lot of private money going there. I explained all of that to the administration. And I think they listen.

Operator: And that's why I said before, we will all look to find ways that, from one hand, affordability and access of the American patients, on the other hand, to the crown jewel, which is the biotech industry, needs to be supported by the government, by the Congress, so that we can there's so much you can do to slow down China. You won't slow them down. They are very good. What we can do is to focus to be better than them. And that should be our goal. With that, next question.

So they are they have filed more Partners than us this year and so they are protecting very well intellectual property and they are enhancing access to their local markets and they are giving tremendous support uh monetize support to their biotech ecosystem, which encourages a lot of private money going there. I explained all of that to the administration and, um, I think there is and that's why I said before would be, we all look to find ways that from 1 hand, affordability and access of the American patients, on the other hand, uh to the Crown Jewel, which is the Biotech Industry needs to be supported by the government, by the uh Congress so that we can, there's so much you can do to slow down sign

If you want to slow them down, they are very good but we can do it is to focus to be better than that and that's what should be our goal.

With that next question.

David Brown Leiera: We'll go next to Kerry Halford with Berenberg.

We'll go next to Carrie Halford with Baron Berg.

Alexandre de Germay: Thank you. A couple of questions for me, please. I'm firstly looking at Adcetris, Tepezzo. Future performance was a little weaker than anticipated. I understand these drugs are perhaps facing increased competitive pressures, but would be interested to hear your strategy reinvigorating that growth of those Seagen assets, X, Panther? And then secondly, a question on the guidance, specifically tax and apologies if I missed this earlier. But Dave, what has changed with regard to the tax outlook for this year, and how sustainable is this underlying 13% tax rate going forward? Thank you.

Thank you. A couple of questions for me, please?

And firstly looking at et cetera to Kaiser, keep your performance with a little weekend and anticipated.

I understand these drugs are perhaps facing increased.

Complexity pressures. But would be interested to hear your strategy. Reinvigorating that growth

Operator: Dave, you want to start with that, and then Amir can?

Of those seed and assets except and then secondly, a question on on the guidance specifically tax and apologies, if I missed this earlier. But Dave, what has changed with regard to the tax outlook for this year? And how sustainable is this? Underlying 13% tax rate going forwards, thank you.

Francesca Demartino: Yeah, just on the tax side, there were some one-time discrete items that allowed us to improve our tax position this year. I would expect going forward with the new tax regs globally that we would be largely closer to the 15% level from a global tax perspective in the long term.

Thank you. Want to start with that and then I'm making. Yeah, I just on the tax side. Uh, there were some 1-time discrete items that allowed us to improve our tax positions. This year, I would expect going forward with, uh, the uh, the new tax regs globally that we would be largely closer to the 15% level from a Global Tax perspective in the long term.

Aamir Malik: Kerry, thanks for the question. I think your question was largely around the Seagen portfolio and the products. So we feel very good about how we integrated those products. As an example, we were able to cross-train all of our field forces. And now we're seeing the benefit of that come through in commercial performance. So if I look at Q2 and the entirety of our Seagen commercial portfolio, we grew 15% year over year. And that was while managing some of the competitive headwinds that you alluded to on Adcetris, which we are starting to see now settle. In particular, we feel very good about the growth in Patsis. We have greater than 50% market share in the in the first line, and we see headroom to continue to expand that share, especially in the CIS platinum eligible population where we are very focused.

Terry, thanks for the question. I think your question was largely around the season portfolio on the products. Um, so we feel very good about how we integrated those products. As an example, we were able to cross-train all of our field forces, and now we're seeing the benefit of that come through in commercial performance. So if I look at Q2 and the entirety of our seasoned commercial portfolio, we grew 15% year-over-year, and that was while managing some of the competitive headwinds that you...

Aamir Malik: And it's also important to note that as part of the Seagen transaction, it was not only the inline products, but the portfolio that came with it, which continues to perform very well.

Operator: Thank you, Amir. Next question, please.

Alluded to on assessments which we are starting to see. Now, settled in particular, we feel very good about the growth in passive we have greater than 50% uh market share in the in the first line and we see Headroom to continue to expand that share especially in the CIS Platinum eligible population where we are very focused. Um and it's also important to note that as part of the uh, cgen transaction. This is not only the inline products, but the portfolio, uh, that team with it, which continues to perform, where it very well.

Thank you. Next question, please.

David Brown Leiera: We'll go next to Evan Segerman with BMO Capital Markets.

We'll go next to Evan's sermon with BMO Capital Markets.

Chris Boshoff: Thank you so much for taking my question. Kind of a follow-up to the prior question. You know, a year and a half into the integration of Seagen, and really aside from Patsis, what do you believe are the two or three assets that have the potential to really drive a positive IRR for the $42 billion or so that you spent? And kind of a follow-up there is what part of the market could SV capture in non-small cell lung cancer if and when eventually approved? Thank you.

Operator: Yeah, I was pretty commended. Let's start that there are four main assets. But when we acquired the company, they were around $2 billion, even less of revenues. But they will grow by year 2030 to $10 billion. Now, of course, the value was not only on that. The value was mainly in the platform of the ABC that we got together with the intellectual property, the capability, the people, and the assets. And I will ask Chris to comment on the most important things that are coming out in the short term, medium term, and long term process.

Nice. Thank you so much for taking my question. This is kind of a follow-up to the prior question. You know, a year and a half into the integration of Cen, and really aside from PADS, what do you believe are the 2 or 3 assets that have the potential to really drive a positive IRR for the $42 billion or so that you spent? And kind of a follow-up: Is there any part of the market where SV could capture a non-small cell lung cancer, if and when eventually approved? Thank you.

Yeah, I was curious about a comment. Let's talk about there are four main assets. But when we acquired the company, they were around $2 billion in revenues, even less, but they will grow by the year 2030 to $10 billion.

Andrew Baum: Thank you very much. So in the short term, Patsis and the readouts for the muscle invasive bladder cancer studies, as you recall, the current indication is 18,000 patients. The new indications will be up to 28,000. So there's both platinum eligible and platinum ineligible. And we expect those readouts in the next six months. And potentially, they could change the standard of care for this population. This next wave of studies we've started by three trials in SV, so gut attack, and Dotan. The second-line study is now fully recruited. In fact, it recruited much quicker than we expected. In the second-line space, what we've seen so far in the phase one study in the late-line population was a 31% overall response rate and a medium overall survival, albeit a single-line experience of 16.3 months. So that gives us confidence in SV. It's a Fadotin payload.

Andrew Baum: So what we've seen with the other studies with Fadotin payloads, including with Tiftaq and Patsis, was this potentially synergistic activity when we combine it with an anti-PD-1. So SV plus pembrolizumab has now been combined. As you know, overall, we've seen a response rate of approximately 60%. But in those in the population specifically, that's TPS high or PD-L1 high expression, all patients so far in the phase one trial have responded. And that obviously is very favorable to what you would expect from pembrolizumab alone. The next molecule, PD-L1b, that's again another first-in-class molecule. We're accelerating that into a phase three program for head and neck cancer, where we've seen a response rate just shy of 60% in the combination with pembrolizumab. And then there's a whole new group of ADCs coming with a TOFA-1 payload, including a follow-up to Adcetris.

Out in the next 6 months and potentially they could change the standard care for this population. This um next wave of studies. We started by 3 trials in SVS. They've got attacked within the second line study is now fully recruited. In fact, it recruited much quicker than we expected in the second line space. What we've seen so far in the phase 1 study in a late line population with a 301% overall response rate, um, and a medium overall survival, albeit a single line experience of 16.3 months so that gives us confidence in SV. It's the dot in payloads and what we've seen with the other studies with epidote and payloads including with Tack and Pat set was this potentially synergistic activity when we combine it with an anti page 1, so SP plus um General is a map has now been combined as you know, overall we've seen a response rate of approximately 60%, but in those in the population specifically that's TPS High.

Or pdl1 high expression. All patients so far in in The Phase 1 trial have responded and that obviously is very favorable to what you would expect from pendulum map alone. The next molecule pdl1 V, that's it again. Another person class molecule, we accelerating that into phase 3 program for hit and neck cancer, where we've seen a response rate just shy of 60% in the combination with Pember map and then there's a whole new group of adcs coming with the Topo.

Andrew Baum: They're currently two or three of these molecules showing highly encouraging data in phase one, and we'll update you in the future about those.

1 payload including a follow-up to a Centrist. They currently 2 or 3 of these molecules showing

Operator: Thank you. So as I said, we are confident that not only will we recuperate the investment with a good return in the season, but I think this is transforming our oncology portfolio and business. Next question, please.

Highly encouraging data in Phase 1, and I will update you in the future about those.

Thank you. So as as I said, we are confident that not only will recuperate the investment with a good return in the season, but I think this Transforming Our oncology portfolio in business. Next question, please.

David Brown Leiera: We'll go next to Carter Gould with Cantor.

We'll go next to Carter Gold with Caner.

Kripa Devarakonda: Good morning. Thanks for taking the question. I'm going to go back to the policy side. I guess Albert, should investors have any expectation around a comprehensive deal that addresses the president's objectives across MSN and tariffs, but also addresses the industry's concerns around enforcing IP protection, compounding, pill parity, IRA implementation? And then separately, Vindicale put up a solid quarter year on year, but this is sort of the fourth quarter in a row where sequential growth was more muted or meager. Is Vindicale US growth behind us? And I guess in answering that, can you help frame the push-pull between price and competition? Thank you.

Operator: Yeah, I would like to give a brief answer to the policy. Look, I don't know. We are in very active discussions. You know that the president is impatient, so she wants the results quickly. We also want to come to a resolution quickly because I want to offer a certainty to all of us and all of you as much as you can have in this period of time. Are we going to, are we discussing in addition to all the things that are related with MSN and tariffs, also things that are related with PBM reform, with 340B, with the pill penalty? Absolutely. And you know that PBM reform is universally accepted that it needs to happen. There was a bipartisan bill, and there is clear reivindication. The president has spoken so many times about the middlemen.

Uh good morning. Thanks for taking the question. Uh I'm going to go back to the policy side. Um I guess Albert should investors have any expectation around a comprehensive deal that addresses, the president's objectives of across mfn and tariffs but also addresses the industry's concerns around enforcing IP protection compounding pill, parody, Ira implementation and then separately uh, vindic Cal put up with solid quarter year on year. But this is sort of the fourth quarter in a row, where sequential growth was, uh, more muted or, uh, meager is vindic US growth behind us and I guess in answering that. Can you help frame? The push pulls between price and competition. Thank you.

Yeah, and let me give a brief answer to the policy.

Operator: Also, with the pill penalty, he has spoken about it, and also the Secretary Kennedy spoke about it. And also, we are working on it. And of course, the 340B has become a major, major problem. Right now, the 340B is expected to exceed $62 billion this year. It's a program that has become bigger than Medicare and Medicaid combined. So that's all at product prices that all of that is value that goes from us out there to, let's say, hospitals. And this value is not passed to the patients because they mark up those products in tremendous amounts, way more than you see in hard data. And you know we can't afford that. So we are discussing, we are explaining. It's more complicated than 340B because it involves hospitals. But the program is very good for the small hospitals that were intended.

Look, I don't know. We are very active in discussions. You know that the president is in patient, so she wants results. Quickly uh we also want to come to a resolution quickly because I want to offer certainly to all of us and all of you uh as much as you can tell, in this period of time. Uh, are we going to are we discussing in addition to all the things that are related with MSN and T, also things that are related with PBM reform with, uh, uh 340b, uh, with the pill penalty absolutely. And, uh, you know, that the PBM reform that was, is universally accepted. That is to happen. Uh, there was, uh, by partisan Bill. And there is clear, indication of the president has spoken so many times about the middleman. Also with the bill penalty, he has spoken about this and also

Secretary Kennedy spoke about it and also we are working on it. And, of course, the 340b has become a major major problem right now. The 3440 bill has is expected to exceed 62 billion dollars. This year, is the program that has become bigger than Medicare Medicaid combined. So that's all a pro prices. That all of that is valuable because from us out there to let's say Hospital,

And this value is not passed to the patients because they mark up those products in tremendous amounts way more than you see in Hardy and, you know, we can't afford that. So we are discussing, we are explaining is more complicated to be because involves Hospital.

Operator: This is not about not having 340B. It's about not having an abuse in the system. So, Amir, you want to take the next question?

But the program is very good for the small hospital that was intended. Is this is not about not having 3 for the, it's about not having an abuse in the system.

Aamir Malik: I can ask you quickly about the Namax in the US and then touch on international too. In the US, yes, we had a very strong quarter. We had 15% year-over-year growth. We maintained momentum and performance versus Q1. And there's a lot that's going on in this market right now. So that performance is a function of improving diagnosis as well as improving favorability dynamics. So we continue to lead in the face of two competitors coming into that market, both in terms of total market share, but also importantly, lead in terms of first-line treatment naive patient share. So we've got good PRX momentum, and that's influenced the growth. Atruvi is taking some first-line share, and it's a little too early to tell about the dynamics of Imbruvica, and we'll keep a close eye on that for the second half of the year.

Aamir Malik: Now, we do expect continued PRX volume growth, but there will be GTN pressure on US performance. And that's a function of both the Medicare Part D design, but also a result of contracting to maintain access for Vinda, both in Medicare and commercial, where we've maintained 90% access for the brand. So we do expect those dynamics to impact our sequential growth in the back half of this year.

Uh, in the US. Yes, we had a very strong quarter. We had 15% year-over-year growth, we maintain momentum and performance versus, uh, q1. And there's a lot that's going on in this market right now. So that performance is a function of improving diagnosis, as well as improving favorability Dynamics. So we continue to lead, uh, in the face of 2 competitors. Coming into that market both in terms of total market share, but also importantly speed in terms of first line, treatment naive patient share. Um, so we've got good PRX momentum, uh, and that's influenced. Uh, the growth. Uh, a TV is taking some first lines, uh, share. And it's a little too early to tell about the Dynamics of Ambush and we'll keep a close eye on that for the second half of the year. Now we do expect continued TRX volume growth, um but there will be gcn pressure on us performance and that's a function of both the Medicare Part B design.

Dave Denton: Yes, for international, so we have a very strong dynamic. So we have grown 30% over the quarter, but actually, since the beginning of the year, we have grown our patient treatment by 50%. So it's clearly what I was describing at the beginning in terms of focus on the key assets where we think we can have an impact. This one is clearly the demonstration of our focus on execution. Moving forward, we think we're going to continue to grow on this product for three reasons. First, the diagnosis rate in international in most of our key markets is still significantly below what we have in the US, and we normally see in this type of disease. Two, the access. Access takes a lot of time in international. You need to negotiate price and access in every single country.

But also a result of Contracting to maintain access for Venda, both in Medicare and commercial where we've maintained 90%, uh, access uh, for for the brand. So we do expect those Dynamics to impact our sequential growth in the back end of this year, just for international. Uh, so we have a very strong Dynamic so we have the grown the 30% for the quarter but actually it seems the beginning of the year. We have grown our patients, which is

Dave Denton: And it took us five years just to get to where we are. And competition will have to follow the same timeline to get to the type of access that we get. Just to illustrate my point is we just unlocked UK and Australia at the end of last year, and we just unlocked South Korea at the beginning of this quarter. So just to give you a sense of it takes time. And now that we have access, we are unlocking the potential of those patients being treated. And then finally, we think that the profile of our product and the experience of our key centers will help us establish, to establish the standard of care that we have developed with this asset. So we are very confident with the potential future growth of the product.

By 50%. So it's clearly the what I was describing at the beginning, in terms of focus on the key assets, where we think we can have an impact, this 1 is clearly the demonstration of our focus on the execution moving forward. We think we're going to continue to grow on this product for 3 reasons, first the diagnosis rate in international in most of our key markets is still significantly below what we have in the US. And, and, and the, and we normally see in in this type of disease, 2, the access access takes a lot of time in international, you need to negotiate price and access in every single country and it took us 5 years just to get to where we are and competitions will have to follow the same timeline to get to the type of access that we get just to illustrate. My point is we just unlocked UK and Australia at the end of last year and we just unlocked South Korea at the beginning of this quarter. So just give you a sense of it takes time. And now now we have access we are unlocking the potential of those patients being treated. And then finally we think that's

Operator: Yeah, and I'm very impressed with the performance of the Vindicare International and the way that we were not counting on that product before. And now suddenly, we see a very big thrive. We're not counting in international anymore. It's mainly US and there. Let's go to the next question, please.

the profile of our product and the experience of our key centers will help us establish and execute to establish the standard of care that we have developed with these assets. So we are very confident with the potential future growth of people. Yeah. And and I'm very impressed with the performance of in the coming in the last month and the way that we will not

Counting on that product before and now suddenly we see a very big uh, Thrive. We're not counting in international, I mean, because, mainly us, and let's go to the next question, please.

David Brown Leiera: We'll go next to Asad Haider with Goldman Sachs.

Kripa Devarakonda: Great. Thanks for taking the question. Albert, just one more if I may on the policy front. Just given the comments you just made and then triangulating those back to your comments on MSN, that it's now quantified and reflected into guidance to some extent, maybe just talk about what could cause large swings to those expectations from here, or is your high-level view that we are now getting more granular around a central and potentially narrow range of outcomes, directionally speaking? Thank you.

We'll go next to Assad hater with Goldman Sachs.

Great, thanks for taking the question, Albert, just 1 more. If I met on the policy front, just given the comments you just made. Um and then triangulating those back to your comments on mfn that it's now Quantified and reflected into guidance to some extent. Uh, maybe just talk about what could cause large swings to those expectations from here or is your high level view that we are now, getting more granular around a central and potentially narrower range of outcomes Direction

Speaking, thank you.

Operator: Yes. To give you the answer, I mean, our team is all over modeling several scenarios. There is no scenario that we have not assessed. There is no scenario that we have not really mitigation plans. And there is no scenario that we haven't assigned the probability of success. But the truth is that we don't know what will be because all of that right now is under active discussion. So, and you know, even if I have some ideas where we should increase probabilities of happening and where we should decrease probabilities of happening, it's not appropriate now in the middle of the discussions and negotiations. We don't open the cards, right? So I can't really do that. Thank you. Next question.

I mean our team is all over modeling. Several scenarios. There is no scenario that we have not assessed there is no scenario but we have not real mitigation plans and there's no scenario to have an assigned the probability of success but the truth is but we don't know.

what will be because all of that are right now under active discussion,

So and you know, even if I sell some ideas where uh we should increase probability of happening and where we should decrease or reduce or happening, it's not appropriate now in the middle of the discussions and negotiations, you don't open the cards, right? So I I I can't really do that.

Thank you. Next question.

David Brown Leiera: We'll go next to Umar Rafat with Evercore.

Kripa Devarakonda: Hi guys, thanks for taking my question. So I'll spare the MSN question, but I did want to ask Albert, I feel like some of the points you're making on this call regarding the China biotech ecosystem could possibly resonate with the administration. But I guess how's, and I'm not even talking Pfizer specifically, but the industry broadly has been very active with a lot of out-licensing transactions to find the next layer of innovation. So I guess is the administration pushing back with sort of balancing those two? And then separately on your oncology side, I feel like this B6A trial in lung will obviously be very, very important. And I was very intrigued to see that you shrunk the sample size from 670 down to 470, which presumably signals increased confidence.

We'll go next to Umar rapid with evercore.

Kripa Devarakonda: And my question is, did you take any interim look to see how the effect size is tracking? Thank you very much.

Side. I feel like this b6a trial um, in in lung will be very, very important and I was very intrigued to see that you Shrunk the sample size from 670 down to 470 uh which presumably signals increased confidence. And my question is, did you take any interim look to see how the effect size is tracking? Thank you very much.

Operator: Let me take the China one, and I asked the press of course to comment on the oncology. Look, I mean, there is a lot of sensitivity in the Senate and in the House about everything that is happening in China, right? But I have to say the sensitivity is way more on things that we transfer there, technology that we transfer, than vice versa, things that we take from them to develop and manufacture in the US. For example, our deal I'm sure that I discussed the Chinese deal that we did with the members of the Congress, many members of the Congress. And I explained that we didn't give anything. We took their science and the license to develop it. We would do it globally, not in China. To manufacture it, we would do it in the US, not in China.

Uh, let me take the time of 1. And then I, I asked the police, of course, to comment on the, on the oncologist. Um,

Look, I mean there is a lot of sensitivity in the Senate and in the House about everything that is happening in China, right? But I have to say the sensitivity is way more.

on things that we transfer their

Operator: And to commercialize it, we'll do it in the whole world, and actually not in China yet because we don't have the rights yet. So I think less sensitivity on these two ways. But don't take me wrong. China is something that is very high in the radar of the political life of the US, and we need to be careful with that. Now let's go, Chris.

Technology that we transfer then vice versa things that uh we take from them to develop them and manufacture it in the US, for example, how our DMS serve. But uh uh, I invite discussed this, I miss deal but we did with members of the Congress, many members of the Congress and I explained that uh, we we didn't give anything. We took their science and the license to develop it. We will do it globally not in China. Too. Manufacturing. We will do it in the US, not in China and to commercialize it and we will do it in the whole world and actually not in China yet because you don't have the rights yet. So I think

Less sensitivity on this 2 ways but don't take me wrong. Time is something that uh is very high in the razor of uh the political life of the us and we need to be careful with that.

Andrew Baum: Thanks for the question, Umar. So usually for studies, we recalculate effect size or study size based on emerging data from ongoing phase one, two trials. And we did not unblind, and there's no unblinding of ongoing phase three programs.

Now, let's go please and thanks for the question. We must. So, usually, for studies, we recalculate, um,

Operator: Okay. Thank you. You saw I knew that you wouldn't have said much. So let's go to the next question, please.

Effect size or study size. Based on emerging data from ongoing Phase 1 and 2 trials. And we did not blind, and there's no blinding of ongoing Phase 3 programs. Okay?

Thank you. You saw I knew that you will not share much. So let's go to the next question, please.

David Brown Leiera: We'll go next to Rajesh Kumar with HSBC.

We'll go next to Rajesh Kumar with HSBC.

Speaker 11: Hi. Thank you for taking my questions. The first one is on, you know, you said you'll absorb the potential impact from the letters this year. Can you confirm that, you know, if there were tariffs, etc., you can say the same about the next year as well? I know you don't have a guidance, but in terms of how prepared you are with inventory, etc., and you know, the pricing dynamics, do you think current consensus sort of captures the effect for the next year? The second one is on the balance sheet. You know, clearly, you are going with a lower financial gearing target. And you know, in effect, that gives you a bit more leeway on a lot of things.

Hi. Thank you for taking my questions. Uh, the first 1 is on, uh, you know, you you, you've said, you'll absorb the potential impact uh, from the letters this year, can you confirm that? You know, if there were terrorists, Etc. You can say the same about the next year as well. I know you don't have a guidance, but in terms of how prepared you are with inventory, Etc, uh, and you know, the pricing Dynamics.

Do you think current consensus sort of captures the effect for the next year?

Speaker 11: When you think of capital allocation, do you think you need to add more types of assets in oncology, or would most of the balance sheet capacity be deployed in obesity, immunology, other areas? That is, if you have to deploy capital in oncology or different indications or different mechanisms, you still need to add. Then would you be comfortable going over the 2.7 times leverage?

The second 1 is on the balance sheet, uh, you know, clearly you are, um, you know, going with a lower Financial caring, uh, Target and, uh, you know, in effect, uh, that gives you a bit more leeway on a lot of things. Uh,

When you think of capital allocation,

Do you think, uh, you need to add more types of Assets in oncology, uh, or would most of the balance sheet capacity, be deployed in obesity Immunology? Other areas. Uh, that is if you have to deploy capital in oncology or, you know, different indications or different mechanisms, you still need to add. Then would you be comfortable going over the 2.7 times? Leverage

Operator: Thank you. Let's start with Dave, and then we will move to Andrew also.

Francesca Demartino: Yeah, so as it relates to future years, 26 and 27, no, we can't, we're not confirming or discussing the implication of tariffs or MSN on those out years. Once we have definitive information and knowledge, we'll come back and share that with everyone. Secondly, just from a BD perspective, and others can comment on this as well, we have lowered our target or improved our target to 2.7 times because we are already at 2.7 times. So it's hard to have a target that we've exceeded so dramatically because our business has done so well. And if an opportunity were to come along that made sense for us from a BD perspective, obviously, we would outstrip the target. It would be higher, just like we did with Seagen, and we'd work to get us back down to 2.7 over time.

Thank you. Let's start with Dave and then we will move to Andre also. Yeah. So as it relates to Future years 26 and 27. No, no we can't. Uh, we're not confirming or discussing the implication of tariffs or mfn on those out years. Once we have definitive information and knowledge we'll come back and share that with everyone. Secondly, on, just from a BD perspective and I'll others we can comment on this as well.

We have lowered our Target or improved, our Target to 2.7 times because we are already at 2.7 times. So it's hard to have a Target that we've exceeded so dramatically because our business has done so well. And if if an opportunity were to come along that made sense for us from a BD perspective, obviously the target we would,

Francesca Demartino: And maybe to Albert's point earlier, from a BD perspective, we're interested across the four areas in which we focus today, and we'll continue to evaluate assets on the market in all of those four areas.

Operator: Andrew?

Andrew Baum: Yeah, I'd just add to Dave's comments. Look, I think every potential licensing deal or acquisition is value-driven. Although there is obviously some value in diversification, we've historically been very active through Seagen and more recently through SBI on oncology. However, as you know, Pfizer has a strong commercial heritage with significant strength in areas such as internal medicine and INI. And obviously, we've got landmark drugs in those areas. So we believe we have a right to will, and if the right opportunity comes up at the right price, you can be sure that we're going to pursue it.

Focus today. And we'll continue to evaluate assets on the market in all of those 4 areas.

Operator: Thank you, Andrew. Next question, please.

100. Yeah, I just um at today's comments look, I think every potential licensing deal or acquisition is value driven, although there is obviously some value in diversification. Um, with historically been very active through C gen and more recently throughs file oncology. However, as you know, fisa has a strong commercial Heritage, um, with significant strength, uh, in areas such as internal medicine. And I, and I, and obviously, we've got Landmark drugs in those areas. So, we believe we have a right to will. And if the right opportunity comes up at the right price, you can be sure that we're going to pursue it.

Thank you. Next question, please.

David Brown Leiera: We'll go next to Tim Anderson with Bank of America.

We'll go next to Tim Anderson with Bank of America.

Speaker 11: Thank you. I have a question on IRA. So you guys have two drugs where prices are being negotiated in the current year for implementation in '27, that's Ibrance and Xtandi. One fear that at least we've had is that the new administration may press harder for bigger discounts versus last year, potentially just to make a point in general, not just for Pfizer products. So you're in the midst of those negotiations. Any color you can provide, such as how those discussions are lining up with what you expected before those negotiations begin.

Uh, thank you. I have a question on Ira. So you guys have 2 drugs, where persons are being negotiated, in the current year

for implementation in 27. That's ibris and xandy 1 fear that. Um, at least we've had, is that the new Administration may press harder for bigger discounts versus last year. Uh, potentially just to make a point.

Um, in general, not just for fiser products. So you're in the midst of those negotiations, any color, you can provide such as how those discussions are lining up.

with what you expected before those negotiations begin

Operator: Look, as we said, we are in the middle of this negotiation again for the same reason. I cannot actually, it's not allowed by law to disclose aspects of the negotiation. But I will say something. We have two products, as you said, for '27. Both of them are losing patent on '27. So for us, of course, we try to achieve the best we can in the negotiations of the prices. But the hit on us is very small. The entity is very small because it's really a few months of the sensitivity. It depends on the product, right? So next question, please.

Look, as you said, we're in the middle of this negotiation. So again for the same reason, I can actually it's not allowed by laws to disclose aspects of the, um, of the negotiation. But I would say something, uh, we have 2 products, as you said for 27, both of them are are losing popping on 27. So for us, of course, we try to achieve the best we can in the negotiations of the prices, but the heat on us is very small. The npv is very small because

It's really a few months of exclusivity, it depends on the product, right? So next question, please.

David Brown Leiera: We'll go next to Steve Sculler with PD Cowan.

Speaker 11: Thank you very much. Two questions. The first one, I apologize, is on MSN. But you've quantified the assumed impact of MSN in 2025, but you won't share your estimate. But I assume it's a big number, well above $500 million for Q4 alone and maybe several times that, which implies a strikingly high number for 2026. And I'm just wondering whether you would walk that number down. Second, for Dave, you noted the positive underlying operational performance year to date. You also noted the positive inflection in FX year to date. Curious how the COVID expectations have changed. It seems they must have come down since revenue guidance is flat or unchanged, or something else in the business turned in a little bit light. Thank you.

We'll go next to Steve scolar, with TD Cowen.

Thank you very much uh 2 questions. The first 1 I apologize is on mfn. Uh, but you've Quantified you are Quantified the assumed impact of mfn in 2025 but you won't share your estimate.

But I assume it's a big number. Well, above 500 million for Q4 alone, and maybe several times that which implies a strikingly high number for 2026.

And I'm just wondering whether you would block that number down.

Second for Dave.

Francesca Demartino: Yeah, maybe on the COVID side, I don't know that our expectations at this moment have changed, but we still have a lot yet to go in Q3 and Q4. So as I think about our future projections, we're still internally working to achieve our number. But as my guidance reflects, we've now de-risked some of that delivery in Q3 and Q4. So I don't think anything's changed. We just know that COVID by itself, because of the nature of that business, will always be a little bit more sensitive and a little bit more fluid and harder to predict quarter over quarter. So this is just allowing us to de-risk that a bit. And then on the MSN perspective, we're not going to comment on those numbers at this point. Thank you, though.

You noted the positive underlying operational performance year to date. You also noted the positive inflection in FX year to date. I'm curious how the company expectations have changed. It seems they must have come down since revenue guidance is flat or unchanged, or something else. Um, in the business turned in a little bit. Thank you.

Yeah, maybe on the co side, I don't know that our expectations at this moment have changed but we still have a lot yet to go in Q3 and Q4. So as I think about our future projections, we're still internally working to achieve our number but as my guidance reflects, we've now de-risked some of that delivery in Q3 and 4. So I don't think anything's changed. We just know that Co by itself because of the nature of that business will always be uh a little bit more sensitive and a little bit more fluid uh and harder to predict quarter over quarter. So this is just allowing us to dis de-risk that a bit.

Operator: And the final question.

And then on the mfn perspective, uh we're not going to comment on those numbers at this point. Thank you though.

And the final question.

David Brown Leiera: Our final question comes from Taren Flynn with Morgan Stanley.

Our final question comes from Terrence Flynn with Morgan Stanley.

Chris Boshoff: Great. Thanks for taking the questions. Maybe just two on the pipeline. Just for Atirmaciclib, was wondering if we'll get an update from the phase two study on PFS potentially at San Antonio later this year. I know you've already committed moving into phase three, but I don't think we've seen anything on durability there. And then on Lobrena, any thoughts about exploring that in the adjuvant setting? Thank you.

Great. Uh, thanks for taking the questions. Maybe just uh, 2 on the pipeline uh, just for a tumor cycle. Uh, was wondering if we'll get an update from The Phase 2 study on PFS potentially at San Antonio. Um, later this year, I know you've already committed moving into to phase 3 but I don't think we've seen anything on on durability there and then on Lorena. Um, any thoughts about uh exploring that in the adant setting? Thank you.

Andrew Baum: Chris, thank you for the question. So Atirmaciclib, you're correct. As we stated, we're focusing now on the third-line space and focusing with CAP6 for second line. We remain very confident in Atirmaciclib on all the data we've seen. And the study, the first-line trial in positive HER2 negative breast cancer, the study is recruiting extremely well. In fact, four times faster than we actually planned or predicted. We're not as close to the date when we will show the data on the second line, but we'll keep you posted on that. For Lurlatinib, there's no current plan for an adjuvant study.

Operator: Thank you very much. Thank you for your attention. Just I want to say that I'm very pleased with the execution of this team in terms of the targets that you have set. I will describe Pfizer right now as a company with a very strong floor and no ceiling. And we plan to maintain the prudent way of allocating capital, the focus on execution, the relentless focus on our pipeline productivity and big assets, and improving our margins by the use of technology, focus, and simplification of our business process. Thank you very much, and enjoy your summer to those that they didn't take vacation like me.

Studies recruiting extremely well in fact both sons um got faster than we actually planned or predicted, we've not disclosed um the date when we will um show that on the second line but we'll keep you posted on that for Latin. There's no current plan for an agiiman study

Thank you very much. Thank you for your attention. Just I want to say that. I'm very pleased with the execution of for this team. In terms of the targets that we have set, I will describe fiser right now as a company with a very strong floor and no ceiling

and we plan to,

To maintain, uh, The Prudent, way of allocating Capital, the focus on execution, the Relentless focus on our pipeline productivity and big assets and improving our margins by the use of Technology.

Focus and simplification of our business process.

Thank you very much and uh, enjoy your summer to those that they didn't take part in like me.

David Brown Leiera: This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Just conclude today's program.

Thank you for your participation. You may disconnect at any time.