Pfizer Inc. (NYSE:PFE) Q1 2024 Earnings Call Transcript

Pfizer Inc. (NYSE:PFE) Q1 2024 Earnings Call Transcript May 1, 2024

Pfizer Inc. beats earnings expectations. Reported EPS is $0.82, expectations were $0.516. Pfizer Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, everyone, and welcome to the Pfizer’s First Quarter 2024 Earnings Conference Call. Today’s call is being recorded. At this time, I would like to turn the call over to Francesca DeMartino, Chief Investor Relations Officer and Senior Vice President. Please go ahead, ma’am.

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 first quarter of 2024 via 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. Joining for the Q&A session, we will also have Dr. Chris Boshoff, EVP and Chief Oncology Officer; Alexandre de Germay, EVP and Chief International Commercial Officer; Dr. Mikael Dolsten, Chief Scientific Officer and President of R&D; Doug Lankler, EVP and General Counsel; and Aamir Malik, EVP and Chief U.S. Commercial Officer.

Before we get started, I wanted to remind you that we will be making forward-looking statements and 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 our 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 obligations to update or revise any of these statements. With that, I will turn the call over to Albert.

Albert Bourla: Thank you, Francesca. Good morning everyone. Thank you for joining our call. In the first quarter, we had a solid start to the year, and we are cautiously optimistic about what we will achieve in 2024. I am pleased and appreciative of how our Pfizer colleagues are executing with discipline as they focus on the patients and others we serve. This helped us deliver a strong performance during the quarter in our non-COVID product portfolio, drive progress towards our oncology leadership, advance our pipeline and continue to strengthen our business. Today we will discuss highlights from the quarter and provide updates about how we’re continuing to make progress with the five strategic priorities we shared with you at the start of the year.

We are proud of the positive impact we achieved around the world with our deep capabilities and global scale. Through the first 3 months of the year, we reached more than 119 million patients with our medicines and vaccines. We will continue to build on Pfizer’s 175-year history of driving medical and pharmaceutical breakthroughs as we maximize the opportunities in front of us. Our confidence in the year ahead comes from our focus on executing the strategic priorities that we believe will deliver operational, commercial and financial success across our business. The priorities are: achieve world-class oncology leadership; deliver the next wave of pipeline innovation; maximize performance of our new products; expand margins by realigning our cost base; and allocate capital to enhance shareholder value.

In the first quarter we made notable progress with each one, and I’ll share some highlights. Many of you joined us at our Oncology Innovation Day in February, and I hope you found it to be a valuable opportunity to see how we are well positioned to achieve world-class oncology leadership. We are pleased with the excellence we have been able to achieve in both integration and commercial execution. With a strong mix of Pfizer and Seagen colleagues in the newly combined team, we believe we have one of the most experienced and talented groups of oncology leaders in the industry. We’re also already seeing the benefit of strong commercial execution with our newly cross-trained sales and field medical teams. In the first quarter of 2024, our oncology revenues grew 19% operationally over the same quarter a year ago, driven in part by, the acquisition of the four in-line products from legacy Seagen, in particular, the strong ongoing launch of Padcev in front-line locally advanced/metastatic urothelial cancer regardless of cisplatin eligibility, following FDA approval based on the groundbreaking EV-302 data.

We have an increased demand for Xtandi, which continues to be a backbone therapy across the prostate cancer treatment continuum. And we have continued growth from Lorbrena, which could emerge as the potential first-line standard of care in ALK-positive metastatic non-small-cell lung cancer. Earlier this week, we also announced the full FDA approval of Tivdak to treat recurrent or metastatic cervical cancer. Tivdak is the first antibody-drug conjugate to have positive overall survival data for patients with previously treated recurrent or metastatic cervical cancer. Going forward, we are guided by a strategy focusing on our greatest opportunities to make a difference for patients with cancer. With the power of our deep expertise, broad and diverse portfolio and global scale, we are confident we are well on our way toward our 2030 goals of doubling the number of patients treated with our innovative cancer medicines; increasing the number of blockbuster medicines in our portfolio from 5 today to 8 or more; and, driving an anticipated tenfold increase in the proportion of revenue from biologics.

This is important because it brings the potential to provide more durable revenue based on several factors, including Inflation Reduction Act considerations and the greater challenges of copying complex biologics. We will look forward to sharing continued updates with you on our progress in accelerating oncology breakthroughs. Now, I’ll turn to our progress with delivering the next wave of pipeline innovation. In Oncology during the quarter, we had three pivotal Phase 3 study starts, including the first Phase 3 trial for our selective CDK4 inhibitor, atirmociclib, our integrin-beta-6-directed ADC, sigvotatug vedotin SV and the fourth Phase 3 trial for Elrexfio in multiple myeloma. At the upcoming American Society of Clinical Oncology annual meeting, we will present data spanning each of our tumor areas of focus and core scientific modalities, including new five-year progression-free survival data for Lorbrena, Phase 3 data for Adcetris in diffuse large B cell lymphoma and additional developments from across our deep and diverse pipeline.

We are also driving continued execution beyond oncology with a sharpened focus on key value drivers expected to build potential multi-billion-dollar product portfolios. Through the first quarter, we are on track with delivering on our anticipated milestones and have important updates in both our growing respiratory and hematology portfolios. With Abrysvo, we believe we have the opportunity to further expand what is currently the broadest approved range of patients for the RSV vaccine, including adults 60 years and older and infants from birth to six months via maternal immunization. We recently reported positive results from the Phase 3 MONeT trial evaluating Abrysvo in adults aged 18 to 59 at increased risk for RSV disease. The trial met its primary endpoints and we intend to submit these data to regulatory agencies.

We believe Abrysvo has the potential to become the first and only RSV vaccine for adults 18 years and older. Hematology is another priority area. With the progress of recent and near-term milestones, we are confident that we could establish a potential multi-billion-dollar product portfolio across hemophilia and sickle cell disease. We recently received the first U.S. FDA gene therapy approval for Pfizer with FDA approval for Beqvez, a one-time gene therapy for adults with hemophilia B. This program builds upon our growing presence in hemophilia. We expect an FDA decision before year end for Marstacimab which has the potential to become the first once-weekly subcutaneous treatment for the hemophilia B market and the first treatment delivered as a flat dose for both hemophilia A and B.

Moving to sickle cell, we recently started the Phase 3 study of osivelotor, our potentially best-in-class next generation hemoglobin S polymerization inhibitor. We are committed to addressing the underserved needs of the sickle cell disease community, and we are leveraging our capabilities for potential breakthroughs for these patients. Now, I’ll turn to our strategic priority of maximizing performance of our new products. While it may take a year to realize the full benefit of the changes we put in place to bring a more efficient structure to our commercial operations, we are pleased by the impact we are already seeing from our sharpened focus and Pfizer colleagues embracing our high-performance culture. Earlier, I mentioned the momentum of our oncology products.

Our Pfizer U.S. Commercial and Pfizer International Commercial organizations are also moving ahead in driving progress and growth in their respective markets. We have several potential key growth drivers for this year and into 2025. With Abrysvo, we’re very pleased with the positive data in the 18 to 59 age group that differentiates our product and we’re encouraged by our opportunities to continue increasing overall RSV market growth and market share. Another example is our enthusiasm for the potential of Nurtec to help the more than one billion people living with migraine worldwide. With oral CGRP penetration leaving room for potential significant growth, we will continue to focus on reducing access barriers for health care professionals and patients, as well as on education through direct-to-consumer marketing.

With Oxbryta, we will continue to educate health care professionals and patients on the importance of proactively treating the underlying cause of sickle cell disease by reframing treatment goals to chronic and proactive treatment. Velsipity is coming off its annual launch, and we are focused on ensuring patient access as a first-line advanced therapy oral option for moderate to severe Ulcerative Colitis. And, I’ll also mention Litfulo. We will work toward continuing to accelerate the consideration of advanced systemic treatments for appropriate patients with alopecia areata and further unlock access to Litfulo. Additionally, we continue to protect and grow our core brands and key blockbusters, including Prevnar, Vyndaqel and Eliquis. In a moment, Dave will provide updates about how we’re also making progress with two other strategic priorities, expanding margins by realigning our cost base and allocating capital to enhance shareholder value.

When we consider what we achieved in the first quarter, along with our continued progress in executing our five strategic priorities. We are cautiously optimistic about the year ahead. We are continuing to focus on commercial execution, protecting and growing our products and driving strong starts with new commercial launches. With the progress we are making in advancing our cost-realignment program, as well as our confidence in the underlying strength of our business and our continued execution, we have raised our outlook for 2024 adjusted earnings per share by $0.10. We have confidence in our company. With some of the most experienced and talented colleagues in the industry, we have demonstrated many times before that we are very good at execution and we expect to continue delivering life-changing medicines for hundreds of millions of patients globally and meaningful value for our shareholders.

Now, I’ll turn it over to Dave to discuss the financial performance during the quarter, as well as our progress in strengthening our business and enhancing shareholder value. Dave?

David Denton: Thank you, Albert, and good morning. As we continue to navigate a challenging post-COVID environment, I’m pleased to share that this year is off to a solid start. We are protecting and growing our core brands while investing in building a more effective organization. Our relentless focus on execution is positioning Pfizer to improve shareholder returns. This morning I will briefly review the highlights of our first quarter results then I will touch on our capital allocation priorities. I’ll wrap up by outlining our 2024 financial guidance as well as our key priorities for the remainder of this year. Turning to the first quarter, let me walk down the P&L. Total company revenues for the quarter were $14.9 billion, reflecting an operational decline of $3.5 billion or 19% versus last year.

As you know, our business continues to be negatively impacted by a declining COVID environment on a global basis. To that end, we expect our COVID products will continue to have an outsized effect on both our top-line and our bottom-line throughout this year. However, I do want to point out that we expect our COVID products will continue to be significant contributors to revenues and cashflows for the foreseeable future. Strong commercial execution across the enterprise drove 11% operational revenue growth in the quarter when you exclude Comirnaty and Paxlovid. Performance was positively impacted by our renewed focus on key products and markets, refined allocation of commercial field resources globally and further alignment of marketing resources into key priority areas.

Contributing to this performance were our acquired products from Seagen, alongside in-line products such as Vyndaqel, Eliquis and Abrysvo. Dampening our growth in the quarter was the expected lower global demand for Ibrance, and Sulperazon, driven largely by lower demand in China in the first quarter of 2024 versus last year. Adjusted gross margin for the first quarter improved by 530 basis points to 79.6% versus Q1 of last year. This improvement was driven by three factors. First, lower sales volume of Comirnaty resulted in favorable sales mix. Second, in the quarter we recorded a product return adjustment for Paxlovid associated with our U.S. Government contract, which I’ll touch upon in a moment, and finally, we executed strong cost management across our manufacturing network.

Improvements in our gross margin rate will continue to be an important focus for the company going forward. Total Adjusted operating expenses increased modestly by 1% to $5.9 billion compared to Q1 of last year despite adding expenses associated with the acquired Seagen business. This disciplined cost control puts us squarely on track to delivering on our $4 billion net cost savings commitment by the end of the year. Adjusted SI&A Expenses increased 3% operationally in the quarter driven by an increase in marketing and promotional expenses for recently acquired and launched products, partially offset by a decrease in expenses for both Paxlovid and Comirnaty. Consistent with our strategy, we are prioritizing our R&D spending to enhance overall returns while supporting growth for our pipeline.

For the quarter adjusted R&D expenses were $2.5 billion, a decrease of 1% operationally versus LY. The slight decline was driven primarily by a lower spending resulting from our cost realignment program and lower spending on certain vaccine programs, largely offset by increased investments mainly to develop certain assets acquired from Seagen. Q1 reported diluted earnings per share were $0.55 cents. Our adjusted diluted EPS was $0.82 which exceeded our expectations due to favorable gross margin performance as well as strong cost management across the enterprise. As I stated earlier, during the quarter we recorded a favorable product return adjustment associated with our U.S. Government contract for Paxlovid. Recall that during Q4 of last year we estimated that the U.S. Government credit for Paxlovid was $3.5 billion.

Earlier this year, the U.S. Government announced that the EUA labeled product was no longer authorized for emergency use and the agreed upon return period had now expired. Given those facts, we could now finalize the total value of the U.S. Government credit. This resulted in a favorable adjustment to revenues of $771 million for Paxlovid and contributed $0.11 to the company’s earnings per share. Now let me quickly touch upon 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 at an appropriate level of financial return and making value enhancing share repurchases after de-levering our balance sheet. During the first quarter we returned $2.4 billion to shareholders via our quarterly dividend; invested $2.5 billion in internal R&D; and as expected, completed business development activity was minimal in the quarter.

We are committed to de-levering our capital structure with a gross leverage target of 3.25x, which we expect to achieve over time. In support of that goal, during the quarter we paid down approximately $1.25 billion in maturing debt and in May we will pay down another $1 billion of outstanding notes. And, importantly during the quarter, we began to monetize our Haleon stake through an initial sale of $3.5 billion which reduced our equity position in the company from 32% to approximately 23%. Looking ahead to the next couple of quarters, I’d like to point out that we expect operating cash flows to be significantly below typical levels, largely due to the timing of certain payments. Despite this near-term pressure, clearly, our objective is to return to a more balanced capital allocation strategy over time.

Now, let me spend a few minutes on our outlook for the remainder of the year. As we entered 2024, the company was highly focused on delivering on its financial commitments and our performance in Q1 demonstrates that we are off to a solid start. With that objective in mind, and the fact that it’s still early in the year, we are modestly updating the earnings outlook for this year. We are raising our full year adjusted diluted earnings per share guidance range by $0.10 to a new range of $2.15 to $2.35. Looking ahead this increase takes into consideration both our improving line of sight to our cost savings target, and continued strength in our underlying business. As a reminder, our EPS guidance also includes an anticipated $0.40 of earnings dilution from the Seagen acquisition, largely due to the financing costs.

While the Paxlovid revenue return adjustment moves us towards the upper end of our revenue guidance range, our top line revenue expectations remain unchanged for the full year. We continue to expect revenues in the range of $58.5 billion to $61.5 billion. In addition, even though Comirnaty revenues continue to perform consistent with our plan, it is important to remember that we expect approximately 90% of our sales to occur in the second half of the year, mostly in Q4 given the seasonal nature of this product. Lastly, we remain on track to deliver at least $4 billion of net savings from our cost-realignment program by the end of the year. Improving our cost base will put us on strong footing towards margin expansion and improved financial returns as we move forward.

As you know, over the past two years the company has made significant investments to drive growth in the back half of the decade. And we remain encouraged by the long-term growth outlook for Pfizer. 2024 is clearly a year of focus, execution and delivering on our near-term financial commitments. The foundation we establish this year sets the stage to deliver on our commitment to enhance shareholder value both this year and through the end of the decade. And with that, I’d like to turn it back over to Albert as we begin our Q&A session.

Albert Bourla: Thank you, David. Now let’s start the Q&A session. Operator, please assemble the queue.

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Q&A Session

Operator: [Operator Instructions] We’ll take our first question from Louise Chen with Cantor. Your line is now open.

Louise Chen: I had a question for you on your RSV vaccine sales. Just curious what drove the downtick versus the fourth quarter. It looks like GSK had a similar downtick. And then, how do you think about potential competition coming into the market for vaccines and treatments, does that impact your future growth projections for the franchise?

Albert Bourla: I think Aamir, that’s a question for you. Then maybe Alexander also you can add because now we started already to register and approve the product in international markets. Aamir?

Aamir Malik: Louise, thanks for the question. So it very much appears like the RSV vaccination market is following a seasonal trend, so you expect the dynamics in Q4 versus Q1 to be different. In Q1, what we saw for the market is for older adults, it certainly attenuated over the course of the quarter. So there was a peak in the second week of January and then a steady week-by-week decline since then. Now in terms of the dynamics for our business and Abrysvo, our performance was in line with what we expected. We think this will follow a seasonal trend. And we think we’re very well positioned for the fall season for several reasons. One is we’re progressing our retail contracting. Second is, we have a real strength in the non-retail channel.

You referred to GSK. They reported their revenues. When you look at the mix of U.S. revenues as reported, it’s about a 60:40 mix. Our retail share is lower than that but our non-retail share is much higher. And that portion of our business really doubled between Q4 and Q1 from about 9% to 17%. And I think that just speaks to our strength in doctors’ offices and relationships we have with organized customers. And I’ll also note that later this year, if approved, we will have a new presentation of Aptivil, which demonstrates ease of administration and also our clinical data, which Albert referred to in his remarks, for label expansion for Abrysvo for 18 to 59 year olds as well as that are at risk as well as durable efficacy through two seasons.

I think the combination of these commercial efforts as well as potential label expansion really position us well for a fall season.

Albert Bourla: Thank you, Aamir. Now, Alexandre?

Alexandre de Germay: Yes. So Louise, thanks for the questions. On the international front, we actually made great progress on Abrysvo. As you know, we got approval in the second half of 2023 in Europe and in the U.K. And since then, we’ve been working with the health authority and the expert to provide medical evidence and health care system benefits associated with [indiscernible] protection against low respiratory tract infection associated with RSV and through immunization of maternal or through immunization older adults. So we’re making good progress. And actually, we’ve already received the recommendation in the U.K., in Australia, in Norway, and we are progressing and awaiting some recommendation from the Vaccine Technical Committee in many other European markets.

We also had good progress from a regulatory standpoint because it was a milestone with the approval of older adults and MI during the maternal immunization in Japan in the first quarter, as well as the Kingdom of Saudi Arabia. So, overall, they don’t get translated to financial because it takes time to get to the approval, to get the VTC and to get funding for those campaign. But we see significant opportunity that we can address and medical need in the international just to give you one example. In Europe, for instance, half of the hospitalization due to respiratory tract infection in the first year of life were caused by RSV. So, there is definitely a great opportunity. And the majority of those hospitalizations occurred for the first three months of age.

And as you know, Abrizo is the only maternal vaccine that helped protect infants from low respiratory tract infection caused by RSV immunization from birth to six months. So, we see a great opportunity.

Albert Bourla: Thank you, Alexandre. Let’s go to the next question.

Operator: We’ll take our next question from Terence Flynn with Morgan Stanley. Your line is now open.

Terence Flynn: Maybe just a two part from me. Just wondering if you can comment at all about any potential impact in 2025 from the Part D redesign. We’ve heard a couple of other companies already comment here. And then one on the pipeline, can you give us any update on danuglipron and your plans more broadly in obesity? Thank you.

Albert Bourla: Yes. Thank you. Clearly, danuglipron is in the interest. Let me take that one to clear the way. It’s not new. We don’t have news on Danuglipron. Everything is as we had discussed before. So, we are waiting around mid-year to get the totality of the data that relates to the once-a-day formulation. And then based on the data and everything else, we will make decisions for future plans. So, we’ll speak about them when we have more to say. However, now, let’s go to Amir about the Part D redesign in 2025. Do you expect that?

Aamir Malik: Sure. Terence, thanks for the question. And as you can imagine, there’s many moving parts to Part D redesign. I think relevant to our business, I think it’s important to first note that as part of what already went into place with the redesign. There is no cost sharing imposed on vaccines. So that given our significant vaccine portfolio is a positive. And then, obviously, over the course of ’24 and ’25, there’s other dynamics with out-of-pocket cost caps, which create better access for patients, and that is helpful to volumes, and we’re starting to see that in ’24 in some parts of our business, including on Vynda. And then there’s things to come, including a change in that cap as well as patients smoothing. So we’ll see how that plays out.

And obviously, there’s also changes in how costs are shared between plans, manufacturers, government, and patients. So how all of that gets implemented, we’re tracking that very closely. We’re not offering any specific guidance in terms of direct dollar impact on our business in 2025 because there’s still a lot to come on this. And when we are ready to do that, we certainly will.

Operator: We’ll take our next question from Akash Tewari with Jefferies. Your line is open.

Akash Tewari: On tafamidis, really strong quarter, but I wanted to ask on patent life. Given we’ve seen the EU patent office write-down multiple invalidity oppositions and on the U.S. side, it looks like defendants are conceding infringement. How should we think about IP for this product? Why shouldn’t this patent fit out to 2025? And then number two, really strong quarter for Padcev and you do have the pending TIVDAK launch in first-line cervical. Is there any possibility we could see Seagen become accretive to Pfizer earnings by next year? Thanks so much.

Albert Bourla: That’s very good questions. Why don’t we go first to you, Dave, to speak a little bit about, clearly, Seagen is doing very well. If you expect that can become accretive earlier. Also, I would like to hear some comments from Chris about the progress of the Seagen portfolio, and then Doug can comment on the IP situation, or legal counsel. So Dave?

David Denton: Yes. So just maybe on Seagen from a financial perspective, obviously, clearly a very solid quarter and a very solid start to the year. I think we’re not changing our expectations, both short-term and long-term for Seagen, but I think we’re cautiously optimistic as we look forward. So probably nothing to update financially other than our continued commitment to the financial metrics that we’ve already established. And again, we’re probably cautiously optimistic on the trends that we’re seeing underlying that business at this point in time.

Albert Bourla: You want to make some comments also, Chris, about the performance of the Seagen business.

Chris Boshoff: Yes, I think just to add to what Dave has said, it’s early days for Padcev as he pointed out. For 302, the data we just launched early this year. We’ve already seen 164% year-on-year pro forma growth. It’s early but we’re very pleased that we’ve got NCCN Guidelines Category 1. We’ve got a New England Journal publication. We’ve got uptake in both academic and community settings. In fact, 70% of the current accounts on the community. And we’re looking forward now because I think we’re well set for the future and the muscle invasive bladder cancer setting and those 2 studies that we’ll read out late in 2025, ’26, and ’27.

Albert Bourla: Thank you very much, Chris. Doug, what about the situation with the IP disputes?

Douglas Lankler: Yes. Vyndaqel and Vyndamax currently has U.S. patent exclusivity through the end of this year. But we have a patent pending patent term extension, which would take it out to December of 2028. And we may be filing additional requests for patent term extensions while that is pending. In major European markets, our patents expire in November of 2026. And in Japan, the patent expires in 2026, but there’s regulatory exclusivity through March of 2029 for cardiomyopathy.

Operator: We’ll take our next question from Evan Seigerman with BMO Capital Markets. Your line is open.

Evan Seigerman: I want to touch on gross margin. Obviously, a nice improvement in this quarter, and I believe back in December, you had said for the full year, it would be around 70%. Do you expect that we could actually see a better gross margin for the full year, given kind of the benefit we’ve seen or are there some other puts and takes that we should be aware of?

David Denton: Yes, so this is Dave. We’re always looking to improve our performance from both a gross margin and operating performance perspective. So I’ll say we’ll continue to focus on that. Obviously, as you know, there’s three things that improved our gross margin rate in the quarter. Some of those are temporal. Some of those are more permanent. I think what is encouraging within our gross margin performance is the fact that our cost control element across our manufacturing platform was really strong. We expect that continue to be a focus. Keep in mind that our Comirnaty volume is very back half weighted priority. Comirnaty, as you know, because of our profit share carries a very low gross margin rate. So that mix will reverse itself in the back half of the year, compressing and putting pressure on our gross margin rate. So you should expect that dynamic to occur as that product plays itself out through 2024.

Operator: We’ll take our next question from Vamil Divan with Guggenheim Securities. Your line is open.

Vamil Divan: Congratulations on the quarter. The 2 products I want to just kind of touch on in terms of the sort of newer growth drivers. So one is NURTEC, which came in a little bit lighter than we expected. Obviously, the first quarter there tends to be impacted by gross to net. I’m just trying to understand if you can just give a little more detail on what the dynamics in the quarter and any sort of change to your sort of expectation on that product outlook? And then the second one on the myeloma side Orexo. Just noticed in your slide presentation that used to be listed under the sort of key growth drivers in prior quarters. This year on Slide 9, when you do your key growth drivers is no longer listed there. So I’m just curious, it looks like it was an intentional change. I’m just curious sort of what drove the decision to move that from the group of key growth drivers.

Albert Bourla: Thank you very much, Vamil. Aamir, NURTEC, and then Chris, myeloma.

Aamir Malik: Thanks for the question, Vamil. So I’m happy to talk a little bit about Nurtec. We’d like to accelerate the momentum of Nurtec and we’re taking several steps to do that. For the quarter itself, what we’re encouraged by is the demand and the volumes that we saw. And then on the flip side, as you already alluded to, the performance in the quarter was impacted by gross to net. So on demand, a few points to just keep in mind. Nurtec continued its market leadership within the class with a 49% TRx share and that was up 28% from Q1 of last year. Secondly, NBRx share, which we keep a very close eye on, that volume, as a whole, hit its high point since we closed the Biohaven acquisition at the end of ’22. So that was up versus last year, but also importantly, up versus Q4 of ’23.

And there were about 11,000 new Nurtec writers in Q1 and this is 90% of all the new writers within the oral CGRP class. So there’s a lot about the volume and the demand that we’re encouraged by. Now on gross to net, there were 3 issues this quarter. One is you typically tend to see this dynamic in the first quarter of every year. We saw that last year, too, just given the benefit design dynamics. Secondly, we did have some payer mix issues between government and commercial channels this quarter. And then, finally, there was an unfavorable onetime prior period adjustment to our GTNs in Q1. Your question about the rest of the year, for NURTEC, we expect continued growth. We’ve talked about the fact that the fundamentals in terms of untreated patients and undertreated patients remain strong.

We also think that some of the gross to net that I described is going to be temporal and will slowly abate over the course of the rest of the year. And then, we have made a number of changes in our commercial execution in terms of what we’re doing with patient engagement and focusing our field force resources on physician awareness in a different way and also working to reduce friction for patient access. So overall, we do expect continued growth from NURTEC in the balance of ’24.

Albert Bourla: Thank you. Chris, about Orexo,

Chris Boshoff: Thank you, Albert. So the reason Albert didn’t list Orexo as a major growth driver, just to remind, so he pointed out Lorbrena, Xtandi and Padcev as the immediate biggest growth drivers for oncology, but we’re absolutely confident that Orexo will become, over the next couple of months and years, a major driver for oncology. Just a reminder, we’ve seen very promising efficacy data in highly refractory patient populations with deep and durable responses. And we’ve reported the longest reported median progressive-free survival in the recurrent/relapsed refractory setting of 17.2 months. Now of course, recognizing there’s no definitive conclusion is there’s no head-to-head studies. We’re currently encouraged by what we’ve seen with the uptake, and with the bulk of new patient starts as we have planned.

And we remain very optimistic with the future from the current indication as well as from the future indications. And a reminder that we have 4 ongoing registrational studies in the next 12 months. The first Phase 3 study would read out MM5 study. We’ve also recently received J-code for access and we smoothened the reimbursement process and continue to gain favorable positions on various pathways and in some, the most favorable pathways to be looking forward to update you very soon on more things from Orexo.

Albert Bourla: Thank you, Chris. Maybe Alexandre, you have anything to add about the product in international markets.

Alexandre de Germay: Yes. On Orexo, we actually have — it’s progressing very nicely because as you know, we got approval in Europe in December of 2023 and in the U.K. in January, and in Japan in March 2024. So we are now moving into reimbursements and we got early access considering the clinical profile, the exceptional clinical profile of the product. So that’s why we got in some market early access, and that’s why we started doing sales in the first quarter. But we are very satisfied that we could close the time to market gap versus competitor. And in some cases, like in Japan, we actually indeed became first in class approved. So now we are moving into reimbursement discussion and introduction of the product later in the year.

Albert Bourla: Overall, in most international markets, there is a gap between the approval and the access grant. But because of the profile of the product, we saw early access, which is basically something that happens on an exceptional base if the product is unique. But some countries, before they approve the price, they are allowing you to have access to your own price. Yes, so that is a very good sign for this product. We are really feeling very polished when we see the clinical profile and the opinions of the key opinion on it. Thank you. Let’s move now to the next question, please.

Operator: We’ll take our next question from Dave Risinger with Leerink Partners. Your line is open.

Dave Risinger: Yes. So how many questions am I allowed to ask?

Albert Bourla: You, Dave, you don’t have a limit.

Dave Risinger: Very kind of you, Albert. Okay, so I’ll keep it to two. So, first, regarding the company’s cost structure, I’m just trying to get a sense of whether it bottomed out in the first quarter. Or if there are additional cost reductions ahead after March 30th, such that the cost structure of the company is coming down after the first quarter. And then, second, with respect to Vyndaqel, I appreciate the comments in response to the question earlier, but I’m just trying to get a little bit better understanding of how to think about it. So, there was a comment about patent term extension potentially applying beyond December of 28. So, if Pfizer is successful, what would the date be instead of December 28 for the U.S.? And then for the EU, the comment was November of 26. But I’ve heard that there is a positive EU patent development, and I’m trying to understand what that would extend the EU to. Thanks so much.

Albert Bourla: Thank you very much, Dave. So Dave, then, please, you take the cost structure.

David Denton: Yes. First, as you well know, right-sizing our cost structure is incredibly important for us from as we think of forward for margin expansion in improving our financial returns. As we look through Q1 and through the balance of the year, keep in mind that the cost changes that we’ve made in the U.S. are largely complete. Obviously, in ex-U.S., some of those changes lag. So, you will see changes in the cost structure ex-U.S. for the balance of the year. Those are probably not quite as large as we look forward compared to what has already happened at this point. But I would just say that this will be a constant focus for us as we think about cost and margin enhancements going forward. Now, we’re on a continual cycle of thinking about how we invest and what is the appropriate cost structure in support of our revenue objectives for this business going forward.

Albert Bourla: Thank you, Dave. And Doug, can you please clarify a few things about Vyndaqel to Dave Risinger’s question?

Douglas Lankler: Sure. Just to be clear, Dave, we shouldn’t think beyond December 2028 on Vyndaqel and Vyndamax. So we’ve got a patent term extension that is filed and is pending. And all I was saying was that in addition to that patent term extension, which would take it out to December 2028 that we filed and is pending, we may file additional patent term extensions, again though, just to take it out to December 2028. I hope that’s clear.

Albert Bourla: Thank you for clarifying that. Okay. Now let’s go to the next question, please.

Operator: We’ll take our next question from Trung Huynh with UBS. Your line is now open.

Trung Huynh: Hi, guys. Trung Huynh from UBS. Thanks for taking my questions. One on the ACIP meeting coming up and just a clarification on the guide, if I may. So on ACIP in June, what’s your expectation on the recommendation for the 50 to 59 population? Could this be a shared clinical decision like the 60-plus? Would you think this is going to be risk-based? Is there any chance you can get the 18 to 59 data on the agenda for this meeting? And just on the guide, a clarification here on the credit for the quarter because you’ve kept your $3 billion guide for PAX. I appreciate the comment you’re now going to be at the upper end of guide. But on PAX, do you expect to have $770 million less PAX sales than you imagined at the start of the year, given that you updated your EPS guide or was this expected? Thanks.

David Denton: Well, maybe I’ll take that first. From a guide perspective, we obviously did not expect this final adjustment. It was an estimate that we did at the end of the year. We’re now finalizing the adjustment based on the returns that we’ve seen, and it is now complete. I would say that as we look forward for the full year, both for Paxlovid and for the full year of all of our products, we’re cautiously optimistic about where we are. I think Paxlovid started off from a very solid utilization. And keep in mind that product will trend consistent with infection rates across the globe. And we’re still cautiously optimistic that we will achieve our objective, and we do not expect anything less than our original expectation at this point in time though.

Albert Bourla: Thank you, David. And Mikael, on the ACIP meetings and the June-October recommendations, et cetera.

Mikael Dolsten: Yes. First, to punctuate, good to hear you interested in our RSV vaccine. We have a lot of positive and informative data that’s coming in 18 to 59, we have already been out sharing a robust outcome for that. And filing is imminent to happen in U.S. FDA. We also have data coming on second season, full second season and data so far that have been available show robust and probably best-in-class profile for us. And you heard Aamir mention, we also have new delivery format. So there is a lot of positive things happening to further strengthen Abrysvo. For a formal decision on recommendation, ACIP normally wait until a product is FDA approved. We don’t know exactly when FDA will potentially approve. We think, clearly, given this unique age range that it can happen to be meaningful for the fall, but that needs to be, of course, pending FDA’s views.