Pfizer Inc. (NYSE:PFE) Q3 2024 Earnings Call Transcript

Pfizer Inc. (NYSE:PFE) Q3 2024 Earnings Call Transcript October 29, 2024

Pfizer Inc. beats earnings expectations. Reported EPS is $1.06, expectations were $0.614.

Operator: Good day, everyone, and welcome to Pfizer’s Third 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 third quarter of 2024 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, including Dr. Andrew Baum, who recently joined Pfizer as EVP and Chief Strategy and Innovation Officer.

Before we get started, I want 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 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.

Albert Bourla: Thank you, Francesca. Good morning, everyone. Thank you for joining us today. Our team continues to execute, and we are pleased to report another quarter of strong performance. We are guided by our purpose of delivering breakthroughs that change patients’ lives. And I’m proud that we have reached more than 270 million patients with our medicines and vaccines through the first 9 months of 2024. The focus on execution excellence is starting to deliver results with market share gains in the U.S. and international as well as robust growth in revenues and EPS. As a result, we are raising guidance ranges and for our full year 2024 total revenues and adjusted diluted earnings per share. In January, we presented the 5 key priorities that would guide Pfizer during our year of execution.

Today, you will hear how we advanced our business in the third quarter with each of the strategic priorities. I will focus on highlights, showing our progress with the first 3. Dave will discuss our continued work to reduce our cost base, expand our margins and strategically deploy our capital. Then we will review our financial performance during the quarter and explain why we believe we are well positioned to deliver on our financial commitments and create long-term value for shareholders, and then we will take questions. So with that, I’ll turn to our performance against our priorities during the quarter. Stated simply, Oncology is having a great year and delivered another quarter of strong performance, with 31% year-over-year performance growth resulting from solid demand across our product portfolio that includes legacy Seagen and legacy Pfizer products.

We set a goal to achieve world-class Oncology leaders. In the U.S., we are already the third largest biopharma company in oncology by revenue through the first half of 2024, and we are proud of the progress we are making toward our goal. Demand continued to increase for XTANDI, the market leader for 4 types of advanced prostate cancer, grew 28% year-over-year. TALZENNA grew by 77% in the quarter versus the same quarter from a year ago. We are encouraged by the opportunity to further advance the prostate cancer treatment landscape based on the exciting overall survival data we announced earlier this month from the Phase III TALAPRO study. TALZENNA in combination with XTANDI demonstrated statistically significant overall survival benefit in patients with metastatic castration-resistant prostate cancer becoming the first and only such combination to do so.

Driving scientific breakthroughs in — cancer is one of the key areas of focus in Oncology. The TALAPRO-2 results show how we continue innovating to improve survival for men with prostate cancer, which is the second most common cancer in men and the fifth most common cause of cancer death among men worldwide. We saw continued momentum during the quarter with the ongoing launch of PADCEV with pembrolizumab for patients with advanced metastatic bladder cancer, regardless of their eligibility to receive cisplatin-based chemotherapy. This combination has quickly become the most prescribed first-line treatment in the U.S. for locally advanced metastatic urothelial cancer. In thoracic cancer, we achieved 31% operational growth this quarter with LORBRENA, a treatment for adult with alpositive metastatic noncell lung cancer.

Following the release of our 5 years of CROWN data during the ASPA Neal meeting, we are observing an acceleration of first-line new patient starts around the world and in particular, in our key markets of the U.S., China, Germany and France. Our BRAFTOVI and MEKTOVI combination also — strong year-over-year growth in the third quarter of 32%, primarily driven by growth in the metastatic non-small cell cancer indications. And we continue to be pleased by strong performance with the launch of ELREXFIO, which had about 80% sequential revenue growth over the second quarter of 2024. In the U.S., we have more than doubled our new patient starts since January. In Japan, we were able to catch up with competition and launch as the first to market, BCMA bispecific, helping address an unmet medical need for patients with triple class exposed multiple myeloma.

We believe ELREXFIO has the potential to be a transformative treatment option for people with multiple myeloma and we are continuing to advance development with 4 ongoing registrational studies in earlier lines of therapy, but if positive and approved, could support serving a way more expanded patient population. Now I will turn to some select highlights of our continued strategical advancing our pipeline. We are prioritizing opportunities where we have scientific leadership and deep capabilities to address significant unmet patient needs. Earlier, I spoke to the strength of our market Oncology medicines. Our pipeline, however, is what excites us the most. Lung cancer is the #1 cause of cancer-related death around the world. At the recent ESMO counts with our long-term follow-up results from FOREST trial, evaluating BRAFTOVI and MEKTOVI in patients with BRAF V600E mutant metastatic non-small cell lung cancer, which demonstrated compelling efficacy for patients.

We are also rapidly advancing to next-generation ADC candidates with the potential to make significant impact on the more than 300,000 patients with non-small cell lung cancer in the U.S. The first is [indiscernible], which is now in Phase III, and we are planning additional — trials in the coming months. The other one is a PD-L1 AV ADC. We are equally encouraged by the updated Phase I data we presented the ESMO for this ADC, and we are planning rotation enabling trials in 2025. Our [indiscernible] pipeline is expanding. We are studying another novel ADC, [indiscernible] in 2 ongoing registration intended trials in unfilial cancer. And MEBROMETOSTAN, our novel EZH2 inhibitor is another example of the progress we are making throughout our pipeline.

This has been starting as a new potential treatment for men who have metastatic castration-resistant prostate cancer, and we are enrolling currently patients into Phase III studies. Finally, to build on the foundation for our drugs, we are making progress with development of 2 candidates we believe can replace the current backbones of HER positive HER2 negative breast cancer. Atirmociclib, our potential first-in-class CDK4 inhibitor is enrolling a second line Phase III trial, and we expect to start a first line Phase III study by early 2025. And we expect the first Phase III data in the coming months for vepdegestrant, an Eastern receptor [indiscernible] that we are codeveloping right now with [indiscernible]. Our fourth generation PCB candidate now in Phase II adult and pediatrics, covers 25 serotypes, including improved immunogenicity for serotype 3, very important, which is one of the largest remaining contributors of disease.

We are focused on building on our leadership in the industry by continuing to expand balance sheet with our fifth generation candidate, which is in preclinical development that covers over 30 serotype. In the last several months, we have advanced the potential new vaccine against Seba, which is considered and urgent public health threat that lacks any approved vaccines. Leveraging experience from our previous STEP program, we have developed a new formulation for a second-generation candidate. After encouraging Phase I data with this new formulation, we have advanced our Phase II study already. We are also working to support significant need for about 90 million Americans and 200 million Europeans in areas with high incidence of lime disease.

VLA15 is a vaccine candidate we are codeveloping that is intended to protect against the 6 most prevalent serotypes in North America and Europe. A Phase III trial is underway, and pending positive data and regulatory approval, VLA15 would become the only vaccine available to help prevent the acute severe and long-term health consequences of lime disease global. TAXICOVID is the standard of care COMIRNATY in oral treatment for those at high risk of progressing to severe disease. We believe, however, that there is an opportunity to expand both our therapeutic impact and market position where our next-generation oral antiviral candidate, EBUSATRELVI. In a Phase II study, we have demonstrated a robust antiviral activity at all doses and without the need for returnable boosting.

We have addressed the drug-drug interactions and the metallic taste associated with TAXICOVID. We expect to start a Phase III study in the coming months. We are also moving forward with our Phase III program in nonsegmental vitiligo with ritlecitinib, a candidate with a differentiated JAK mechanism developed in-house at Pfizer that has the potential to be an expansion of indications for [indiscernible], which is currently approved in severe alopecia areata. Vitiligo, like alopecia areata , an autoimmune disease with high unmet need. It is the leading cause for skin depigmentation and affects nearly 3 million patients in the U.S. alone. We are also enthusiastic about our 2 first-in-class trispecific antibodies with early data demonstrating excellent 3-in-1 potency.

We believe this program has the potential to deliver improved efficacy in atopic dermatitis with an ongoing Phase II study evaluating safety and efficacy. We had a Phase II readout of ponsegromab, which is another in-house discovered and developed by us. We are encouraged by the potential for a breakthrough for patients with cancer cachexia, who lack treatment options for this life whitening wasting condition that currently has no FDA-approved treatments. The Phase II study met its primary endpoints change from baseline in body weight compared to placebo across all dose tests. And the highest dose of [indiscernible], sought improvements for baseline in appetite, cachexia symptoms, physical activity and muscle mass. Based on these positive results, we expect to advance to a registration-enabling study next year.

Our Phase II study in patients with heart failure related cachexia is ongoing. We remain on track with our dose optimization studies for danuglipron, our oral GLP-1 receptor agonist candidate and look forward to discussing more about this in early 2025. In our broader obesity portfolio, we continue to advance our early-stage candidates, including our oral small module GIPR antagonist, which is advancing to Phase II in 2024 this year. And in additional, all once daily oral GLP-1 receptor agonist in Phase I. The highlights, I mentioned today across important therapeutic areas show how we have made meaningful advancements with our pipeline. As we announced earlier this year, Dr. Mikael Dolsten, Pfizer’s Chief Scientific Officer, will depart from Pfizer after 15 years of leading Pfizer’s research efforts.

Our progress for selecting a successor is not quite advanced, and we look forward to announcing an update soon. Now I will turn to our commercial performance. And another one of our strategic priorities is maximizing the performance of our new products. I’m pleased that the decisive actions we took to enhance our commercial organization at the beginning of the year are giving satisfactory results. With NURTEC, we saw 28% total prescription growth and continued leadership in the oral [indiscernible] class. Importantly, 85% of primary care clinicians writing CGRP prescriptions first time [indiscernible] NURTEC, 85%. This shows the progress we are making in primary care as well as our work with payers to remove barriers for timely patient access to treatment.

Among our vaccines, we are very pleased with our performance since the launch of Prevnar20, which has already achieved 83% market in pediatric and 97% in adults. With last week’s recommendation by the Advisory Committee on Immunization Practices to expand adult pneumococcal vaccination to include all adults age 50 and older, we believe Prevnar20 is well positioned to serve and expand the population in the United States. Outside of the U.S., we are predominantly serving the pediatric market. And following the recent first quarter approval in Japan and EU, we are gaining vaccine technical committee recommendations and several market in programs. With ABRYSVO, we continued improving our U.S. market acquisition with strong commercial execution.

Our market share of sales, retailers and clinics out of wholesalers has exceeded 50% for the quarter. And our market set of shots in arms in the [indiscernible] setting has increased for 9 consecutive weeks through mid-October, currently reaching 43%. Last week’s FDA approval for ABRYSVO for patients 18 through 59 who are at increased risk of low respirable drug disease caused by RSV, could help a serve and expand the population over time. With the rise in COVID-19 infection in the summer and early fall, we have responded to increased demand for PAXLOVID as we launched in the U.S. commercial market at the beginning of the year. Our better-than-expected growth during the quarter for PAXLOVID reflects higher inflection rates and the strong commercial execution of our team.

Our ability to execute effectively includes improving patient actions, raising awareness of this treatment option, expanding use of alternative sites of care and also continuing to educate health care providers. The demand for PAXLOVID have stabilized. In the slide, you can see the total number of patients treated with PAXLOVID in ’24, which is very similar to the same period in ’23. It appears to be closely correlated with its weight of COVID-19, but also appear to have very similar pattern in ’23 and ’24. The 63% operational growth in the third quarter of our VYNDAQEL family of products is a direct result of our progress in expanding the health care provider base and supporting clinicians in identifying more patients who can benefit from this therapy, as well as our work to improve patient access and adherence to therapy.

Internationally, VYNDAQEL is reimbursed in 44 markets right now and more affected next year. While that integrates value across markets, the unmet [indiscernible] remains significant as restated by the 10% increase of patients on treatment in the third quarter versus the second quarter of 2024 in the U.S. We were pleased by the 74% quarterly operational growth and continued progress with expanding access with CIBINQO, a treatment for patients 12 and up with moderate to severe eczema who didn’t respond to other treatments and 27% growth in the U.S. on the second to third quarters of 2024. With Litfulo, the first and only FDA-approved prescription pill for both adults and adolescents as young as 12 with severe alopecia areata. Now, and I will turn it over to Dave.

Dave Denton: Thank you, Albert, and good morning, everyone. I will build on Albert’s comments by reinforcing that we are very pleased with the financial results for the third quarter of 2024. These results demonstrate that our focus and our execution against our 5 strategic priorities are driving positive patient outcomes and continued financial and operational strength. In addition to our strong top line performance, our cost reduction programs are creating a more efficient organization, setting the stage for increased capital returns and supporting our commitment to both maintaining and growing our dividend, all while enhancing shareholder value. This morning, I will briefly review our Q3 P&L performance, I’ll highlight our capital allocation priorities and touch upon our full year 2024 financial guidance.

Additionally, as we approach the end of the year, I will also share several modeling considerations as we began to plan for 2025. Turning first to the third quarter performance versus the same period of last year. Let me walk on the P&L. Total company revenues were $17.7 billion, representing an impressive 32% operational growth. Our COVID-19 products were significant contributors with PAXLOVID generating $2.7 billion in revenue. This included $442 million related to delivering 1 million treatment courses to the U.S. Government Strategic National Stockpile. COMIRNATY, our COVID-19 vaccine contributed $1.4 billion in revenue. Our COVID-19 products were not the only drivers during the quarter. Our non-COVID products also exhibited robust performance with revenues of $13.6 billion, reflecting 14% operational year-over-year growth.

This performance shows that our refined commercial approach is working. We continue to focus on key products and geographies, we’ve refined how we allocate our commercial field resources globally and we’re further optimizing our marketing resources into key priority areas. We saw strong contribution from our recently acquired Seagen products, including Passive, which continues its momentum following the results of the EV302 study last year. Other key growth drivers included VYNDAQEL, ELIQUIS, XTANDI and NURTEC, partially offset by declines in Xeljanz and Ibrance. Adjusted gross margin for the third quarter is approximately 70%, primarily the result of a net unfavorable mix related to our COVID-19 products, primarily due to the COMIRNATY profit split with BioNTech and applicable royalty expenses, as well as a slight dampening due to the associated costs incurred with the withdrawal of Oxbryta.

All of this was partially offset by our ongoing focus on cost management across our manufacturing network. We continue to expect gross margins to be in the mid-70s for the full year. And as previously communicated, long-term improvements in gross margins will remain a key focus for the company over the next several years. We expect to achieve savings from Phase I of our manufacturing optimization program beginning in 2025 and deliver approximately $1.5 billion in savings for the first phase by the end of 2027. In parallel, we continue to evaluate our strategy for both Phase II and Phase III, which will focus on network structure and product portfolio, respectively. And we expect to have more information to share on those components of the program once they become available.

Total adjusted operating expenses decreased 2% operationally to $5.8 billion. And I will note that this amount includes spending acquired via our Seagen transaction. And looking at the components, adjusted SI&A expenses increased 1% operationally, driven primarily by marketing and promotional expenses for recently launched and acquired products partly offset by a reduction in the U.S. health care reform fees. Adjusted R&D expenses decreased 4% operationally, driven primarily by lower spending on certain vaccine programs as well as our cost realignment program, partially offset by an increased spending related to the Seagen acquisition. We continue to be disciplined with our operational expense management and remain on track to deliver at least $4 billion in net cost savings from our cost realignment program by year-end.

Q3 reported diluted earnings per share was $0.78 in the quarter and our adjusted earnings per share was $1.06, benefiting from our top line performance and efficient operating structure as well as a favorable tax rate driven primarily by jurisdictional mix. As mentioned last quarter, unique onetime items included in our GAAP results and excluded from our adjusted results this quarter include a $420 million charge related to the expected sale of one of our facilities, resulting from the discontinuation of our DMD program earlier this year. Now let me quickly touch upon our capital allocation strategy, which is designed to enhance long-term shareholder value. Our strategy consists of both 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 delevering our balance sheet.

In the first 9 months of ’24, we returned $7.1 billion to shareholders via our quarterly dividend, invested $7.8 billion in internal R&D and as we expected, completed business development activity was minimal. Our commitment to delevering our capital structure to a gross leverage target of 3.25x remains a key priority. In support of that goal, year-to-date, we have delevered by approximately $4.4 billion, paying down approximately $2.3 billion in maturing debt and approximately $2.1 billion in commercial paper. And in October, we monetized another tranche of our Helion shares, which for reporting purposes is a Q4 event. We received approximately $3.5 billion in net cap proceeds, and our ownership in Helion was reduced from approximately 23% to approximately 15%.

Year-to-date, we have received approximately $6.9 billion of net cash proceeds from the sale of our shares. We intend to monetize our remaining Helion investment in a prudent fashion considering our cash flow requirements and future market conditions. Overall, in Q3, we generated robust operating cash flows, which combined with the Helion net sale proceeds of approximately $3.5 billion, resulting in significant cash flow generation as we enter the fourth quarter. Our objective remains to delever and return to a more balanced allocation of capital between reinvestment and direct return to shareholders over time. Now let me spend just a few minutes on our outlook for the full year. Based on our focused execution and strong year-to-date results, we are raising our full year ’24 revenue guidance by $1.5 billion and our adjusted diluted earnings per share by $0.30.

We now expect revenues in the range of $61 billion to $64 billion and operational revenue growth, excluding COVID-19 products is unchanged at 9% to 11% and takes into consideration reduction of sales associated with Oxbryta. COVID-19 product revenues are now expected to be $10.5 billion, $5 billion for COMIRNATY and $5.5 billion for PAXLOVID. Our guidance for adjusted SI&A, adjusted R&D and our effective tax rate on adjusted income remains unchanged. And last, we expect adjusted diluted earnings per share of $2.75 to $2.95, primarily reflecting the top line increase and absorbing the Oxbryta impact. As a reminder, our EPS guidance includes an anticipated $0.40 of earnings dilution from the Seagen acquisition, largely due to financing costs.

Now as we begin to look towards next year, I want to touch on a few modeling considerations. As we’ve previously discussed, there are several nonrecurring items included in our 2024 results. First, during 2024, PAXLOVID revenue included a U.S. government revenue credit true-up and the fulfillment of our obligation to the U.S. National Strategic Stockpile. Second, given our ownership of Helion is now below 20%, we will no longer record equity income from that investment in our adjusted earnings beginning in 2025. And finally, our 2024 tax rate on adjusted income was favorably impacted by timing with respect to the impact of Pillar 2 and to a lesser extent, audit settlements. All in, these items are expected to have a favorable impact on full year 2024 adjusted diluted earnings per share of approximately $0.30.

In closing, I’m extremely pleased with our third quarter 2024 results and our overall performance this year. Our team remains dedicated to strong operational execution, and we believe our cost-saving programs will drive enhanced operating leverage over time that will enable us to consistently deliver on our financial commitments to our shareholders. We are committed to driving long-term value creation through scientific leadership, portfolio strength and productivity across all aspects of our business. And with that, I’ll now turn it back over to Albert.

Albert Bourla: Thanks, Dave. It’s time for the Q&A. But before we take our first question, I want to briefly address the topic that I know is in the minds of many. We seek to be attentive to our shareholders and are always open to hearing their perspective. We had a meeting with Starboard Value 2 weeks ago. I was there with our Lead Director and our Head of Investor Relations. The meeting was constructive and [indiscernible]. They presented the same deck they made public last week. And given the proximity to our quarterly earnings day, we were mainly in listening mode. While we agree with some of the points they raised, we have vastly different views on many others. For example, they expressed dissatisfaction with our total shareholder return.

We are not satisfied either, though we believe we are executing on the best path forward to increase shareholder return. On the other hand, they challenged our capital deployment for business development. We believe that our deals will produce significant shareholder returns, and some of them like Seagen or BioNTech have been transformational for Pfizer. The important thing is what we do to improve performance. In January, we presented a 5-point [indiscernible] aiming to create shareholder value that has guided our decision-making all year long. We remain focused on executing this plan and on delivering for our commitments, including driving long-term shareholder value. We will engage productively with our shareholders, including Starboard, and will consider all good ideas that are offering.

And with that, operator, please assemble the queue to discuss our third quarter performance and pipeline.

Operator: [Operator Instructions] We’ll take our first question from Chris Shibutani with Goldman Sachs.

Q&A Session

Chris Shibutani: I wanted to ask questions about the pipeline, particularly with regard to obesity, where we appreciate the additional insights into what you have in the clinic. Albert, you previously said that you believe that Pfizer could be the #2 company on the market with an oral. That would imply that danuglipron is the lead asset there, however, you do have 2 additional assets that we find intriguing at a GP-1 oral that is in Phase I that is once a day, but would clearly be behind. And then now an oral GIP antagonist, which I think is a source of debate. Can you frame what your strategy is, how important it is to be second to market versus perhaps having a differentiated approach with these 2 assets?

Albert Bourla: Look, I will ask Mikael to comment because there is a lot of activities going on right now, all that. But my general comment is that, as I have said, if Daniel moves fast based on what we know right now, we should be the second oral into the market, provided that the first one will be successful and the other ones will not come before us. But so far, this is what the situation looks like. The market is very, very large. And there is a significant need for oral solutions. We know that. So there is no doubt that if successful, we will have our decent market share of oral. But the important thing it is that obesity market is developing, let’s say, nicely also in terms of science, and we are exploring several other opportunities right now. The two that we have mentioned in the clinic, Mikael Michael can speak a little bit more, both about the danu and the other two, Mikael.

Mikael Dolsten: Thank you, Albert. Yes, as you heard in Albert’s remarks before the meeting, we continue to execute on our danuglipron plan, which includes a once-a-day profile with a modified release type of system. And we do believe that once a day with modified release could have some really special features and bringing that as a second oral would help really to have a strong foot into that market, in the same way, we have seen injectable being split etweenn 2 different products. I don’t expect that the various oral will, in the end, differ that much in the GLP-1 class. So that’s why we were keen also to move a GIFR, which could add better tolerability and more efficacy. And we’re right now, initiating Phase II studies on the backbone of [indiscernible] engines.

And these are our 2 more advanced bets, plus we always like to bring in this huge segment in drives and have more options as we advance. And you’ve heard there are so many applications for GLP-1s, and that’s why we have a second once-a-day again.

Operator: We’ll take our next question from Kripa Devarakonda with Truist.

Kripa Devarakonda: I have actually a question on your recent data from fensegrumab program in cachexia. You reported positive Phase II data. And just broadly speaking, this program has been previously highlighted as well. For the registrational trial, would a trial that replicate your Phase II in a larger group of patients be sufficient? Or would you need to show outcomes like survival? And also, adding away details of the registrational trial, can you help us understand how big of an opportunity you see for this drug?

Albert Bourla: Let’s start with Mikael a little bit on the science, and then maybe Andrew can speak about the potential market size of the [indiscernible].

Mikael Dolsten: I think in general, for cancer agents, and this is more in the supported care, we’re addressing segments of unmet patient needs, which relates to be able to regain the performance status with better body weight, have higher physical activity and be able to go through more treatment cycles, which should often translate to better long-term survival. As you know, that is always dependent on how patients cross over to different trials. So I do think initial registration will come from similar endpoint as in our Phase II studies, but we clearly aim to translate better patient performance to other outcomes that are more harder endpoint going through more treatment cycle and treatment that, call it, with better cancer outcome over time.

And this is — will be shown in multiple cancer types. So we do think similar to other product that earlier have been heavily used in support of cancer care, this could be a very large opportunity. And in addition to that, we are running a heart failure studies and looking at a third opportunity, also large chronic disease. And with that, Andrew, some comments on the potential of this molecule?

Albert Bourla: Yes, correct. And building on Mikael’s comments, look, Extia is a massive unmet medical need. It’s 50% to 80% of patients with oncology, suffer from that, particularly, as you know, within pancreatic and non-small cell lung cancer. It’s probably about 20% to 30% in heart failure and COPD. The size of the market really depends on whether it’s viewed as a supportive care therapy. But also, obviously, as Mikael mentioned, whether you have outcome benefit. And obviously, depending on the outcome of those trials, we’re going to be looking at different price points. So the size of the market or particularly the size of this drug is going to be very much informed by the data that we deliver in the pending Phase II and Phase III trials.

Operator: We’ll take our next question from Umer Raffat with Evercore.

Umer Raffat: I feel like it’s still very early in your engagement with some of your shareholders and the new shareholders. So perhaps it might be too premature to ask much further on that. So instead, maybe I’ll focus on pipeline briefly. I know you mentioned, Michael, that the oral GIP antagonist adds better tolerability and more efficacy. It sounded like you were implying it’s more incremental to what an oral GLP could do as a stand-alone. Could you just lay that into context, for example, in the 4-week Phase I study you ran, did it hit 4% to 5% weight loss? And secondly, the more than 30-valent pneumococcal vaccine that you guys disclosed this morning, does it have more than one carrier protein?

Albert Bourla: Mikael?

Mikael Dolsten: Yes. I think the ability of GIPR to act in concert with GLP-1 has been well documented in a few different peptide settings. So we aim to be the first to document this with an oral approach, and that could offer a really nice differentiation for patients that need more and faster achieving of the treatment objectives. That’s what we want to reveal right now. On the — our new platform for PCV generation 4 and 5, we include a number of technical improvements. We don’t want to disclose those today, but we did — we’re open to mention that our PCV fourth generation, which covers 25 serotypes have as an example and improved serotype 3 based on new technology that moves it far beyond what we believe any other technology has been able to accomplish.

And why is that important? Well, serotype 3 covers somewhere between 15% to 30% of disease in different countries and improving on that can have a bigger impact than adding a number of rather infrequent serotypes. As we go to the more than 30 valent, it will be a combination of such improvement and many more serotypes.

Operator: We’ll take our next question from Trung Huynh with UBS.

Trung Huynh: Sorry, I was on mute there, Trung Huynh from UBS. I have two. So thanks very much for the comments on the activist investor. You said you disagreed with the thoughts over capital deployment and then you cited significant shareholder returns for Seagen and BioNTech. What’s the difference between what you’re thinking and perhaps what the Street is thinking here on BD? And then how do you intend to restore that and restore confidence back into the company, so that bridge between your expectations and the Street can be aligned? And then just on your commitment to delever, and thanks for the comments on the prepared remarks here. Is there an appetite to delever even quicker and sell the hospital business and [indiscernible] the Helion stake earlier? And you do have products going off with LOE soon. That could give you a little bit more flexibility on the balance sheet. So yes, just thoughts here.

Albert Bourla: Why don’t we start with this one and then I’ll take a little bit the activist question.

Dave Denton: Yes. So first, on the levering point, yes, our objective is to delever as rapidly as possible. And I think the company has been laser focused on doing that, given the fact that we’ve taken out about $4.4 billion in debt year-to-date, and we’ll continue to do that. Secondly, without speaking directly around any potential BD opportunities here, is we’re always looking to evaluate the infrastructure that we have and the assets that we currently maintain and understand if there’s availability to, I’ll say, monetize some of those assets over time to further support our delevering activity. So I would say all options are on the table, and we’ll continue to evaluate on what makes the most sense for us strategically long term.

Albert Bourla: As regards the – our projections compared to the Street projections in the business development. First of all, let’s start by saying that by far, the 2 biggest Seagen and BioNTech in terms of revenues, right? And in both as, I think the Street move on seem way up compared to when we made the deal. And upon the [indiscernible] we are very, very stable. The other ones that also –if you add to that, the Biohaven with NURTEC, which we are on our plans and we just exceeded for the second quarter, Street expectations, it is covering 80% of the investments that we have made and probably weigh more in terms of revenues. And the most important thing is that those Seagen, for example, or the BioNTech with our development of mRNA infrastructure around the world.

And the Seagen acquisition with our taking over the ADC technology of [indiscernible] was a unique, unique asset is transformational for Pfizer. It’s not the revenue growth, but we are seeing right now, and we’ll continue seeing all the way towards the end of the decade. But it is 2 – a disease, one already in Phase III, the other is about to start Phase III that we got from Seagen, one the SV and the other, the PDL-1 ADC. Those are mega-blockbusters, if there are technical success, mega-blockbusters. And we are moving to Phase III because we have seen very positive earlier data. The same issue. We’re starting with [indiscernible] cancer, another ADC. So I would say that I think – we truly think that this was well invested capital and will demonstrate significant value for shareholder.

But I want also to make a final comment for any discussion with activists. But no matter if we are agree or disagree on what has happened, I think the most important thing, it is what we are doing going forward. Starboard has not presented any specific actions, but they suggested something needs to change. From that point, in the beginning of the year, already a year ago, we are already starting changing a lot of things. Over the past 10 months, we have implemented changes like we changed our commercial model to separate the U.S. and international business and appointed new leaders who have now delivered 3 consecutive quarters of revenue. And we integrated Seagen and created an end-to-end oncology research organization to ensure a successful integration of the company – of the Seagen pipeline.

And we have retained the vast majority of the legacy Seagen colleagues, and we have delivered multiple, multiple successful readouts from that. We announced a plan to reduce OpEx by $4 billion, which we are executing successfully without negatively affecting the top line. We announced an additional plan to reduce manufacturing costs by $1.5 billion, which so far is delivering satisfactory results. We brought in Andrew Baum, which is a knowledgeable research analyst to help prioritize our R&D pipeline and future business development. We are advancing now the process of selecting a new scientific officer. And we have enhanced our Board with 2 terrific new directors who have deep expertise in corporate governance and shareholder value creation.

So what we believe is that all these changes are the result of an intentional 5-point plan that we rolled out already in January of last year. So as I said in my personal, let’s say, remarks, we plan to engage with shareholders, including Starboard and consider any good ideas that create long-term shareholder value. But I don’t think that the statement something needs to change is really pragmatic because it’s coming 15 months late.

Operator: We’ll take our next question from Louise Chen with Cantor.

Louise Chen: So I just had two here. First one, I wanted to ask you is how we should think about the big pushes and pulls for sales and EPS in 2025? And when you might give guidance? Could it be as early as this year? And then second one, just on Seagen, just wondering how the integration is coming along and if you have any updates to some of the metrics that you gave like sales in 2030 and what have you for the Seagen deal?

Albert Bourla: Okay. Dave, let’s start with the first question.

Dave Denton: Yes. So thank you. Regarding 2025, it’s really topical because we’re in the middle, as you can imagine, building our 2025 financial plan here across all of our business lines at — to your point, there’s going to be a lot of pushes and pulls as we think about growth into next year on both our core business as well as our COVID business. It is our expectation that we will provide guidance for 2025, most likely by the end of this year. So stay tuned, more to come. We will lay out all the pushes and pulls when we give guidance for 2025, so you can get a very clear understanding of our business and the opportunities to enhance shareholder value longer term.

Albert Bourla: Chris, can you give us an update on the Seagen integration, both speak a little bit about the commercial, but also focus on the research, which is a significant value?

Chris Boshoff: Thank you very much for the question. Overall, we’re very pleased with the integration to date. We’ve retained the vast majority of colleagues at legacy Seagen, and we now have over 1,500 colleagues working in our facilities in Basel just outside Seattle. As you saw the global revenue in Q3, we printed $854 million from legacy Seagen and of that, PADCEV printed over $400 million in Q3. Seagen year-to-date delivered for us $2.3 billion, which is 38% year-over-year on a pro forma basis. We continue to execute very well on the portfolio, on the pipeline. We started Phase III studies with dasitamab vedotin in urothelial cancer, that’s HER2-low, which is up to 40% of bladder cancer. With Sigotatacvedotin, the differentiated B6A started the first Phase III study in non-squamous non-small cell lung cancer, that’s where we saw most significant data.

And we’re also planning to start the combination of sicotatactedotin pembrolizumab in the first-line setting of non-small cell lung cans and recently discussed and aligned with the FDA on trial design and on the dosing. We’re also progressing and to start a Phase III program with the PD-L1 V, the [indiscernible] in combination with pembrolizumab early next year. So overall, great commercial performance so far. We haven’t missed a beat, and we continue to execute on the pipeline.

Operator: We’ll take our next question from Geoff Meacham with Citi.

Geoff Meacham: Thanks so much for the question. Just had a couple of quick ones. Mikael, another one on obesity. And I know you’ve added assets outside of danuglipron and I appreciate that it’s early. I want to ask you, what does success look like on efficacy just given the bar today? And then strategically, how does Pfizer view orals versus longer-acting injectables when you think about the investments Pfizer is making in this category? And then real quick, Albert, on the IRA. Obviously, it seems here to stay. But when you think about the potential for a new administration, what would Pfizer like to see obviously beyond closing the gap between orals and biologics on exclusivity?

Albert Bourla: Mikael?

Mikael Dolsten: For orals, to keep it very [indiscernible], I think you have a number of things that could be advantageous. One is, of course, the combined [indiscernible] with all other drugs that are involved in [indiscernible] metabolic disease to give long outcomes. And what you’re looking for I would say is 10% to 20% order weight, the lower range of the first GLP. The upper range is where you can see oral combinations edge towards. And that’s very much similar to what you can see with the peptide. So I can very broad with a lower and an aspirational range, the lower for more single agents that will edge above that and combi agents that can aspire to go above 15 and edge above that.

Albert Bourla: Thank you, Mikael. Now on [indiscernible] IRA. Clearly, IRA overall is negative for innovation and does not promote a spirit that people could provide investments, but there are also some good things about it. So clearly, I wouldn’t like to see that the out-of-pocket that next year will be $167 per month for all your medicines for seniors. That, we want to be maintained. But this forced price setting [indiscernible] negotiation and also the penalty deal between – are things that needs to change. And it’s not only on IRA. I would mention that 340B right now, it is one of the biggest issue, and it is unethical and it is the way that it is evolving. And it is creating significant transfer of funds from where it needs to be the [indiscernible] people to booster the profit lines of some business. So 340B reform is something that myself and the entire pharma is setting as a priority. So thank you for your question.

Operator: We’ll take our next question from Terence Flynn with Morgan Stanley.

Terence Flynn: Great. Appreciate the questions. Two for me. I guess, first one is on the RSV opportunity. Just wondering what you see as the most likely outcome here for revaccination frequency and the potential impact on the longer-term market opportunity? And then the second question is more of a clarification. On your CDK4 inhibitor, you guided to starting first-line Phase III study early next year. Just wondering if you can share any more detail there on the design, if that would be a head-to-head versus IBRANCE? And if it would be in combo with VFD or if that’s a monotherapy type design?

Albert Bourla: All right. I mean, would you like to speak a little bit about the RSV and the maybe Terence, to directly answer your question. So how the market evolves, it’s going to be a function of how ACIP recommendations for RSV evolve, and that includes revaccination timing, as you mentioned, but also [indiscernible] populations. I don’t think it’s really productive for us to predict how ACIP is going to evolve these recommendations. But we do feel confident in the Bristow’s profile. And importantly, what I would like to highlight is we feel very confident in our ability to pull that profile through. You heard Albert describe our momentum in the U.S. market, particularly in light of dramatic improvements in our market share versus last year.

And we continue to be ready to advance in vaccinations in the fourth quarter as well. And the last thing I would say is the FDA’s recent approval of the 18- to 59-year-old at-risk population makes ABRYSVO the only RSV vaccine that’s indicated to protect patients as young as 18 years of age, and it further strengthens this active on the viability of ABRYSVO. Last thing I’ll say is on maternal. We have also had really good momentum on our ABRYSVO maternal indication. We see very strong signals in uptake for the month of September. We had a 20% uptake, which is a full doubling of where we ended the last season. And we continue to see uptake amongst OB/GYNs and health systems. So in the first 4 weeks of this season, the units that we shipped into those systems were up 56% from the first 4 weeks of last season.

So we see momentum on ABRYSVO, and we look forward to future [indiscernible] updates.

Albert Bourla: And Alexandre, do you want to add something on the international because that’s also an important market for us. .

Alexandre de Germay: Yes, absolutely. Even though it’s not material yet, we’re actually making very good progress. So on the adult front, we actually got BTC recommendations since the beginning of the year in large markets like U.K., Germany, in France, in Canada, in Australia, in Saudi Arabia and a lot of other midsized market positive share recommendation. Now we’re moving into funding. And as you know, at the second quarter, we said that we won the exclusive U.K. tender. That’s what we did. We also won the Canadian tender. Now in terms of reimbursement, we just got actually regional reimbursement in Germany, and we are launching [indiscernible] October in Germany. Now all the others, the large market and the client market that I’ve talked about, are in phase of negotiation.

On the other side, the last thing I want to say is actually, we are working toward our immunobridging study in 2025 in China, so that we can do an NDA filing, which is also an important market for us. On the pediatric side, also, we are making good progress. We also got BTC recommendation in large markets like the U.K., in France, in Australia, in several other midsized markets. And actually, yesterday, we just got also the Pan-American Health Organization that covers 40 market in the Americas, that actually leased ABRYSVO in the RSV recommendation. So we’re gaining also reimbursements in France. And we have actually just launched in France recently. There, again, on pediatric, once we got all those positive recommendations, we are moving into reimbursements.

So we see great potential. It’s going to take a bit of time because we go through all those statement steps, but we see good potential there. Absolutely.

Albert Bourla: And then why don’t we go to Chris for the question on the design of the Phase III.

Chris Boshoff: Thank you very much for the question. On atormocyclib, our highly selective CDK4 inhibitor. This was another small molecule that was conceptualized and discovered in our laboratories in La Jolla. And as you know, it’s currently in a Phase III program for second line plus hormone receptor positive breast cancer. This is potentially, not only a first-in-class, but basin class, highly selective CDK4 inhibitor. And as you know, CDK6 leads to some of the vulnerabilities, including the bone marrow toxicity, and that’s why we’re focusing on CDK4, which drive breast cancer proliferation. So we believe with the current date, including the safety and tolerability, the early clinical data support the potential for more complete and continuous dosing with CDK4.

And as you’ve seen, we’ve got no grade 4 neutropenia, no Grade 3 or 4 diarrhea and no grade 4 and treatment-related AEs was observed. We’ve aligned with the FDA on the first-line hormone receptor positive breast cancer study, which will start in the coming months. And it will be against physicians’ choice of CDK4/6 in advance.

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

Evan Seigerman: I have one for Andrew on [indiscernible] of what I believe is this first call on the other side. In your first 4 months or so, can you help us better understand your findings regarding the portfolio? And more broadly, how do you hope to shape and focus the wide variety of assets that Pfizer has to drive sustainable growth?

Albert Bourla: So what — now that you’re in the dark side, what is your opinion, my friend?

Chris Boshoff: Well, I think, a, Evan, thanks for the question. B, I think in response to Albert’s question, I think coming from finance, I guess, pharma is a segment of the light side rather than the dark side. But in terms of the question, look, I always regarded Pfizer’s R&D engine, highly just because when you look at the stream of molecules that have been internally discovered at Pfizer over the years, first ALK inhibitor, first CDK4/6 inhibitor, numerous JAKs, ABRYSVO, there’s clearly a very, very strong record of discovery and execution. And it’s not just small molecules, I hasten to add. You see that in vaccines in oligos, in cell therapies, in bispecific. And for me, when I made the move, this was absolutely key in terms of a company that have this because if you don’t have this, then life is very, very difficult.

Now in answer to where I hope to add value coming forward, I think, as Albert alluded to earlier, historically, perhaps you may have pursued areas where that R&D investment hasn’t translated into the type of revenues you want. The point is that this is a much easier challenge to solve. It’s a matter of taking this incredibly powerful machine and put together in the right direction so that we are targeting those areas that translate into revenues. One thing that I think the COVID experience shows you is once Pfizer focuses, execution is something you should feel very comfortable about.

Operator: [Operator Instructions] We’ll take our next question from Courtney Breen with Bernstein.

Courtney Breen: This is Courtney Breen from Bernstein. Perhaps building on the last question, looking at Slide 28 in the presentation today, it suggested that in the last 3 months, from the end of July to today, that there has been no meaningful advancement of the pipeline, albeit there are a number of pipeline actions kind of suggested to be initiating too. We are suggesting is as likely as a response to the reset and cost cutting that’s going on. My first part to this question is, how will you ensure that this isn’t repeated in further quarters? And how are we balancing the need to kind of take stock and cut while ensuring that high potential opportunities are getting appropriately accelerated through the pipeline?

Albert Bourla: Then maybe I will ask the 2 R&D heads to comment on that. Please, let’s start with Chris.

Chris Boshoff: Yes. Thank you for the question. So just to remind us, this year, we’ve already started 8 new first in-patient studies in oncology, which I believe makes us the number 1 company in terms of Phase I clinical trial started. In the coming months, we expect potential Phase III readouts for breakwater, which is a very importation for us in BRAF mutated colorectal cancer which is up to 10% of colorectal cancer, and that will be in the first line setting, a big unmet need because there’s particularly poor prognosis patients presenting with BRAF mutated colorectal cancer. We also expect readouts for Veritex2 our ER [indiscernible] we codeveloping with ovens for ER-positive second-line plus methodic breast cancer and potentially for Crest which is a sasanlimab, a differentiated subcut PD-1 in combination with BCP in non-muscle invasive bladder cancer.

We will also present in the coming months, Phase II randomized data for [indiscernible]. This is a randomized Phase II data in patients with prostate cancer. We’ve seen the data, and that provided us the confidence to initiate the 2 Phase III programs. In the coming months, we’ll also start additional Phase III studies, as I mentioned, CDK4 in first line [indiscernible] breast cancer [indiscernible] in combination with pembrolizumab in PD-L1 high first-line non-small cell lung cancer and CAT 6 with positive breast cancer.

Albert Bourla: So quite impressive on the Oncology side. Mikael, what about the rest?

Mikael Dolsten: We thought we help you focus by this quarter displaying some nice movement, most valuable part of this chart, the right-hand. When you look over the next 18 months and including Oncology and non-Oncology, we will have up to 40 different opportunities to fill the left side that I hear you are eager to see progress on and the right hand. If you’ll include the 40 will be divided between potential approvals, projected pivotal readouts and potential proof of concept. And that did not even include early signals in clinical development.

Operator: We’ll take our next question from Steve Scala with TD Cowen.

Steve Scala: Pfizer has previously stated, it anticipated having visibility on long-term COVID product sales based on 2024 trends. Since we are now nearing the end of 2024, I’m wondering what that long-term number is? And then secondly, does Pfizer have the Phase III booster data for the RS vaccine in adults in-house? And if yes, does the data show a similar step-down in Booster immunogenicity as did the GSK vaccine?

Albert Bourla: All right. So on the stability, let’s — maybe [indiscernible] you want to make a [indiscernible].

Chris Boshoff: Let me just comment on performance. I think, Steve, I think both on PAXLOVID and COMIRNATY. I think what our performance to date as well as the quarter, which show us is that these are both entering into a category where we understand what the volumes are likely to be. And we believe these are going to be durable businesses going forward. So just as an example, on PAXLOVID, even if you take the onetime items that Dave alluded to aside for a moment, we’ve seen significant PAXLOVID treatment course utilization, right? Even just in the summer wave that happened over the course of the third quarter, we saw an average of about 100,000 courses of treatment at the start of July, growing to about 225,000 treatment courses in mid-August before that wave declined.

And we’ve built a very durable commercial engine to support that with increasing treatment rates, with very viable reimbursement, both on the government side as well as on the commercial side and a way to activate HCPs and consumers who need our treatment. And similarly, on the vaccine, our goal this year with COMIRNATY, and we had the benefit of being able to start 3 weeks before last year, was to start the season with plenty of vaccine in fridges, both in the retail setting as well as in the health system setting. And again, we’ve demonstrated an ability to do that quite well. When you look at where vaccination is this year versus last year, it’s a little bit higher, actually, but a big part of that is just a function of the calendar in the 3 weeks earlier.

We expect to see vaccinations continue in October through December. And the shape of that curve will continue to evolve, but all of this makes us confident that we’re seeing a durable business, both on vaccines and PAX.

Alexandre de Germay: For international, this is Alexandre, thanks for the question, too. Same principles, we see enduring business. In COMIRNATY, just I want to remind everyone that in the International vision, we closed our third quarter at the end of August. So basically, you don’t see any sales of COMIRNATY simply because most markets are starting of the vaccination campaign in September. Having said that, we are progressing very nicely in our key regions. So in Europe, we got the approval of the GEN-1 adapted vaccine in July, and we got the KP12 [indiscernible] September. So it’s basically an [indiscernible] started to work with our health care authorities partner in Europe, where we have existing contract to implement the multiyear contract that is in place.

Something in the U.K. and Canada, we’ve also worked with the authority to actually execute our contract. In Japan, we also got the GEN-1 adapted vaccine approved in mid-September. And COMIRNATY is actually the only PFS vaccine, never frozen, which could be a completed advantage considering the distribution model in Japan. So again, we see this as an enduring business and we see us as I said, executing our existing contracts in our key locations. So it’s probably a — PAXLOVID stands Q3 — was a good Q3 for us, and it’s actually very good because it satisfies of perception that actually is a sustainable business with sustainable demand, which coincides with the COVID wave. And we had quite a strong spring waves in Europe and Asia, and that translated into [indiscernible].

Just to close, I want to say that 47 countries outside of the U.S. have transitioned from advanced purchasing into commercial. So as we see in the U.S., it is an enduring and now the sales that we see quarter after quarter reflect the absolute demand and reflect the waves as they hit the different region of the world.

Albert Bourla: And still also, I can’t resist also making some comments. In the 5.5 years of CEO, I had 23 earnings releases, of which 22 we beat EPS at Bloomberg and one we missed. And I don’t like the one that we missed, and that was in Q3 last year and we missed it because of COVID. We severely miscalculate. Yes, there are excuses that last pandemic was 100 years ago. So we didn’t have, let’s say, benchmark. But — and also, we had to reduce it significantly. We had $56 billion of COVID revenue in 2022 and we had a guidance of 22. So we reduced it at 40% on what used to be. However, life proved, that we got it wrong and us and everybody else. And the reality was that it was not 22 but 12. So we are very careful now when we speak about COVID because we don’t want to miss it again.

And — but I would like to say that when I see the trends of the COVID business, PAXLOVID which for us is even more important because of the higher level of profitability, it is basically identical the utilization of last year compared to this year. So far, we had 4.9 million patients treated, end of Q3 with PAXLOVID in the U.S. and — compared to 5.2 million people last year, the same period. The treatment rates have improved from 50% last year to 57%. And the fulfillment rates went a little bit down because now there is [indiscernible] from 88% went to 81%, but it’s very, very stable. The same is with the COVID vaccination. When you see the trends of COVID vaccination, the utilization are basically the same like last year, more or less and still it’s early in the season.

So there could be fluctuations over there. But — so I think your statement that some, we consider COVID as normal business now, it’s absolutely true. And this is how we regard it. And we will stop separating our business to COVID and COVID because it’s Pfizer business. And with that, I will ask Mikael to make a comment on the [indiscernible].

Mikael Dolsten: Yes. Thank you for your question. We have started to accumulate data on both durability and the impact of revaccination for RSV. On the majority of patients that we expected to go to pharmacy for revaccination, the titers remain robust after 1 and even 2 years, which is punctuate the quality of our oral vaccine. But they, of course, declined gradually, and we can have some meaningful improvement in this type with a booster. But I believe that likely in 3 years, around 3 years, we will see a drop in the titer that makes the boost really improve meaningfully, the protection for a substantial fraction of the patient. And that’s what we are going to monitor now, whether the [indiscernible] is a good interval. But otherwise, it’s performing exactly as expected for a high quality vaccine.

Now there could be patient groups that go to physician offices that are more immunocompromised, moderate to severe patients, that may benefit from once a year, and that will be more a physician directive. So I hope that will give you a bit of an understanding how this will evolve.

Operator: We’ll take our next question from Rajesh Kumar with HSBC.

Rajesh Kumar: My apologies. I was on mute. So two questions, if I may. What is the impact of [indiscernible] IRA on your business next year? Are there any numbers you’re calling out, which might help us with the modeling? That would be very helpful to understand if there are any impacts. And the second one is, I appreciate the color on the Seagen pipeline and how you’re progressing and how the market under appreciates the size of the opportunity? The sell-side estimates clearly did reflect your optimism. When is it that you’ll feel a bit more confident or what do you need to see to increase your longer-term guidance on Seagen?

Albert Bourla: Dave, can you take the IRA [indiscernible].

Dave Denton: So I’ll just hit on it very briefly. Obviously, the IRA and that [indiscernible] has pluses and pull — pushes and pulls to us as we cycle into next year. When we provide guidance by the end of this year, we will give you a view on the net impact of that as we think about our business. So more to come, hold tight on that.

Albert Bourla: And there are puts and takes, so positive things are negative, right? So we need to assess it as we are building now these calculations as we are building our budgets for next year. Seagen pipeline, Chris?

Chris Boshoff: Yes. Thank you for the question. So I think last year, at this time, we didn’t expect we’re going to have PADCEV approved in first-line bladder and everyone forecast of that approval for the first half of this year. And obviously, the approval happened very early because of the unprecedented data. So I think the performance commercially is really as we expected or exceeded what we expected in 2024. If you look at the rest of the pipeline now, the new molecules like [indiscernible] D-L1B as well as next-generation CD30 ADC called 35C for cancer [indiscernible], we will present next year conferences more updated data on these, including in combination with pembrolizumab for [indiscernible] for DB and for PD-L1 as well as really highly encouraging data for 35C, the next-generation CD30. So I think by showing and releasing more data next year will help all of you to build confidence in the pipeline.

Operator: We’ll take our next question from Akash Tewari with Jefferies.

Akash Tewari: So looking at some of your IP around 25 [indiscernible] and Prevnar, it looks like you’ll have a step up versus your previous 20 [indiscernible] vaccine, but it does look like effective serotype coverage could lag meaningfully versus Merck and backside approach it by 10% or more in older adults. How confident are you that the [indiscernible] vaccine could stave off a preferential rec from some of your peers down the line in adults? And then number two, can you talk about what special properties your once daily modified release enabledron could have outside of improved half-life that investors might be under-appreciating? I think those earlier comments stood out to us.

Albert Bourla: Mikael?

Mikael Dolsten: Yes. The 25 [indiscernible] that you asked about, the fourth generation, we aspire to the one that first hits the pediatric market, which is where the bulk of use of doses. But we also think because of this unique improvement of serotype 3, that is far more important and several of the other tiny serotypes will bring an overall value to the other segment that will be very meaningful. And as you have heard, we are working on a fifth generation that will include both improved performance such as serotype 3 and go far beyond any of those serotypes that you are talking about in numbers. We used 30 plus just to keep a bit of details for the future. For the QD, I think in general, you saw, of course, with the injectable when you went from once a day to once a week and you’ve got a smoother profile and reduced the number of peaks that many patients perform better on them.

So that’s hypothesis, we are keeping our eyes on that with a modified release, you will have a more smooth profile. You avoid certainly additional high peaks that immediately is halved, and that’s something we have seen in other formulation of other drugs. And that’s why I think we are trying to be attentive in order to have our eyes on details that can help to make this product a really nice oral product with some differentiation.

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

Vamil Divan: I’ll keep it to two. So one just on the guidance for the full year. You increased the total sales guidance by 3.5%. You increased the COVID products by $2 billion. So I guess, you’re lowering the non-COVID by about $500 million. I guess some of that does not surprise us. I’m wondering if there’s anything else you might call out where you’re sort of trimming your expectations for the full year? And then second one, sort of tie to [indiscernible] news from a few weeks ago. We noticed the GVT601 of Savelator. So that seems to be progressing still in your pipeline. I’m just curious if you’re contemplating or have you made any changes to that approach? And the mechanism is obviously similar [indiscernible], just wondering if anything you learned from the [indiscernible] situation. Should we should think about carrying over in [indiscernible].

Albert Bourla: Thank you, Vamil. Dave?

Dave Denton: Yes. On the guidance from a revenue perspective, you’re absolutely correct. We increased our overall guidance by $1.5 billion. We increased PAXLOVID by 2, which implies that a $500 million compression in someplace else in the business, which is largely Oxbryta. We’re absorbing the Oxbryta headwind and maintaining our 9% to 11% growth rate in our non-COVID business, which actually implies that our baseline business is actually performing quite well.

Albert Bourla: And I want to remind that the non-COVID business was 14% growth this quarter. Then Mikael?

Mikael Dolsten: Yes, on [indiscernible], which was previously called 601, yes, I’m encouraged about that opportunity. And of course, we try here to incorporate learnings, how – which price was developed to our advantage. As you know, that drive was already approved 2019 when we did acquisition a bit later and with several programs already up and running. 601 by itself is at a 10-fold lower dose, it has more potency and brings more improvement for hemolytic anemia as one example. So this part has performed very well in our Phase II and looked really nice in tolerability. So I [indiscernible] about that one. When I speak about higher learnings, Oxbryta was performed in the more recent studies in a part of the world where it’s really difficult to do the type of high-quality, consistent to clinical trials.

And as we investigating some of those learnings with Oxbryta, we have, as a countermeasure, focus [indiscernible] entirely on high-performance sites that have a history of delivering great drug development. And this will obviously also support a profile. So I’m optimistic. And as there’s final end here. Please remember that when we did a GPT deal, our eyes were really on [indiscernible] up to 80% of the value of the deal. But Oxbryta allowed early entrants into the market, and we’ll continue to investigate Oxbryta and keep you updated, what we learned.

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

Dave Risinger: And thanks for taking all these questions today. So my first question relates to cost cutting ahead. Obviously, the company has already engaged in significant SG&A and R&D efficiency initiatives. But I’m curious about whether management sees opportunities for further SG&A and R&D reductions? And then with respect to the over 30 valent pneumococcal conjugate vaccine candidate in preclinical development. Given management’s prior statements about it’s R&D initiatives, I’m assuming that, that will be adjuvanted and I just wanted to confirm that?

Albert Bourla: Let’s take quickly, although that savings domain, the satin R&D. We did significant reductions and we were very careful to make them in a way that will not affect our pipeline and will not affect our business. So we are very happy with what has happened. Now are we going to not continue being efficient? Of course, we will. I think I see tremendous opportunities ahead of us that we can reduce some of the less ROI-driven investment that we are doing, both in R&D and SI&A. And part of that will be, of course, invested in more productive with a trend to be able to control the cost and absorb our cost inflation. So you should see a constant, very cost focused, very cost-conscious counsel as we move on. Now Mikael, on the 30 valent.

Mikael Dolsten: Yes. Thank you for tying the question. And I think we really have been breaking new ground in our PCV technology platforms. And we’re obviously very pleased to get some of our new technologies validated with the serotype 3 that you heard about in the [indiscernible] generation, the 25 [indiscernible]. The components that allows us to go far beyond 30 includes very sophisticated new type of chemistry that on certain hyper serotypes can give several fold improvement in titer. There are minor or more substantial formulation changes that can give some to quite significant fold increase and that may or may not include adjuvants and I also experienced that we’re gaining on the use of carriers that we haven’t been working on in PCV that can add to this tool book.

So we are right now bringing all of these data together. And while we see we ran a lot with adjuvant as seen in our CDP program that allow us to go from 3 to 2, and we have a toolbox of new adjuvants, where it really will be necessary or not, it’s too early to tell, but I acknowledge your good skills in the vaccine technology, and we keep you updated as we get closer to selecting candidates.

Operator: We’ll take our next question from Chris Schott with JPMorgan.

Chris Schott: Just two quick ones here. Just first on margin structure and following up on the prior question. Is a mid- to high 30% adjusted kind of operating margin — adjusted for COMIRNATY are still fair for Pfizer? And what’s the rough time line to get there? And then my second question was just on the vepdegestrant Max franchise. Obviously, a very strong year this year. But as [indiscernible] out to next year, we’ve got the Part D redesign, we’ve got incremental competition. Is there still enough volume opportunity here to think about this as a franchise that’s going to be generating healthy growth? Or should we think about growth slowing significantly going forward?

Albert Bourla: [indiscernible] you start.

Dave Denton: So first, obviously, mid- to high 30s is very much within the realm of our business model. We’re very focused against that. We continue to march and make progress against that over time. So we don’t have a specific date for at this point in time. But as we continue to progress, both this year and we give guidance for next year, I’m sure you should see us completely progress on that front.

Albert Bourla: And I think COMIRNATY was also a little bit the question.

Dave Denton: Yes. Well, I think COMIRNATY obviously, is a down draft to that. So obviously, adjusted for the size of that business will be important. But having said that, we continue to make investments in our business such that we’re more productive, top to bottom, therefore, expanding our operating margin profile of the company.

Albert Bourla: And we don’t want to speak for specific products, the markets, right, because it’s a little bit misleading. It depends on multiple things. We did it because of the extraordinary circumstances in ’22. But in general, you all know that from 2 products, PAXLOVID is very, very high margin and COMIRNATY is on the low. [indiscernible], why don’t we start international this time and then we end up with a mirror on [indiscernible] the redesign.

Chris Schott: Okay. So on the international, we had a very strong year, and we continue to grow very strongly this quarter at 31%. Actually, our total patients on [indiscernible] have increased by 14% in the third quarter versus the second quarter. So this is a straight [indiscernible] that we are growing, and we continue to add new patients on treatment. This is essentially the result of 3 things. One, the average of [indiscernible] as the standard of care pretty much in all the countries where we operate. Two, the establishment of a robust infrastructure of care, which can enable the faster diagnosis and treatment of this complex disease. So this is a complex disease, and finding those patients takes time. And now we have a [indiscernible].

And the third element is also, of course, the increased access. Today, we have 45 countries where we have reimbursements. And we just recently had in this quarter, 2 countries, the U.K. and Australia, so 2 significant countries, that have started to reimburse in that [indiscernible]. So moving forward, we really see that those 3 elements will continue to deliver and drive growth in the key international markets. And if you look at the treatment rates, in our major international market, we still see some potential to increase that diverse. So that will be the drivers of growth in the next flowing quarters.

Albert Bourla: I mean so Chris, in the U.S., I’ll give you a little bit of color. Obviously, Vinda had very strong growth this year. And I think a big part of that has been just a direct result of the commercial effort and attention that we’ve put on it where we’ve seen real growth in the diagnosis rate and new patient starts. So new patient starts are up about 61% versus last year. And they’re up about 3% quarter-over-quarter as well, and we’re also improving compliance rates significantly with existing patients. For the market, there’s a lot of patients, nearly half that remain diagnosed. So there’s significant opportunity there. We will have tailwinds as we go forward. So we continue to put attention on this, and that’s going to be largely increased diagnosis education, the prescriber rate that we’re growing as well as affordability conditions and we’ve turned the page into 2025.

But we do think that the volume growth will be at meaningfully lower levels than what we’ve seen year-to-date. And a big part of that is obviously headwinds we’re going to see from the changing market landscape, where we will have new competitive entrants that will impact new patient starts as well as potential switching of existing patients onto some of these options. So those are some of the puts and takes on Vinda. IRA will be a piece of that as well as Dave mentioned, and we’ll have more to share about ’25 specifics when we give guidance.

Operator: We’ll take our last question from Mohit Bansal with Wells Fargo.

Mohit Bansal: And first of all, congrats on a phenomenal hire in [indiscernible]. So maybe like taking the step back, can you comment something about ABRYSVO if there was any stocking this quarter? This particular market is a lot of like stocking driven in fourth and first quarter. So how you are thinking about that? It looks like from the IQVIA trends, price — line price jumped a lot. So if you could help us understand what is going on there? And how should we think about this particular product in coming quarters?

Albert Bourla: Which product is Mohit? Unknown Executive ABRYSVO. [indiscernible]

Albert Bourla: So a few comments on ABRYSVO. So we wanted to, as I mentioned before, really start this vaccination season with ABRYSVO in fridges. And retailers, predominantly where volume is as well as with health systems. So we work with our customers and our channel partners to make sure that we were appropriately stocked and that’s reflected in our Q3 numbers. Now what we have also seen over the course of Q3 is that administration volumes. And for ABRYSVO, that began in August, over the course of the quarter have continued to steadily rise. Now they are at lower volumes than from a market perspective, where they were last year. Lots of reasons for that, including timing of the COVID vaccines as well as the change in the ACE recommendation.

But we anticipate that there will be volumes that continue into the fourth quarter. And finally, our results are also a function of what Albert mentioned is our significant improvement in market share. So we’ve doubled our market share into end customers from wholesalers and our market share of actual shots in arms of administrations in the retail setting in the middle of October was at 43%. So those are all the dynamics that are going into play for ABRYSVO performance in Q3 and heading into Q4.

Albert Bourla: Thank you, Amir, and thank you, everyone, for your attention. It was another good quarter for Pfizer. I think we are continuing to execute the 5 points plan, but we have presented at the beginning of the year. There is an underlying operational health of our business, there is stabilization of the COVID business tool. Now we feel comfortable to [indiscernible] and we have seen strong growth from the remaining part of the business. We have seen strong performance from new products. Most of them, they have beaten analyst expectations this quarter, which shows that they are doing better at me than what was perceived they will do. And we are looking forward to continuing this path of executing and creating shareholder value. Thank you for your interest in Pfizer and you have a wonderful.

Operator: That concludes today’s call. You may disconnect at any time.