Pfizer, Inc.

Good day, everyone, and welcome to Pfizer's first quarter 2021 earnings conference call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Chuck Triano, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning, and thanks for joining us today to review Pfizer's first quarter 2020 results. and financial guidance update, as well as other relevant business topics. I'm joined today as usual by our Chairman and CEO, Dr. Albert Borla, Frank D'Amelio, our CFO, Michael Dolston, President of Worldwide Research and Development in Medical, Angela Wong, Group President, Pfizer Biopharmaceuticals Group, John Young, our Chief Business Officer, and Doug Lankler, General Counsel. The slides and the accompanying remarks that will be presented on this call were posted to our website earlier this morning and are available at Pfizer.com forward slash investors. You'll see here on slide three our disclaimer regarding forward-looking statements we will make during this call regarding, among other topics, our anticipated future operating and financial performance, business plans and prospects, and expectations for our product pipeline and inline product. which are subject to risks and uncertainties, as well as the use of non-GAAP financial information. Additional information regarding forward-looking statements and our non-GAAP financial measures is available in our earnings release, including under the disclosure notice section and under risk factors in our SEC forms 10-K and 10-Q. Forward-looking statements on this call speak only as of the original date of this call, and we undertake no obligation to update or revise any of the statements. Albert and Frank will now make prepared remarks and then to a question and answer session. With that, I'll now turn the call over to Albert Borla. Albert?

Thank you, Chuck, and hello, everyone. I couldn't be prouder of the way Pfizer has started 2021. During the first quarter, we delivered strong financial results. Even excluding the revenue provided from our COVID-19 vaccine, our revenues grew 8% operationally, 10% reportedly. And this 8% growth includes a negative 5% impact from price. We continued to accelerate production and shipments to our COVID-19 vaccine, in many cases exceeding our contractual obligations for delivery timelines. And we achieved several important clinical, regulatory, and commercial milestones. with commentary on some of our biggest growth drivers in this quarter. The Pfizer-BioNTech COVID-19 vaccine contributed $3.5 billion in global revenues during the first quarter. As of May 3rd, 2021, Pfizer, along with its partner, BioNTech, has shipped approximately 430 million doses of the vaccine to 91 countries and territories around the world. I will share some thoughts on the sustainability of this revenue stream later in my remarks. Eliquis has continued to deliver a strong performance, with revenues up 25% operationally to $1.6 billion in the first quarter. In the U.S., Eliquis sales growth was driven mainly by strong volume growth. Vintaco and Vintamax generated revenues of $453 million, representing operational growth of 88%. Our disease education efforts in the U.S. continue to support a diagnosis, increasing the estimated diagnosis rate to almost 24% at quarter end, up from 21% at the end of 2020. At the end of the quarter, more than 23,500 patients have been diagnosed, more than 17,000 patients have received a prescription, and more than 10,500 patients have received the drug. including patients who receive the drug at no cost through our patient assistance programs. While there are still regional differences in cardiology activity and elective diagnostic procedures due to COVID-19 guidelines, on a national base, diagnosis rates in the U.S. have now recovered and exceed pre-COVID levels as compared with the first quarter of 2020. We also have seen strong growth from Japan and from developed Europe, where it is the largest contributor to our revenues outside the U.S. Zeldens also performed well, with global revenues up 18% operationally to $538 million. The growth was primarily driven by 16% growth in the U.S. and 14% growth operationally in international development. The underlying prescription demand in the U.S. grew 9% compared with the first quarter of 2020, outpacing the advanced therapy market by 3% at points. We have invested in formulary access in the U.S., which has played a vital role in enabling this falling growth. In the U.S., iBranch revenues declined 7% compared with the year-ago quarter. Total prescription volume is relatively stable, and we continue to be the leading product in the CDK class by a wide range, with an 84% of total patient share in first-line use. However, we saw increased enrollment this quarter in our patient assistance program, which provides eyebrows free of charge to certain low-income patients. We believe this increase is due to COVID-19-related economic hardships. that are affecting particularly the demographics of the high branch patient population. And we do expect this to normalize over time as the economic impact from the pandemic subsides. As of mid-April, we had contracted for approximately 1.6 billion doses of our COVID-19 vaccine expected to be delivered in 2021. As a result, based on the contract signed through mid-April, We are increasing our revenue guidance and now expect revenues of approximately $26 billion from the vaccine in 2021. We also are in ongoing discussions with multiple countries around the world about their needs. And we expect these discussions to lead to additional supply agreements. Based on what we have seen, we believe that the durable demand from our COVID-19 vaccine, similar to that of the flu vaccines, is a likely outcome. We want to be a long-term partner to health authorities around the world in their ongoing efforts to combat COVID-19, including their planning for an ongoing pandemic vaccination approach that is fit for purpose to local requirements. To that end, together with our partner BioNTech, we expect to have the capacity to manufacture at least 3 billion doses in 2022. We are in discussions with a number of countries around the world for multi-year contracts for the potential supply of COVID-19 vaccine doses during 2022 and beyond. In fact, we recently signed an agreement with the UK to supply 60 million additional doses in 2021, and with Israel to supply millions of doses in 2022, enough for the government to boost every eligible citizen, subject to local guidelines. with the option to purchase millions of additional doses for additional booster. We have also reached an agreement with Canada to supply up to 125 million doses in 22 and 23, with options to supply up to 60 million additional doses in 2024. It is our hope that the Pfizer BioNTech vaccine will continue to have a global impact by helping to get the devastating pandemic under control. and helping economies around the world not only open, but stay open, creating a scenario in which Pfizer can continue to be both a leader and a beneficiary. To realize this goal, we are continuing to lead with strong science, not only to maximize the impact of our COVID-19 vaccine in preventing disease, but also with the work we are doing to develop two potential novel protease inhibitors, one administered intravenously and one administered As you can see on the accompanying slide, we have many clinical studies ongoing and expect to have multiple results and submissions throughout the remainder of the year. Let me touch on a few. First, while we are currently distributing our vaccine in the U.S. under an emergency use authorization, we expect to submit this month a biologics license application to the U.S. Food and Drug Administration seeking full approval for our COVID-19 vaccine for individuals 16 years of age and older. Second, we are evaluating the safety and immunogenicity of a third dose of the existing formulation of our COVID-19 vaccine to understand the effect of a booster on immunity against the SARS-CoV-2 variants in circulation. Additionally, we have started an evaluation of an updated prototype variant version of our vaccine that encodes the spike protein of the lineage B1351 SARS-CoV-2 variant, which includes the mutation E484K, first identified in South Africa. This study is designed to establish a regulatory pathway to update the current vaccine to address any future variant or potential concern in approximately 100 days, if needed. We expect to have immunogenicity data for both studies in early July. Third, we are continuing our efforts to evaluate the Pfizer-BioNTech COVID-19 vaccine in additional populations. We expect to hear back shortly from the FDA on our application for expanded emergency use authorization for our COVID-19 vaccine to include individuals 12 to 15 years of age. The Pfizer-BioNTech pediatric study evaluating the safety and efficacy of our COVID-19 vaccine in children six months to 11 years of age is ongoing. We expect to have definite readouts and submit for an EUA for two cohorts including children two to five years of age and five to 11 years of age in September. The readout and submission for the cohort of children six months to two years old are expected in the fourth quarter. We also expect to have phase two safety data from our ongoing study in pregnant women by late July, early August. Fourth, we are making progress with improving the stability of our COVID-19 vaccine. On Friday, we submitted new stability data to the FDA, and we believe we could soon receive an update to our EUA prescribing information, allowing the vaccine to be stored at standard refrigerator temperatures of 2 to 8 degrees Celsius for up to four weeks. We are also working on a ready-to-use formulation that's subject to generating supportive stability data and obtaining regulatory approval, could potentially be stored at standard refrigerator temperatures for up to 10 weeks and up to six months at minus 50 to minus 7. If successful, we expect to have the data to support this formulation in August. Fifth, as we move closer to potential approval for our investigation of 20-valent pneumococcal conjugate vaccine for adults, which if approved, may be launched during an ongoing pandemic, We plan to begin this month a study of co-administration of the Pfizer-BioNTech COVID-19 vaccine with a 20-valent pneumococcal conjugate vaccine. Moving to COVID-19 treatments now. We have early studies ongoing for two protease inhibitors antiviral candidates, one administered intravenously and one orally. We expect to begin our phase 2-3 study for the intravenously administered compound in May. and for the orally administered compound in July. With regard to our oral protease inhibitor, we are planning to evaluate its safety and efficacy through three development pathways. We are studying it compared to a placebo to confirm whether it is efficacious against COVID-19. We are studying it against monoclonal antibodies to assess relatively efficacy against current circulating strains. Mutations of spike protein may lead to diminished efficacy of presently available monoclonal antibodies. And our intent is to bring about a therapy with durable efficacy through a different mechanism of action and conservation of the 3CL protein. Also, we are studying it in unvaccinated household contact. exposed to someone infected with COVID-19 to evaluate if it prevents close contacts from contacting COVID-19. It has been well established with flu antiviral drugs that administering them to close contacts of subjects who have flu reduces the chance of them also getting flu by more than 80%. Though SARS-CoV-2 is a different virus than flu, we are hopeful the principle will be the same. If we administer the investigational treatment to those who are at risk from close contact, does it prevent them from getting sick? As you can see on our timeline, if things go well, we could potentially apply for approvals before the end of the year. The intravenously administered protease inhibitor is being studied inpatient phase 1b studies in the U.S., Spain, Belgium, and Brazil. We expect to begin a phase 2-3 study in which the IV compound will be tested against the current standard of care this quarter. With the current unmet global medical need for antivirals, we are constantly assessing how we can accelerate the development of these potential treatments. Pfizer has emerged as a leader in mRNA development. and we are exploring a wide range of opportunities for the technology. We are making rapid progress with our potential flu mRNA program, and we aim to maintain mRNA leadership with two potential game-changing mRNA approaches to a flu vaccine expected to enter the clinic in the third quarter of 2021. We will test multiple constructs in Phase 2 and 2 to facilitate swift selection of an optimal tetravalent flu product dose regimen. We aim to develop initially a tetravalent flu vaccine using the modified mRNA platform. Pending the generation of favorable immune and tolerability phase 1 to data, a potential rapid progression to phase 3 is possible, given our large-scale pharmaceutical science and manufacturing capabilities. We are also exploring the potential to address other infectious diseases. that we plan to discuss in the near future. In addition to prophylactic vaccines for infectious diseases, we believe mRNA has the potential to address a wide range of therapeutic areas, including cancer and genetic disease. As you have seen, today we have increased our 2021 R&D guidance to reflect our plans to increase our mRNA capabilities, build momentum in our targeted areas of interest, and deliver on mRNA's breakthrough potential for the benefit of people worldwide. We can expect to hear more about our plans and potential applications in the coming weeks. Now let's turn to Pfizer R&D pipeline, which continues to be one of the great strengths. Our pipeline currently includes 99 potential new therapies or indications. That's 99 potential opportunities to change the lives of patients around the world. I will now provide an update on some of these exciting, exciting candidates. In vaccines, as referenced earlier, the FDA is reviewing the biologic license application for our investigational 20-valent pneumococcal conjugate vaccine for adults 18 years of age and older with a PDUFA date in June of 2021. Among pneumococcal conjugate vaccines on the market or in late stage development, if approved, we believe it could provide the most comprehensive coverage against pneumococcal pneumonia disease in adults. In internal medicine, in December of 2020, we enter into a collaboration with Myovat Sciences to commercialize relucolix combination therapy with witherine fibroids and endometriosis pending FDA approval. as well as Relugolix for advanced prostate cancer. We are excited about the prospect of soon commercializing this product for its potential indication of uterine fibroids, if approved. And the FDA has a date of June 1st, 2021. An estimated 5 million women in the U.S. suffer from symptoms of uterine fibroids, and an estimated 3 million women are inadequately treated by current therapy and require further treatment. We are also working on our planned FDA submission for the endometriosis indication, which we hope to submit this year. An estimated 6 million women in the U.S. suffer from symptoms of endometriosis, and an estimated 1 million women are inadequately treated by current therapy and require further treatment, unfortunately. In inflammation and immunology, alopecia areata is an immune disease that causes hair loss and has no approval treatments in the U.S. and Europe. The phase 2b3 pivotal clinical trial to evaluate our JAK3 tech inhibitor ritlacitinib in alopecia areata is expected to read out late in the third quarter of 2021. If approved, ritlicitinib has the potential to transform the lives of certain patients with this condition. The FDA has extended the priority review period of our new drug application for abrocitinib for the treatment of adults and adolescents with moderate to severe atopic dermatitis. The PDUFA date has been extended three months to early third quarter 2021, as the FDA has requested additional information and will require additional time to review this data. We believe in the efficacy and safety profile of abracitinib, which has demonstrated in phase three clinical trials of more than 2,800 patients. We look forward to working with the FDA and other regulators around the world over the coming months to potentially help bring this important option to patients. It is important to note But each DAK inhibitor is unique and potential risk identified in one molecule do not necessarily indicate other molecules. We continue to remain confident in the importance of a DAK inhibitor class for appropriate patients with inflammatory diseases given the role of DAK pathways in inflammatory processes. Patient safety is of utmost importance, and we continue to monitor all compounds in our portfolio to identify signals both in development as well as after regulatory approval. In oncology, we continue to evaluate talazoparin in three studies in prostate cancer. The first is TALAPRO-1, a Phase II study in second-line plus patients with DDR mutations. which recently had a positive result as a monotherapy providing the key proof of concept to move forward to prostate cancer combination studies. The second is TALAPRO-2, a phase three study in first line metastatic castration-resistant prostate cancer in an unselected population for which the primary completion date is expected in the second half of 2021. And finally, TALAPRO-3, which is beginning soon, and we studied telosoparin in combination with enzalutamin in DDR-deficient metastatic castration-sensitive prostate cancer. In February 2021, we announced that the first participant has been dosed in the registration-enabling Phase II Magnetism MN3 study of ternalacabab. and investigational B-cell maturation antigen. CD3 targeted this specific antibody in patients with relapsed refractory multiple myeloma. New enrollment in this study has been paused while we provide additional information to the FDA regarding three cases of peripheral neuropathy observed in the ongoing Phase I Magnetism M1 study. Patients who are deriving clinical benefits from erlanataba may continue treatment. In rare disease. Our Phase III lead in-study for the gene therapy, fidanacogene, elaparvovac, in hemophilia B has now been fully enrolled with more than 40 patients. We remain on course to complete dosing and expect to conduct a planned interim analysis for a potential data readout in this year, in 2021. We also continue to progress our hemophilia A gene therapy. which was developed in collaboration with Sangam Therapeutics. We anticipate presenting two-year Phase I and II data in the fourth quarter of 2021. Additionally, we are pleased to report that our leading study for our Phase III AFIM study is in hemophilia A, now fully enrolled, which could lead to a pivotal result in 2022. For our gene therapy candidate, for DUSAIN muscular dystrophy, we now have an approved generic name. For the dystrophic gene, MOVAPARGOVEC. And we are progressing our phase three trial, SIFREM. Today, we have opened 15 trial sites in eight countries, Italy, Spain, Israel, the UK, South Korea, Japan, Russia, and Canada. In the U.S., we are actively working with the FDA to address outstanding questions related to our investigational new drug application, including technical aspects of our potency assay matrix, so that we can begin enrolling patients in Phase III U.S. study sites. While we have high confidence in our current quality control overall and with the potency H-A matrix, which has been accepted in countries outside of the U.S., the FDA has additional technical requests that we are working to address as quickly as possible. We understand the sense of urgency among many families in the U.S. who are hoping for sites to open soon. While we cannot speculate at this time as to when sites may open in the U.S., we do not expect a resolution in the first half of 2021. We are working with a sense of urgency and hope to reach alignment with the FDA as soon as possible. In the interim, we will continue to progress our trial globally and enroll patients at other sites, which we believe will allow our program to remain on track to potentially enable programs around the world, including the U.S. Now, I would like to address a key policy issue in which we continue to be actively engaged, affordable access. We expect the Biden administration will soon announce a human capital component to their infrastructure package that will include health provisions. Pfizer is mobilizing to work with the administration, as well as lawmakers in both political parties, on meaningful solutions for patient access. Specifically, there are three key areas where we would like to see Congress and the administration focus. Rebate reform, capping beneficiary cost-sharing in Medicare Part II, and incentivizing the uptake of biosimilars. At the state level, we have focused our efforts on meaningful solutions to directly address patient affordability challenges. This includes legislation to require 100% of negotiated rebates to be passed through to consumers at the pharmacy county. We can also work with state policy makers to advance legislation in several states, ensuring that patient assistance provided by manufacturers will count towards the patient's deductible and out-of-pocket maximum. Looking ahead. We remain focused on being nimble and investing in our R&D organization so we can build on the strong improvement in the clinical success rates that have been seen over the past five years and potentially translate that success into strong commercial launches that benefit patients. Excluding any impact from our COVID-19 vaccine, we are on track and continue to expect a revenue caregiver of at least 6% on a risk-adjusted basis through the end of 2025, as well as double-digit growth on the bottom line. We remain very confident in our ability to achieve these growth rates because of the strength of both our current product portfolio and our R&D pipeline. At the same time, we will continue to pursue business development opportunities with the potential to further enhance our long-term growth process. Just last week, for example, Pfizer acquired Amplix Pharmaceuticals, a privately-held company dedicated to the development of therapies for debilitating and life-threatening diseases that affect people with compromised immune systems. Amphlyx lead compound is a novel investigational asset under development for the treatment of invasive fungal infection. Thank you. And now I will pass the stage to our CFO, Frank D'Amelio.