Pfizer, Inc.

Everyone and welcome to Pfizer's fourth quarter 2022 earnings conference call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Chris Thibault, Senior Vice President and Chief Investor Relations Officer. Please go ahead, sir.

Thank you, Kelsey. Good morning. Welcome to Pfizer's fourth quarter earnings call. I'm joined today by Dr. Albert Bourla, our Chairman and CEO, Dave Denton, our CFO, and Dr. Michael Dolson, President of Worldwide Research and Development in Medical. Joining for the Q&A session, we also have Angela Fong, Chief Commercial Officer and President, Global Biopharmaceutical Systems, Amir Malik, our Chief Business Innovation Officer, Dr. William Powell, our Chief Development Officer, and Doug Lankler, our General Counsel. Before we begin the call, I wanted to remind you of some logistical items. The materials for this call section of Pfizer.com. You see our forward-looking statements disclaimer on slide three, and additional information regarding these statements and our non-GAAP financial measures is available in our earnings release, as well as in our SEC forms 10-K and 10-Q under risk factors and forward-looking information and factors that may affect future results. Forward-looking statements on the call are subject to substantial risks and uncertainties. Speak only as if the call is original based. and we undertake no obligation to update or revise any of the statements. With that, I will turn the call over to Albert. Thank you, Chris.

Hello, everyone, and thank you for joining us today. During this morning's call, I will touch on some of our highlights from 2022 and share some thoughts regarding Pfizer's exciting near and long-term growth plans. 2022 was an outstanding year for Pfizer on multiple fronts. We exceeded $100 billion in revenues for the first time in our 174-year history. We maintained our industry-leading clinical success rate and further improved our cycle times, which already were among the industry's best. We were named to 10 different best employer leads, including those published by Ford, LinkedIn, Glassdoor, and others. And most important, more than 1.3 billion patients around the world were treated without A truly humbling achievement. Our key growth drivers for the full year 2022 included global sales of Paxlovid, strong growth of Comirnaty in developed markets, the launch of Revner20 for the adult population in the U.S., the continued strong growth of Eliquis Global, the strength of our vintage and family globally, and the addition of newly acquired products Nurtec, ODP, Looking ahead, we foresee strong operational growth of 7% to 9% in 2023, excluding revenues from our COVID-19 products and the impact of foreign exchange. We expect our potential new launches, newly acquired products and in-line products will all contribute to this growth. These projections include our focus for several important potential product launches, including our RSV vaccine for older adults, potential prematurity pediatric indication, and products and candidates that came to us through recent business development activities, including Etrasimone for ulcerative colitis, Nurdec and Zavezepam for migraine, and Oxbrita for sickle cell disease. We are in the midst of an 18-month period during which we expect to have up to an unprecedented 19 new products or indications in the market. Fifteen of these 19 are from our internal pipeline, with the remaining four coming to Pfizer, as just explained, via the recent business development deals. Recognizing the importance of this potential launch, and the patients who rely on our innovations, we are increasing the support we are putting behind them by investing an incremental 1.3 billion in SINA expenses in 2023. Dave will provide more details in these investments during the presentation. One example of a product that is already benefiting from this additional support is Syndinco, which recently has seen an improving growth trajectory, but we expect to continue through the course of 2023. In the fourth quarter of 2022, Sybingo's new-to-brand prescriptions grew 84% sequentially, the fastest growth rate in the class. We have started 2023 with 55% commercial formulary access and we expect that access to continue to improve during the year, especially with the upcoming expected expansion of the U.S. indication to include adolescents 12 to 18 years old in approved. We also introduced a new direct-to-consumer campaign in November, which has increased patient awareness of Cipinco and led to more patients asking their doctors. We look forward to the expected US launches of Etrasimone in ulcerative colitis and Ritlacitinib in alopecia areata, if approved, as well as the expected launch of Abrilata, a biosimilar to Humira, to further expand our franchise in immunology this year. However, we recognize that investors are not only interested to hear this year's guidance, but also to understand the long-term growth prospects of the company. Particular questions are focused on our plans to offset the expected 17 billion impact of the LOEs between 2025 and 2030, and our long-term projections for our COVID-19 products. We will try to address both, starting with this slide regarding our business excluding COVID. As you can see in this chart, we expect the 15 of the 19 potential launches that are coming from our internal pipeline, to generate 2030 revenues that will more than offset the expected LOE losses forecast for 2025 to 2030. The potential $20 billion in this chart is a very fantastic number. I would also point out that some of the potential launches are expected to be bigger contributors to our growth than others. And if all 15 were to achieve their full potential, this figure could go even higher. In addition, we believe we have the ability, if successful, to add at least 25 billion of risk-adjusted revenues to our 2030 top-line expectations through business development activity. As we have said previously, we believe the deals we have already done for ARENA, BioHealth, have the potential to get us more than 40% of the way there, with approximately 10.5 billion in expected 2030 revenue. I am very pleased to see that the analysts' consensus expectations for the same revenues have already reached 9.5 billion, closing materially the gap that previously existed between internal and external expectations. Four of these products have already launched or are expected to launch, subject to regulatory approval in 2023. We also have more than enough capital to invest in the additional opportunities needed to meet or exceed this target. And of course, we have many more potential numerous launches expected in the 24 to 2030 timeframe, if successful in clinical trials and approved. Some of the most promising assets include our oral GLP-1 candidate for diabetes and obesity. All of them are under this dotted box, XB. Potential combo vaccines for flu, COVID-19, and RSV. Potential vaccines for Lyme disease and singles. Multiple new oncology product candidates, including IRB471 and our CDK4 inhibitor for endocrine receptor-positive breast cancer. Our gene therapy candidates for hemophilia A, hemophilia B, and to said muscular dystrophy. Our pan-hemophilia A and B antibody treatment, and many more. In April, we expect each of these to be key incremental contributors. to our growth aspirations through 2025 and beyond. Even without any of these additional potential projects, we expect our 2025-2030 revenue CAGR to be approximately 6%, and if some of them are successful, the CAGR could exceed 10%. Now, let me turn my attention to our COVID-19 portfolio. At the J.P. Morgan conference earlier this month, I spoke about expecting 2023 to be a transition year, representing a low point in our COVID-related revenues. Let me provide a little bit more color on that. I will start with COVID in the U.S. as an example. In 2022, 31% of the population, or 104 million Americans, received an average 1.4 doses of COVID-19 vaccine. for a total of 144 million doses. The relative share was 64%, or 92 of these 144 million doses, as you can see in the first column. In 2023, we expect about 24% of the population, or 79 million people, to receive vaccine doses for COVID during this year. This drop is due to expected fewer primary vaccinations and reduced compliance with recommendations. We expect they will receive about 1.3 doses per person on average in 2023. The drop is because fewer people are expected to receive their primary doses and for the most part only those who are older or at higher risk are expected to continue receiving more than one booster per year. This should result in about 102 million total vaccine doses administered in 2023. We believe Pfizer will maintain at least 64 market share and therefore expect about 65 million doses of the Pfizer-BioNTech vaccine to be administered in 2023. In 2024, we expect the utilization rates and market share figures to stabilize and come in roughly the same as in 2023. Then, starting in 2025 and continuing in 2026 and beyond, we expect to see an increase in COVID-19 vaccination rates, assuming the successful development and approval of a COVID flu combination product. A successful reproduction of a COVID flu combo could over time bring the percentage of Americans receiving the COVID-19 vaccine closer to the portion of people getting flu shots, which is currently about 50%. Outside the U.S., we expect these general trends to be similar with some variations from country to country. So, what does this mean for revenues? We expect 2023 to be a transition year in the US. In 2022, we sold, at pandemic prices, more doses than were eventually used. This resulted in a government inventory bill that we expect to be absorbed sometime in 2023, probably the second half of the year. Around that time, we expect to start selling Comirnaty through commercial channels at commercial prices. We expect that in years 2024 and beyond, the doses sold and doses used in a year will more closely align together, and the commercial price to remain relatively stable with only inflation-like price increases. Now, let me briefly run to PaxCovid. In 2022, we estimated 110 million COVID-19 symptomatic infections were reported in the world, excluding China. Approximately 12% of them were treated with approximately 14 million oral therapy courses. And PaxCovid had a lion's share of them, with approximately 90% market share. are exceeded than 90. Keep in mind that this reflects a full year of reported inflections, but only a partial year of accelerated availability due to supply constraints in the first quarter of 2022. In 2023 and beyond, we expect infections to increase slightly at 2% annually. due to waning immune protection of the population, resulting from reduced vaccination rates. Similarly, we expect treatment rates to increase as awareness, education and additional oral entries will grow the oral antiviral market. Finally, we expect Vaxlovid to maintain very high given its strong benefit-risk profile and brand recognition. So, what does this mean for revenues? As with Comirnaty, we expect 2023 to be a transition year for PaxClovit as well. In 2022, we saw at pandemic prices more treatment courses than were eventually used. This resulted in a government inventory bill that we expect to be absorbed sometime in 2023, probably second half. Around that time, we expect to start selling Pax Clovis through the commercial channels at commercial prices. We expect in years 2024 and beyond that the courses sold and used will align closely together within every year. There has been a great deal of speculation regarding the new but uncertain market opportunity for Paxlovit in China. So let me share what we are seeing. We have an agreement with one company to import and distribute Paxlovit in China, a local company, and we have a manufacturing agreement with another local Chinese company for local manufacturing. Pfizer in fiscal year 2022. From December, which is the first month of our non-US fiscal year, through March, we expect to ship millions of courses to meet local demand. We expect we will be able to sell effectively under government reimbursement through end of March. And despite China's recent decision not to include Paxlovid on the country's natural drug reimbursement list, we expect to offer the product on the private market after April 1st, unless, of course, a listing opportunity opens up before then. Lastly, I want to point out that while we are expecting increased utilization in all regions of the world as infections increase, we are not including any major non-US or non-China contracts in our 2023 forecast. Let me close with a few thoughts regarding our scientific answer. R&D continues to be the lifeblood that fuels us as a company, which is why we plan to increase our R&D spend by at least 8.7% in 2023 to 12.4% and 13.4% range, the obedience range. In addition to the increased investments, we are taking steps not only to further improve our interest-related success rates and cycle times, but also to increase overall return on investment and R&D productivity. As you have seen in the last year, we continuously prioritize our pipeline to focus on the assets that represent potential breakthroughs and have the potential for generating higher returns, putting more capital behind larger opportunities like GLP-1, FLU, Erlan Adanov, and others. We are at an inflection point to walk from a position of strength with our best-in-class R&D productivity, a robust pipeline of innovative assets, and one of the highest R&D budgets in the industry. I will turn it over to Dave to provide details on our fourth quarter performance and our outlook for 2023. After Dave, Michael will provide an update on our R&D pipeline. Take it over, Dave.

Great. Thank you, Albert, and good morning, everyone. Albert has already taken you through many of the key drivers of our four-year performance, so I will focus my opening remarks on some key highlights from the fourth quarter. Revenues grew operationally 13%. primarily driven by communities' strong growth in developed markets, following the slowdown in deliveries that we discussed in the third quarter, ahead of the rollout of the bivalent booster. We also saw very strong performance from Pax Slovis outside the U.S. and the ongoing launch of Prevnar 20 for adults within the U.S. Excluding direct sales and alliance revenues related to our COVID-19 products, Pfizer's And if recently acquired products from Biohaven and GBT are also excluded, revenues were up approximately 3% in Q4. Reported diluted earnings per share this quarter grew 48% to $0.87, while adjusted diluted earnings per share of $1.14 grew 69% on an operational basis in the quarter. Both EPS figures include a $0.32 benefit from lower required IPR&D expenses compared to last year's fourth quarter. Once again, in the quarter, foreign exchange movements significantly impacted our results, reducing fourth quarter revenues by approximately $2.5 billion for 11%, and adjusted diluted earnings per share by $0.19 for 24% compared to LY. On a full year basis, foreign exchange negatively impacted revenues by $5.5 billion, or 7%, and adjusted diluted earnings per share by 36 cents, or 9%. Turning now to 2023 and the financial outlook for the company. Let me first point out that our approach to guidance in 2023 is fundamentally different than prior years. Given the expected transition to commercial markets for our COVID franchise and away from an advanced purchase agreement environment, our guidance reflects our best estimates for both revenues and profits for these products for the full year, not just what has been contractually secured. On a total company basis, we expect revenues of between $67 billion to $71 billion, reflecting an operational decline of 31% at the midpoint. Importantly, we expect that revenues from our business excluding COVID will grow between 7% and 9% on an operational basis in 2023. That growth is projected to be split between contributions from our new product launches, our recently acquired products, as well as our inline portfolio. The total company revenue declines are entirely driven by our COVID products, which are expected to go from their peak in 2020 to their low point in 23 before potentially returning to growth in 24 and beyond. While patient demand for our COVID products is expected to remain strong throughout 2023, much of that demand is expected to be fulfilled by products that were delivered to governments in 22 and recorded as revenues last year. Now, I want to point out that our total company revenue guidance range is wider than what is implied by the 7% to 9% operational growth rate range for the business excluding COVID. The wider guidance range reflects the potential volatility that we see in our COVID product revenues, given that they could be significantly impacted by factors outside of our control, such as the infection rates and the severity of the virus, as well as the timing for transitioning to a traditional commercial model here in the US. And you can see on this slide our cost and expense guidance for 23. As I mentioned in my remarks at our investor event in December, both SINA and R&D expenses are expected to be significantly higher in 2023 versus 22, despite the fact that our overall revenues are coming down. Higher investments in SINA are significantly focused on the successful launches of the large number of potential new products that Albert highlighted, as well as recently acquired assets. Additionally, the expected commercial launch of both Comirnaty and Paxlova in the U.S. will require additional investments as we transition away from the government market. These investments are squarely focused on supporting the company's 2025 to 2030 growth aspirations. We also intend to invest significantly in our research efforts this year, with multiple exciting and potentially high-value programs receiving additional funding, including our oral GLP-1 programs, Elimodimod, and respiratory combination vaccines. All this spending to support our commercial and research activities we believe will not only yield an attractive return, but also contribute towards setting us on a path to achieving our long-term growth goals. I point out that when you exclude revenues and expenses related to our COVID products, our expected operating margin profile this year is largely consistent with the prior year. This reflects incremental investments in SMA related to launch products and R&D as well as lower acquired IP R&D expenses. In 2023, we are investing in both R&D and SMA in advance of revenue contributions from new products. Looking longer term, we expect the spending will be maintained with the P&L growing into the cost base as new product revenues begin to be fully realized with margins improving as a result. Given that 2023 is both a year of investment and transition, I thought it would be helpful to outline many of our key assumptions built into our guidance. I don't intend to walk you through all of the elements here, but both slides 19 and 20 outline many of the details. In summary, these assumptions include strong revenue growth of 7% to 9% in our business, including COVID, additional investments in SMA and R&D for Pfizer's near and longer-term growth plans, continued patient demand for COVID-related products worldwide, with vaccination rates declining slightly and utilization of treatments slightly increasing. re-invasions of the European permission for emergency contract over multiple years versus full delivery in 2023. And finally, U.S. commercialization of the COVID products in the second half of 2023. In summary, as we enter a new year, our business is extremely strong with many in-line, acquired, and expected launch products capable of driving strong growth with an attractive pipeline of potential products coming in the future. We believe 23 will be an important year for Pfizer, and that is why we are deploying our resources into quality execution in order to fully realize the growth opportunities we see within our portfolio and within our pipeline. We have the potential to impact our growth outlook through 2030 and beyond. So with that, let me turn it over to Mike.

Thank you, Dave. Today, I want to set the stage for an anticipated catalyst reach 18 months. As Albert mentioned, we're in a position of unprecedented strength in our history, and I'm excited to share a high-level overview of an involved strategy for Pfizer R&D to focus our resources on transformative programs which could be most impactful for patients, drive improved return of R&D investment, and create the most value. We will leverage and continue to innovate our powerhouse capabilities in medicine design, and continue to innovate light-speed drug development to further improve our industry-leading success rates and cycle times. We have rethought our approach to rare disease, and we move from having a standalone research unit to aligning key programs with other therapeutic areas. We plan to externally advance rare disease programs that do not fit into a core therapeutic area focus. At the same time, we plan to tap into the expanding external innovation ecosystem by actively pursuing biotech innovation and emerging innovation that fits strategically and accessing external assets that are differentiated. Taken together, we believe these actions will help position us to lead the industry in reaching more patients with the most impactful near-term blockbuster breakthroughs while driving forward the next wave of innovations. I'm pleased to share some examples with you today. We are pursuing potentially transformative efficacy in our inflammation and immunology franchise with the potential launches of etrazimod, inuncercid colitis, and lisicinib inalopecia rata, which both have the potential to be blockbusters, and a planned phase 3 study start of anti-interferon beta in dermatomyositis and other idiopathic inflammatory myopathies. Our next wave of innovation includes two monoclonal antibody candidates for atopic dermatitis, which exemplify our multi-specific platform and in-house biomedicine design expertise. To assess currently in phase one clinical trials, each targets three cytokines in a single therapeutic. So we refer to them as tri-specifics. On the right are phase one pharmacokinetic profile of the average plasma concentration. For both molecules, the profile suggests that once a month or even less frequent subcutaneous dosing may be supported. There is potential for improved efficacy with more potent interleukin 4 and 13 neutralization plus and expanded breadth of efficacy by blocking thymic stromal lymphopoietin to potentially cover more endotypes or by blocking interleukin-23 to potentially enhance its reduction. The phase one studies continue. We aim to bolster our 30-year experience in hematology with a strong pipeline that complements our inline portfolio and collectively has blockbuster potential. I will talk more about elranatamab and GBT61 in a moment. So we'll highlight here that we expect multiple data readouts for TPI62 in hematological malignancies, two phase three readouts for implacamab in sickle cell disease in second half of 24, and a phase three readout for mastacemab in patients with hematoma A or B in second quarter of 23. for both hemophilia A and B with inhibitors. If successful, we project submitting for the non-inhibitor indication in both A and B hemophilia in the third quarter of 23. We recently announced positive topline results from a phase three study of our hemophilia B gene therapy candidate and expect a pivotal readout for our hemophilia A gene therapy in the first half of 24. We recently presented strong updated phase 2 data on L-granatomat, our investigational B-cell maturation antigen or B-CMA CD3 targeted by a specific antibody for relapsed or refractory multiple myeloma in heavily pre-treated patients who had received at least three classes of prior therapies. This candidate, which has the potential to be a leader in the B-CMA by a specific class, demonstrated a high objective response rate of 61% in patients with no prior BCMA-targeted treatment, early and deep responses, and a manageable safety profile. Given factors currently limiting the availability of novel therapies in the triple-S exposed setting, L-venetamab has the potential to reach a broader and greater number of patients as an off-the-shelf option simultaneously, offering more convenience than intravenous administration. With FDA Breakthrough Therapy designation granted last year, L-Venetamab could potentially be approved this year. After its blockbuster potential and patient value beyond the triple-press refractory population, our clinical strategy aims to move to earlier lines of therapy and combination approaches with the potential, if successful, for multiple approvals to expand eligibility and duration of therapy. Now, to our next generation, oral, once-daily hemoglobin S polymerization in individuals that's in a unique class and has the potential to expand the prophylactic treatment of people with sickle cell disease. Standard of care treatment rates have typically been low due to side effects or efficacy of both. While Luxbrita made substantial progress in preventing hemoglobin polymerization or sickling, GBC601 is a potential investing class candidate which may reduce both hemolysis and frequency of phase-inclusive crises. The most recent data from our Phase I multiple ascending dose study showed improvements in hematocrit and hemoglobin levels over time. Mean hemoglobin occupancy of more than 32% for the 100 milligram maintenance dose and more than 41% for the 150 milligram maintenance dose. And improvements in red blood cell health with a higher maintenance doses. The maintenance doses were well tolerated. We believe these results may be transformative for patients with a potential to achieve 35 to 45% hemoglobin occupancy which is considered optimal for both hemoglobin-oxygen affinity and preventing sickling and approaches levels seen with gene therapy. This asset is also being studied in an ongoing phase two study with a seamless phase two redesign. We plan to start the phase three part in the second half of 2023. Next, we aim to expand our leadership in breast cancer with a pipeline of complementary Next-rate candidates. Our CDK4 inhibitor targets improving on CDK4-6 inhibition standard of care by maximizing CDK4 coverage. We're studying it in Phase I in hormone receptor-positive R2-negative metastatic breast cancer as a single agent and in combination with endocrine therapies. The majority of hormone receptor-positive breast cancers express low CDK6 inhibition while CDK4 is likely to be a major cell cycle driver. We have seen that CDK4 inhibition can lead to neutropenia that requires more frequent blood test monitoring, mostly driven by CDK6 inhibition, and that complete CDK4 inhibition by these inhibitors is challenging due to dose-limiting hematological adverse events. In the phase 1 combination study, the confirmed objective response rate in combination with falvestrant or leptosol reached nearly 30%, and the clinical benefit rate was approximately 50% in 21 patients with measurable disease. The median progression-free survival was more than 24 weeks in 26 patients, including 5 without measurable disease. All patients were heavily pretreated with a median of four lines of prior treatment. All patients received prior CDK4-6 inhibitor treatment and 67% received prior Fulvestra. JASET was well tolerated with the CDK4-DRIVE showing only 15% grade 3 neutropenia and no grade 4. Here we show a scan of a patient to achieve partial response and was on treatment for 47 weeks. She had received six lines of prior treatment, including CDK4-6 inhibition and falvestrant. We are currently engaged in dose optimization, enrolling CDK4-6 naive cohort, and planning to start a randomized study in second-line treatment of estrogen-receptor-positive R2-negative metastatic breast cancer this year. Additional data readouts from our next wave of breast cancer candidates In addition to the assets I spoke about today, we anticipate multiple milestones over the next 18 months. We expect a pivotal iGrants readout in hormone receptor-positive or 2-positive metastatic breast cancer, a pivotal study start for ARV471, and a phase 2 readout for our CAT6 inhibitor. We have achieved incredible advancement in our vaccines portfolio. including candidates that harness our leadership in mRNA with an unprecedented number of milestones expected. In addition to the expected launches shown here, we expect a Phase III data readout from our ModRNA flu candidate vaccine and a potential respiratory combination vaccine study start. A Phase I-II study of our shingles candidate, the first mRNA-based shingles vaccine program, began last week. In inflammation and immunology, as well as internal medicine, key catalysts include potential launches of potential blockbusters, a planned pivotal study start within from beta map, and data readouts in metabolic disease. We are also making good progress in our anti-infectives portfolio, including anticipating full approval for Paxlovid and planned study starts for both our second generation COVID-19 antiviral candidate, which may have no or limited drug-drug interaction, and our RSV antiviral candidate. In closing, we are very optimistic about the many transformative catalysts emerging from the pipeline. Pfizer scientists are working with urgency and commitment to help the most patients as quickly as we can. Thank you. Let me turn it over to Chris to start the Q&A session.

Thank you, Michael. Chelsea, why don't you poll for questions, please? We'll take as many questions as time permits and investor relations will be available after the call to answer any detailed questions that you're not able to address on the call itself.

Yes, sir. At this time, if you would like to ask a question, please press the star and one keys on your touchtone phone. You may remove yourself from the queue at any time by pressing star two. Once again, that is star one to ask a question. And we'll take our first question from Louise Chen with Cantor. Your line is open.

Thank you for taking my questions here. So first question I have for you is, do you expect your COVID flu combo to be on an mRNA platform? And then I wanted to ask you on this RSV vaccine, there's a few players in the space, and just wondering if you think Anybody could potentially get a preferential recommendation from ASIP, or is that really hard to achieve? And the last question is on your tri-specific monoclonal antibody. Is atopic dermatitis still a key focus for you? And if so, are you moving the focus to this monoclonal antibody, or are you still focused on the trasmod for atopic dermatitis? And I'll see you had a topical PDE4 that was in development. Thank you.

Thank you, Liz. Clearly, for the ACIP, it will depend on the data, and it is difficult now to say if the professor could be achieved or not. But for both questions, COVID flu is mRNA, or is it not, Michael? And then also, what about the trial-specific antibodies?

So, as I was told about Sibinko's expansion, We think there's room for many opportunities in atopic dermatitis. We wanted to highlight this as a really novel pioneering approach to go beyond the current antibodies in atopic dermatitis with potentially many other allergic diseases. But there is room for several products in our pipeline in both oral and topical segments, as you mentioned. So this is an area I think we will excel in. Well, I think it actually offers an opportunity when you have the breadth to have a pipeline with different platforms. We think that the COVID flu, which contains six components, and we have made a real good progress in enrolling the study and we start to share data in the near future. by itself, of course, a fast track forward and in data, but for the use of a potential triple vaccine, rather than adding up more and more mRNA with the current technology that we have seen can lead to reactinicity limitation and less trollability, we think the flexibility to add on a protein may give you the perfect balance

You know, we are mastering multiple technologies, so we are using fit for purpose here. Every time we feel that the technology is appropriate for the problem we're trying to solve, we apply this technology. Flu and COVID, they are species of essence because there are variants that are coming. So mRNA is ideally positioned to address these challenges. With RSV, the virus is not changing. But often. So a protein approach that has a brilliant ability profile, almost like when we saw the data, the responses of the vaccine arm compared to the placebo arm were very difficult to separate, with very, very high efficacy in our case. I think it's the best way to move forward. That's the benefit of having multiple approaches and multiple technologies. Next question, please.

Our next question will come from Terrence Flynn with Morgan Stanley. Your line is open.

Great. Thanks for taking the questions. Maybe two part for me. I was just wondering if you can provide any more details on European vaccine contracts that were extended. Just wondering if you were able to secure a higher average price, given some of the headlines in the press earlier this week. And then latest thinking on Paxlovid commercial pricing in the U.S. as well. Was wondering if you could weigh in on that. And then the second question relates to economics with BioNTech on a combo vaccine. Just wondering how that will work in the event that you do go forward with a combined COVID and seasonal flu messenger RNA vaccine. Thank you.

I'll take the last one and then Angela will answer the European vaccine and the Paxlovid. As you know, the flu vaccines that are developing, biotech also have an economic position into it. And of course, the COVID vaccine, it is a vaccine that we are sharing with that. So we are not ready to make any comments about the economics, about the potential COVID and flu vaccine. Angela, what about the European situation and tax credit pricing?

So for community in Europe, as you know, this was a multi-year contract that we entered into with the Commission and the member states. And so I think the pricing there, you know, is what it is for the contract. And we're in discussions with the European Commission regarding, you know, 23 and what the deliveries will look like. Specifically for PACS, I think that was your next question. You know, that is going commercial only later in this year, so we're now preparing what those pricing scenarios could look like, and we'll share more at the right time.

Thank you, Angela. And also to repeat, I think David has mentioned already that in our guidance for this year, we factored only a portion of the European contract, so we spread the volumes into multiple years, although no agreement has been reached yet. Next question, please.

Our next question will come from Robin Karnascus with Truist. Your line is open.

Hi, thanks for taking my question. So just to drill down a little bit on tax COVID, it looks like a QVIA numbers are implying about 9.3 million versus say the 12 million that you mentioned for 2022. So I was wondering if you think about the split going forward, XQS, could it be somewhat similar or do you think it'll be more skewed be more even between the US and XUS. And my second question is, it also could imply that about half of your 20 million contracts were used in 2022. So how do you think about, could it be very minimal revenue as you draw down that tax flow of it and will it go into a stockpile? Thanks.

Yeah, Angela?

Sure. Well, let's start with the US tax flow of it. So in 2022, when we launched Paxlovid, the first quarter of Paxlovid, the first quarter post-launch, we did not really have sufficient supply because we were still ramping up. So the total number of doses that were used in the U.S. for Paxlovid is actually less than the demand. So that's why you see, you know, we used about 8.6, 8.9 million doses in the U.S. when actually demand was much more than that. Then you asked a question about IQVIA and the difference. As you know, IQVIA doesn't capture all the channels, so you're not going to see an exact match, but I think that in general for 2023, the number of doses that you will see for the U.S. and for SQS is just going to be a function of the contracts that were made, the deliveries that we have to make in each of the countries, and also the timing of the commercialization. And it just looks different in every single country.

Thank you, Angela. And also to emphasize that the 12 million calculations are a global number, not a U.S. number. It's a global number. So I believe there are 9 million supply carriers approximately in the U.S. But I don't know if they have also estimations for outside the U.S. So next question, please. Our next question will come from Jeff Meacham with Bank of America. Your line is open. Hey, guys. Good morning, and thanks for the question. Just have two.

The first one's on COVID. When you look at the 2023 demand and beyond, really, for both products,

I guess I'm trying to better understand the volume side of the equation. Are you guys baking in the emergence of, say, a new variant or maybe a change in behavior towards boosters? That's the first question. The second one is from a BD perspective, you know, Albert, you have a lot of cash to deploy. If your COVID assumptions don't quite play out, does that inform the number of deals or the size of deals? I guess I'm trying to get a view about where BD fits in your strategic priorities. Thank you.

Of course. First, what is the assumption about the disease? Because that's a fundamental assumption behind all these projections that we are doing. It is that the disease will continue in the foreseeable future manifesting clinically the same way that it has the last six to nine months. So there will be mutations and there will be infections over there and that the vaccination rates will be coming down because of lack of compliance but will that they believe in vaccinations and they feel they are at high risk and they want to make the vaccines. At the same time, the infections were slightly going up because when you have waned immune protection for the population, then you will see more infections and actually more severe infections. So these are the assumptions that we are using. We are not using assumptions that all the variants will escape in the protection of the vaccine. But we are using the assumptions that people will be getting 1.3 in the beginning and then going down 1.1, 1.2 doses per year as a normal booster. What was the second question? On the BD, yes. Clearly, business development is by far one of our biggest priorities. Something that I personally take care of and something that we have a very big team. screaming all the opportunities. I would like to ask Amir, who is responsible for that area, to make some comments about our priorities.

Just specifically to your question, as you heard Albert describe, we set this aspiration goal of $25 billion in 2030 from BD. We're over 40% of the way there with approximately $10.5 billion of that number through the deals that we've done. And we feel very confident that we've got the financial flexibility on the balance sheet and the firepower to complete what we need to to achieve that goal. We're going to continue to be disciplined about how we pursue that.

Thank you. I think we can move to the next question.

Our next question will come from Steve Gala with Cowan. Your line is open.

Thank you. I have a couple questions. On page four of the release, Pfizer reiterated that non-COVID revenue growth in 2023 will be 79% and anticipates it will be split between launch acquired and inline products. That implies about $3.5 billion in incremental revenue growth. But in 2022, Prevna alone grew a billion, and Eloquist and Vandiquil together added another billion. So with the launch and acquired products growing well, what does this guidance imply for the base business in 2023? It seems like a substantial slowdown is implied in the base business in the current year. Second question, has Pfizer learned anything from the Ziposia performance to date that would either increase or decrease its confidence in an atrazumab? Thank you very much.

I would say, Dave, you want to say how is allocated the growth between in-line new products and acquired products?

Yeah, really good question. I think if you look at each of those three buckets, we see growth from acquired products, we see growth from new products, and importantly, we see growth in our in-line portfolio as well. We do not anticipate nor do we see a slowdown.

It's approximately one-third, one-third, one-third. And Angela, what about the address?

You know, I think we're really excited about Estatomart as a new entry in UC. You know, it's a market that has been heavily dominated by biologics and then followed by the use of JAKs, you know, after the biologics. But really, in the earlier treatment, you know, the earlier treatment positions, there really hasn't been much innovation, and that's where allows it to be used very well as an agent prior to the use of biologics. And that's where we see the ability to, you know, tap into a new segment and to grow.

Because I'm very excited about the product. William, would you like also to add something about it?

Yeah, I would just say we're excited about its best-in-class profile. You know, with the study that we did at G3 Design, we hope and anticipate that we'll have no black box warnings.

so we still have an opportunity. Let's go to the next question, please.

Our next question will come from Colin Bristow with UBS. Your line is open.

Hey, good morning, and thanks for taking the questions. I guess, first question on COVID, and to sort of piggyback on what Jeff was asking, And from your slides and comments, you're clearly expecting a sort of stable vaccine utilization rate when in the last 12 months, we've seen this number decline on a backdrop of a virus that is evolving to less clinically severe variants. And so what underpins your confidence in these longer term assumptions? And also, in terms of your COVID-23 guidance, you mentioned you'd guided to a sufficient range for variations in infection rates, et cetera. I was just wondering how much an allowance you've made for the potential timing or reduction in contractual orders, as is the current situation with the Brussels negotiation. And then maybe just a quick one on the pipeline, DMD. This feels noticeably in the background versus other assets at a similar stage. Just could you update us on your level of enthusiasm and commitment to this program, especially in light of the potential competitor approval in May of this year? Thanks so much.

Thank you. DMD Michael. You know, we continue to be enthusiastic about the insert in D&D. I think we have actually published the strongest data on the two drugs with efficacy as well as a lot of biomarkers from our phase one across a much broader age group than anyone else. And, you know, I can't comment when possibly someone else will get it registered, but we expect data readouts within possibly less than a year. And we think that... this could be a very important drug, and we will have randomized data, which is not the case for any other application currently to have at that size and scope. Thank you.

As regards the assumptions of our COVID protection vaccines, for example, we are dropping the numbers. So, for instance, 31% of people receiving a vaccine, that was the actual in 22. We are going to 24. Then you are reaching a level of really people that they are really committed to the idea of getting vaccinations and they are looked by physicians that they truly believe in the vaccination, in the value of vaccinations. We are also dropping the number of doses. So we go to 1.3 and then eventually as the years progress, the number of doses that people will receive is small. Keep in mind that to get a doses and children. So we believe the assumptions are very reasonable with the expectation that the COVID will remain as it is right now. So nothing more severe and nothing that will make it less disappearant to take into consideration. But the compliance with the recommendation of the health authorities, also because of the funding, will be less. clearly a pivotal moment would be the introduction of combination vaccines. Because the convenience of something like that, and the fact that people are presenting themselves to receive flu vaccines, given that a combo vaccine could be in the same injection and will cost zero copay, likely would become the choice of many to get this flu coverage. So we have quite confidence on these assumptions. But of course, they are only assumptions. The other thing it is, on the Europe you asked a few questions. I know that there are rumors, but I don't think that it is appropriate for us to make any comments while we are in negotiations with our partners in the Commission and with the member states. So we only said that we factor only part of the deliveries in this year instead of all the deliveries. because we are in the middle of negotiations, but we can make other comments. Next question, please.

Our next question will come from Trun Huynh with Credit Suisse. Your line is open.

Hi, guys. Morning. It's Trun Huynh from Credit Suisse. Thanks for taking my questions. I have a quick clarification on COVID and then my questions. So just on the clarification, in those long-term COVID vaccine and Pax slides. Do you expect any US government sales in 24 and 26? It just looks like commercial sales on your slides. So does that mean Medicaid, Medicare populations are bought at a commercial price? And can you comment on the margin change for the vaccine and Pax as you step up to that commercial price? And secondly, just following on from the base business question from Steve, we saw lower revenues ex-US for some important base business drugs. So Eloquist was down 19% ex-US. Iberence down minus 22% ex-US. Prevnar, there was also a decline there. You've noted some product-related issues, but are you seeing anything more broadly in the US, which is making it for more difficult environments? And going forward, should we expect more normal levels ex-US to these products?

A quick one, because that's easy. We do not expect 24 and 25 and beyond to have governmental sales in the US. In fact, we think that not even a year other than of some small deliveries that we have still pending to the US government from the ground as before, we will not see any US purchases, but our assumption right now that we will move into a commercial model that will cover all challenges with all other vaccines and products. Margin changes, we haven't said anything yet about tax flow, so I can't comment. You can calculate. We said the risk price, you can calculate the net, and then you can make your assumptions on margins. We don't give margins on specific products. Now, a little bit on the lower revenues, about the revenues ex-U.S. Antonella, do you want to make any comment on that?

Sure. And as you said, there were some specific reasons for why we saw what we saw for Eloquence, iBrands, CCD. I mean, Eloquence specifically was the loss of exclusivity about patent challenges that led to some generic increase at risk in both the UK and Netherlands. I mean, iBrands is a mature product, and so it goes through sort of the reimbursement and the sort of the you know, the pricing regulation that it typically goes through in Europe. And I think PCV in general, you know, what we're seeing is that I think on the T side, not on the adult side, but on the T side, vaccinations are still not back up to where they are, where it was prior to the pandemic. So I think in all three cases, there were very specific reasons for what you saw. And we don't anticipate anything extraordinary or different in 2023. I think it's sort of business as usual.

Thank you. Next question, please.

Next question will come from Tim Anderson with Wolf Research. Your line is open.

Thank you. I think one of the challenges for analysts modeling Pfizer is to try to understand what the flow through to profitability is from tax, LOVID, and Comirnaty. So I'm hoping directionally you can tell us how that looks going forward once you get past this transitional year of 23. So on 24 and beyond, is the profitability of that combined franchise likely to be higher, less, or the same as what it was in 2021 and 2022? And then a second question is on SG&A, how much of that increase was driven by inflation in 2023? And just any quick comments on European austerity measures on pricing.

Yeah, so maybe on the COVID franchise, obviously we don't give profitability for each product, but you can imagine, as we stated before, on the vaccine, we quit our gross margin with BioNTech, so therefore that would obviously carry a lower general.

And the one you can predict, for example, in the first year of 2020, we had very high R&D expenses. We maintain our R&D expenses in COVID. A very big part of our expenses in 2023 is for COVID, because we are investing. But you expect over time, those, unless if we bring new products, that will not be as high. On the contrary, prices are going up. That says that markets could improve, but also S.I.N.A. promotion expenses are going up, right? So, without wanting to give direction from what it used to be 20 and 22, likely, we expect going forward to be higher, the markets, but all of these equations will be in play. Next question, please.

Our next question will come from Mohith Benzal with Wells Fargo. Your line is open.

Great. Thanks for taking my question and thanks for all the clarification. Maybe one question if I can ask. So regarding the expenses for COVID businesses, Dave, you mentioned that you will be essentially relaunching these products with the commercial scale and everything. So is there... How much cost, given that your COVID business is declining significantly this year, are you modeling any kind of cost cuts in that business, or should we model on dollar basis as to the same? Is there any synergies you can achieve, especially for vaccine, with your existing Prevnar business, because the channels are similar or not? And last part is, do you think you can do more share buybacks given the stock price at this point? Thank you.

Let me take the first two quickly. Of course, as you saw, the business is going down because of COVID. The average is growing. Expenses are going up because we are promoting new losses, including COVID. So right now, moving into commercial and tax levies in the commercial tunnels, Now we treat them like normal promotional products, very sensitive in promotions, in the beginning of their launch. So we are going very hard with promotions, TV, fuel forces, and all the other educational measures that we are taking when we do this type of launch. So there is clearly this piece. What about, David, are we going to buy back?

allocation at this point in time. We actually see a lot of opportunities to invest back into our business both from a research perspective and importantly getting behind our launches to make sure that we're doing all that we can to ensure that our growth trajectory is 25 and 30 and those goals and aspirations become reality. So I think our best and highest use of capital right now is investing in our business both internally as well as from a I would say never say never to an incremental share repurchase, but that's not high on the priority list at this moment.

And Mark, you also asked us about the synergies. It's clear there are a lot of synergies right now, both in the PaxClovid. PaxClovid is covered by a lot of physicians, and we have very, very strong primary care field force, and we have very strong also vaccines field force that is covering all these physicians that are other vaccinated or prescribing vaccines. So clearly a lot of synergies in retail and in the medical profession. Let's go to the next call, please.

Our next question will come from Chris Schatz with KP Morgan. Your line is open.

All right, great. Thanks so much for the questions. Just building on some of the OpEx discussion here, I guess I'm not sure I'm understanding the OpEx dynamics properly over time. So I guess should we think about 2023 as more of a one-time step up in OpEx and then much slower growth in 2024 and beyond? Or should we think about this as a couple-year process as you really get the pipeline and new products ramped and then it's maybe more second half of the decade before 2023? We think even about margin, you know, bigger margin expansion or that OPEC slowing. I just want to make sure I'm saying those dynamics properly. And then the second one was on the COVID flu combination. I guess is your expectation that the tolerability of that will be similar to what we see with Cominarty or different? Is there some trade-off of we could see maybe slightly higher kind of side effects for the six components you mentioned, but that's offset by the convenience. I'm trying to make sure I understand what your expectations are for that program.

Thanks so much. Thank you very much, Chris. To this scientific question, to Michael first.

Yeah, we think that, you know, the tolerability will be well on par with vaccines used in the target population and be perceived as tolerable and convenient as you described the combination will attract the high volume of flu people to also be able in one shot to renew the COVID coverage particularly with more and more variants coming so we are very positive and think we are right in the balance

And, of course, the data will say, but right now this is the profile that we are targeting. And, you know, we think it's easy to do it with two viruses. So to load enough so that you have very good efficacy and good tolerability profile. We believe it will be more challenging for three. But, of course, it needs to be seen. And that's why we believe that our eyes within a protein and having such a good tolerability profile offers better combination results. Dave, also there was this question that I think you touched upon it earlier in your script about how we see going forward the expenses of SMA.

Yes, so importantly, 2023, we're seeing a step up in SMA, and it's really, again, investments around the launches and the products that have been acquired, which we think are really important to really drive growth in the back end of the decade, so we're very focused on that. We do think 2023 is probably the big year of step up from an expensive, and then these expenses will grow more moderately after that.

Thank you very much.

Let's go to the next question.

Our next question will come from David Reisinger with SVP Securities. Your line is open.

Yes, thanks very much and thanks for all of the additional details that you're providing. So it seems like the 2023 guidance is conservative, which is encouraging, but looking to Paxlovid longer term on slide 11, I guess I'm surprised that the percentage of symptomatic patients that you expect to be treated with an oral therapy would almost double from 12% to 22% between 22 and 26, even though the pandemic is being viewed as being over. So I'm hoping that you could talk a little bit about those assumptions and what the denominator is. So when you say symptomatic patients, is that high risk slash elderly that you're calculating the 12% on going to 22, etc.? ? And then in terms of the Paxlovid share, it was approaching 91% at the year of 22, according to the slide, but only declining to 80% in 26 when there are several companies, both large and small, ranging from Gilead to smaller companies, that are planning to develop agents to compete aggressively. And that could have implications for both volume and pricing longer term. So wanted to understand that. Thank you very much.

David, very good questions. Let me try to explain a little bit. First of all, it's not 12 going to 22. It's really 17 going to 22. include the full year. The real demand, it is, let's say, 23 full year, it is 17. And it's going up because of two factors. One, it is a small increase in infections. And as I explained, the assumption is that COVID will not disappear, will be there. But vaccine rates, vaccinations, are going down. So that will create, will weigh the protection, the new protection of the population And that will manifest with a small increase, which in fact will be 2% based on our modeling, a small increase of both the infections and eventually also the severity. So that's one. So the second is that the more introductions of new entries likely will not happen before 2025, in the U.S. at least. will depend if EUA will still be available, which will depend if we will be in a state of emergency or not for EUA. But if we will not be in a state of emergency, which could be a likely scenario, there will be no EUAs, and we don't see in 24 any introduction. Actually, it's in 25, the introductions. The introductions, though, also, as always, are increasing the overall class share. So, and... That is what also is driving. We are dropping market share, but we are increasing the volume. The last is, are we dropping the market share aggressively enough, or are we, let's say, very optimistic in dropping? The assumption here is that we are the only one who have right now, for years, presence in the market. with a label that is extremely strong, with 86% clinical efficacy against hospitalization and against deaths, high actual deaths. So it's very difficult for anyone to reproduce this data right now. The studies will run forever likely and will be very long. So very, very difficult to reproduce something like that. So as a result, given that for years we will be among who will be basically the line of market share, plus the excellent profile, the loyalty that will be developed. All of that are telling us that it is very reasonable to maintain very high market share into Hashiba in first-in-class. And this is in every treatment, from cancer to that compared to the second and third. It is easy to maintain 60-70% under normal conditions. Now that we have all these advantages, We think maintaining at 7.75%, I think it's reasonable. Of course, we'll have to see. Next question, please.

Our next question will come from Chris Shigutani with Goldman Sachs. Your line is open.

Thank you very much. Two questions, one on Paxlovid. cross-currents there between China in terms of the millions doses that you described for your first fiscal quarter and a potential transition to a private market in China. And then you asked for a similar transition will occur to the commercial. Can you help at all frame what you think the relative contributions could look like in 23 and how that could progress? And then in particular with regard to the transition to commercial markets for the COVID franchise products, can you share any early color on the discussions or engagement that you're having with payers? What kind of dynamics? Any color there would be helpful, particularly in the broader context of a global pharmaceutical opportunity with many different therapeutics that will be on their list of budget items, obesity, Alzheimer's, et cetera. So any color on the discussions with payers would be helpful. Thank you.

Hi, Chris.

So I think we'll pack a little bit. Again, the time period, the way to think about it is two time periods, from now until April, which is a reimbursed market, which gives us access to both public as well as private channels. And then off to April, private channels only. As you heard, we have included in our guidance what we believe we can do in the first three months of this year. But given the fact that the back half of the year, we will, you know, we... going to be highly uncertain. It will be a very dynamic market. We will continue to make sure that we have supply, but we'll have to just wait and see what happens there. On the side of U.S., similarly, we will be transitioning this year. We will have a year where some of the revenue will be made through the completion U.S. government in 2022. And then part of the year, the revenues will come from the commercialization of tax lovers. So you're going to see that play through, you know, both of those dynamics play through. And I think you had one more question.

Yeah, the payers, what is their reaction with their vaccine?

So it's still early days, you know, especially in the U.S., right, because that's only happening, you know, middle of the year. But what I can say is is that we have had some early discussions already with agencies and reimbursement agencies outside of the U.S. who have given us, I guess, earlier feedback. And even if you take a country like the U.K., we've actually had very favorable feedback on the pricing that we've provided, and they agree with the cost-effectiveness of tax roses. So I think we'll, you know, obviously get good feedback, and we'll be taking those learnings and those, you know, those value arguments to multiple countries around the world.

Thank you all so much. Next question, please.

Our next question will come from Carter Gould with Barclays. Your line is open.

Great. Good morning. Thanks for taking the questions, and David, thank you for all the transparency on the underlying assumptions. I guess two for me. First off, just in terms of the upcoming, I guess, Messaging around the end of the public health emergency, can you talk about the potential impact you see on your EUAs, access as well? I'm specifically thinking about patched COVID populations in this period before we switch to a commercial market where you're still, the government's still just working through the inventory they have in hand. And then going to the COVID flu combination, just trying to better understand some of your assumptions here. Because I guess when we think about that 26-40% adoption number, you know, it's some, I guess, either the incremental bump from 24-15% or the 40% absolute. You know, just kind of what that implies about how you think the underlying flu market will change. Like I said, comply with 30% to 80% share within two years. But just wanted to understand kind of the underlying drivers there and how you think about that market evolving.

Thank you. Maybe I try myself quickly because you're running out of time. If there is an end of emergency, we don't think that we'll have any impact on current EUAs. We'll have an impact on issuing new EUAs. I don't think that anything changes in the way that emergency or not, whether inventories will be managed or the access that patients will have in any of these treatments. Now, as regards to COVID flu... that would change. Now, the step up, it is clear, we expect that, you know, around 24-25%, it is a population in the U.S. that believes, needs protection, and is diligent enough, not believes, more believe, but they are diligent enough to follow their recommendation and go and get their annual booster for COVID, when they will present themselves to Excuse me, when the flu people will present themselves and they will be asked the question if you want flu single or flu with a combo. And they will be given the information that will protect them in a single injection at the same time, zero copay for COVID as well. We believe it's reasonable to expect that the 25% stable will become 30. So we'll add another 5% of the population. And that over time, that will move closer to the 50%. We projected 40 over there. So those are the assumptions that we're using. Next question, please.

Our next question will come from Carrie Holford with Barenburg. Your line is open.

Hi, thanks. Couple of questions on vaccines, please. Firstly, on RSC, can you confirm you're on track? to provide that second season of data ahead of approval and the investment discussions in May, June for the older adult vaccine. And can you confirm whether you've now filed your maternal RSV vaccine with the regulator? If not, are you waiting for the approval in the older adult setting first? And then just on the flu COVID combo, if we assume you have positive flu phase three data in the second half of the year, positive phase one combo data in the first half. Would you expect to move the combo into phase three or is there the possibility you will not need a full phase three combo study to proceed to filing an approval? Thanks.

Michael? Yeah, I mean, we always follow multi-seasonal vaccines and we share the second season data as soon as it's available. Of course, there are many ways this can play out with combination vaccines, which could lead to more regular vaccination rather than protracted. And you also asked about Let's see the flu-COVID combo here. So we need a full phase three trial. So if we need a full phase three, we have both the flu and the COVID. We expect that you need a phase three that is based on immunity and safety and not a large long trial based on events. So we think we can complete that fast. And if anyone can do it fast, it's we. So that's very high on our list. currently pending data to move with Lightspeedium. Right, and there was a question on reimbursement, if that is the question, I think.

Yeah, I think, Kerry, you asked if the second season durability data, how that will impact reimbursement discussions.

Also, if we submitted the truth.

Yeah, I think it will impact ACF recommendation. In fact, since once you have ACF recommendation or not, you are getting automatic access with all formulaires without copay. Let's go to the next question, please.

Our next question will come from Andrew Baum with Citi. Your line is open.

Thank you. On Paxlovid, following commercial approval and withdrawal of the EUA, will pharmacists describing remain intact? And then a couple for Michael. Could you just explain the reasons for the out-licensing of the TL1A inhibitor to Roivant? I apologize if I missed it. And then second... In relation to your multispecific antibodies or trispecifics, this has been tried previously, I think, at the NGNJ, previously tried in RA and I think in psoriasis with TNF IL-17s, but they ran into issue with binding affinity and they didn't have efficacy. Do you think you've managed to solve the issue here?

I don't know. I don't know if the pharmacist will. It's very unlikely, I think. But I don't know. We don't have it in our assumptions right now. And let's go to Michael.

I'll start with Andrew. Great question. You touched my heart today. We have cracked it. These antibodies that I shared today have, first of all, pharmacokinetics like an excellent single antibody, but three in one product, and have very high potency, which you asked about, actually exceeding the marketed product substantially. So we think it's really something that we will move very quickly as we learn more of it. And, you know, . We think we have a very good partnership with Roivant that helps us to do more things within our pipeline. And you have heard Amir Malik earlier allude to that, you know, we have commercialization rights with Japan. We have, you know, about half of the value of this product, and we have a full on, a bi-specific T1I P40 that's active mechanism Stellarum. So we think of such a richness in this space and really enjoy to build the ecosystem with others and maximize what we bring to patients. Andrew, do you want to add something here?

The only quick thing I will add, Andrew, is if you look at how prolific our R&D engine has been, the total funding demand from all of the R&D programs that were generated would significantly exceed what we guided to as our R&D spending in 22 and 23. So in that context, we are going to be very thoughtful about how we prioritize. We have a robust process for that. And consequently, from time to time, you're going to see programs like the TL1A that have very clear scientific merit, but We think we're sharing the cost, the risk, and capabilities with a partner is the best way to create value. And that's what we did in that situation, and we've had a long history of doing that in a number of other situations as well.

Thank you. Now let's move to the last question.

Our last question will come from Evan Siegerman with BMO. Your line is open.

Hi, guys. Thank you for squeezing me in, and I'm not going to ask a COVID question because I think they were all asked. So just looking at business development, when you did Biohaven, what were some of the characteristics of the deal that you want to bring forward in kind of your go-forward approach for BD? You know, how should we think about potential holes in your pipeline that you could fill with external deals? Thank you.

Why don't you take this one? Sure. You know, the Biohaven deal for us represented an excellent opportunity to – leverage our capabilities, and specifically where were capabilities in terms of our global commercial footprint that Biohaven as a company alone could not maximize, but where application of those capabilities could take NERTEC and the follow-on product to places and reaches for patients that they couldn't have gotten to alone. And also the way in which we structured that transaction began with an X2S partnership, which we then expanded to take on the full global QGRP franchise, and also excluded some assets that were less relevant to us strategically that created a new code. And I think what you can take away from that is that we're going to continue to look for things that are scientific breakthroughs where we can add capabilities, and we're also going to be creative and disciplined about how we structure our deals. And we think that's going to serve us well as we complete our ambition against our $25 billion goal.

Thank you, Amir. So, thank you very much. In summary, let me close by saying, first of all, I feel extremely proud for the team in Pfizer that was able to deliver break all records in 2022. The highest ever revenue, the highest ever profits. The highest, more importantly, ever number of patients that we protected or treated with our medicines. The best ever reputation for our company. The most productive wave of R&D with 19 products launching in the next 18 months. The best R&D must be in terms of multiple measures. All of that were able to achieve in 2022. Clearly though, I believe that the best years of Pfizer are ahead. Because we are building on a significant capital position that we know how to deploy to create growth. We are building on an R&D engine that is more productive than ever in the history of this company. A manufacturing engine that it is the envy of the industry, the commercial envy, the commercial engine that it is around again and again and again as the best commercial engine in the industry. And, of course, a mindset in Pfizer that is characterized by nothing is impossible. We can make everything possible. So, with that in mind, I think that we are moving ahead. even more successful 2023. Thank you very much for your attention, your interest in us, and your support as shareholders. Thank you.

Thank you, ladies and gentlemen. This does conclude Pfizer's fourth quarter 2022 earnings conference call. We appreciate your participation and you may disconnect your line at any time.