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.