Pfizer, Inc.

Good day, everyone, and welcome to Pfizer's fourth quarter 2024 earnings conference call. Today's call is being recorded. At this time, I would like to turn the call over to Francesca DiMartino, Chief Investor Relations Officer and Senior Vice President. Please go ahead, ma'am.

Good morning, and welcome to Pfizer's earnings call. I'm Francesca DiMartino, Chief Investor Relations Officer. On behalf of the Pfizer team, thank you for joining us. This call is being made available via audio webcast at Pfizer.com. Earlier this morning, we released our results for the fourth quarter and full year 2024 via a press release that is available on our website at Pfizer.com. I'm joined today by Dr. Albert Bourla, our chairman and CEO, and Dave Denton, our CFO. Albert and Dave have some prepared remarks, and we will then open the call for questions. Members of our leadership team will be available for the Q&A session. Before we get started, I want to remind you that we will be making forward-looking statements and discussing certain non-GAAP financial measures. I encourage you to read the disclaimers in our slide presentation, the press release we issued this morning, and the disclosures in our SAC filings, which are all available on the IR website at Pfizer.com. Forward-looking statements on the call are subject to substantial risks and uncertainties, speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements. With that, I will turn the call over to Albert.

Thank you very much, Francesca. Good morning, everyone. Thank you for joining us today. 2024 was a strong year of execution and performance for Pfizer. We were guided by clear strategic priorities and we met or exceeded our goals for each one, while also delivering on our financial commitments. I'm pleased with the progress we made in executing transformative changes that strengthened our company. First, we successfully integrated the citizen business, one of the largest investments we have made in the past decade, creating one of the best oncology companies in the industry. At the start of 2024, we split our commercial operations into two divisions, U.S. and international, and appointed two senior commercial leaders to increase focus in both. Amir Malik and Alexandre Deseromet have done a tremendous job to upgrade our commercial capabilities. They consolidated our external agencies down to one powerhouse, global advertising company, and leveraged the power of AI to transform our marketing and selling engine. New data-driven deployment of our commercial and medical field resources, precision market targeting in social media, and elevation of the Pfizer brand in commercial communications are some of the strategies that have significantly increased our commercial and medical effectiveness and returns on investment. We are seeing the impact of these actions in our strong financial performance and in the recognition of our market leaders. We earned the top position in the 2024 IQVIA US Field Force Ranking Report, and improved our ranking to claim number one or two spot in 70% of the specialties in which we focus. I'm also proud of our strong year of pipeline progress in 2024, including more than a dozen approvals, seven pivotal study starts, and eight key phase three redoubts. I'm very excited with the changes in our R&D engine under its new leadership. Chris Bossoff moved fast to create four end-to-end R&D units focused on oncology, vaccines, internal medicine, and inflammation and immunology. This structure fully empowers research units that can operate with the focus and agility of a biotech company while tapping into our differentiated enterprise-wide capabilities such as AI power, drug discovery, and development. Our focus on financial discipline also has yielded good results. We ended the year with expanded margins after a series of actions to realign our cost base. And we strategically deployed capital to enhance shareholder value, investing nearly 11 billion in support of internal R&D programs, delivering by 7.8 billion and returning 9.5 billion directly to shareholders through our dividends. Finally, we also reinforced our commitment to strong governance. Our two new board members bring deep expertise in financial markets and shareholder value creation. All these changes have created a strong foundation and allow us to start the new year from a position of strength. So now let me speak about our 2025 priorities. Last year, we had a significant emphasis on improving our commercial effectiveness. In 2025, the emphasis will move to improving R&D productivity, while maintaining focus on margin expansion, commercial excellence, and shareholder funding capital allocation. Let me start with R&D. Across our pipeline, we believe we have a strong year of catalysts ahead of us and expect our new R&D organization to achieve multiple key milestones, including the possibility of at least four regulatory decisions, up to nine potential phase three readouts, and 13 potential PivotR program starts. For example, with Atir Mosaiqli, our next generation highly selective CDK4 inhibitor candidate, Yesterday, we dosed our first patient in a phase three study in first-line metastatic breast cancer. We also anticipate starting an additional first-line study in combination with the degastrant, the ER degrader we are co-developing with Arvinas. Our ADC Sigvogata vedotin continues its phase three study in second line non-small cell lung cancer, and this year we expect to start a phase three study in first line non-small cell lung cancer. Our PDL1VADC candidate, a potential first in class PDL1 targeting vedotin ADC, is expected to begin two phase three studies this year. One in first-line metastatic had an exquemus cell carcinoma, and one in second-line, plus non-small cell lung cancer, where the unmet need is significant. We have a robust clinical development program aimed at expanding RxV indications in macrophyllium lung. And this year, we anticipate the readout of a phase three study in double class exposed relapse refractory multiple myeloma. But if successful and approved, we'll triple the addressable population versus the currently approved indication. In vaccines, we expect to start the phase three study this year for our PCV25 candidate, covering 25 serotypes. This is important foundational work that could help us bridge to and accelerate progress with our fifth generation PCV candidate covering more than 30 serotypes. This year, we also expect to start a phase three study for our SIF-DEF vaccine candidate. In internal medicine, we remain on track to provide an upgrade of our dose optimization studies of danugliprin in the first quarter of this year. For polsegrama, we expect to start a pivotal study this year in cancer cachexia. And ibuzatrelvir, our second-generation COVID-19 oral antiviral candidate, continues its phase 3 study. Within IAI, we continue to progress a portfolio of medicines that include two potential first-in-class tri-specific antibodies, currently in phase 2. Now let's discuss our commercial strategy. 2024 was a strong year of commercial execution and we are pleased with our progress in improving performance of our newly launched products and gaining and maintaining market share for several of our core brands. I will start by highlighting the strength and impact of our oncology portfolio. Patsib plus Pembrolizumab. is an important growth driver as it has already become the number one prescribed first-line treatment for locally advanced metastatic urothelial cancer in the US. We are expecting potential registration of interim data this year from ongoing pivotal studies in muscle-invasive bladder cancer, which, if successful and approved, would nearly triple the total addressable patients in the US. Raftovi-Mektovi achieved a 27% year-over-year worldwide operational growth and expanded its leadership position in multiple graft tumors, which are some of the hardest to treat cancers. Yesterday, we announced that Raftovi, in combination with Cetuximab and M4FOX6, so statistically significant and clinically meaningful improvement in progression-free survival and overall survival in patients with metastatic colorectal cancer with a BRAF V600E mutation. We are very excited with the robust improvement in PFS and OS and are looking forward to presenting this data in a scientific conference. Lorbrenna, a treatment for adults with ALKI, ALK-positive metastatic non-small cell lung cancer, achieved 37% worldwide year-over-year operational growth and is emerging as a potential standard of care in the first-line setting. Following last June's unprecedented crown trial data showing 60% of patients were alive without disease progression after five years. Lorbrenna has seen a double-digit share increase in the first line, in both new patient starts and new prescribers. Elorexio had a strong performance in 2024, with more than 130 million in full-year revenue, and increasing overall share within the class of BCMA directed by specific antibodies. for patients with triple-class exposed relapse or refractory multiple myeloma in the United States. I also want to comment about our COVID-19 portfolio. We continue to see stabilizing patterns in the disease burden with a strong correlation between the COVID-19 burden of disease and PaxClovid utilization. We see the same stabilizing patterns in US vaccination rates at relatively low levels. Our assumptions for 2025 are on par with this 2023 and 2024 patterns. And with the multi-year contracts we have secured in international markets, we are confident that our COVID-19 portfolio will continue to be a predictable and durable contributor to our business. In another key category, Our ventricle family of products achieved continuing momentum with 90% year-over-year growth in the US and 32% operational growth in international markets. We drove progress in diagnosing more patients and improving access to this treatment for transthyretin amyloid cardiomyopathy. Eliquis is a core brand for Pfizer with 10% worldwide year-over-year operational growth. It is prescribed to millions of patients and we continue to strengthen its leadership position in a growing oral and coagulant market. We are also pleased with the ongoing positive momentum for Nurtank, with 36% worldwide year-over-year operational growth, driven by strong commercial executions. Nurtek is a leader in the oral CGRP class used for treating and preventing migraine, with about 49% market share, and we see opportunities for continued growth. Our respiratory vaccines, Abrisver and Prevna 20, also are key products in our commercial portfolio. We have achieved a market leadership position for the season in sick dose for Abrisver. with an approximately 13 percentage points increase in market share, and remain confident in our ability to retain our position through strong commercial execution, even as we see a decrease in the total adult RSV market volume, driven by a reduction in vaccination rates in the US for the older adult indication. We achieve positive momentum in key regions, such as Europe and Latin America, and are also seeing a strong demand for our maternal indication. A brief season today, cumulative maternal vaccination rate nearly tripled compared to last season. With Brevna, we are confident that we are well positioned for strong, sustained leadership with over 87% market share in the US across indications. Globally, The paediatric market accounts for approximately two thirds of our revenue, and we also continue to make progress for the adult indication in key international markets. We are encouraged by opportunities to maintain our leadership in the PCV space with our next generation PCV25 candidate mentioned earlier. In phase one, we demonstrated potentially improving immunogenicity for serotype three, one of the largest contributors of disease at approximately 20% of invasive disease in adults aged 65 and older in the United States and Europe. Across our commercial portfolio, in 2025, we are confident that we are in a strong position to build in our 2024 success and achieve commercial excellence in our key categories of oncology, cardiovascular, migraine, vaccines, and INI. With that, I will turn it over today.

Thank you, Albert, and good morning, everyone. I'll build on Albert's comments by reinforcing that we are very pleased with the financial results for both the fourth quarter as well as the full year of 2024. These results demonstrate that our focus and execution against our strategic priorities are driving both positive patient outcomes as well as financial and operational strength. In addition to our strong top-line performance, our cost reduction programs are creating a more efficient organization, driving operating margin improvement. And as we move into 2025, these efforts will continue to lay the groundwork for potential increased capital returns and reinforce our commitment to maintaining and growing our dividend while enhancing long-term shareholder value. With that said, let me start with our full year and fourth quarter results, then I'll touch on our capital allocation priorities. I'll finish up with a few comments on our 2025 guidance, which we are reaffirming today, and our near-term expectations that will continue to drive our growth potential in the latter half of the decade. For the full year of 2024, we recorded revenues of $63.6 billion versus $59.6 billion last year. Importantly, our operational revenue growth when excluding contributions from our COVID products was 12%, exceeding our expectations of 9% to 11%. Full year 2024 adjusted gross margins expanded to 74% as we continue to drive cost improvements across our manufacturing network. On the bottom line, we reported full year 2024 diluted EPS of $1.41 versus $0.37 last year, and adjusted diluted earnings per share of $3.11 versus $1.84 last year, significantly ahead of expectations due to our overall strong P&L performance. Now, turning to the fourth quarter performance versus the same period of LY, let me walk down the P&L. Total company revenues were $17.8 billion versus $14.6 billion in the fourth quarter of last year. Once again, our non-COVID-19 products exhibited robust performance with revenues of $13.7 billion, reflecting 11% operational year-over-year growth. This performance continues to show that a refined commercial approach is working. We continue to focus on key products and geographies, We've refined how we allocate our commercial field resources globally, and we're further optimizing our marketing resources into key priority areas. We saw strong contributions across our product portfolio, primarily driven by the Vindickel family, PADSEV, Eloquest, and Nurtec, partially offset by declines in Abrizvo and Zelljans. Adjusted gross margin in the fourth quarter was approximately 68%, primarily the result of a net unfavorable mix related to our COVID-19 products, primarily due to the community profit split with BioNTech and applicable royalty expenses. This was partially offset by our ongoing focus on cost management across our manufacturing network, as I previously mentioned. And as we previously communicated, long-term improvements in gross margin will remain a key focus for the company over the next few years. We expect to begin to achieve initial savings from phase one of our manufacturing optimization program in the latter part of 2025 and continue to expect approximately $1.5 billion in savings from this first phase by the end of 2027. We continue to evaluate other strategies to improve our network structure and as well as our product portfolio. And we plan to share more information on those components of the program once it becomes available. Total adjusted operating expenses are essentially flat operationally at $7.3 billion in the fourth quarter of 2024. And I will note that this amount includes spending acquired via our CGEN transaction. Looking at the components specifically, adjusted SINA expenses decreased 4% operationally, driven primarily by a decrease in marketing and promotional spend for various products, including both Comirnaty and Paxlovid, partially offset by an increase in spending for certain oncology and recently launched and acquired products. Adjusted R&D expenses increased 8% operationally, driven primarily by a net increase in spending, mainly to develop certain product candidates acquired from Segen, partially offset by lower spending on certain ongoing vaccine programs, and certainly as a result of our cost realignment program. We continued to be disciplined with our operational expense management and delivered on our goal of at least $4 billion in net cost savings from our cost realignment program. Q4 reported diluted earnings per share was $0.07, and our adjusted diluted earnings per share was $0.63, benefiting from our top-line performance as well as our efficient operating structure. partially offset by a higher effective tax rate driven primarily by jurisdictional mix. In support of our goal to enhance R&D productivity and to focus on high impact medicines, our fourth quarter gap results reflect strategic decisions in our development plans and updated long range revenue forecasts for several medicines. And as a result, we recorded approximately $2.9 billion in non-cash and tangible asset impairments related to several medicines in development, as well as several inline products. These decisions reinforce our focus on future growth, as well as innovation. Now, let me quickly touch upon our capital allocation strategy, which is designed to enhance long-term shareholder value. Our strategy consists of maintaining and growing our dividend over time, reinvesting in our business at an appropriate level of financial return, and finally making value-enhancing share repurchases after delivering our balance sheet. In 2024, we returned $9.5 billion to shareholders via our quarterly dividend, invested $10.8 billion in internal R&D, and as expected, completed business development activity was minimal. Our commitment to delivering our capital structure to a gross leverage target of three and a quarter times by the end of 2025 remains a key priority. In support of that goal, in 2024, we delivered by approximately $7.8 billion, paying down approximately $2.3 billion in maturing debt and approximately $5.5 billion in commercial paper. And in January of 25, we monetized another tranche of our Halion shares, which for reporting purposes is a Q1 25 event. We received approximately $3 billion in net cash proceeds, and now our ownership in Halion was reduced from approximately 15% to approximately 7%. We intend to monetize our remaining Halion investment in a prudent fashion during 2025. Overall, in Q4, we generated robust operating cash flows, which combined with the most recent Halion net sales proceeds of approximately $3 billion, resulted in significant free cash flow generation as we enter 2025. Our objective remains to deliver and return to a more balanced allocation of capital between reinvestments and direct return to shareholders over time. Given we issued our full year 2025 financial guidance on December the 17th, let me just hit a few highlights. We expect total company full year 25 revenues to be in the range of $61 billion to $64 billion, and full year 25 adjusted diluted earnings per share to be in the range of $2.80 to $3 a share, which reflects our expectation of strong contributions across our product portfolio, as well as our focus on disciplined cost management. Importantly, we believe the steps taken to right size our cost base will put us on a strong footing towards increased operational efficiency and support our goal to return to pre-pandemic operating margins. In further support of this initiative, we now expect to deliver overall net savings of $4.5 billion from our ongoing cost-reliant programs by the end of 2025, while continuing to advance programs that will improve cost of goods sold in the years to come. As a reminder, the impact of the IRA Medicare Part D redesign is expected to be a net headwind to the company's revenue of approximately $1 billion across our product portfolio. dampening growth by approximately 1.6% versus 2024. The impact of catastrophic coverage is expected to exceed the potential volume benefit from the reduction of the patient out-of-pocket cap, leading to a negative impact beginning early in the year, while the positive impact of lower patient out-of-pocket costs is expected to build throughout this year. As the IRA is felt more acutely in higher-priced medicines, we expect Vindickel, Ibranx, Xandi, and Zeljanz to reach catastrophic coverage much earlier in the year. And due to these changes, we expect a higher gross-to-net impact on our revenues for all drugs in the beginning of 2025 that is expected to moderate throughout the remainder of the year when compared to 2024. And lastly, I will mention that we continue to monitor currency fluctuation as the year progresses. So in closing, let me just emphasize several key aspects of our business. We believe our financial targets for 2025 are both reasonable and achievable, reinforcing our commitment to operational excellence. We also believe our revenue volatility is largely in the past, as COVID-related uncertainties have diminished. Additionally, our cost improvement programs have set the stage for ongoing margin expansion. We will continue our focus and execution to maximize the commercial value of our product portfolio. And our new R&D leadership is committed to driving value, creating innovation, and strengthening our pipeline. And lastly, we have a clear path to reloading our balance sheet, enabling enhanced capital deployment and pursuit of additional opportunities to strengthen our business and create value for our shareholders. We are dedicated to maintaining and growing our dividend and meeting our delivering targets by the end of 2025, providing for a more balanced capital allocation. And with that, I'll turn it back to Albert to start the Q&A session.

Yeah, thank you, David. But before we turn to the questions, I would like to close the year with one comment. Pfizer knows how to execute well when we set our focus on something. We saw what we could do in 2020 when we rapidly developed and prepared to manufacture billions of doses of the COVID-19 vaccine. In 2021, when we repeated the same with PaxClovid. And in 2022, when with successful commercialization, we exceeded 100 billion in full year of it. In 2023, despite the difficulties with the rebased COVID-19 expectations, we invested in our future with a big bet in oncology with the acquisition of CIGI. And last year, we exceeded expectations repeatedly with four consecutive quarters of strong financial performance from our disciplined commercial execution. Now, as we are directing similar focus and our proven ability to execute on our R&D pipeline, we are confident that we are well positioned to drive meaningfully improved productivity. And with that, operator, please assemble the queue.

At this time, if you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star one to ask a question. We'll go first to Steve Scala with TD Cowan. Please go ahead.

Oh, thank you so much. I have two questions. First, on the Daniel Glibron dose optimization data, it's apparently still on track for the first quarter of this year. What is the range of possible outcomes, and is dropping this version of the compound a possibility, and what would be the next step? Second question is Chris Boshoff. I assume he's on the line. Under the heading of nothing's perfect, can you share with us two or three things in the Pfizer R&D portfolio or system that you think need to be fixed? New leaders usually say they want to move quicker, but sometimes they also thoroughly go through the portfolio and shed many projects. Is that also a possibility? Thank you.

Chris? Should we start with Daniel? So for Daniel, just to be clear, as we stated previously, we're now targeting first quarter to have data from the ongoing dose optimisation and formulation study, the PK study, and we're on track to deliver that in Q1. And we haven't seen the data yet, but obviously that data will then determine decisions for the future of Danic Lebron. On your second question, as we've recently announced, we already focused our portfolio further. We've now established four end-to-end therapeutic areas, oncology, vaccines, internal medicine and INI. And part of that will be to focus on those opportunities that could provide the biggest value. both for patients, but also for Pfizer. So you will see during the coming months how we further focus and execute and accelerate those medicines we believe could be potential future blockbusters.

Thank you, Chris. And Steve, you're right that usually new leaders are taking their time to assess. But the good news with Chris is that he knew really the Pfizer organization. And I'm very impressed with the speed and thoughtfulness that he's deploying his changes. Already he announced the new organizations, selected a lot of leaders, and refocused our pipeline in collaboration with Andrew. So next question, please.

We'll go next to Jeff Meacham with Citibank. Please go ahead.

Good morning, everyone. Thanks for the question. Just had a couple of quick ones. So for the COVID franchise, you guys talked about, you know, stabilizing revenue for this year. Maybe just give us some level of conviction and your level of investments in this business kind of going forward. I think most investors kind of would like for it to kind of be viewed as just maybe upside to the story. And then from a capital allocation perspective, When you guys think about, you know, the appetite for potential BD as you reprioritize or look at the pipeline and evaluate, you know, a lot of the assets and say early to mid-development, just want to get a sense from you guys for the appetite for growing out the number of TAs, if you had more optimization to do that can be achieved through BD. Thank you very much.

Jeff, on COVID, maybe I'll start with Paxlovid. You saw Albert describe, we have multiple years now of reference where Paxlovid utilization tracks directly to the level of disease outbreak, and the year 2024 was no different. So, We know that to be the case and we've also put in place a very effective commercial model in Paxlovid that allows us to deliver on that and continue to improve. In fact, if you look at 2024, we had higher physician treatment rates than 23 and we also had gains in market share versus 23. So we know we have a model that works and with regards to resource allocation, we have targeted our resource modeling for Paxlovid so that we are investing the places where it's relevant, when it's relevant. So we have a very, very tailored model. And I think you see that in the results. We had a very big summer and early fall wave of COVID in 24. And then we had a milder and shorter winter wave. And you see that reflected in Paxlovid utilization. And we've also ensured that we have the right pricing model in place and put in place a new agreement with the U.S. government on our Paxlovid contract that defines the eligibility for the USG PAC going forward. So there's clarity on that for January, February, and going into March. And with regards to vaccinations on Comirnaty, again, we saw a pattern in 24 that very closely mirrored 23. So vaccination rates were quite stable. Again, here we also saw an improvement in our market share position for Comirnaty. And we are confident that our commercial execution, both with regards to the retail setting and the non-retail setting, will continue to put us in good stead as we move forward.

Thank you. And of course, in international, to save time here, we have contracts with our multi-year contracts that they are covering not only this year, but the year after. So all of that makes us feel that this is a very stable and predictable revenue stream. Why don't we go to capital allocation and then Dave, maybe also Andrew, you can comment on the VT.

So just, Albert, I'll be real quick. From a capital allocation perspective, I'm very pleased with the company's cash flow generation throughout 2024 as we've continued to Enhance our cash flow yield, number one. Number two, continue to aggressively de-lever. And now as we enter 2025, we'll be in a position from a cash and a de-levering perspective to have a more balanced capital allocation strategy, allowing us to do slightly bigger business development programs if so desired in 2025. And with that, maybe I'll pass it over to Andrew to give some context around how we're thinking about that.

Yeah, so to recap what Chris says, we've narrowed our current therapeutic areas to the four, so oncology, vaccines, INI, and internal medicine. Now, it's fair to say that those are fairly broad areas. They're big buckets that you can put lots of therapeutic indications in. If we were to explore adjacencies or indeed therapeutic areas where historically Pfizer hasn't been active, I think firstly, we'll be looking for truly breakthrough science that's tractable with a drug. Second, an unmet medical need that we feel that can be monetized. And thirdly, and most importantly, we have to have the talent with it in order to develop those assets if we go into a therapeutic area that is one that is unfamiliar to us or we don't have historically that bad word of talent.

thank you very much andrew and dave next question we'll go next to chris schott with jp morgan please go ahead all right great thanks so much just uh two questions for me just coming back to capital deployment uh dave just to build on those comments you talked about slightly larger bd transactions can we just help size the range of what pfizer is able to look at from here and how you think about balancing business development versus share repo, which I know I think you talked about as you started to deliver would be part of the story. The second is on the RSV market. Can you talk a little bit about the thinking and the size of the opportunity from here and the potential for growth given some of the 2024 results, both the U.S. as well as globally? Thank you.

Yeah, so as far as capital deployment goes, Chris, I think the good news is the company has a very robust cash flow generation capabilities. And over time, we'll be able to do both dividends as well as BD, as well as value enhancing share repurchases. Specifically, as we come into 2025, given the strength of the company from a cash flow perspective, We have the capacity, the $10 to $15 billion zip code from a business development perspective within 2025 if we chose to focus in that area.

Thank you. Amir and Alexander, the RSV. Very quickly in the U.S., firstly, the market did decrease in 2024, and that's something that we have been signaling for quite some time. This was because of shifts in ACIP as well as the early adopters of the vaccine in 2023. important thing for us the things that we can control the strength of our commercial execution led us to the leading market share of doses shipped and customers at 50 for 2024 and an improvement in the shots in arms market share by 18 percentage points versus last year and our maternal indication also performed very well tripling the uptake from from last season now as we look forward In the absence of any major policy or ACIP change in 25, the RSV market without that is likely not to grow. But there are a lot of catalysts for midterm growth. One is any policy updates to year-round vaccination. Second, age expansion for 18 to 59-year-olds that are at risk where we have great data, as well as potential revaccination recommendations as data becomes more available. So those are midterm growth catalysts. And in the meantime, we remain confident in our ability to execute as that evolves.

So on the international front, Chris, what we see in this quarter is the beginning of the financial impact of the work we've done in approving and getting through the VTC and the payers for Abrisbo. In the countries where we received positive ETC and got reimbursement, we start to see great execution working hand-in-hand with the authority and the HCP. Let me give you two examples in maternal immunization. So in the UK, after winning the exclusive tender, healthcare professionals vaccinated with approval over 60% of the eligible pregnant women in just one quarter in 2004. In France, in a competitive setting, a bruise bow was administered to over 40% of the eligible pregnant women in Q4 alone. So clearly, we see a potential as we move into 2025 in the MI, a great opportunity to expand usage and to expand the vaccination. And of course, that is not just in the developed market, but also in emerging markets. And for instance, as you know, Abrizvo was listed at the Pan American Health Organization. And so starting this year, we can have Latin American countries to start contracting Abrizvo. Now, in the OA, we start also to see some traction. And the vaccination campaign in the UK already reached 44% of the eligible population. And regional vaccination was granted late 2024 in about half of the German population. And we're expecting to get the full German population access in Q1 2025. So again, on both maternal immunization and older adults, plenty of opportunity to grow. And your next question, please.

We'll go next to Vanil Devan with Guggenheim Securities. Please go ahead.

Yeah, great. Thanks for taking my question. So maybe a couple I could on the pipeline. So Prevnar, the 25, you mentioned starting phase three in adults this year. Just curious if you can comment on what you've seen so far. It gives you comfort in moving up for when we might see the data publicly and also any updates on the pediatric population and where things stand there. And then the second one is on punzichromab. And just you have the obviously cancer cachexia, which you're starting phase three. We also noticed in the phase two heart failure program, you increased the patient enrollment significantly there. Just curious if you can provide any perspective on what drove that change and just maybe your broader views on the heart failure opportunity for that product. Thanks.

Great. So first for PCV25, as Albert mentioned, this is an ongoing phase 2 study with potential best-in-class vaccine. The phase 2 study is ongoing in both adults and in paediatrics. As we've mentioned earlier, serotype three is very important and is emerging as a very important serotype with up to 20 to 30 percent of the population actually developed serotype three. So we're very pleased that we're now seeing what looks like best in class immunogenicity against serotype three. On the pediatric front, as you mentioned, the study is ongoing, so we hope to provide additional data later this year. But everything we've seen so far suggests to us that we've got improved immunogenicity of PCV25 versus our current vaccine. Just a reminder as well, we do have a fifth generation vaccine, 30 plus, that's also now in preclinical development that we hope to launch in phase one later this year. On Ponsacrobat, very quickly, we're excited about the data for cancer cachexia, and the cancer cachexia study should start later this year, in a phase three experience. We stopped the development of the cardiovascular study.

Thank you. And I want to also emphasize that the development strategy on PCV30+, uh involves the development of pcb25 so define the strategy which is development and regulatory that will allow us to accelerate the 30 plus by investing now in 25 which will come earlier of course to the market and i think there was a question also on the penetration obviously but uh right now both pediatric and uh and uh adult we have a very, very high market share. We reported actually 87% market share. Next question, please.

We'll go next to Courtney Green with Bernstein. Please go ahead.

Hi, everyone. Thanks for taking my call today. And thanks for the details on kind of how you're thinking about the R&D organization. Just a clarifier, and perhaps you can help us understand the strategy a little bit more here. It sounds like you're shifting into four R&D organizations. I also heard reference though to end-to-end areas. So can you talk about whether these are similar or different to how oncology was set up earlier this year, earlier last year? And then additionally, can you talk a little bit about how you're allocating investment across R&D, across those four separate engines? How are you making sure that the bar is high

in all of those different therapeutic areas and ensuring you've got the right prioritization given the independence of these these units oh thank you that's a great question so chris start and then andrew can sign it and yes so thank you very much for the question so for oncology as you stated since the beginning of 2023 we had an end-to-end organization covering discovery early stage development late stage development as well as medical and we already had that in vaccine since 2009 and now we build the same structure for ini and internal medicine so essentially all four of those will be end-to-end organizations for quicker decision making and quicker handover between discovery phase one and then from early development into late phase development andrew regarding the

Yeah, Courtney, you hit upon a critical question. So historically, when you look back, there's no shortage of first in class breakthrough molecules that we've successfully shepherded through development. However, some of those really have not delivered in terms of financial revenues and therefore to shareholders. And the key issue is really ensuring that we have successful portfolio prioritization, bringing that commercial lens to much earlier during the process and having estimates that are derived in an unbiased way and are dynamic and subject to continued revision. So it's in my role as chair of the PMT, since I joined Pfizer, partnering with Chris, we've been working through that pipeline, starting with the later stage assets, but then moving earlier to make sure the decisions we make, drug by drug, indication by indication, are ones that are going to deliver value for shareholders as well as to patients.

Thank you for the question, Courtney. And I want also to chime in and say that in our The R&D organization that we have right now, I think, has very, very, very strong capabilities. And it's proven with the number of approvals. But we had 13, right, last year, and even the same number in 23. No one even had even close to this number. If you see our success rates are at 17% compared to 10, 11 of the industry. Very few that have these success rates. and in time to the market we are having approximately 5.6 years when most of the industry is in seven eight years after improvements however looking back i don't think that we necessarily we could have done way better in choosing the right products to focus our r d capabilities which is i think what now chris and andrew with the commercial assessments will try to do the good news is that If it was a question of capabilities to improve our productivity, that would be a multi-year undertake. When it is a question of refocusing your investments, that's way more quick. And I'm very optimistic that the results will come out very, very quickly. With that, let's go to the next question.

We'll go next to Evan Sigerman with BMO Capital Markets. Please go ahead.

Hi, guys. Thank you so much for taking my question. Congrats on all the progress. Given RFK Jr.' 's approval by the Senate Finance Committee this morning, can you walk me through how you plan on working with him as a likely head of HHS, especially with his views on vaccines and general skepticism of the pharma industry?

Yes. I was also informed that the Senate committee voted in favor of him. So I think his confirmation is pretty much secure right now. Of course, we will see what the full Senate will do. Look, I mean, we have with the Trump administration as a pharma industry, in particular, I would speak as Pfizer, a very good relationship. Personally, myself, I have a very long-lasting relationship with the president, but it was cemented during the operational worshiping when we developed the vaccine for COVID. And I know that the president is very proud of what he was able to accomplish, and he has made public statements on that. We met with Mr. Kennedy. Actually, the president introduced me to him and to have dinner. all three together, and we try to understand his views. I focused more, not on the things that we clearly disagree, like the vaccines, but on the things that we can agree and we can do things together. And those are things in chronic diseases, in cardiovascular diseases, and more importantly, in cancer, which is something that is very, very high in the mind of the president. And it is also very high in the mind of Mr. Kennedy. I met him a few times also after that. And we expect that we will have a collaboration. It's not my... Do I expect that we will agree on everything on vaccines? I don't know, but I think probably... as I hear all the statements that have been done by him and by the administration, he will have a way more tempered view on how to interact with the vaccines. But I don't want to speak about him. I think there are a lot of opportunities that probably outweigh the risks that we have with the radical change that we will see from the Trump administration, actually, that we are seeing now with the Trump administration. So I'm cautiously optimistic. Now let's move to the next question.

We'll go next to Kripa Devarakonda with Truist Securities. Please go ahead.

Hey guys, thank you so much for taking my question and congratulations on all the progress. I have a question on your breast cancer franchise. You know, you recently announced a strategy for developing your CDK4 in frontline, first-line breast cancer as monotherapy and also in combination with the WebDAG, the ER ProTag, as the landscape evolves, you know, with other CDK4-6 inhibitors, different combinations, how do you see Pfizer's portfolio in breast cancer evolve over the next few years? Do you see this, you know, as the strategy of getting a piece of the broader pie, or are there areas with your CDK4 and with WebDAG where you think you could establish a niche? And also with the phase three data from WebDAG expected any time in per squatter, what needs to happen with these data for it to be considered competitive? Thank you.

Please. Thank you very much. Thank you for the question. We are very fortunate because we've got a lot of optionality now in breast cancer. I'll start with CDK4. We believe this is the best in-class CDK inhibitor and what we've seen for compliance and the rate of AEs, specifically treatment-related AEs, as well as discontinuations. We are very optimistic that CDK4 could not only replace eye brands, but all CDK4-6 inhibitors, early-aligned breast cancer, including first-line as well as potential in the future also in the adjuvant setting. As Albert has mentioned, we are pleased that the first-line study is now ongoing. That's CDK4, a tetracycline in combination with letrozole. To your point, we also expect the readout for VECTEC in the second-line setting with a de-risk study that includes ESR1 population as well as all-coma population, and that medicine potentially could become a replacement for backbone endocrine treatment. We are planning a study in the first-line setting combining VEBDEC plus CDK4 in first-line ER positive breast cancer. I also just quickly want to mention CDK and CAT6 because CAT6 is a differentiated epigenetic This is a first in category medicine. You've seen the data, very exciting, very encouraging data in later line disease. And we're accelerating that also into a registration study with an ongoing phase three trial in second line plus ER positive brain scale. Thank you. Thank you.

Was there a question also for Daniel?

No, it was not. Okay, good. Let's go now to the next question, please.

We'll go next with Terrence Flynn with Morgan Stanley. Please go ahead.

Great. Thanks so much for taking the question. Maybe two for me on the pipeline. On El Rex VO first, just on the commercial side, can you talk about what you're seeing in terms of uptake at the academic versus community centers are you seeing any um any broadening out into the community setting or is that really going to be contingent on getting some of the um the earlier line data that you're expecting later this year from the phase three trial and then on dana glitbron on the dose optimization study can you just kind of clarify how much data you're going to share um later this quarter will we get you know weight loss data will we get tolerability data how much data will be in the initial press release. Thank you.

Thank you. Amir? Yeah, we're very excited about the momentum on LRXVO. We continue to see increase in share in new patient starts quarter over quarter in the class. And the uptick also does include community receptivity and awareness and new account adoption. And obviously, with the whole slew of trials, assuming they're successful to follow, I think there's a lot of momentum behind LREXVO. And over the course of this year, we expect it to grow rapidly, driven primarily by increased demand in our top 100 accounts, as well as increased adoption in the community setting, which I think positions LREXVO very, very well for the future as we expand indications into earlier lines of therapy in 26 and beyond.

Thank you. And myself, I was quite impressed with the community oncologist's uptake of this product as quickly as it happened in the US. But also we have very good news for L-rexfuel in the international market, Alexander.

Indeed, L-rexfuel was commercially launched in already six markets in 2024. out of our top 15 markets, quite fast penetration. And of course, in 2025, we're expecting to get an additional 18 markets and four additional of our top 15 markets will launch this year. But the combination of the expand access plus the performance of the brands where we already have introduced the product gives us great confidence for accelerated growth. And to give you a sense, you know, Japan is the second largest market outside of the US and we had a significant and very rapid demand in Japan where Eurexio was introduced first to market BCMAB specific and that's we've seen an immediate acceleration of utilization actually deep into the community in Japan. Where we've launched with other product BCMEP specific, like in the UK, in Spain, in Italy, are markets where we have demonstrated that are actually leadership and we expect to continue this leadership position in 2025. So the combination of increased access and where we already introduced growth expansions are two reasons why we believe the product has great performance.

in general direction because we do think that it is a mega blockbuster that will become you need to understand that already in the first year we had more than 130 million dollars of sales and this is in a very nice indication this is triple refractory which means patients that they have short duration of treatment and they are really failed after everything else that was tried As we move to, we have four phase three studies, right? One could reach this year. And that not only triples the population, so we go to bigger population, but also expands significantly the duration of treatment. And that is true as we go to the next line and to the first line eventually. So we think that in the US and international, this product will become a very big oncology product for Pfizer. And with that, Daniel. Please, Chris.

Yeah, just what we said it earlier. So in Q1, we expect the PK data. We are target for that. Remember, this is looking at different formulations and will determine the dose selection for once a day tablet for once a day approach for a potential patient. taking forward into a registration strategy. Although you mentioned weight loss, weight loss is a secondary endpoint on the study. This is a smaller study, it's an in-unit study, so it may not be that reliable for weight loss from a small number of patients.

Thank you. Next question.

We'll go next to Mohit Bansal with Wells Fargo. Please go ahead.

Thank you very much for taking my question. Maybe if you can talk a little bit about Femnar, how are you seeing Femnar share? You did talk about the market share here, but in terms of PEDs versus adults, how are you seeing the market share evolving? Now that also VaxNuVans has an expansion in next year, there's also a lower adult eligibility in terms of age. So can you talk a little bit about these dynamics and how do you see market evolving here?

All right, let's start with international and we go to the U.S. for a change.

Okay, all right. So on Prevna, as you know, an international two-thirds of the business comes from the pediatric indication. And this macro view, with our Prevna pneumococcal vaccine, we have maintained exclusivity in an IP in about 140 markets around the world. So that gives you the sense of the breadth. of our non-local vaccine. And as we move over the times, our intention is, of course, to replace our PMLA-13 to our PMLA-20. So now, of course, they are now going to the details in emerging market. We have a very large cohort of babies every year, so around 76 million new baby. And of course, alongside our great collaboration with the Gavi organization, we have our commercial organizations where we have demonstrated this year a double digit growth of our Prednar franchise. So a great execution in the emerging market. Now, in the developed markets, Following the EMA and the Japan approval, remember in March only of 2024, we've started to gain VTC approval and funding. And where we start to see that, we see that we are recapturing very quickly some of the business that went to competition. So give you an example. in Japan. PREMNAR 20, as I said, was approved in March. We got the BTC recommendation in October, and our market share in first dose went from 3% in September to 86% in December. So we see that when the PREMNAR 20 gets approved, we really have an opportunity to regain that business. And on the other side, Here again, we've seen a very strong growth in 2024 that we continue to expect significant growth just because we are expanding access in more mature markets with our premium 20 adults. And Amir, in the US?

In the US, let me start with the adult market. We have right now a very strong position in the adult market. Now, we are going to face competitive pressure over the course of 2025 from capacity of But we are confident that we will continue to maintain meaningful market share. A lot of that has to do with our commercial execution, as well as the fact that many accounts, particularly non-retail accounts, prefer to stock a single vaccine. So we'll see that evolve over the course of the year. And while we don't think that there's much catch-up opportunity in the 65 plus, we also think there is growth opportunity in the 50 to 64 age group that brings about 30 million adults into the eligible population. So those will be the dynamics in adults. Now in PEDS, there again, we have very significant market share. And on the theme of improved market share across all of our vaccines, we saw a 12 percentage point improvement from August 23 to December 24 in our pediatric market share. And here we expect this to be a much more stable market. We plan to retain that kind of leadership share and we expect volumes to be more stable here.

Okay, thank you very much.

Next question.

We'll go next to Dave Reisiger with Lear, Inc. Partners. Please go ahead.

Yes, thanks very much, and thanks for all the updates. So my question is just going back to RFK Jr. So assuming he is confirmed as HHS secretary, and given his history of suing manufacturers and his commentary on lawsuits in the hearings last week, Could you just help us understand his ability as HHS secretary to remove U.S. vaccine liability protections that manufacturers currently benefit from and allow manufacturers the freedom to develop and sell vaccines that save lives? Thank you.

Look, I don't want to comment because these are legal issues, but I believe that the liability is through Congress approval. So I don't think anyone can change that without, let's say, Senate approval. I know that that creates a turbulent into the market today with RFK. it was almost certain that he would get confirmed and we have engaged with him early enough so that we can mitigate all the issues if he does the things that he has said in the past because during the hearings here of course clearly tempered his statements on vaccines. But if he tries to do some of the things that he said in the past, I think that he won't find in front of him the industry. He will find in front of him the total medical community and the total scientific community and payers that they don't want to see a reduction in vaccinations because that's a very effective way of controlling healthcare costs. And more than important, this is not what the Trump administration would like to see another health crisis. So I would say that I feel cautiously optimistic that they will be very, very prudent with everything they're tracking. Let's go to the next question.

We'll go next to Trung Nguyen with UBS. Please go ahead.

Hi, guys. Thanks for the questions. Just two from me. So firstly, going back to Abrazo, I think Amir noted potential policy changes in RSV. So do you have any insight if there's going to be a discussion from ACIP on revaccination or cohort expansion this year? I guess that could be a positive for your guide. And then two, on PADSERV's potential registrational muscle invasive bladder cancer trial, in general, I think cystectomy is used to cure patients in this setting. So just wondering how you're going to position this and how quick could you penetrate this population if approved? Thanks very much.

Thank you. Very quickly, Amir, on the brisbo, and then we go.

What I described during were the catalysts that could result in market expansion for a brisbo. Obviously, it's too early and not our place to comment on what exactly ACIP's going to take on and when.

Thank you. And Chris and Patsy. Thank you for the question. Reminded that this is event-driven studies, so we hope by the end of this year, but if the event doesn't happen, we'll move a little bit on. And muscle invasive, about 28,000 population in the US alone. So it could more than double, as we mentioned, triple the population currently eligible. Currently, there's no standard of care treatment other than surgery, cystectomy for patients considered cisplatin ineligible. So there's two studies, one for cisplatin. button eligible and one for cisplatin ineligible for the cisplatin eligible the current currently is dominated by new adjuvant chemotherapy so there's a real need for both adjuvant and new adjuvant treatment and to replace chemotherapy in the setting of cisplatin eligible disease And of course, for cisplatin ineligible disease, it will completely change the future treatment paradigm. So we're very excited if these studies are positive and what we've seen, we've got confidence in these data from earlier studies. So yeah. Thank you. Next question.

We'll go next to Akash Tiwari with Jefferies. Please go ahead.

Hey, thanks so much. Just on QVD and Glipron, it looks like you're using a bilayer immediate release in matrix technology here, but you don't actually test your bilayer formulation until the second half of your weight loss trial. Is that what your team's waiting on before you make a formal update, or is it perhaps the Lilly-Orpha-Glipron data that's also going to factor into this decision? Thank you.

I don't think we have disclosed the technology. I know that there were speculations into the marketplace, but we haven't disclosed the technology.

So I'm not sure we can say much. But Chris, do you want to add anything? No, I don't think we need to add right now. Yeah. Let's go to the next question.

We'll go next to Chris Shibutani with Goldman Sachs. Please go ahead.

Great, thank you. Quick one on the pipeline and another on business development strategy. On the pipeline, I notice in phase two you've advanced the GIP antagonist. Is that something that you'll be continuing to share data on, particularly as a monotherapy? And do you have any efforts ongoing to do a combination? In terms of business development strategy, I think the vocabulary you used included a capacity of perhaps in the $10 to $15 billion zip code. And I'm curious to know what you are solving for. And I ask this in part because historically, There had been a view of using cash to acquire $25 billion in revenue by the end of the decade. But now when we think about where we are in this decade and what you could be solving for structurally, there seem to be approaches sourcing assets from China, for instance. Many of your competitors are doing this. Are you solving for near-term revenues, or are you looking to use other methods, including perhaps partnerships over M&A? That would be helpful. Thank you.

Yeah, let me start a little bit on the BD and also Andrew can chime in. We had very clear about so far we have acquired $20 billion of 20, 30 revenues. We are very confident that we will hit this number. Very confident. So that's so far so good on that, right? Looking forward, of course, we are looking at more strategic opportunities right now. which will enhance pipeline in areas that we would like to play, rather than near-term revenues on VT. I would ask Andrew to comment, and then if you can speak, Chris, about the GIP antagonist.

Sure. So hi, Chris, nice to hear your voice. So on the B side, Albert said the key word, which is strategic. So everything we do will be through a strategic lens of building around our core competencies or building competencies in areas that maybe we have not been in previously, if that's what we decide to do. On your point regarding China, it has not escaped our attention, of course, the innovations from China across multiple therapeutic areas. And indeed, that was most evident with oncology some years ago, but now it's expanding to most therapeutic areas. They're mostly fast followers, but I expect that will change as well. It's an area that we are very, very active in. We continue to have very fruitful discussions. And let's just see where we go. So I'll hand over to Chris.

We have a very strong footprint in China. And that includes not only commercial, but we have very strong R&D footprint that they are looking at science innovation because they are progressing very fast and to identify an opportunity. Chris.

On the GIPA antagonist, this is potentially a first-in-class oral small molecule GIPA antagonist. It's currently in an ongoing phase two placebo-controlled study evaluating the GIPA antagonist in adults with obesity on the background of GLP-1 receptor agonists. If the data from the Phase 2 study are positive, we may potentially be able to develop also fixed-dose combinations, including with GLP-1, including potentially that of Lupron in the future.

Thank you. Next question, please.

We'll go next to Alex Hammett with Wolf Research. Please go ahead.

Thanks for squeezing me in. On Vindopal, with new competitors on the market and on the way, can you walk us through how we should think about the near-term commercial dynamics Where could we see the largest share impact, newly prescribed patients or switches? Thank you.

Thank you, Alex. Amir? Yeah, Finda obviously had very significant momentum in 24. You saw the growth rates, and that was due in large part to the commercial efforts and the attention and investment we put behind it. We saw improvement in diagnosis rate as well as new patient starts, and we also did benefit from what was a one-time bolus of annual enrollment patients in the first quarter of 24 due to favorable affordability. So as we look into 25, there's both headwinds and tailwinds, and we're confident in the growth of VINDA, obviously at a different rate than it grew in 24. We do see increased diagnosis education, growth in the prescriber base, and there will continue to be favorable affordability conditions. But we do expect that there will be some headwinds. Obviously, you referred to two new market entrants. That will have some impact that remains to be seen both on switching patients as well as new patient starts. I think it's also important to remember that there will be impact of IRA on VINDA and the effect that it has on the calendarization of our GTN, with more of the GTN impact coming earlier in the year as we reach the catastrophic phase. Now, with all of that said, I think we remain really confident and excited. With Vinda, we've got a robust clinical profile that has data both from the clinical trial and the long-term extension. We've got five-year real-world data on vows. We've got strong access, and we are confident in our position as the standard of care.

And let's move to the last question now.

Our last question comes from Tim Anderson with Bank of America. Please go ahead.

Oh, thank you. I have a question on just obesity strategy. So to me, late-entrant companies with, you know, one lead asset might struggle unless they have real clinical differentiation issues. It could be in a better position if they have a collection of assets. There's natural return key solutions out there in terms of companies that any larger company could either partner with or acquire outright. How is Pfizer looking at its B efforts in this regard, either partnership or acquisition that could bring you one or more assets that aren't far away from being in phase three?

Andrew? Yeah, hi Tim. So I agree with your assertion that obesity is heterogeneous and likely require a set of tools encompassing both different modalities and different delivery devices in order to manage what is a lifelong condition. These assets do exist. Some are scattered, some have portfolios, but you could imagine that, of course, we are looking at all the opportunities and trying to understand what delivers the most value to patients and obviously to Pfizer shareholders.

Thank you very much. And I think that concludes our call. Thank you all for your interest. 2024 was a strong year of performance and our 2025 Strategic priorities are very clear. We are planning to execute as well on them as we executed in 2024. Thank you very much and have a nice day.

This does conclude today's program. Thank you for your participation. You may disconnect at any time.