Good day everyone, and welcome to Pfizer's First Quarter 2019 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Chuck Triano, Senior Vice President of Investor Relations. Please go ahead sir..

Good morning, and thank you for joining us today to review Pfizer's first quarter 2019 performance and 2019 financial guidance.

I am joined today by our CEO, Albert Bourla; Frank D'Amelio, our CFO; Mikael Dolsten President of Worldwide Research and Development; Angela Hwang; Group President, Pfizer Biopharmaceuticals Group; John Young, our Chief Commercial Officer;and Doug Lankler General Counsel.

The slides that will be presented on this call were posted to our Web site earlier this morning and are available at Pfizer.com/investors. We'll see here that slide three covers our legal disclosures. Albert and Frank will now make prepared remarks and then we'll move to a question-and-answer session.

With that, I'll now turn the call over to Albert Bourla.

Albert?.

Thank you, Chuck, and good morning everyone. It's been a busy and productive first few months as CEO. I've had the pleasure of meeting with many of you to discuss Pfizer's long-term growth prospects. I have also met with thousands of colleagues from around the world.

All of them are committed to driving sustainable growth through scientific and commercial innovation, all in creating capital allocation and a renewed focus on our purpose, breakthroughs that change patient's life. I'm pleased to report that we began the year with a strong first quarter. Revenues were up 5% operationally companywide.

This was driven by 8% volume growth, offset by net pricing decline of 3%. If we look at our Biopharmaceuticals Groups, which represented 70% of our revenue base this quarter, we generated a strong 11% volume growth, and realized a net pricing decline of 3%.

We saw volume growth in several key brands, emerging markets and biosimilars, and we got our Upjohn business up and running. Let's begin with our result also from the Biopharmaceuticals Group.

This business grew its top line 7% operationally, due primarily to the continued strength of several key brands, including Eliquis, Ibrance, Prevnar 13, and Xeljanz. Eliquis had a strong start to the year, growing its revenues by 36% operationally in the quarter.

Eliquis continues to extend its leadership in many major geographies around the world, and in the U.S. we achieved an all-time high prescription served for the brand this quarter. We remain pleased with the performance of Ibrance. Global revenues in the first quarter increased 25% operationally to $1.1 billion.

As you know, the Ibrance growth story is now predominantly in international markets, where we saw 107% operational growth in the quarter. This was driven by continued strong uptake in developed Europe, Japan, and certain emerging markets.

In the U.S., we saw 2% growth which reflected continued moderating volumes in approved metastatic breast cancer indications..

Thanks, Albert. Good day everyone. As always, the charts I'm reviewing today are included in our webcast. Now moving on to the financials, first quarter 2019 revenues were approximately $13.1 billion, which reflects operational growth of $664 million or 5%. And the unfavorable impact the foreign exchange of $453 million or 4%.

Our biopharmaceuticals Group business recorded 7% operational revenue growth in the first quarter, driven primarily by Eliquis and Xeljanz globally, Ibrance primarily in international markets, and Prevnar 13 and emerging markets in the U.S., all of which were partially offset by the clients in our hospital and rare disease businesses.

Revenues for our Upjohn business in the first quarter increased 1% operationally, primarily due to 25% operational growth and emerging markets, driven by strong value driven operational growth in China, primarily from Lipitor, Norvasc, and Celebrex partially offset by a 9% operational decline in developed markets primarily driven by lower revenues for Viagra and Upjohn's authorized generic for Viagra in the U.S.

due to increased recent generic competition; Lyrica, primarily due to lower volumes in the U.S.

and wholesaler de-stocking in advance of anticipated generic competition, beginning June 30, and in developed Europe from continued generic competition, and Greenstone Upjohn's authorized generic subsidiary, primarily due to industry wide pricing challenges in the U.S.

Revenues of our consumer healthcare business declined 2% operationally reflecting an 8% decline in the U.S. partially offset by 4% operational growth in international markets..

Thank you, Frank and Albert for you prepared remarks. At this point, we would like to move to our Q&A session please.

Operator?.

Your first question comes from Tim Anderson from Wolfe Research..

Thank you. A couple of questions please. On your 20-valent Prevnar follow-on, I am hoping you can talk about when you expect that to move in the pediatrics? It's your largest product Prevnar 13. It's a race between you and Merck to come up with a new and improved version of Prevnar 13.

You guys are the incumbent, yet you are not yet in phase 3 in peds, and Merck is. I am wondering if that potentially foretells if there is some sort of formulation problems with your product in peds. So asking for assurances that there are.

Second question is on Ibrance and just the longer term international opportunity if you look at major cancer drug precedent in the past by their companies, lot of the times those product sell more outside the U.S. eventually than they do in the U.S.

Wondering if that could happen here with Ibrance in the CDK 4/6 class because that's not how it's being modeled, or has there been too money price concessions made such that it's not really achievable? Thank you..

Tim, thank you very much. Both excellent questions; I will ask Mikael to address the question on our 20-valent compared to 15-valent from the Merck? And then Angela will answer the question about Ibrance.

So that, Mike?.

Yes, thank you. We are very pleased with our 2-valent pnuemo next generation vaccine that covers the certain stereotypes of Prevnar 13 plus seven new ones.

These seven new ones were careful selected to make sure we have a broad coverage of emerging invasive pneumococcal disease strains associated with high case fatality rates and antibiotic-resistance in some cases combined with meningitis.

We communicated our adult data at the ECCMID Conference recently which showed a compelling profile which also of course was linked to the breakthrough designation by FDA. We are moving with good and robust pace forward in the pediatric settings.

As you know, in the pediatric settings, we have multiple immunization as well as a boost as is the current regimen for use of conjugate vaccines which is different from the adult trial that are fast as it's only one immunization.

We look forward to read out from the infant trial need to of this year in phase 2 proof-of-concept study, and pending review those data sets, we look forward to interaction with regulatory agency and swift moving forward into a potential pivotal start. We are very pleased with the formulation.

It was very well-tolerated this far and think we have included all experiences from decades of pneumococcal work into our plan..

And I would like also to remind that we have a very strong patent portfolios on Prevnar.

Angela, would you like to address the question with Ibrance please?.

Thank you. Ibrance revenue growth continues to be very strong ex-U.S. And you heard Albert mentioned in his opening remarks that currently we are growing at 107% in Q1 of 2019. We believe this growth to be sustainable as we see that there is still significant room to grow in this CDK class as well as our own market share.

Just as an example in the EU 5 this CDK class is currently 35% of all first-line new patient starts while we have 86% Ibrance class share. In Japan, as an example, this CDK class is only 21% first-line new patient starts and a 100% of the Ibrance class share.

So while we are continuing build our Japan and EU business, we will also intensely focus on our launches in the emerging markets. So far, we have seen 122% operational growth year-on-year in the emerging markets, and led by double digit growth that we are seeing in Argentina, India, Saudi Arabia as an example.

We have launches coming up both in Brazil and China which we are very excited about, and we expect these to be very strong contributors to our 2019 growth trajectory. So, in view of the three big phases of growth of Ibrance, the first being the U.S., which is where we began with our first indication.

Now in our international launches which are moving beyond the developed markets to the emerging markets. And then the anticipation of our adjuvant indications to come with Ibrance, we continue to be extremely optimistic, and I feel very positive about the growth trajectory of Ibrance..

Great. Thanks, Angela.

Next question please, Operator?.

Your next question comes from Vamil Divan from Credit Suisse..

Great. Thanks for taking my questions. The first on extending the sales there were a little lighter than we thought and just wondering if there is any onetime item. The prescription trend also seemed a little lower last quarter than what we were seeing in the past. So, comments there.

And then just maybe outlook for that product longer term, I know you have expanded label and new indications coming, so just so you could frame how you see that longer term? And then second on the DMD data you mentioned coming in June. It's interesting a lot of focus on that even though it's pretty early day.

So maybe if you could just sort of help sort of frame expectations around that in terms of what we will actually see and what we should be expecting going into just so people sort of have appropriate expectations given that it is such early data. Thanks..

Thank you very much, Vamil.

Angela, I think you can cover the Xtandi question, and then, John, if you can please discuss the DMD data on ?.

Thank you. Well, we have seen very strong prescriber adoption of Xtandi across all of our indications. I think that this demonstrates the confidence that prescribers have with Xtandi. Year-on-year urologists have prescribed -- prescribing has grown 45%. And oncology prescribing has grown 20%.

We are also pleased with the uptake of Xtandi in non-metastatic CRPC. This is our PROSPER trial. Even though this was launched just eight months ago, its market share is already equivalent to our metastatic indication which was launched seven years ago. And this market share is more than doubled that of a leader in non-metastatic CRPC.

We have yet to realize the full potential of PROSPER, because the impact of patient accumulation and the longer days of therapy are still to come, and just as a reminder, the days of therapy for the PROSPER trial is 18 months. This quarter, as you say, the U.S. net revenue did lag behind total patient demand.

But this was due to some gross to net adjustments, some inventory differences, and our free drug program.

But we continue to believe in the strong growth potential of all of our indications, and we look forward to our indication from both the ARCHES and the EMBARK Trials, which will continue to drive growth through expansion into new patient segments and offer longer days of therapy.

So we need to stay the course with our strategies, and we believe the impact from PROSPER as well as our new indications will drive future growth, change the standard of care, and meet high patient unmet needs..

John Young:.

. :.

Thank you, John. It's a devastating disease, and we all hope that the solution that we are working and others, but the solution that we are working would be really transformational.

Next question?.

Your next question comes from Chris Schott from J.P. Morgan..

Thanks very much. Just two bigger picture questions, I guess, the first one with the progress you've been seeing on the pipeline, can you just update us in terms of where you see business development fitting into the longer term view and strategy for the company.

I guess, specifically, I think you have been clear that larger deals are off the table for now, but when we think about bolt-ons, what type of size of deal could that encompass and what are the latest priorities in terms of commercial stage assets versus clinical assets et cetera? And my second question with the Upjohn division, do you believe it would be possible to eventually separate and spin this division from the rest of Pfizer and if so what are the factors and kind of data points we need to be watching that would make that type of separation something that would be possible at the time? Thank you..

Yes. With the business development, I will ask John to comment and you have heard our comments that we plan to invest significantly in business development. It's a little bit different, the way that we plan to do it right now.

Before we were targeting revenues, now or soon -- right now, the focus, it is how to -- and because this is what we needed at the time. And now our growth, I think organically is going to be robust post 2020. So what we are looking for, it is to enhance even further our pipeline.

So, as regards the direction in how we are selecting clinical, John, can you please make a comment? John has the responsibility of managing this strategic area for us..

All right. Thanks, Albert, and thanks Chris for the question. So I wouldn't repeat what Albert has already said about the reorientation of our focus of opportunities to really strengthening our pipeline with clinical stage assets.

I think, if you were to look into the future, I think you'll see us continue to be very active in business development, but I think with our focus generally on earlier to mid stage opportunities where clinical risk may be higher as data is less mature, but we believe that the opportunity for value creation is greater.

And the risk, importantly, of operational disruption to the pipeline, internal pipeline, which is obviously maturing, we believe, very nicely, is going to be lower. Certainly, in terms of what size we consider to be a bolt-on, generally, we don't comment specifically on size.

I think you would say that assets that are in the range of a few billion dollars, we would consider to be bolt-on acquisitions, and that's really complements our pipeline. So we are very excited about the opportunities that we have and that's something that's particularly we're going to be focused on over the months ahead..

Thank you, John, and maybe I can provide some color to your question about Upjohn. It's a good question and I received a lot this question and I understand the reasons. Right now, as I said nothing is changed other than Upjohn performed very well in the first quarter.

It's always said that our focus it is to make sure that we strength up this business in that way, that will operate affected and the fact remains that in the very new lean construct with the management relocated in China where most of the opportunities are as evident from the first quarter also where most of the challenges we're come as we know that there are some reforms that the Chinese government taking into this business.

So right now, it's very, very pleased with the way that the whole thing has evolved. If we think that we could separate the down their hope, yes, it is a possibility, but this is not what it is, in my mind right now. First, we need to make sure, but we have a strong stand-alone business.

So we are working to make sure that of the rates absorb as a subsidiary within a company..

Great, thank you, Albert, and John.

Next question please, Operator?.

Your next question comes from Geoff Meacham from Barclays..

Good morning, everyone. Thanks for the question. Mike and Albert, just wanted to see if you had any additional color on the recent add long-term data, just in particular the RPOA rates and I know you're awaiting FDA feedback. But would you view the totality of the data so far or the unmet need is still warranting filing at this point.

And then another one on BD somewhat, so on the gene therapy front, you guys are obviously progressing a number of programs hemophilia DMD, but a lot of BD activity in this area.

Recently, so the question has the decision to buy versus build, or partner change for Pfizer over time, it seemed like post the Bamboo deal you guys have a working platform that really could add multiple indications quickly I just wasn't sure what the, what the strategy is there. Thank you..

Right. I will ask Mikael and John to comment on Tanezumab.

So John, why don't you start and then maybe Mikael can give a little bit of scientific information?.

Yes. So look, thanks for the question, Geoff. Obviously we've released fairly significant commentary on the study in our press release. I wouldn't comment on that, but I think, let me just say for Tanezumab we are continuing to analyze the clinical profile based on the ongoing Phase 3 development program in both OE and chronic lower back pain.

That includes in totality five Phase 3 studies and nearly 7,000 patients and we plan to review the totality of the data with regulatory authorities and we'll assess potential next steps for Tanezumab and as we engage with regulators will be in a position to provide an update in the coming months..

It was very well-summarized John and of course it's a very large data sets from these recent Phase 3 and previous Phase 3. So it's a real opportunity to put together to tell it date together with our partner, Lilly, and have a discussion with regulatory agencies about that data set and paying landscape..

Thank you, Mikael, and then maybe I can give you an answer to your question about gene therapy, it is yes, as you said gene therapy is an area but of significant focus for us in this scenario that we started much earlier and our strategy was to combine our clinical expertise and said they're therapeutic areas together with biotech expertise as they were developing specific projects and very early we realized that in this category the bottleneck is going to be manufactured.

This is why Pfizer embarked into significant investments to build a platform in manufacturing, which is progressing very, very well.

As we look to the future, we plan to the box we grow our platform organically for projects that we're developing and indirectly through the licensing and partnership that we are going to make and actually the last partners, but we announced was in the gene therapy field for the Wilson disease, which is a lever disorder.

We believe actually that exactly because of our track record of having successful partnerships, but also because we have built a significant manufacturing capability, we will become a partner of choice for Biotech that will see that the combination will unlock value for that..

Great. Thanks for those responses, we move on to the next question please. Thank you..

Your next question comes from Andrew Baum from Citi..

Thank you. Couple of questions please, firstly, you referenced these pending ACIP review for Prevnar 13, given the replacement there tight risks that we've seen because the pediatric vaccination. I know that your numbers and guidance includes those hedge their recommendation.

What's your level of confidence and is high, which seems to be exactly why it is high given the meeting has been scheduled to discuss that. And then second, in reference to adequate.

Could you talk to what you see is the likely impact on realized pricing and volumes for Eliquis sales within your Medicaid book of business assuming rebate reform takes place the administration that seems to be pushing for the beginning of 2020 many time..

All right, why don't you Angela answer the ACIP question?.

So, our adult PCV13 vaccination program has been extremely effective and it's difficult for me to speculate on the ACIP vote because that's coming up in June. But I do want to emphasize that Pfizer strongly supports the continuation of the current adult vaccination program.

This is because there are actually important serotypes such as serotypes 3 and serotypes 19A that still have not reached acceptable protection levels. So keeping the current recommendation will prevent numerous individual cases of pneumonia, hospitalizations and other outpatient treatments.

Direct vaccination is important because they are also underserved populations still in our country where the disease risk is high. And just to give you a couple of examples, those that are living in rural communities, have 50% less coverage than those that live in suburban areas or there is a 24 point gap among the low socioeconomic adults.

I think you've also seen through the recent news reports the importance of direct vaccination for adults as well as for public health and we also looking forward to the filing of our next generation pneumococcal vaccine, where we received FDA breakthrough to exit designation.

We expect to file this by the end of 2020 and so it underscores the importance of an interrupted adult vaccination program..

Thank you. Andrew, you asked us about the Eliquis and how we think this will perform in the Medicare population particularly given price and volume. First of all, I would say that Eliquis had the phenomenal performance I think I'm seeking highly about the profile of this product.

But 36% growth is really something that we feel - make us feel very proud and actually in the U.S., the growth was even stronger 38% but the U.S., it's part of the business, right. So it is a very, very well diversified geographically.

And I think that the pricing pressures, the growth is coming predominantly those 38% from volume, and all our strategies it is how to make sure that the diagnosis rates are more accurate and people and physicians understand the profile of the products that they can make the right choices when they choose to prescribe a medicine like about.

So given that everything is the predominant growth with this volume, I think very good about the growth prospects of this product going forward..

Thanks.

Albert and Angela, can we move to our next question, please?.

Your next question comes from Umer Raffat from Evercore..

Hi, thanks so much for taking my questions. I wanted to focus on two broad topics. First on Ibrance adjuvant can you quantify for us how large an opportunity you think that is? And given the significance of it, I have to ask, is there an interim this summer.

And secondly on DMD gene therapy, my question is, do you think you have a best-in-class asset and I ask partially because I don't see this asset listed in your 15 blockbusters, by 2022 which should theoretically be a very realistic possibility even if the pivotal where to start in early 2020, so just wanted to reconcile both of those. Thank you..

Thank you. Angela, I think you can deal with the Ibrance market potential and also let me, let me say that, on the studies, yes, there is an interim analysis, as with all studies, but the studies are designed to come to full completion.

So we expect that the studies will be completed and we expect that this completion will happen next year although it is event-driven, so we'll need to see how events will evolve.

But Angela, let's speak about the commercial opportunity, and then John, maybe you can give the clarification about DMD because what we have is 15 and 5, it was not the gene therapy molecule. Please..

So, we have the two Phase 3 studies ongoing in the high risk early breast cancer population, the first is the PENELOPE, which enroll patients with high risk early breast cancer previously treated with the neo-adjuvant therapy and then we have PALLAS which enrolled patients with the high risk early breast cancer stage 2 and 3, we're optimistic about both of these studies because of the ability to meet unmet need but also to your question more directly if successful we will have the ability from both of these programs to double the number of patients that are eligible for this..

Yes, and thanks for the question about DMD again, obviously the 15 and 5 or up to 15 and 5 portfolio reflected the portfolio that we had at that time and cleanly one of the sort of good things in our industry is the portfolio is never static and so I think as we begin to see data readout from our DMD gene therapy program, the profile of that medicine will become clear to us and to clinicians and to importantly to patients.

So we would really see this having the potential to be an additional complement to that portfolio that we described last year.

So I think it's obviously premature for anybody to disgrave the relative profile of respective or other comparative gene therapy assets, the data is still emerging, it's still and relatively small patient numbers and obviously for us and other players in this field, we will see the totality of data that emerges over the months and years ahead.

But we feel cautiously optimistic about the program as I mentioned in my comments earlier on, we look forward to presenting some clinical data from that later on this year..

Thank you, John and Angela for the background.

Next question please?.

Your next question comes from Louise Chen from Cantor Fitzgerald..

I don't think we can hear you, if you are asking a question maybe you are in mute..

Hold on, un-mute the phone.

Can you hear me, okay now?.

Very well..

Okay, sorry about that. Okay, so thanks for taking my questions, I have a few here.

So first question I had was on Tanezumab, just curious how the recent data impacting thinking with respect to the CLBP and cancer pain indications and then secondly on Tafamidis, how do you expect the initial launch to go if you do get approval this year, what is your anticipation for adoption, payer coverage, physician and patient awareness and then last question is on your business development comments, just curious if you have any interest in primary care or you more focused on specialized medicine? Thank you..

Thank you.

John, what about Tanezumab?.

Yes, thanks for the question Louise. I mean I think we probably covered that mostly in our comments or later on.

So we obviously issued fairly detailed press releases as each of our Phase 3 studies readout and I think what do I just say in overall is we're going to look at the totality of the data from all of our Phase 3 studies, we have round about 7000 patients worth of data, we're still on the process of analyzing the clinical profile and understanding its potential value across different indications.

Our next step is obviously most importantly going to be to discuss that data with regulators and we will be in a better position to be able to provide you with an update on this..

Thank you. Angela, very exciting news for Tafamidis potential launch, so tell us….

Yes, we are very excited about Tafamidis and that's because it's a transformative therapy for ATTR-CM and today it treats a fatal and a rare disease where there are no therapies and no alternatives but it also addresses a large burden on the healthcare system because of the complications and the hospitalizations that arise from this disease.

We do see this so as a rare disease, so approximately 100,000 patients in the U.S. But as you know today it is severely under diagnosed, we estimate approximately a less than 1% diagnosis rate because of the lack of treatment and the use of invasive heart biopsies to drive the diagnosis.

So, as you can see diagnosis is going to be key to growing this market. At launch therefore we're going to be focused on creating suspicion of this disease by cardiologists and patients through educating them around the signs and symptoms of cardiomyopathy.

We also need to increase the utilization of non-invasive methods such as scintigraphy and integrity versus a heart biopsy for diagnosis. So as you can see, this will all take time because we need to educate both physicians and patients on these red flag symptoms.

We need to drive the utilization of scintigraphy and we also need to advocate for the changes in treatment guidelines which will help to drive both diagnosis and treatment. But as Pfizer, we are confident about our capability to build this market because we have a track record of success in creating new markets.

And just to bring up an example from Xalkori, you may recall that at the time of launch of Xalkori the diagnosis rate of the ALK mutation was only 1%. But today it is 80% to 93%. So Tafamidis has excellent data, it has a compelling patient benefit. Pfizer has deep expertise and a commercial footprint in cardiology.

So we look forward to bringing all of these capabilities to bear in launching this important medication to the patients who need it..

Thank you, Angela and maybe I can make some comments about your question Louise about if we would be interested to all sort in license Primary Care potential candidates and medicines and the answer is of course yes. But let me be clear and specific what we mean.

We have specific criteria what we are interested in licensing in, so it's not just the blind segment we have given to people go and license things. But those criteria involve the potential medicines it'll be breakthroughs. It's to be significant science that can create significant improvement in current standards of care.

And they need to be within the areas of expertise of Pfizer, so that we can add value to it, just to go on without doing licensing. But we can add value. And we have six areas of expertise right now that they are all from that aspect from my perspective, they are treated equally.

Those are areas that we know we have the best science in the world that they can make fewer mistakes as we're selecting products.

And this is where we have the scientific expertise to develop potential in licensing assets in the best possible way because the development path plays a key role in unlocking the value of a molecule and primary care is definitely one of the areas of significant expertise or funds from the long way that goes way back but also in the current days as we are having some of the best scientific programs running in evolving diseases and other primary care conditions in our research centers.

So the answer is yes, and the criteria that we are going to implement I hope I made that clear..

Great, thank you, Albert.

Next question please?.

Your next question comes from Jason Gerberry from Bank of America Merrill Lynch..

Hey, good morning. Thanks for taking my questions. I guess it's firstly coming back to the Tafamidis launch. Can you give us a sense of what you view as maybe the best analogs for driving this diagnosis and treatment rate above this 1% level.

I guess on the one hand it looks like there's a largely an educational element to this with a lot of these patients basically sitting in the cardiologist office just not diagnosed but you also have a drug that's pretty easy to dose no monitoring. So I'm just kind of curious, if there are any analogs that you guys have thought about.

I wouldn't think that's Xalkori would be the greatest analog but correct me if I'm wrong.

And then secondly on DMD gene therapy, it sounds like you haven't dosed any patients at the intermediate dose, I was curious sort of the rationale for having an intermediate dose, was that more of a safety consideration or just seeing the above normal expression levels achieved with separate program had a lower dose than your high dose was the decision ultimately to just have the optionality around a lower dose? Thanks..

Thank you. Angela, why don't you deal again with Tafamidis question. There is a lot of interest in this product and they understand why..

Yes, sure. So actually we do think that Xalkori is a great analog for what we see coming up for diagnosis in both Tafamidis and cardiomyopathy. You know, today this is a disease, where the symptoms, and the signs and symptoms are, easily, I guess it could be confused with heart failure.

So I think the ability for us to be able to find diagnostic approaches that will help us to really identify and to isolate who, specifically the cardiomyopathy patients are going to be really important. I think that there are some symptomatic, some symptomatic attributes that we plan to be educating around at the time of launch.

But really, what we need is the ability to leverage technology such as integrity as an alternative to what exists today, which is a hard biopsy, which is extremely invasive.

And I think that the ability to use scintigraphy will allow us to more readily diagnose these patients, I think the qualitative attributes some symptoms will allow us to create suspicion around what the right pool of patients might be. But the definitive diagnosis really needs to come with scintigraphy.

There are 15,000 scintigraphy machines within cardiology offices today and 32 centers of excellence. So I think that this effort around education and awareness building is going to be key to both bring patients to the doctors' offices, but also to highlight the importance of these symptoms to prescribers and then to eventually diagnose and to treat.

So as we said, I think we have deep expertise and capabilities in doing this, but that you can imagine with a disease that is so undiagnosed and up till now has had no therapeutic options. This is going to take time for us to really educate and to bring you know the full benefit of tafamidis to be bear..

Thank you, Angela.

And Mikael please, if you can comment on dosing strategy with a DMD development program, and maybe you can provide any color you would like about this breakthrough medicine?.

Thank you very much. Yes, we worked with our bamboo colleagues and carefully designing these 89 vectors that contains muscle relevant to specific promote for expression of the transgene.

And the protocol was designed intentionally based on our experience of many gene therapy programs to allow some flexibility, which was the basis for dosing at one into through 14 and swing into the 14 to gain experience, of course a reasonable dose range in what would be the expression of the transgene -- ability and clinical performance for young boys that as Albert alluded to earlier, we're aiming to a transformative outcome.

Now, we look forward to share data at the PPMD meeting in Orlando this late June. We think it is a good meeting for that purpose is one of the largest Duchenne Muscular Dystrophy gathering where both key scientists attend and patient representative.

As you know, these types of devastating rare disease, you work very closely with the leading scientist and patient groups. So, we look forward to be there and share data set as John alluded to earlier. .

Thank you very much, Mike..

Right. Thank you for that background also.

Next question, please?.

Your next question comes from Alex Arfaei from BMO Capital Markets..

Good morning and thank you. A couple of follow-up questions on Tafamidis, congratulations on the approval in Japan; it was faster than we expected. We focus a lot on the U.S. market, but could you also comment on the ex U.S.

opportunity families, and following up on the diagnosis rate commentary, my understanding was that you were also working on blood tests to make diagnosis even easier. Could you give us an update on those efforts as well as your potential launch readiness in case of earlier approval in the U.S.? Thank you..

Thank you, Alex. Angela again, you have the ex U.S.

support through this and the testing?.

Right. So, yes, with the Japan launch was very recent. And I think that the opportunity there sets us up well, for the kind of launches that we expect to see around the world, as you say, it's not just the U.S., it's Japan, it's also rest of world.

In terms of rest of world, I think the findings have been submitted and unable to comment on those for now because we are still awaiting for commentary from the regulatory agencies, but I think that my general comment about Tafamidis is really one that I mentioned earlier, which is the critical aspect of this is diagnosis.

It really is a rare disease. It is severely under diagnosed today because of the lack of options. And so, critical to our ability to drive Tafamidis growth anywhere in the world, is the ability for us to be able to find the patients and then be able to screen them and to be able to diagnose them and then send them on to treatment.

So I see that these trends are pretty consistent wherever we are around the world..

Mikael is a great physician, but you are as well.

Can you please comment a little bit on the diagnosis opportunities for this tafamidis?.

Yes, I want yes to punctuate that. The growing availability of scintigraphy technician based, makes it increasingly easy to get the diagnose off the suspicion often raised by clinical symptoms, and echocardiogram. We all seem parallel and looking at potential future blood markers.

But right now, I think there should be no really hindrance to fast and easy diagnosis based on clinical sign scintigraphy. And in addition, we have made work on diagnostic algorithms, including artificial intelligence today which advise on typical algorithms that makes a hard cardiomyopathy, more likely to be TTR related, than unrelated..

It's amazing how many -- how much work is happening right now in this field, and particularly how AI also can help identify potential people that potentially could suffer from this disease. And we had multiple discussions with payors well and a lot of them, they're having high interest to exploit this opportunity.

Because when we say 1% is diagnosis, we don't mean that the 99% they just don't treat it. Usually all of these patients are presented with heart failure symptoms, and they are treated for the wrong reason.

And they're going, of course, because the doctor haven't identified that this is the real cause of their cardiac issues, and then they treat it and fail and fail, and then eventually, there's a fatal event. So payers are highly interested diagnosis disease, I think, but as Angela said, this is the key. And we know how to do it very well.

But it will take time to pick up these diagnosis rates, but we will do..

Great. Thanks for that context as well.

Next question, please?.

Your next question comes from Navin Jacob from UBS..

Hi, Navin Jacob, UBS. Thanks for taking the questions. A few, if I may a interesting slide on your treatments beyond up to 15 and 5, 2 in particular stood out the Oral GLP-1 and the HER2 ADC.

Could you provide any context for how far along those assets are particularly the oral GLP-1, is it -- are those Phase 2 assets, Phase 1 assets, any color would be helpful. And then, I'll add to the questions on tafamidis.

With regards to your pair discussions, are most of those related to traditional contracts or are you exploring outcomes based contracting? And if so, to what extent is that do you think outcomes-based contracting is will be a broad mandate or is it more of a experimental type of situation.

And then finally, if you have any color on resolution of the sterile injectable manufacturing issues, is the resolution still expected for end of 2019? Thank you very much..

Thank you very much.

Mikael, let's start with you, and with the Beyond 15 in 5?.

Yes, I really appreciate your interest in the Beyond 15 in 5, which of course covered in next period Beyond 22 of the up to 15 in 5. So for the oral GLP, that's been an area where we have deployed some unique chemistry.

And I'm very pleased to say that we are right now concluding a Phase 1b trial in diabetic patients and I've seen some very encouraging performance of that drug related to control of diabetes and bodyweight and we look forward to share those and we'll swiftly move into a larger Phase 2 trial for diabetes.

To the best of our knowledge, this is the only true small molecule that have come this far and shown this promise in PK and pharmacodynamic favorable effects. The next generation or ADC is based on site directed conjugation of adjuvant inhibitor and has been going through dose escalation and showed promising signs of activity.

We continue to optimize dose and expect to go into Phase 2 expansion cohort relatively soon including potential combination with P21 agents..

Thank you, Michael. Let me give you a very brief comment on Tafamidis and then I will ask Frank to take the manufacturing question.

On Tafamidis, as you know breakthroughs requires a breakthrough approach is also commercial and we believe that we want to, we believe that Tafamidis is also suitable product given that we have a strong clinical outcomes data for value based agreements.

So we are discussing and with multiple base it's too early to comment because also we are in the middle of the year and usually contract starts from the beginning of the year. Nevertheless there is significant interest and discussions between ourselves and payers on agreements that will really value that the product brings to patients.

So Frank, on manufacturing?.

On the manufacturing, yes we do plan on having significant improvements implemented by the end of 2019. But please also know along the way we've already implemented numerous preventive and corrective actions and we've seen a nice improvement in our overall supply to-date..

Okay. And I want to say Frank is always a man of few words and a lot of factions. I'm very, very pleased with the way that under Frank's leadership and the new leadership business we are progressing on addressing the issues with manufacturing..

Thank you.

Can we take next question please, Operator?.

Your next question comes from Seamus Fernandez from Guggenheim..

Thanks very much for the question. So just a couple of quick ones, can you just help us understand the number that you guys printed on EUCRISA this quarter as well as the sales for Xeljanz. What were the main impacts on both of those products? And then just a second question if you guys wouldn't mind again this is a bit related to Xeljanz.

Can you help us understand how differentiated the products in the dermatology Phase 3 clinical trials whether it be in alopecia or in atopic dermatitis. How differentiated those are from Xeljanz and perhaps from some of the other programs in development? Thanks so much..

Right.

Angela, why don't you hit quickly the decrease in Xeljanz's question and then you can leave time to Michael who is very passionate about the JAK portfolio to speak about it?.

Okay, great. So let me start with some comments on Xeljanz. So as you can see Xeljanz had a 34% operational growth globally. In the U.S. Xeljanz grew 18% but actually the scripts grew 37%. So if you look at some of the Q1 effects some of that is due to higher rebating and favorable channel mix and reauthorizations for patients that change insurance.

And this is pretty typical of what we see every quarter. So I think we're really encouraged by the strong volume growth that we've continued to see in the U.S.

and around the world for Xeljanz and it's all three of our indications strong growth from RA, exciting new launches for both PSA and UC and we're beginning to see some very, very strong market shares for UC as well coming out of the gate. For EUCRISA, specifically the number of EUCRISA patients in the U.S.

for the first quarter was actually up more than 80,000 patients, so that's a 55% increase compared to where we were last year at this time. However, you do see revenues down slightly in Q1 and this is because despite the increased demand, we were negatively impacted by higher rebates in the U.S.

So we need to continue to work on improving our formulary position and continuing to drive growth of EUCRISA in segments both in the U.S. as well as ex-U.S..

Michael?.

Mikael Dolsten:.

For alopecia, it's a different type of underlying mechanism where we deal with cytotoxic cells destroying the hair follicles and the X3 selective inhibitor is what we thought would be the best. And that was what we nicely recorded as a very effective agent in our Phase 2 trial.

And it also has a very clean profile, the most well-tolerated agent we have seen so far. So we look forward certainly to the Phase 2b pivotal study, and we also started with with this X3 inhibitor..

For alopecia, it's a different type of underlying mechanism where we deal with cytotoxic cells destroying the hair follicles and the X3 selective inhibitor is what we thought would be the best. And that was what we nicely recorded as a very effective agent in our Phase 2 trial.

And it also has a very clean profile, the most well-tolerated agent we have seen so far. So we look forward certainly to the Phase 2b pivotal study, and we also started with with this X3 inhibitor..

All right. Thank you very much, Michael.

Our next question please?.

Your next question comes from David Risinger from Morgan Stanley..

Yes, thanks very much. So first I'm hoping that you can talk about your expectations for organic revenue growth prospects for your Upjohn division relative to the 1% that you printed in the first quarter. I just don't have a sense for how we should think about that, whether that will grow or since you put Lyrica in there, that it's about to decline.

So if you could help us understand the growth prospects for Upjohn, that would be helpful.

Second, with respect to your patents that could potentially be blocking Merck's 15-valent launch in coming years, could you please talk about those patents and your level of conviction that Merck cannot launch and then just a final tidbit what are your planned biosimilar launches in the U.S. in the second half of this year? Thank you..

So let me start with Upjohn and obviously Doug can cover the Merck patent situation and then Angela you can speak a little bit about the biosimilars. Our expectations for Upjohn in this year, of course, is going to be a decline, because they would be seriously affected by the loss of patent of Lyrica that will happen in the middle of the year.

And that will affect their growth also next year, because they will have to face full-year LOE, which would be next year with only half a year LOE which is this year.

Following that, I see Upjohn as a very stable to low -- single-digit growth on the top line, and much higher on the bottom line, and leverage bottom-line growth, but of course, that will be post 2020 period where the impact of Lyrica will be absorbed.

Doug?.

So we were pleased that the patent trial and appeal board denied Merck's IPR petitions on two of our U.S. patents covering compositions of pneumococcal vaccines. These patents stand is valid and will not expire until 2026.

We believe that these patents and others in our portfolio present freedom to operate issues for Merck in its development of a 15-valent pneumococcal vaccine..

Very clear..

Angela Hwang:.

. :.

Thank you, Angela..

Thank you, and Operator, if we could take our last question, please..

Your final question comes from Steve Scala from Cowen..

Thank you. This is actually Kathy Miner on for Steve. Just a question on Bavencio please, we had been expecting Bavencio Phase 3 data in second line bladder this year, is this still possible. And secondly is there any chance for an interim on the JAVELIN Lung 100 this year and what is the PDL1 cut off for that trial? Thank you..

Two questions Mikael for you..

Yes. So, thank you for showing interest in our Bavencio portfolio.

So we expect late this year or possibly early next year as you know these store event driven trials that we will conclude the bladder, it's actually a first line trials so it's quite an interesting trial where we have Bavencio as maintenance therapy of the chemo, we'll also have PDL 1 high expression trial in line, which if positive could be the second PDX available for monotherapy and PDL 1 are in line and then we have a guest weak first line also post-chemo patients in maintenance for Bavencio, so, quite nice remaining cohort and we look forward to review the data coming out of this.

Thank you..

Thank you, Mikael. And I think this concludes the Q&A session. But just I wanted to say, that I found this session very productive. I'm very pleased that the vast majority of the questions with the minus one or two, maybe we're focused on our pipeline and we're focused on new launch products.

And I don't remember any other sessions but frankly didn't receive any finance question, which is what happened today. I think this is exactly how science-based company when the results for the quarter are good, should be discussed in our earnings call. I'm very pleased about that. We continue to believe that Pfizer's position in the market is strong.

We have great products, we have a strong R&D and marketing skills, prudent capital allocation and perhaps most important, a clear path towards sustainable growth. Thank you very much and have a great day..

Ladies and gentlemen, this concludes Pfizer's first quarter 2019 earnings conference call. You may now disconnect..