Good day, everyone, and welcome to Pfizer's Fourth Quarter 2021 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Chris Stevo, Senior Vice President and Chief Investor Relations Officer. Please go ahead, sir..

Thank you, Sylvia. Good morning, everyone. Welcome to Pfizer's fourth quarter earnings call. I am joined today by Dr.

Albert Bourla, our Chairman and CEO; Frank D’Amelio, our CFO; Mikael Dolsten, President of Worldwide Research and Development in Medical; Angela Hwang, Group President Pfizer Biopharmaceuticals Group; Aamir Malik, our Chief Business and Innovation Officer; and Doug Lankler, our General Counsel. We expect this call to last 90 minutes.

The materials for this call and other earnings-related materials are on the Investor Relations section of pfizer.com.

Please see our forward-looking statements disclaimer on Slide 3 and additional information regarding these statements and our non-GAAP financial measures is available in our earnings release and in our SEC Forms 10-K and 10-Q under risk factors. 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 these statement s. With that, I'll turn the call over to Albert..

product innovation; equitable access and pricing; product quality and safety; diversity, equity and inclusion; climate change; and business ethics. Each quarter going forward, I will provide examples of how we are embedding ESG into all core areas of our business.

This quarter, I will highlight our efforts to improve clinical trial diversity, to improve diversity within our colleague base, and help ensure equitable access to our COVID-19 vaccine and treatment. Last year, Pfizer published an industry-first retrospective analysis of demographic data of U.S.

participants in 213 of our interventional clinical trials that initiated enrollment from 2011 through 2020. The analysis demonstrated that overall trial participation of Black or African American individuals was at the U.S. census level, 14.3% versus 13.4%, participation of Hispanic or Latino individuals was below U.S.

census, 15.9% versus 18.5%, and female participation was at U.S. census 51.1% versus 50.8%. We published this analysis to be transparent and for it to serve as a baseline as we measure progress in this area.

We believe that diversity in trials is a matter of equity and good science and are taking decisive steps designed to improve diversity in our trials. Our goal is to achieve racially and ethnically diverse participation at or above U.S. census or disease prevalence levels as appropriate in all our trials.

The second item I want to highlight is the significant progress we are making in diversifying our colleague base, particularly at more senior-level positions. In the last three years, for example, we have increased the percentage of women at the Vice President level and above globally from 32% to 42%.

Over the same timeframe, we have increased the percentage of minorities at the Vice President level and above in the U.S. from 19% to 25%. The third item I wanted to highlight is the progress we are making to help ensure our COVID-19 vaccine and oral treatment are accessible by everyone everywhere.

I am thrilled to say that we remain on track to meet or exceed our goal of delivering at least 2 billion doses of our vaccine to low- and middle-income countries by the end of 2022, having just met our goal of delivering the first 1 billion by the end of 2021. I also want to highlight two data points about our 2 billion-dose commitment.

1 billion of these doses are being provided to the poorest countries completely free of charge, thanks to our agreement with the U.S. government. Pfizer is providing these doses to the U.S. government at a not-for-profit price, and the government is then providing them to the poorest countries for free.

Also, the 1 billion doses we delivered in 2021 represented 37% of all doses we delivered this last year.

In terms of our oral COVID-19 treatment, we have signed a voluntary license agreement with the Medicines Patent Pool, which we hope will lead to expanded access pending country regulatory authorization or approval in 95 low- and middle-income countries that account for approximately 53% of the world’s population.

Lastly, I'm pleased to announce that the Compensation Committee of our Board of Directors has been reviewing methods for linking executive compensation with ESG performance, which we expect to begin this year.

For details regarding the impact of our ESG strategy had on our business in 2021, please keep an eye out for Pfizer’s 2021 ESG Report, which will be published online in mid-March.

In summary, 2021 was an outstanding year for Pfizer, and we look forward to continuing to apply the lessons learned from COVID to deliver breakthroughs for patients across all our therapeutic areas.

We remain focused on being nimble, investing in our R&D organization and exploring dynamic partnerships that will enable us to fully realize the power of our science. None of this is possible without the contributions of our amazingly purpose-driven colleagues, who continue to rise to the challenge of addressing the world’s most devastating diseases.

In 2021, our colleagues exceeded expectations.

Therefore, we will once again use a part of the bonus pool that the Board approved for bonus-eligible colleagues and executives to provide a one-time special COVID-19 Circumstances Bonus to our non-bonus eligible colleagues across the board to reward them for their hard work and to help them cover personal, family and living expenses incurred because of the COVID-19 pandemic.

With that, I will turn it over to Mikael to update you on our R&D efforts. After Mikael, Frank will provide financial details on the fourth quarter and our outlook for 2022.

So Mikael?.

Those who have already received two doses of the current vaccine 90 to 180 days prior to enrollment will receive one or two doses of the Omicron-based vaccine. Those who have already received three doses of the current vaccine 90 to 180 days prior to enrollment will receive one dose of the current vaccine or the Omicron-based vaccine.

And those who are vaccine-naïve will receive three doses of the Omicron-based vaccine.

This study is part of our science-based approach to develop a variant-based vaccine that we hope achieves a similar level of protection against Omicron as the current vaccine has with both wild-type and earlier variants, but with potentially longer duration of protection. Now, let’s turn to our next generation CDK inhibitors for cancer.

Most patients with advanced or metastatic breast cancer eventually develop resistance to both endocrine and CDK4/6 inhibitors despite their transformative efficacy. Inhibition of CDK2, delivered with a CDK selective active drug or a triple activity CDK 2/4/6 agent, may prevent, delay, or reverse resistance and prolong survival.

These are data from a subset in the CDK2/4/6 inhibitor Phase 1 dose escalation and antitumor activity study of heavily pre-treated patients with hormone receptor positive metastatic breast cancer. The most improvement in terms of tumor size reduction was seen in patients treated with monotherapy or in combination with fulvestrant.

We observed three confirmed partial responses and three patients with stable disease for more than 12 months. One patient has been receiving ongoing treatment for more than 28 months. There has been an acceptable safety profile at the recommended Phase 2 dose, which is 25-milligram twice daily.

We plan to conduct a Phase 1 dose expansion and expect to complete it in the fourth quarter of this year. Selective CDK2 inhibition with -- CDK2 only inhibitor may allow dose titration and has the potential to be used in combination with approved CDK inhibitors, such as palbociclib, or other next-generation CDK4 selective inhibitors.

There were two confirmed partial responses in the Phase 1 study of our selective CDK2 inhibitor in patients with advanced or metastatic hormone receptor/HER2 negative breast cancer who had received/progressed on prior CDK4/6 inhibition and endocrine therapy.

One patient had a maximum tumor shrinkage of 54% following CDK2 inhibitor treatment for approximately 8 months, and the second had 100% shrinkage of all target lesions following treatment for approximately 9 months. We are showing scans of the first patient at baseline and 8 weeks.

There was an acceptable safety profile as a monotherapy, and we are currently exploring combinations. We expect the Phase 1/2 study to be completed in the second quarter of '23. Now, let’s turn to our six-valent Lyme disease vaccine candidate which we are developing in partnership with Valneva.

13 We have received further positive data from our Phase 2 proof of concept study and expect to start Phase 3 in the third quarter of 2022 with a dosing regimen of zero, 2, and 6 months to prime, followed by routine boosters before the start of a Lyme season. Our Phase 2 study is continuing and includes a pediatric population ages 5 to 17 years.

Since Lyme disease is seasonal, our goal is to establish a regimen that results in high antibodies at the beginning of each season. We, therefore, looked at a boost one year after the primary series.

We saw substantial boost antibody response in Phase 2 to all six serotypes present in North America and Europe following the three-dose primary series vaccination schedule, with a 14- to 31-fold rise in season one and a 51- to 69-fold rise in season two.

The vaccine candidate was generally well tolerated at all dose levels tested, and we are excited about further development and the potential to help prevent this debilitating disease. Last quarter, we told you that we saw robust dystrophin expression out to one year in our Muscular Dystrophy gene therapy Phase 1b study.

I will show you encouraging functional motor data in a moment. We recently shared some very sad news that a DMD patient with advanced disease in the non-ambulatory cohort of the Phase 1b trial passed away after presenting with hypovolemia and cardiogenic shock.

This patient was 16 years old and the first in the non-ambulatory cohort treated with RAPAMUNE, along with steroids, as part of the immunosuppressive regimen. RAPAMUNE is not used in the Phase 3 ambulatory study. Like most non-ambulatory DMD patients, he had more advanced disease with underlying cardiac dysfunction.

There is evidence of an active viral infection and we are investigating how this may have contributed to the outcome. Additional assessment will be required to define next steps needed to restart the Phase 1b study in non-ambulatory patients who are more progressed in the disease. I will now share data from this study.

The ambulatory cohort -- sorry, I had one more sentence to say here. 19 patients were enrolled in this study, 16 of whom received the dose selected for our Phase 3 program and three of whom received a previously studied lower dose.

At one year post-treatment, there was a 5.6 point improvement in ambulatory function as measured by North Star Ambulatory Assessment compared to an external control, matched for age and baseline function.

This is particularly encouraging given that patients at this age and stage of disease typically experience a considerable decline in ambulatory function as illustrated by the external control. On the right, we show time in study, with six participants nearing or more than three years since treatment.

The ambulatory cohort in Phase 1b is similar, but slightly older on average, to the population in the Phase 3 CIFFREO trial.

Considering the favorable benefit to risk profile in this study and observed in ambulatory patient population and in consultation with the Data Monitoring Committee, we believe the safety profile of our DMD gene therapy is manageable in this patient group.

Additional mitigations are being added to our study protocol in consultation with the DMC and other medical experts. Pending regulatory feedback, we anticipate Phase 3 study sites to begin to re-open in the next few months, with the potential to report topline results and, subject to clinical trial success, submit a BLA by the end of 2023.

Turning now to Internal Medicine, and ponsegromab, our candidate for cachexia due to cancer. It targets GDF-15, which as seen is frequently elevated in cancer patients, drives reduction of appetite and body weight loss, and is associated with poor outcomes.

There may also be potential to treat cachexia associated with other chronic diseases such as heart failure and COPD. We have encouraging Phase 1b data which I will show next.

Ponsegromab was evaluated in 10 cancer patients who were undergoing anti-tumor treatment and had more than 5% body weight loss in the last 6 months, or more than 2% body weight loss with a body mass index of less than 20 kilogram per meters squared or diagnosed sarcopenia.

Ponsegromab administration was found to suppress circulating GDF-15 levels in cancer cachexia patients below the level observed in healthy subjects. Preliminary data from the Phase 1b trial show ponsegromab treatment resulted in significant body weight gain compared to historical placebo.

You can see the nice trend in body weight increase remained even after the dosing was stopped at week 12. The gray dotted line indicates the historical cut-off associated with improved survival.

We are co-developing a companion diagnostic with Roche Diagnostics designed to enable precision medicine, and we expect to start a Phase 2 study in cancer cachexia in the fourth quarter of this year.

Injectable GLP-1 receptor agonists offer potent lowering of glucose and weight in diabetic and obese patients, with proven cardiovascular benefit, but this drug class is underutilized due to its injectable administration route.

Our small molecule GLP-1 receptor agonist danuglipron could potentially offer a convenient oral alternative to injectables and is being evaluated for the treatment of Type 2 diabetes, obesity and NASH.

It has been developed in our Internal Medicine Research Group with a vision to expand the use of this potent, easily administrated GLP-1 drug class to a primary care setting. Here are data from the Phase 2 study in Type 2 Diabetes.

We recorded strong dose-dependent reductions in both HbA1c, a measure of long-term blood sugar levels and body weight, compared to the marginal effects noted with placebo. After 12 weeks of treatment with the 200 milligram twice daily dose, HbA1c decreased by almost 1.6% and body weight decreased by 5.4 kilograms.

The safety and tolerability profile is consistent with the GLP-1 class and the most frequent adverse event rates were GI-related. We expect to start a Phase 2b titration optimization study mid-'22 with doses up to 200 milligram twice a day, and complete a Phase 2b study in non-diabetic subjects with obesity in the first quarter of next year.

Finally, here are select recent and upcoming milestones from across the pipeline. The solid blue dots represent milestones achieved and the open blue dots represent anticipated milestones. Programs in bold are major anticipated events.

Some of the programs on the right have already been designated as lightspeed, meaning they have accelerated development timelines, or are being considered for lightspeed designation.

Finally, I would like to take a moment to thank Morrie Birnbaum, our outgoing Chief Scientific Officer of the Internal Medicine Research Unit, for his immense contributions over the last seven years, and welcome Bill Sessa, who joins us from Yale School of Medicine following a decades-long career in academia, including serving as Vice Chair of Pharmacology, Professor of Medicine, and Director of the Vascular Biology & Therapeutics Program at Yale.

Bill is an eminent leader in this field, a groundbreaking scientist and a celebrated innovator, and I know he will bring his tremendous vision and insights to our investigation of cardiovascular and metabolic diseases. Thank you for your attention. I look forward to your questions. Now, let me turn it over to Frank..

Thanks, Mikael. I know you’ve seen our release, so let me provide a few highlights regarding the financials. The COVID-19 vaccine once again had a positive impact on our quarterly results and Albert and Mikael have already addressed the key points on the COVID-19 landscape. Turning to the income statement.

Revenue increased 106% operationally in the fourth quarter of '21 driven by COVID-19 vaccine sales and strong performance from a number of our other key growth drivers.

And looking at the revenue excluding the COVID-19 vaccine direct sales and alliance revenues and Paxlovid contribution, the fourth quarter was slower than the first nine months of the year, declining by 2% operationally.

As we discussed during our third quarter call, there was a 4% negative impact, or approximately $500 million, from fewer selling days in the U.S. and International. Excluding that impact, operational growth would have been 2%, which is still lower than the mid-to-high single-digit growth we had experienced during the rest of the year.

This was factored into our forecasts for the year but let me briefly walk you through this. In our Biopharma business, you will remember that the fourth quarter of '21 faced a tough comp from the fourth quarter of 2020 for Prevnar, as pneumococcal vaccinations were strong ahead of COVID-19 vaccine availability.

Excluding vaccines from the current and comparable period would add 5 percentage points to the growth. Adjusting for the unusual comparative period differences related to vaccines and selling days, our revenue growth would have been approximately 7%, which is similar to what we've been delivering lately.

For the year, operational revenue growth was 92%. Excluding Comirnaty direct sales and alliance revenues and Paxlovid, 2021 operational revenue growth was 6%. This is consistent with our projected revenue CAGR of at least 6% from 2020 through the end of 2025.

Of course, there will be some variability in quarterly and annual growth rates due to a variety of factors, but we continue to expect at least a 6% CAGR through 2025.

The adjusted cost of sales increase shown here reduced this quarter’s gross margin by approximately 16 percentage points compared to the fourth quarter of 2020, which is almost entirely driven by the impact of the COVID-19 vaccine.

Adjusted SI&A expenses in the fourth quarter increased primarily due to increased product-level spending, including Comirnaty and higher healthcare reform sales-based fees.

The increase in adjusted R&D expense this quarter was primarily driven by increased investments in late-stage pipeline projects, including additional spending related to our oral COVID-19 treatment. [Technical Difficulty].

Frank, I think you were disconnected..

Chris?.

Yes. We can hear you, Frank. Go ahead..

Okay. I'm not sure I left off, but I think what I'll do is start with the '22 financial guidance. So we’ve again provided total-company guidance, which includes the business with the COVID-19 vaccine.

We will continue to provide insight into our expected revenues for Comirnaty, and, now for the first time, we will also provide some color on our expected revenues for Paxlovid. However, note that we will no longer be providing EPS guidance for the business excluding Comirnaty. Similarly, we won't provide EPS guidance for Paxlovid.

Our revenue guidance represents a record for Pfizer, and we expect total company revenue to be in a range of $98 billion to $102 billion, representing an operational growth rate of 24% at the mid-point.

Please consider that this revenue range reflects approximately $1.1 billion of anticipated negative impact from changes in foreign currencies and also the impact of the loss of Meridian's sales of approximately $300 million, both of which your models may not take into account.

Regarding our COVID-related revenues, we now expect the COVID-19 vaccine revenue for the year to be approximately $32 billion, an increase of approximately $1 billion compared to our prior guidance provided on December 17. For Paxlovid, we expect sales of approximately $22 billion.

This means that excluding the COVID-related revenues, we expect sales to be $46 billion at the midpoint, representing operational growth of 5%. While this is slightly below the 6% CAGR that we continue to expect between 2020 and 2025, I would remind you that there will be volatility along the way.

Let me give you some detail on our cost and expense guidance. For adjusted cost of sales, we are expecting a range of 32.2% to 34.2%. Given that we are now more than 12 months past the launch of Comirnaty, we expect its negative impact on our cost of sales margins to be less than it was in 2021, assuming a similar level of revenues.

Further, Paxlovid is expected to have a very positive impact on cost of sales as a percent of revenues in 2022. On adjusted SI&A, we expect $12.5 to $13.5 billion, an increase of $900 million at the midpoint. We expect our adjusted R&D guidance range to be $10.5 billion to $11.5 billion at the midpoint that is about $500 million higher than last year.

We expect an adjusted effective tax rate for the year somewhat higher than 2021 at approximately 16%. These assumptions yield an adjusted diluted EPS range of $6.35 to $6.55 or 47% operational growth at the midpoint compared to 2021, excluding an expected $0.06 negative impact from foreign exchange.

I would like to point out some additional information which may be helpful for your models. You will note that our guidance assumes a weighted average share count of approximately 5.8 billion which represents an increase of approximately 100 million shares over 2021.

This accounts for the number of shares that we normally issue for employee compensation annually. The increase of 100 million shares over 2021 decreases our EPS by about $0.10 at the mid-point. I notice that most of your models instead assume a flat share count for 2022 as compared to 2021.

From the first quarter of 2022 and going forward, we've made a decision to modify our adjusted financials' treatment of amortization of intangibles. Previously, we only excluded amortization related to large mergers and acquisitions.

Now exclude all intangible asset amortization expense, this is anticipated to contribute $0.6 to our 2022 adjusted diluted earnings per share, and helps improve comparability with our peers. 2022 guidance once again assumes no share repurchases. You will note that Pfizer did not repurchase shares in either 2020 or 2021.

While we continue to have outstanding unused authorization to repurchase another $5.3 billion of stock and can be opportunistic, given the potentially value-enhancing business development opportunities which are available to us, we do not expect to repurchase shares in 2022. Now a word on our 32% stake in the Consumer JV with GSK.

As you know, GSK has announced its intention to engage in a demerger transaction for at least 80% of its 68% stake in the JV in summer 2022. We talked about our stake as a non-core asset whose value we will seek to realize over time.

While we have determined neither the manner nor timing of how we will do so, there are a number of possible alternatives and we will attempt to monetize this asset in the manner which will create the most value for our shareholders.

We receive approximately $600 million in pre-tax income from the JV annually, and this will not change as a result of the demerger transaction, and our guidance assumes that this will continue throughout 2022 with no change to our 32% stake.

Let me quickly remind you of some assumptions and context on the projected COVID-19 vaccine contribution and our collaboration agreement. The Pfizer-BioNTech COVID-19 vaccine collaboration construct is a 50/50 gross profit split.

Pfizer books the vast majority of the global collaboration revenue, except for Germany and Turkey where we receive a profit share from BioNTech, and we do not participate in the China region. We continue to expect that we can manufacture 4 billion doses in total by the end of 2022.

The $1 billion increase in expected COVID vaccine revenues to approximately $32 billion in 2022 primarily represents the impact of contracts signed since mid-December, which was the cutoff for our prior guidance.

While we can’t predict what may be needed due to omicron or other variants, I would also caution you that there is less potential upside to this guidance through the year, compared to the situation we faced in 2021 when the vaccine was newly available and few people had received any doses of the vaccine.

As you will remember, our cost of sales for the COVID-19 vaccine revenue includes manufacturing and distribution costs, applicable royalty expenses and payment to -- representing 50% gross profit and split.

We expect that, the adjusted income before tax margin for the COVID-19 vaccine contribution to the slightly higher than the high twenties as a percentage of revenue that we had in 2021.

Unlike the situation for Comirnaty demand for Paxlovid should have upside from these levels, depending on the outcomes of discussions with certain governments and potential purchases for stockpiling against future coronavirus pandemics.

If we remove the projected COVID-19 vaccine and Paxlovid contribution from both periods, you'll see that we expect at the 2020 to 2022 revenue range to be $45 billion to $47 billion, representing approximately 5% operational revenue growth at the midpoint.

Please remember our guidance excludes the former revenue contribution of approximately $300 million to Meridian, and all '21 quarters have been recast to exclude Meridian is discontinued operations, accounting for its divestiture.

Going forward, we will not give earning guidance, excluding the estimated income from our Comirnaty direct sales and alliance revenues and Paxlovid. However, to help you with your forecasting, a couple of minutes ago, I gave you my view on 2022 Comirnaty pre-tax margins.

For Paxlovid, I would think about its margins as being typical for a small molecule drug, and unlike Comirnaty, it is expected to not be dilutive to pre-tax margins.

To help you further, several years ago before COVID-19 existed, I spoke about our business being on a path back to a 40% plus pre-tax margin and we expect to achieve this level in 2022 for the business excluding Comirnaty and Paxlovid.

Going forward we will continue to be prudent in our capital allocation activities with the opportunities for deployment shown here on this slide. In summary, an exceptionally strong quarter and year based on continued strong performance for our growth drivers.

During the year, we raised guidance, and for the year, we met or exceeded our guidance in all key metrics. Our pipeline continues to advance, and we have invested record amounts to support that advance. Last week, Arena's shareholders voted to approve Pfizer's acquisition of the Company.

We look forward to a targeted closing of the Arena acquisition as soon as the first half of 2022, subject to the satisfaction of the closing conditions, including antitrust approvals.

We continue to expect to be active in regards to business development throughout 2022, as we continue to get access to the best external science and bring breakthroughs to patients in 2025 and beyond. With that, let me turn it over to Chris to start the Q&A session..

Thank you, Frank. Apologies everyone for those technical difficulties. Just want to remind you, we do have the prepared remarks posted to the website.

So, if there's anything you missed because of the difficulties, please refer to the prepared remarks, and given the technical difficulties, we're going to try to let the Q and a session run a little longer to answer people's questions. First question, please..

Thank you. Your first question comes from the line of Geoff Meacham from Bank of America Securities..

Hey, guys. Thanks for taking the questions. Just had two.

The first one, Paxlovid guidance, I know you guys are factoring in only signed agreements, but can you give us a general sense as to agreements or doses perhaps that are under discussion, and is that dependent on supply ramping? The second question, on external BD Albert, I understand the strategy.

I think the uncertainty is really the ability to scale some of the products that you brought in. So, if COVID-19 is less of a long-term contributor than you assume, what’s the appetite to do higher impact larger deals? You clearly have the capacity. Thank you..

Thank you.

Angela, do you want to take a little bit of Paxlovid?.

Sure. So, currently, we are in active discussions with over 100 countries and governments around the world. So, I’d say that the discussions are going really well. In terms of where we are with the contracting, as you say, we’ve included some of the contracts that we already are -- that we have. But, of course, this number changes every day.

And contracts are being secured and distribution agreements being secured literally on a day-to-day basis. So, I think that this is a number to watch out for. And we do continue to expect movement. I think that there is a tremendous amount of interest for our product.

And certainly, as the clinical program continues to develop and emerge, as you know, we only have the high-risk study right now, we still have the standard risk and the prophylaxis that’s coming up, and I think that the full clinical program will also be another point of impetus for contracting and ordering.

So, I think it’s going just really well and more to come on this front..

Thank you. Aamir, maybe some comments on the BD..

Sure. Thanks for the question, Geoff. I think in terms of the top line, we’re going to be incredibly flexible. We have said repeatedly that we are most interested in compounds that have potential to be real breakthroughs, and this can take the form of later-stage clinical development as well as earlier stage medical innovation.

We’re going to bias to the Tas, oncology, I&I, rare, vaccines, internal medicine and hospital, where we’ve got the scientific chops to make good choices and add real value. And we’re going to be flexible on the deal types. Acquisitions are obviously very much in the cards, but strategic partnerships and alliances are well.

And, in fact, some of our best successes have come from some capital-light collaborations. If we see a larger opportunity that’s strategic and creates value and meets the criteria that I just described, we’ve obviously got the balance sheet to utilize to do that.

So, we certainly will look at those, but we’re going to talk about and focus on the priorities that I described more so than synergy driven deals per se..

Thank you, Aamir, and just to add to both points because I’m sure that both will be asked a lot. On the Paxlovid, clearly, the numbers could become way bigger than what we have right now, but this is not something that we have done in the past and we don’t plan to do right now to give based on what could be the potential as a guidance.

We are giving guidance based on what it is more or less secure. However, signed deals are already agreed, but not signed yet deals, but agreed prices and volumes. So, clearly, if you remember, when we started with the vaccine, in the beginning, we had a guidance of, I think, $15 billion in the first quarter, something like that.

Eventually, made $36 billion. Here, we start even stronger in our first projections with Paxlovid. So and that’s why we manufacture and we’ll move ahead with our plans and already we are at 120 million treatments and we have the ability to go higher if the discussions that we’re having materialize.

In terms of also the business development, I just want to emphasize that -- because I’m getting a lot this question on the size. We are agnostic to size. Where we are biased, it is deals. But in order to justify the premium, we will have to do significant cost synergies.

This is not -- these are -- could be very profitable deals for other, let’s say, periods of the history of the Company, not now.

Right now, the Company is having a manufacturing machine, but it is performing at its best, an R&D machine, but it’s performing at its best, a commercial machine, but keeps being the leader in the industry in terms of their ability to execute and deliver.

So, the last thing I want to do, it is to do a deal, but in order to justify the premium to the shareholders of the other company, we will have to shut down manufacturing sites and to consolidate the shared sites and consolidate field forces, so that we can justify, so we can generate the core synergies.

This is not the time to disrupt the momentum of the Company. This is a time to bring into this manufacturing machine, the research machine, the commercial machine more substrate in addition to what we produce organically ourselves. And this is why the business development is aiming in these areas. So, let’s go to the next one..

Your next question comes from Mohit Bansal from Wells Fargo..

Great, thanks. Thanks for taking my question. Maybe one on Paxlovid. So, there have been some news reports talking about logisticals and access issues for Paxlovid.

And I understand the supply is tight for now, but would love to get your thoughts on how you’re working on improving the logistics when the supply is no longer an issue, especially in a world where home testing would become a norm and one needs to take this drug within five days of diagnostics. Thank you..

I wouldn’t say that we have logistical issues of supply.

But, Angela, would you like to take that, please?.

Sure. So first of all, again, our deliveries and our allocations for the doses have gone extremely well here in the U.S. Just to give you some context, 265,000 doses have been allocated by the U.S. government since the EUA was approved. And of that 265,000, 85% of all the doses have been ordered.

So and we see a range of ordering patterns from the states. Some states are ordering 100% of the allocation, others are 80%, 70%, so on and so forth. So, it is really only a handful that haven’t really ordered up to their allocation. But I would say, for the most part, the weekly orders are going up and increasing week by week.

And there is a very strong placement of orders. So, I would say that the drawdown right, of the doses and the utilization is going really well. And again, it differs by state what the allocations are and how that’s going. And then, as Albert said, I don’t know that we have logistical -- like, they are not logistical issues.

I think, initially, what was difficult was that it was not clear where the doses were being located because every state had a different system for where to actually distribute Paxlovid from. But there are a number of tools now that have gone up online, both at the state level as well as on Pfizer’s website.

We’ve taken the state government tool and also loaded it on our website, so that both HCPs and patients can see where Paxlovid is being -- where it’s available and where the orders as well as prescription can be placed. So, I think in that regard, that’s all been ironed out.

I think looking forward into the future, clearly, having a seamless sort of end-to-end, from diagnosis, positive results to then being able to prescribe quickly and having the patient be able to acquire the drug quickly is our goal.

And I think, on all of those fronts, we’re working with a number of partners both from a testing and a diagnostics perspective, but also from a telemedicine perspective and from a pharmacy perspective, to ensure that we have as fast and as efficient, I can say, a patient journey, right from diagnosis right until treatment.

So, all of that is in place. And you’ll continue to hear more about that as the launch and as the utilization increases..

So, again, to punctuate and give a little bit of context to what Angela said, the 85% that -- it has already been ordered from the quantity that we are making available to U.S. government. It’s a very, very high number.

For example, the same number in the first month for vaccines, if you remember well, if you remember from that time, was dramatically lower than that because it takes time for the states to get their act together and it is really variable state by state.

So, there are states right now, but once the quantities are made to them available, they are ordering immediately and there are states that take their time until they get their act together for the distribution.

In general, way, way, way more efficient than what used to be in the first months of the vaccine, also, what is extremely important, it is that every week, there is constant replenishments, which although we do not have right now, data for scripts, because it’s too early, what we do have it is that the quantities that the states are accumulating, they’re disappearing and then immediately they are placing orders.

So, I would say we have, let’s say -- we are pretty happy with the way that the first month, the collaboration with the U.S. government went in terms of allocating doses. And there is dramatically also improvement in the tools, as Angela described.

But the bigger improvement will come from the fact that the second month, we will make available way more quantities, and the third month, way more quantities because the issues right now for people trying to find it, it is in few places in the state because you can’t expand the network of places that it is variable when you have smaller quantities.

That will be very, very different in this month and basically all over the place, I think, in the third month where significant quantities will be delivered. Okay. I think let’s go to the next question..

Your next question is from Evan Seigerman from BMO Capital Markets..

Hi, guys. Thank you so much for taking my question. I was wondering if you could provide an update on the FTC review process for the Arena deal. If I’m not mistaken, there was a recent procedural move where you and Arena withdrew and re-filed the HSR Act filing essentially to allow the FTC an additional 30 days for review.

And then, I’d also love for you to walk me through your assumptions on how you forecast $13 billion in revenue from BD transactions that would imply to your specific targets and combination of targets in mind. Any color here that you could provide would be very helpful. Thank you..

Yes. Thank you very much. On the last one, just to make sure, but this is not our assumption. Our assumption is way higher of the $13 billion. What I just gave you, it is what is the consensus of the deals that we have signed so far. But on the FTC review, I would like to ask Doug to provide maybe a review on that, Doug Lankler, our General Counsel..

Yes. As you pointed out, we did request to refile, which is not unusual. Under -- the deal is, of course, subject to customary closing conditions and typical anti-trust clearance and shareholder approval, which, as you know, we’ve received.

We don’t expect a significant break in time from our proposed sense that the deal will close in the first half of this year. We still expect it to close in the first half of this year..

Thank you.

And Aamir, although I did explain that this is consensus numbers, not our numbers, do you want to make any other comment on the $13 billion of 2030 revenues that consensus forecasts for the deals that we have signed?.

Yes. The only thing I would add is, we feel very good about the progression of all of the substrate and the deals since 2019 that Albert outlined. We’ve seen a significant number of approvals in the EUAs in that group, submissions as well as quite a few Phase 3 starts.

So we think that that substrate is progressing well and the $13 billion is the consensus number. Our expectations of what’s there are materially higher and there are a number of transactions.

We spoke to Trillium, Biohaven and even some of the recent things that we’ve done in mRNA that are not yet factored in the consensus forecast on those transactions..

Thank you. Next question please..

Your next question comes from Umer Raffat from Evercore ISI..

Hi, guys. Thanks so much for taking my question. Perhaps two on vaccines today, if I may. First, on the flu vaccine. I know you’ve had a trial ongoing on your mod RNA since September. And I noticed you just initiated a new trial of a self-amplifying mRNA for flu.

And I wonder if the decision to progress a second mRNA program in flu was triggered by any emerging data from your first-gen flu Phase 1 that’s been ongoing. And then, secondly, on the Omicron-specific booster, perhaps in light of some of the emerging data on immunogenicity differences or lack thereof versus regular COVID-19 vaccines.

I guess my question is, what’s your confidence on ability to show superiority of an Omicron-specific booster versus regular and what would be the regulatory criteria? Thank you..

Thank you. Thank you very much. I think Mikael can take the question. On the flu vaccines, just to make sure what I clarify, the plan was always to initiate an mRNA for flu and a round of two programs entirely. It’s not that we show data that forced us to do SI&A. It was always the plan. We are advancing new forms of mRNA technology in SA.

It is one of the most promising next-generation of RNA technologies.

But Mikael, any comments on that and on the Omicron-specific -- our confidence for superiority?.

Thank you. Yes, we are accumulating, first of all, from our mod mRNA data trial, data on various regimens and on multivalent constructs. We remain of the view that we aspire to develop a flu vaccine. Currently, the most aggressive timelines are focused on the mod mRNA.

Our plans is to develop something that has a differentiation versus the current tetravalent standard of care. I know other companies have spoken about being similar, while at this moment we still see opportunities to possibly differentiate with an mRNA-based or mod mRNA. As Albert alluded to, we are actually filing the IND for the self-amplified.

I think, the protocol may have gone up already on ClinicalTrials.gov, but dosing is going to be within the next couple of months or so.

And it’s entirely based on us aiming to develop that platform, which has particular relevance for combinations vaccine, given that possibly we expect to have much lower mRNA burden and can over time build vaccine combination of several different pathogens.

We’ll keep you updated on progress with the mod mRNA flu and we certainly see data that suggests that this is a feasible path and we are working to refine our approach to aim for a differentiated vaccine..

What about Omicron and how confident we are about the superiority?.

Yes. The regulatory path is that we expect to have a -- if successful, an Omicron boost would show higher neutralizing antibodies for Omicron versus a similar boost by the Wild Type vaccine and acceptable titers to the other previously available strains to preserve broad protection, but possibly with higher Omicron. I really think we showed.

Let the science play out here. We are talking about a number of weeks before we get data. And as alluded to, it has three different arms on top of three doses, Omicron versus Wild Type, that was on top of three previous doses, on top of two previous vaccine doses, one or two Omicron, that will be very interesting data set, and then Omicron on naive.

So, I think it’s a really interesting trial and we’ll extract a lot of data and we’ll report whether we can get that superiority. But in any case, I would just want to punctuate that our current vaccine is active of the three doses and raise relevant neutralizing antibodies.

And the T-cell responses that we see are likely the one that contribute in real world evidence to provide effective protection of the current vaccine against hospitalization and death. Omicron vaccine is an interesting opportunity that we’ll learn more about.

But our science is progressing against several dimensions on how to further improve over time mRNA vaccines, although they’re all pretty good ones. So, you should expect Pfizer continue to be a leader in this field through multiple approaches, together with BioNTech..

Thank you, Mikael. Next question please..

Your next question comes from Louise Chen from Cantor..

Hi. Thanks for taking my questions.

So, my first question for you is, what are the key pushes and pulls to your underlying business excluding COVID? And what gives you confidence that you can still meet that top-line sales guidance that you gave through 2025 despite some of the volatility that we’re seeing right now? And then, just wanted to ask you on your TL1A antibody and where you are with development of that product and the reporting of data? Have you changed any of the timelines for when you report data? Thank you..

Thank you very much. On the 6%, what gives us confidence, it is that we are -- we keep meeting the goal. As I said that we set the goal in ’19 for a 6% all the way CAGR. And then, we had -- year-to-date, we are at 6% right now. The year particularly it is at 5% for the underlying business.

But there is a little bit of volatility, but always we knew that this will be a year that we are losing some of the revenues of CHANTIX compared to previous year, which affects quite significant this deal, which then, as we are launching new products, they are coming up.

Maybe I will ask Angela to give a little bit more details on the inputs and how this is progressing and also Mikael on the antibody question.

Angela?.

Thank you, Louise. I think the 6% confidence is really driven by two things. First of all, the launches, right, that will take place between now and 2025, which will continue to drive growth for us. But also importantly, in our in-line portfolio, Louise, every single one of our products still have opportunities to grow.

They can grow from a number of different ways, right? There is still under-diagnosed patients. So, from new diagnosis, you can continue to drive a tremendous amount of growth in Eliquis and in Vyndaqel. In many of our products, we still have class growth. Think about the CDK4/6s, think about Xtandi, think about Braf/Mektovi.

These are all therapies that are still, I think, underutilized from a class perspective. So, there’s growth there. And then finally, for all of them, there is the opportunity to grow in terms of market share, just given just the strong clinical profile and strong lifecycle support that we have for all of our product.

So, I think we see tremendous amount of growth still. We just have not tapped out of growth in our core in-line brands. And then, you add on top of that, the launch brands. This is where we’re going to get our growth from..

Mikael?.

Thank you, Angela. On the TL1A, as you remember, the previous earnings call, we showed some really strong data in the range of 34% endoscopic improvement and, with a biomarker, 48% in patients way above expected standard of care. That trial has enrolled very fast. It’s fully enrolled. Full trial readout will be Q4.

We are obviously considering based on the encouraging data in the previous trial opportunity for interim analysis that pending data could allow us to accelerate development of the program to its potential pivotal study. So, all in, it’s moving very well and very fast..

Thank you. Next question please..

Your next question comes from Steve Scala from Cowen..

Thank you very much. Just to be absolutely clear, I understand that Pfizer wants to be conservative on Paxlovid, but it seems that Pfizer has merely scratched the surface on its 2022 potential and that scratching of the surface is what’s in 2022 Paxlovid guidance. So, please just tell me if you disagree with that statement.

Secondly, and just to be clear once again, do you not see growth for Pfizer overall in ’25 through ’30 without business development? And then, lastly, on danuglipron, Slide 39 shows some very good data.

I’m curious what was the discontinuation rate in the study? Can the dose be increased further? And does Pfizer expect additional weight loss beyond 12 weeks? Thank you very much..

Yes. So, let me take the two first questions and then Mikael can take the research one. Look, it’s not that we are giving conservative guidance. What we do, we have principles that we follow because otherwise you can be lost.

And the principles that we are following, it is that we are only giving guidance for contracts that have been signed or they are very close to be signed because we have agreed critical terms predominantly. So, this is what you have heard about Paxlovid.

Clearly, this is only a very small fraction of the 120 million treatments that we are right now preparing to manufacture and it is a small fraction of things that we are discussing right now around -- with different governments.

But we are not taking, for example, an approach that we take all the discussions that we’re having with the different governments, we risk-adjust them to see how many things can go part through and then we give a guidance. This is not what we do.

We only give, and this is the same with the vaccines, things that have been signed or are really agreed by the time -- in a specific deadline. And I think, Frank said it was last week, I think, this deadline. So, clearly, there is a lot of potential, but it is not that we are putting a little bit of our own conservatism in the numbers.

We are following a principle, so that we can always be clear with what we say and why we say.

So, that’s the -- then what about the study dose and the 12 weeks delay, Mikael?.

On the danuglipron, I’m pleased that you were happy and impressed with our data. And indeed, I would say the glucose lowering through HbA1c and the body weight deductions are probably among the best in such a short treatment period.

Tolerability and discontinuation rates improved versus previous study because we extended the dose titration from two weeks. And overall, safety, adverse events, I think, are very much in line with what you see comparable titration approaches with injectables.

Given that we see that we can improve tolerability and discontinuations with this medium titration rate, we have the next studies coming up with a further slow dose titration, maybe up to a month or so, and we think that may even bring readouts of efficacy further above this. So, we are very pleased with the profile.

And I think the next study will nail down for us dose regimen and will help us to move with a strong profile into a potential pivotal study..

All right. Next question please..

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

Thank you. A few questions. The RSV vaccine data previously said early ’22, now you’re saying first half ’22, does that imply there has been some slippage because early to me, I always felt that meant January, February, something like that.

mRNA flu, second question, what’s a realistic timeframe for potential regulatory filing of a product like that, assuming you find success in your trials? And then, last question, Ibrance, sales soft. You say it’s due to patient assistant programs. We haven’t seen that impact, other CDK4/6s.

And I haven’t generally heard about those programs impacting other brands, either at Pfizer or other companies. So, I’m wondering what else may be putting pressure on Ibrance.

Are you having to cut price to maintain access?.

Yes.

What was your question on flu vaccine?.

A realistic timeframe for filing for approval of the mRNA flu vaccine..

Yes. Thank you. Thank you. So, why don’t we go -- Mikael, what about RSV? If you can speak about both. We have both now, adult and maternal. And then the mRNA. And then, Angela, if you speak about Ibrance..

Yes. On the RSV, we have enrolled very well maternal and adult, and are basically, I would say, fully enrolled. So, it’s entirely to ensure we have the number of events that we were looking for.

And we expect both trials to readout, whether it’s somewhere between Q1, Q2 or at a later part of Q2, we’ll just see and as events accumulate, but it’s going very well. So, I feel very optimistic with RSV study to conclude and we’re looking forward to that data.

MRNA flu, we are right now accumulating ingenuity from several different type of dose regimens.

And if we are able to conclude with an optimal dose regimen using the mod mRNA, a potential Phase 2/Phase 3 study could certainly be initiated this year, but of course it’s a little bit early to speculate before you have identified the right Phase 2/3 dose regimen.

If we would embark on such a study this year, we expect it can conclude very fast, given our experience to run very large trials in this sector and this population of adults. And so, we’re talking about possible conclusion then within next year. But it’s, I would say, one step at a time. We’ll keep you informed. We are encouraged so far.

And we’ll go from there..

Thank you, Mikael.

And then, what about, Angela, on the Ibrance?.

Sure. I can confirm that the patient assistance program is indeed the primary reason for the decline in volume that you’ve seen on Ibrance. Just to give you some perspective, in Q4 of 2021, our PAP prescriptions were up 32% compared to where it was in Q4 of 2020. And all of this is 53% more than what it was pre-COVID.

And so, this is really what has cost us a tremendous amount of paid prescriptions. And that’s really the primary reason. We also saw, and throughout the year, and this has been something that we’ve been watching quarter-over-quarter, just some slowdown in a new patient starts.

And -- but we’ve seen this sort of phenomenon across multiple products in our portfolio. So there’s a small contribution from that. But the largest contribution by far is truly this phenomenon we’re seeing here in terms of PAPs.

Thanks, Angela. Before we move to the next question, I realize that I didn’t answer one of the questions that Steve made, Steve Scala, about if we believe that we need business development to grow in the period ’25 to ’30. And clearly this is not the belief right now. We think that we have a clear LOE number that we estimate around $17 billion.

And we have a pipeline that delivers more than the LOEs. So, only organically, with what we have right now, in our calculations, we are at positive growth trajectory.

The $25 billion I just mentioned needs to be on top of everything, the balance between LOEs and different funds like that, everything new but will be invented in the meantime, and of course, the COVID trajectory through 2030. But we don’t need right now business development at all to grow.

What we need business development is to maintain high level of 6% growth top-line, all the way through 2030, for example. Let’s go now to the next question, please..

Your next question comes from Andrew Baum from Citi..

Thank you. Couple of questions.

First, what are your expectations that you’ll need two shots of Omicron as opposed to one? The reason I ask is recently published animal models suggest that one Omicron mRNA vaccine actually generates lower levels of neutralizing antibody against Omicron than the ancestral spike variants, presumably due to antigenic sin.

It obviously has implications for both revenues in terms of two shots but also compliance. And then, second, perhaps you could comment on the outlook for CD47 and talk to the differences between your molecule and Gilead’s, which obviously has run into some safety issues with trial suspensions. Many thanks..

Yes. I will take the first one very quickly so that I can give time to Mikael to speak about the second one. Look, we have to wait to see the result, but I don’t think it is all mRNA vaccines are the same, so I don’t think we should extrapolate preclinical data for one effort to what will be the clinical, let’s say, results of the other effort.

We are testing both; one shot, we are testing two shots, and we are testing pretty soon hybrid vaccines, but everything what we have seen so far give us confidence that we will have a very strong reaction and immunogenicity of the an Omicron against Omicron. But, of course, that’s based on preclinical.

We need to wait see the first clinical data so that this assumption can be validated. With that, Mikael, what about Gilead? And by the way also, Andrew, you said what about your expectations. Our expectations are not based on one shot or two shots or five shots. Our expectation, as I said, it is contracts signed as for last week with Comirnaty.

So what we’ll sign further on will be in addition to whatever we have given so far.

Mikael, on the Gilead?.

Yes. The interest in our product from Trillium was triggered by its unique design. It is what we call receptor fusion blocker protein in contrast to magrolimab that you referred to that’s on hold, the Gilead antibody, it binds with a lower affinity to the target.

And that was by purpose to allow it particularly to accumulate on high-expressing cancer cells and less accumulate on red blood cells to cause -- not to cause anemia or hemolytic anemia.

And indeed, in our studies that have generated proof of concept, we have seen single-agent activity in blood cancers with basically negligible effect on red blood cells. So this is playing well out.

We do not know why magrolimab is on clinical hold, but of course this differentiation that we have in our molecule may be one example of why our molecule has been doing so well this far.

While we initially focus on lymphoid malignancies of the B-cell type, we think we also may become increasingly interested to go to the myeloid space where magrolimab has been, AML and MDS, particularly if our profile now may be superior and we’re waiting readout from such studies also.

So, for us, the Trillium deal is delivering on all what we expected and may actually have upside due to its more unique profile..

Thank you, Mikael. Next question, please..

Your next question comes from Chris Schott from JPMorgan..

Hi, great. Thanks much for the questions. Maybe just two to start with on just some clarifications around guidance, I know you’re not giving a lot of details around core versus COVID-related earnings this year, but there’s a lot of questions on that front.

But if I just take the low end of your sales range at $45 billion, apply a 40% margin, tax-adjust that, I think I’m getting a number somewhere around $2.60 per share at the low end.

Is there any issues with that math I’m doing? Or am I in the right ballpark there if I just want to think about a low end of core guidance for this year? My second question was on Paxlovid, and you’re referencing here typical small molecule, I guess, gross margins for this one. Just help us frame that a bit more.

I guess, is something in the mid-80s a reasonable level to think about for gross margins for this product or is it substantially higher or lower? I’m just trying to better understand profitability to maybe think about some of these contracts coming forward in this year and maybe that Paxlovid number moving.

And then, just the final one just to wrap up. I’m still trying to get my hands around the BD side of the business and kind of the approach.

I guess, should we be thinking about a significantly different approach to business development for Pfizer today versus what the Company was doing two or three years ago prior to the COVID upside? Or is this more just a continuation of, I guess, the focus and what you’re looking at if we’re thinking back to like 2019 as an example? Thanks so much..

Yes. I’ll take very quickly the third one and then Frank can take the first two questions. I wouldn’t -- I would say, it is a continuation but with a way more accelerated pace. I don’t think we are changing what we’re saying since 2019. We are going into the science, as Aamir said.

We are going into areas that we think we’ll make fewer mistakes in selecting the right targets. We will be more successful, so we will be able to meet at least the success rates of the industry. Our aim is to exceed them as we’re selecting assets.

We prefer to go to areas that we can add value and there are significant areas that we can add value by becoming the preferred partner of several biotechs.

And also, we have seen, as Aamir said, that some of the best deals we have done were not the most capital-intensive deals, right? So, there are -- so all of that, we are learning, we are not going to relax the discipline that we’re having in selecting, but we are going to intensify a lot our activity in that area because, of course, we think that now is the time science is at a stage that we can find enough targets to be able to add value and create value.

So that’s on the BD side. Now, Frank, a lot of financial questions for margins, guidance, etc..

Sure. So, Chris, on the walk through you did on, I’ll call it, the business excluding Comirnaty and Paxlovid, I would use the midpoint on the revenue. You used, I think, a 40% income before tax margin. Then you got to tax-effect that. I didn’t hear you say tax-effect it.

So, if you do the math, you do the walk through and then you tax effect it, obviously dividing that by shares outstanding. That will give you, I think, a number that’s in the ballpark. On Paxlovid gross margin, let me answer the question this way.

One, we don’t give margin information by individual product, right? It’s something that, for many reasons, we don’t do. But the way to think about it is, one, that the income before tax margin on that, the margin profile is similar to our other solid oral dose products.

And remember, when you look at the gross margin, there’s going to be SI&A investment in Paxlovid this year because we’re launching that product. There’s additional R&D investment in product that year because we’re continuing obviously to evolve that product.

All of that obviously is captured in the income before tax margin on that business, which is similar to our other solid oral dose products. It’s all factored in our guidance. The one place where you can really see the impact, and hopefully this is helpful, you look at our cost of sales as a percentage of revenue last year, for the full year, 37.7%.

If you look at our guidance this year, 32.2% to 34.2%, the midpoint is 33.2%. That’s down, at the midpoint, 4.5%, most of which is being driven by the Paxlovid revenue this year. So maybe that’s the way to help you in terms of just how to work the numbers..

Thank you, Frank. Next question please..

Your next question comes from Chris Shibutani from Goldman Sachs..

Thank you very much. Two questions. One, again, just to make sure I understand clearly the thinking about what underpins the intermediate growth expectation through ’25. I believe, when that was originally issued back in 2019, that did not assume contribution from business development to achieve that CAGR of 6% to ’25.

Is that still the case? That would be the first question. And then, the second question relates to Paxlovid. We have the standard risk study that you’ve modified expanding.

Can you talk about what kind of result we would need to see in order to influence the kinds of decisions and discussions that Angela is having with governments, in particular, the primary endpoint which just missed statistical significance on the alleviation of symptoms.

Do you need to hit that? Or are the discussions being guided around the ability to meet the secondary endpoint, which was the decreased risk of hospitalizations and severe disease from that standard risk study? Thank you..

Maybe I can take both in the interest of time. I can confirm that our guidance of 6% was excluding BD. So that was from ’19 all the way to ’25, 6% CAGR, from the things that we had at the time.

As regards the standard risk primary endpoint, I think most of the governments, if not all, they are focusing right now all their purchases and their discussions that they’re having on the ability to reduce hospitalization.

And by the way, most of the -- I mean, FDA, for example, has already approved vaccinated and unvaccinated, which is included -- that means that includes also people that were in the standard risk population because the high-risk population were all unvaccinated.

So, if we go -- the standard risk, I think, will contribute, but I think everybody is moving with the assumption that we give it to all people to prevent hospitalization. That’s the main thing that everybody is looking. Now, the in-house contact, this is a very different that can change very much the landscape.

There are no discussions around that right now. But if it comes positive, clearly that could be used also in preventing infections in high-risk populations once someone in the household or in the senior house or in other, let’s say, business -- in other, let’s say, settings that people are living together, one is getting infected.

But this is something that will come on top of any discussions that we are having right now if it is positive. Let’s go to the next question please..

Your next question comes from Vamil Divan from Mizuho Securities..

Hi, great. Thanks for taking the questions. I guess I’ll stick with the same theme around Paxlovid and business development.

First, on Paxlovid, just to make sure we’re all starting on the same page, I guess, can you comment on exactly how many doses are included in the guidance that you’re giving right now? You mentioned in the release, the 20 million to the US, I think 2.75 million to UK, but there’s obviously been some other contracts that have been signed.

So, I don’t know if you can give us a number or a range just so we have a sense of kind of what’s included right now. And then, on business development, I just thought one thing was sort of interesting when you’re talking about Slide 13.

Albert, you mentioned the strength of allocating cash flows while you pursue new BD opportunities going forward that could add at least $25 billion of risk-adjusted revenues in 2030. And I’m just curious, that $25 billion is sort of a specific number, I’m wondering -- obviously that’s in your prepared remarks. So, I’m sure it’s well thought out.

So I’m just curious what sort of drove that, and obviously that number could be much smaller or probably a lot bigger depending on what you do over the next few years. So, maybe if you can give some -- provide some clarity on why you worded that the way you did. Thank you..

Why we selected $25 billion to speak about $25 billion, you mean?.

Yes, saying at least $25 billion in adjusted revenues..

Yes, I got it, I got it.

Frank, would you like to take the Paxlovid and the doses?.

Of course. So, Vamil, on the Paxlovid guidance, you heard Angela mention before. We’re very active right now, 100-plus negotiations with different governments. Don’t want to put any information out there that could, I’ll call it, lead to misleading assumptions and those assumptions being detrimental to those contract negotiations.

But now, you mentioned a couple of contracts that have been announced publicly and where the dose information was included. You mentioned the US $20 million and the UK $2.75 million. If you look at everything we’ve announced publicly, give or take, it’s around -- about 30 million treatments.

And so that 30 million treatments is clearly included in the guidance that we provided in the $22 billion of revenue..

Thank you.

And Aamir, why we selected $25 billion?.

Sure. So, Vamil, a couple of thoughts. One, we obviously -- between the strength of our balance sheet and the cash flows, we have the ability to deploy significant capital. And going beyond our growing dividend, we think that those cash flows deployed into business development are going to give us an attractive return. So that’s one piece of it.

The second is, we think that this is frankly a great time for scientific advancement in our industry, as you look across academia, venture, biotech, big, small, there is no shortage of external substrate that we think can complement what we’re doing internally. And we’re going to be thoughtful and disciplined about the science that we want to pursue.

And the combination of those two things, combined with the capabilities that we have, we think that there is significant growth that we can add to our business through business development going forward..

Yes. And also -- it is very important also to understand, Vamil, that we believe that once you put a target, you better execute way better when you have a target in front of you. And actually believe that the target is to be public because we’re a public company and we don’t have a problem to do it.

So, also we went into to analyze the substrate and the opportunity, and as always, we are providing at least $25 billion, because as always we like to have targets that we’re putting out there and we’re beating them.

But we believe that with the current, all our analytics that we have done, this is a very reasonable target to achieve, without, let’s say, utilizing all of our firepower right now. So that will allow to do dividend and other uses of capital and still do volume. And we are confident to put it out there so that people can start measuring against it.

Thank you very much.

And next question?.

Your next question comes from Kerry Holford from Berenberg..

Thank you. Firstly, just on the oral GLP-1, I wonder if you can confirm the number of pills a day that you’ll be using in Phase 2b study up to that maximum dose 200 mgs twice a day.

Was that pill burden for the highest dose? And also, on obesity, you’ve not discussed that today, but do you have the Phase 2a data inhouse? I note too that you said that you’ve made another oral GLP-1 molecule into the clinic. And I’m just interested to know how that asset will differ from the initial danuglipron.

And then, lastly, just on the guidance.

So if I’m thinking about the $4 billion range on your sales guidance, given you’ve given us a point estimate there or thereabouts for the vaccine and the antiviral, should I assume the majority of the flex remaining relates to the base business? And if so, can you help me understand the key moving parts within that element of the business, which drugs may be a driver of that flex? Thank you..

Thank you. Let me take very quickly, in the interest of time, the last one. No, the flex is spread around everything. So you should assume, for example, in the 31 of -- in the 32 that we gave for -- 33, right, on the vaccines, $500 million up, $500 million down, that’s $1 billion.

On the Paxlovid, $500 million up, $500 million, that’s another $1 billion. And then, on the business, as always, we gave $1 billion, up and down. So whatever you think is the midpoint, $1 billion up, $1 billion up, which is consistent with what we were doing all these years for that level of business.

And Mikael, on the oral?.

Yes. Danuglipron is a BID drug and pill burden will be relatively low. You also asked for the additional GLP-1 drug we have in clinical development, that’s once a day drug. As we have now, I think, really defined what will be soon optimal tetration for an oral GLP-1 and we were of course pioneering that there isn’t really a date on it.

We may actually consider to take the once daily in the same study as danuglipron, given that we have now this unique opportunity to look through what seems to be two great directs. But currently, I believe danuglipron has all what it takes to go forward to a potential pivotal study based on this study that we shared with you.

But it’s, of course, a unique situation to have more than one molecule, and it gives us the very best option for going into Phase 3 quite rapidly after concluding that Phase 2b, pending, of course, expected outcome..

Thank you, Mikael. And the last question, please..

Your final question comes from the line of Carter Gould from Barclays..

Great. Good morning. Thanks for taking the question. I’ll keep it to one since we’re at the end. And at the risk of not getting an answer, on OUS pricing for Paxlovid, I understand the underlying aspect is driving sort of your pricing strategy between GDP and volume-based discounts.

But in practice, how consistent has the pricing been across geographies? Any color at a high level would be helpful.

And as we think about potentially the standard risk data, the prophy data kind of playing out over the course of the year, should we anticipate that pricing will be relatively consistent per course in the second half relative to the first half? Any color there would be helpful. Thank you..

Our pricing for Paxlovid is a tier pricing. So there is a tier for high-income countries, and that is more or less in line with what you have seen published for Merck’s, for example, product, and we have seen published ourselves.

Only exception was the U.S., that they got a very special price because of higher orders, but the rest are more or less consistent. And then there is, of course, there is a second tier for middle-income countries. And for the lower-income countries, we are going to provide it at cost.

But also for the low-income countries, in addition to our own providing at cost, of course, we have also initiated a process that a very big number of generic companies will start manufacturing for the low-income countries, which will be 53% of the global population. Now if the price will remain consistent, clearly, this is nothing to comment here.

We will not, let’s say, commenting on how prices may or may not evolve in the future. Thank you very much. Now some closing comments very quickly. We have generated strong results, of course, for both pace and impact and financial performance, and we look forward to continue that in 2022.

I want to speak a little bit about a few changes in people that we are doing. Speaking about that, we continue to attract visionary, purpose-driven leaders, with a track record of delivering breakthrough results for patients. Case in point, last week, we announced that Dr.

William Pao will join Pfizer as Executive Vice President and Chief Development Officer, effective March 21 of this year. Dr. Pao brings more than 25 years of experience as an oncologist and scientist. He joins us from Roche, where he most recently served as the Head of Pharma Research and Early Development.

He oversaw the discovery and early development of a portfolio of new molecular entities to treat diseases related to cancer, neuroscience, ophthalmology, rare diseases and can go on and on and on. Of course, cancer is a very big part of his portfolio. Clearly, I want to mention that Dr.

Pao succeeds Rod MacKenzie, a legendary leader in Pfizer, who recently announced his intent to retire after 35 years of Pfizer. I want to thank Rod for his incredible contribution to Pfizer, including the outstanding leadership in helping bring Comirnaty and Paxlovid to the world so quick.

Of course, also, I need to touch based on something that everybody has in mind. I want to take a moment to recognize my trusted colleague and friend, Frank D’Amelio, who also has announced his intention to retire from Pfizer after an incredibly impactful decade and at the half with the Company as CFO.

Frank is one of the smartest, more respected and most effective leaders I have ever had the good fortune to work with, and the positive impact he has had on Pfizer and on all our stakeholders is immeasurable.

Frank isn’t going anywhere yet, just to clarify as he has agreed to stay on board and as we search for his successor and also to serve in a consulting role through the transition. That said, I wanted to take the opportunity to thank him publicly for all he has meant to Pfizer and to me personally.

And Frank, on behalf of our 80,000 colleagues around the world, I wish you good health, every happiness as you begin a new chapter when this time comes, because it’s not yet. Wherever life’s journey takes you, I’m sure it will be directionally correct. And that will bring an end to our call. Thank you for joining us. Have a great rest of your day..

Ladies and gentlemen, this does conclude Pfizer's fourth quarter 2021 earnings conference Call. You may now all disconnect..