Pfizer (PFE) Q1 2021 Earnings Call Transcript

Moderator: (00:00) Good day everyone, and welcome to Pfizer's First Quarter 2021 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. Chuck Triano: (00:18) Thank you, Operator. Good morning. And thanks for joining us today to review Pfizer's first quarter 2020 results and financial guidance update, as well as other relevant business topics. I'm joined today, as usual, by our chairman and CEO, Dr. Albert Bourla, Frank D'Amelio, our CFO, Michael Dolsten, President of Worldwide Research and Development and Medical, Angela Hwang, Group President, Pfizer Bio-Pharmaceuticals Group, John Young, our Chief Business Officer, and Doug Lankler, general counsel. Chuck Triano: (00:50) The slides and the accompanying remarks that will be presented on this call were posted to our website earlier this morning and are available at pfizer.com/ investors. Chuck Triano: (01:02) You'll see here on slide three, our disclaimer regarding forward-looking statements we will make during this call regarding, among other topics, our anticipated future operating and financial performance, business plans and prospects, and expectations for our product pipeline and inline product, which are subject to risks and uncertainties, as well as the use of non-GAAP financial information. Additional information regarding forward-looking statements and our non-GAAP financial measures is available in our earnings release, including under the disclosure notice section and under risk factors in our SEC forms, 10K and 10Q. Chuck Triano: (01:42) Forward-looking statements on this call speak only as of the original date of this call, and we undertake no obligation to update or revise any of the statements. Albert and Frank will now make prepared remarks, and then move to a question and answer session. Chuck Triano: (01:57) With that, I'll now turn the call over to Albert Bourla. Albert? Albert Bourla: (02:02) Thank you, Chuck and hello, everyone. I couldn't be prouder of the way Pfizer has started 2021. During the first quarter, we delivered strong financial results, even excluding the revenue provided from our COVID-19 vaccine. Our revenues grew 8% operationally, 10% reported. And this 8% growth includes a negative 5% impact from price. We continued to accelerate production and shipments to our COVID-19 vaccine, in many cases, exceeding our contractual obligations for delivery timelines, and we achieved several important clinical regulatory and commercial milestones. Albert Bourla: (02:42) Let me start with commentary on some of our biggest growth drivers in this quarter. The Pfizer BioNTech COVID-19 vaccine contributed three and a half billion dollars in global revenues during the first quarter. As of May 3rd, 2021, Pfizer, along with its partner BioNTech, has sent approximately 417 million doses of the vaccine to 91 countries and territories around the world. I will share some thoughts on the sustainability of this revenue stream later in my remarks. Albert Bourla: (03:16) Eliquis has continued to deliver a strong performance with revenue sub-25% operationally to $1.6 billion in the first quarter. In the U.S., Eliquis sales growth was driven mainly by strong volume growth. Albert Bourla: (03:29) Vyndaqel and Vyndamax generated revenues of $453 million, representing operational growth of 88%. Our disease education efforts in the U.S. Continue to support the prognosis, increasing estimated diagnosis rates to almost 24% at quarter end, up from 21% at the end of 2020. Albert Bourla: (03:54) At the end of the quarter, more 23,500 patients have been diagnosed, more than 17,000 patients have received the prescription, and more than 10,500 patients have received the drug, including patients who receive the drug at no cost through our Patient Assistance Program. Albert Bourla: (04:14) While there are still regional differences in cardiology activity and elective diagnostic procedures due to COVID-19 guidelines, on a national basis, diagnosis rates in the U.S. have now recovered and exceed pre- COVID levels, as compared with the first quarter of 2020. We also have seen strong growth from Japan and from developed Europe, where is the largest contributor to our revenues outside the U.S. Albert Bourla: (04:44) Xeljanz also performed well, with global revenues up 18% operationally to $538 million. The growth was primarily driven by 16% growth in the U.S. And 14% growth operational in international developed markets. The underlying prescription demand in the U.S. grew 9% compare with the first quarter of 2020, outpacing the advanced therapy market by 30 percentage points. We have invested in formulary access in the U.S. which has played a vital role in enabling this volume growth. Albert Bourla: (05:20) In the U.S., Ibrance revenues declined 7% compared with a year ago quarter. Total prescription volume is relatively stable, and we continue to be the leading product in the CDK class by a wide range, with an 84% of total patient share in first-line use. However, we saw increased enrollment this quarter in our Patient Assistance Program, which provides Ibrance free of charge to certain low income patients. We believe this increase is due to COVID-19 related economic hardships, but they're affecting particularly the demographics of the Ibrance patient population. And we do expect this to normalize over time as the economic impact from the pandemic subsides. Albert Bourla: (06:07) As of mid-April, we had contracted for approximately 1.6 billion doses of our COVID-19 vaccine expected to be delivered in 2021. As a result, based on the contract signed through mid-April, we are increasing our revenue guidance and now expect revenues of approximately $26 billion from the vaccine in 2021. We also are in ongoing discussions with multiple countries around the world about their needs, and we expect these discussions to lead to additional supply agreements. Based on what we have seen, we believe that the durable demand from our COVID-19 vaccine similar to that of the flu vaccines is a likely outcome. Albert Bourla: (06:52) We want to be a long-term partner to help authorities around the world in their ongoing efforts to combat COVID-19, including their planning for an ongoing pandemic vaccination approach, that is fit for purpose to local requirements. To that end, together with our partner, BioNTech, we expect to have the capacity to manufacture at least 3 billion doses in 2022. Albert Bourla: (07:17) We are in discussions with a number of countries around the world for multi-year contracts for the potential supply of COVID-19 vaccine doses during '22 and beyond. In fact, we recently signed an agreement with the U.K. To supply 60 million additional doses in 2021, and with Israel to supply millions of doses in 2022, enough for the government to boost every eligible citizen, subject to local guidelines, with the option to process millions of additional doses for additional boost. We have also reached an agreement with Canada to supply up to 125 million doses in '22 and '23, with options to supply up to 60 million additional doses in 2024. Albert Bourla: (08:05) It is our hope that the Pfizer BioNTech vaccine will continue to have a global impact by helping to get the devastating pandemic under control and helping economies around the world not only open, but stay open, creating a scenario in which Pfizer can continue to be both a leader and the beneficiary. To realize this goal we are continuing to lead with strong science, not only to maximize the impact of our COVID-19 vaccine in preventing disease, but also with the work we are doing to develop two potential novel protease inhibitors, one administered intravenously, and one administer orally. Albert Bourla: (08:45) As you can see on the accompanying slide, we have many clinical studies ongoing and expect to have multiple readouts and submissions throughout the remainder of the year. Let me touch on a few. Albert Bourla: (08:58) First, while we are currently distributing our vaccine in the U.S. Under an emergency use authorization, we expect to submit this month a biologics license application to the U.S. Food and Drug Administration, seeking full approval for our COVID-19 vaccine for individuals 16 years of age and older. Albert Bourla: (09:16) Second, we are evaluating the safety and immunogenicity of a third dose of the existing formulation of our COVID-19 vaccine to understand the effect of a booster on immunity against the SARS-CoV-2 variants in circulation. Additionally, we have started an evaluation of an updated prototype variant version of our vaccine that encodes the spike protein or the lineage B.1.351 SARC-CoV-2 variant, which includes the mutation E484K, first identified in South Africa. This study is designed to establish a regulatory pathway to update the current vaccine to address any future variant of potential concern in approximately 100 days, if needed. We expect to have immunogenicity data for both studies in early July. Albert Bourla: (10:10) Third, we are continuing our efforts to evaluate the Pfizer BioNTech COVID-19 vaccine in additional population. We expect to hear back shortly from the FDA on our application for an expanded emergency use authorization for our COVID-19 vaccine to include individuals 12 to 15 years of age. The Pfizer BioNTech pediatric study, evaluating the safety and efficacy of our COVID-19 vaccine in field in six months to 11 years of age is ongoing. Albert Bourla: (10:40) We expect to have definite readouts and submit for an EUA for two cohorts, including children two to five years of age and five to 11 years of age in September. The readout and submission for the cohort of children six months to two years old are expected in the fourth quarter. We also expect to have Phase 2 safety data from our ongoing study in pregnant women by late July, early August. Albert Bourla: (11:11) Fourth, we are making progress with improving the stability of our COVID-19 vaccine. On Friday, we submitted new stability data to the FDA, and we believe we could soon receive an update to our EUA prescribing information, allowing the vaccine to be stored at standard refrigerator temperatures of two to eight degrees Celsius for up to four weeks. Albert Bourla: (11:35) We are also working on a ready-to-use formulation, but subject to generating supportive stability data and obtaining regulatory approval, could potentially be store at standard refrigerator temperatures for up to 10 weeks, and up to six months at minus 52 to minus seventy. If successful, we expect to have the data to support this formulation in August. Albert Bourla: (11:59) Fifth, as we move closer to potential approval for our investigation of 20-valent pneumococcal conjugate vaccine for adults, which if approved may be launched during an ongoing pandemic, we plan to begin this month, a study of congruent administration of the Pfizer BioNTech COVID-19 vaccine with a 20-valent pneumococcal conjugate vaccine. Albert Bourla: (12:22) Moving to COVID-19 treatments now. We have barely started this ongoing for two protease inhibitors, antiviral candidates, one administer intravenously and one orally. We expect to begin our Phase 2-3 study for the intravenously administered compound in May and for the orally administered compound in July. Albert Bourla: (12:43) With regard to our oral protease inhibitor, we are planning to evaluate its safety and efficacy through three development pathways. We are studying it compared to a placebo to confirm whether it is efficacious against COVID-19. We are studying it against monoclonal antibodies to assess relative efficacy against current circulating strains. Mutations of spike protein may lead to diminished efficacy of presently available monoclonal antibodies. And our intent is to bring about a therapy with durable efficacy, through a different mechanism of action and conservation of the 3CL protease. Albert Bourla: (13:25) Also, we are studying each in unvaccinated household conducts, exposed to someone infected with COVID-19 to evaluate if it prevents close contacts from contacting COVID-19. It has been well established with flu antiviral drugs, that administering them to close contacts of subjects who have flu reduces the chance of them also getting flu by more than 80%. Though SARS-CoV-2 is a different virus than flu, we are hopeful the principle will be the same. If we administer the investigational treatment to those who are at risk from close contact, does it prevent them from getting sick? Albert Bourla: (14:09) As you can see on our timeline, if things go well, we could potentially apply for approvals before the end of the year. The intravenously administered protease inhibitor is being studied in patient Phase 1B studies in the U.S., Spain, Belgium, and Brazil. We expect to begin a Phase 2-3 study in which the IV compounds will be tested against the current standard of care this quarter. Albert Bourla: (14:37) With a current unmet global medical need for antivirals, we are constantly assessing how we can accelerate the development of these potential treatments. Albert Bourla: (14:49) Pfizer has emerged as a leader in mRNA development, and we are exploring a wide range of opportunities for the technology. We are making rapid progress with our potential flu mRNA program, and we aim to maintain mRNA leadership with two potential game-changing mRNA approaches to a flu vaccine expected to enter the clinic in the third quarter of 2021. We will test multiple constructs in Phase 1-2, to facilitate swift selection of an optimal tetravalent flu product dose regimen. We aim to develop initially a tetravalent flu vaccine using the modified mRNA platform, pending the generation of favorable immune and tolerability Phase 1-2 data, and potential rapid progression to Phase 3 is possible, given our large scale pharmaceutical science and manufacturing capabilities. Albert Bourla: (15:46) We are also exploring the potential to address other infectious diseases that we plan to discuss in the near future. In addition to prophylactic vaccines for infectious diseases, we believe mRNA has the potential to address a wide range of therapeutic areas, including cancer and genetic disease. Albert Bourla: (16:07) As you have seen today, we have increased our 2021 R&D guidance to reflect our plans to increase our mRNA capabilities, build momentum in our targeted areas of interest, and deliver on mRNA's breakthrough potential for the benefit of people worldwide. We can expect to hear more about our plans and potential applications in the coming weeks. Albert Bourla: (16:32) Now let's turn to Pfizer R and D pipeline, which continues to be one of the great strengths. Our pipeline currently includes 99 potential new therapies or indications. That's 99 potential opportunities to change the lives of patients around the world. I will now provide an update on some of these exciting, exciting candidates. Albert Bourla: (16:55) In vaccines, as referenced earlier, the FDA is reviewing the biologic license application for our investigation of 20-valent pneumococcal conjugate vaccine for adults 18 years of age and older with a PDUFA date in June of 2021. Among pneumococcal conjugate vaccines on the market, or in late stage development, if approved, we believe it could provide the most comprehensive coverage against the pneumococcal pneumonia disease in adults. Albert Bourla: (17:24) In internal medicine, in December of 2020, we entered into a collaboration with Myovant sciences to commercialize Relugolix, combination therapy with uterine fibroids and endometriosis, pending FDA approval, as well as Relugolix for advanced prostate cancer. We are excited about the prospect of soon commercializing this product for its potential indication of uterine fibroids, if approved. And the FDA has a PDUFA date of June 1st, 2021. Albert Bourla: (17:58) An estimated 5 million women in the U.S. suffer from symptoms of uterine fibroids, and an estimated 3 million women are inadequately treated by current therapy and require further treatment. We are also working on our planned FDA submission for the endometriosis indication, which we hope to submit this year. An estimated 6 million women in the U.S. suffer from symptoms of endometriosis and an estimated 1 million women are inadequately treated by current therapy and require further treatment, unfortunately. Albert Bourla: (18:34) In inflammation and immunology, alopecia areata is an immune disease that causes hair loss and has no approval treatments in the U.S. and Europe. The Phase 2B-3 [inaudible 00:18:46] our clinical trial to evaluate our JAK3/TEC inhibitor, abrocitinib, alopecia areata is expected to read out late in the third quarter of 2021. If approved abrocitinib has the potential to transform the lives of certain patients with this condition. The FDA has extended the priority review period of our new drug application for abrocitinib for the treatment of adults and adolescents with moderate to severe atopic dermatitis. The PDUFA date has been extended three months to early third quarter 2021, as the FDA has requested additional information and will require additional time to review this data. We believe in the efficacy and safety profile of abrocitinib, which has demonstrated in Phase 3 clinical trial of more than 2,800 patients. Albert Bourla: (19:42) We look forward to working with the FDA and other regulators around the world over the coming months to potentially help bring this important option to patients. Albert Bourla: (19:54) It is important to note that each JAK inhibitor is unique and potentially, a risk identified in one molecule do not necessarily implicate other molecules. We continue to remain confident in the importance of the JAK inhibitor class for appropriate patients with inflammatory diseases, given the role of JAK pathways inflammatory processes. Patient safety is of utmost important, and we continue to monitor all compounds in our portfolio to identify signals both in development, as well as after regulatory approval. In oncology, we continue to evaluate talazoparib in three studies in prostate cancer. The first is TALAPRO-1, Phase 2 study in second line plus patients with DDR mutations, who recently a the positive readout as a monotherapy providing, the key proof of concept to move forward to prostate cancer combination studies. Albert Bourla: (20:55) The second one is TALAPRO-2, a Phase 3 studying first-line metastatic castration-resistant prostate cancer in an unselected pop- Albert Bourla: (21:01) ... castration-resistant prostate cancer in an unselected population for which the primary completion date is expected in the second half of 2021. And finally, TALAPRO-3, which is beginning soon and will study talazoparib in combination with enzalutamide in DDR-deficient metastatic castration-sensitive prostate cancer. In February 2021, we announced that the first participant has been dosed in the registration-enabling Phase II Magnetis-MM3 study of elranatamab, an investigational B-cell maturation antigen, CD3-targeted bispecific antibody in patients with relapsed/refractory multiple myeloma. New enrollment in this study has been posed while we provide additional information to the FDA regarding three cases of peripheral neuropathy observed in the ongoing Phase I Magnetis-MM1 study. Patients who are deriving clinical benefits from elranatamab may continue treatment. Albert Bourla: (22:06) In rare disease, our Phase III lead-in study for the gene therapy, fidanacogene elaparvovec in hemophilia B has now been fully enrolled with more than 40 patients. We remain on course to complete dosing and expect to conduct a planned interim analysis for a potential data readout in this year in 2021. We also continue to progress our hemophilia A gene therapy, girocotocogene fitelparvovec, which was developed in collaboration with Sangamo Therapeutics. We anticipate presenting two-year Phase I/II data in the fourth quarter of 2021. Additionally, we are pleased to report that our lead-in study for our Phase III AFFINE study is in hemophilia A now fully enrolled, which could lead to a pivotal readout in 2022. Albert Bourla: (23:06) For our gene therapy candidate for Duchenne muscular dystrophy, we now have an approved generic name, fordadistrogene movaparvovec, and we are progressing our Phase III trial CIFFREO. To date, we have opened 15 trial sites in eight countries: Italy, Spain, Israel, the U.K., South Korea, Japan, Russia and Canada. In the U.S., we are actively working with the FDA to address outstanding questions related to our investigational New Drug Application, including technical aspects of our Potency Assay Metrics so that we can begin enrolling patients in Phase III U.S. study sites. While we have high confidence in our current quality control overall and with the Potency Assay Metrics, which has been accepted in countries outside of the U.S., the FDA has additional technical requests that we are working to address as quickly as possible. Albert Bourla: (24:04) We understand the sense of urgency among many families in the U.S. who are hoping for sites to open soon. While we cannot speculate at this time as to when sites may open in the U.S., we do not expect a resolution in the first half of 2021.We are working with a sense of urgency and hope to reach alignment with the FDA as soon as possible. In the interim, we will continue to progress our trial globally and enroll patients at other sites, which we believe will allow our program to remain on-track to potentially enable approvals around the world and in the U.S. Albert Bourla: (24:40) Now I would like to address a key policy issue in which we continue to be actively engaged, affordable access. We expect that Biden administration will soon announce a human capital component to their infrastructure package that will include health provision. Pfizer is mobilizing to work with the administration as well as lawmakers in both political parties on meaningful solutions for patient access. Specifically, there are three key areas where we would like to see Congress and the administration cover: rebate reform, capping beneficiary cost-sharing in Medicare Part D, and incentivizing the uptake of biosimilars. Albert Bourla: (25:23) At the state level, we have focused our efforts on meaningful solutions to directly address patient affordability challenges. This includes legislation to require 100% of negotiated rebates to be passed through to consumers at the pharmacy account. We have also worked with state policymakers to advance legislation in several states, ensuring that patient assistance provided by manufacturers will count towards the patient's deductible and out-of-pocket maximus. Albert Bourla: (25:57) Looking ahead, we remain focused on being nimble and investing in our R&D organization, so we can build on the strong improvement in the clinical success rates that have been seen over the last five years and potentially translate that success into strong commercial launches that benefit patients. Excluding any impact from our COVID-19 vaccine, we are on-track and continue to expect a revenue CAGR of at least 6% on a risk-adjusted basis through the end of 2025 as well as double-digit growth on the bottom line. We remain very confident in our ability to achieve these growth rates because of the strength of both our current product portfolio and our R&D pipeline. Albert Bourla: (26:44) At the same time, we will continue to pursue business development opportunities with the potential to further enhance our long-term growth process. Just last week, for example, Pfizer acquired Amplyx Pharmaceuticals, a privately held company dedicated to the development of therapies for debilitating and life-threatening diseases that affect people with compromised immune systems. Amplyx's lead compound is a novel investigational asset under development for the treatment of invasive fungal infection. Thank you. And now I will pass the stage to our CFO, Frank D'Amelio. Frank D'Amelio: (27:26) Thank you, Albert. Good day, everyone. I know you've seen our release, so let me provide a few highlights regarding the financials. Clearly, the COVID-19 vaccine has had a dramatic positive impact on our year-over-year results, and Albert has addressed the key points on the COVID-19 vaccine landscape. Looking at the income statement. Revenue and adjusted cost of sales was significantly impacted by COVID-19 vaccine sales and the associated 50% gross profit split with BioNTech, which we recognize on the cost of sales line. Revenue increased 42% operationally in the first quarter of 2021, driven by COVID-19 vaccine sales and solid performance from a number of our other key growth drivers. The adjusted cost of sales increase shown here reduced gross margin by 10 percentage points compared to the first quarter of 2020, which primarily reflects the impact of the COVID-19 vaccine gross profit split, which accounted for approximately eight percentage points and, to a much smaller extent, product mix. Frank D'Amelio: (28:31) Looking at the business excluding the COVID-19 vaccine contribution, we saw a continuation of solid revenue growth for the business in the quarter, which nicely supports our projected revenue CAGR of at least 6% through the end of 2025. As a reminder, this growth projection continues to exclude any contribution from the COVID-19 vaccine. In addition, compared with the prior year quarter, first quarter 2021 revenues were favorably impacted by approximately $400 million as a result of the first quarter 2021 having three additional selling days in the U.S. and four additional selling days in international markets. This increase in selling days will be offset in fourth quarter of 2021, resulting in essentially the same number of selling days in full year '21 as compared to full year 2020. However, the favorable impact on quarter-over-quarter comparisons in first quarter 2021 from selling days partially offset by the non-reoccurrence of favorable revenue impacts related to COVID-19 in first quarter 2020, including increased demand for certain products of approximately $150 million and additional wholesaler inventories of approximately $100 million. Frank D'Amelio: (29:49) Given these factors, the net favorable impact on first quarter 2021 revenues is approximately $150 million or approximately 1.5 percentage points of operational growth, which in effect reduces a strong 8% operational growth rate to about 7%. Reported diluted EPS for the quarter was up 44% compared to the year-ago quarter, while adjusted diluted EPS grew 47% for the quarter. Foreign exchange movements resulted in a 3% positive benefit to revenue and a 1% benefit to adjusted diluted EPS. Frank D'Amelio: (30:27) Let's move to our revised 2021 guidance. We've again provided total company guidance, which includes the business with the COVID-19 vaccine, and then we provided some additional sub-ledger detail on our assumptions regarding the projected COVID-19 vaccine contribution, so you can also see our projection for the business without the COVID-19 vaccine. To start, the adjustments we've made to our total company guidance are almost entirely due to the anticipated impact of the COVID-19 vaccine and R&D spending on incremental COVID-19 programs and non-COVID-19 mRNA programs, along with a small increase in the revenue outlook for the business excluding the COVID-19 vaccine. Frank D'Amelio: (31:12) For adjusted cost of sales, the ranges have increased to 38% to 39%, which incorporates the incremental anticipated COVID-19 vaccine revenue, which has a significantly higher cost of sales due to the gross margin split with BioNTech as compared to the rest of the business. The projected COVID-19 vaccine revenue as a percentage of total company revenue has increased to 36% as compared to 25% in our initial 2021 guidance. On adjusted SI&A, we have maintained our initial guidance of $11 billion to $12 billion. In addition, we increased our adjusted R&D guidance range to $9.8 billion to $10.3 billion to incorporate anticipated spending on incremental COVID-19-related programs and other mRNA-based projects that are not part of the BioNTech partnership. Working this through with a projected 15% effective tax rate yields an increased adjusted diluted EPS range of $3.55 to $3.65 or 59% growth at the midpoint compared to 2020, including an expected 4% benefit from foreign exchange. Frank D'Amelio: (32:25) Let me quickly remind you of some assumptions in context on the projected COVID-19 vaccine contribution and our collaboration agreement. As referenced earlier, the Pfizer-BioNTech COVID-19 vaccine collaboration construct is a 50-50 gross margin split. Pfizer will book 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 China. We now expect that we can manufacture up to 2.5 billion doses in '21, subject to continuous process improvements, expansion at current facilities and adding new suppliers and contract manufacturers. As of mid-April, we have contracted for approximately 1.6 billion vaccine doses to be delivered in 2021 and still have contracts for potential additional doses under review. Frank D'Amelio: (33:19) Based on the approximately 1.6 billion doses, we are now forecasting approximately $26 billion in COVID-19 vaccine revenue this year. We continue to have three pricing tiers for government contracts depending on the relative wealth of nations. Our cost of sales for the COVID-19 vaccine revenue continues to include manufacturing and distribution costs, applicable royalty expense as well as a payment to BioNTech representing the 50% gross profit split. We continue to expect that the adjusted income before tax for the COVID-19 vaccine contribution to be in the high 20s as a percentage of revenue. This margin level also includes the anticipated spending on additional mRNA programs. Frank D'Amelio: (34:07) As I noted earlier, the COVID-19 vaccine is now projected to account for 36% of total revenue for 2021, up from 25% in our initial guidance for the year. Let me add that if we contract for additional delivery of doses during the year, we will provide a guidance update in our subsequent earning releases. If we remove the projected COVID-19 vaccine contribution from both periods, you will see that we slightly increased 2021 revenue range to be between $44.6 billion and $46.6 billion, representing approximately 6% operational revenue growth at the midpoint. In terms of adjusted diluted EPS, we continue to project a range of $2.50 to $2.60, which represents approximately 11% operational growth at the midpoint. These growth rates are all consistent with how we've been publicly positioning the business post the Upjohn separation. Frank D'Amelio: (35:07) You likely saw our announcement that we have maintained our dividend payment for the second quarter at its current level despite Viatris announcing their expected dividend payment. For those continuing to own Viatris shares, this effectively represents an increase in the dividend income, and our Board felt that the strength of our business supported maintaining our dividend. For the foreseeable future, we expect our Board to continue to support annual dividend increases at approximately this year's level. Obviously, we have no say as to what Viatris does with its future dividend. Frank D'Amelio: (35:42) In summary, a tremendous start to 2021. The COVID-19 vaccine continues to benefit millions of people around the world, and the business is on-track for anticipated solid top and bottom line growth. We remain focused on advancing our pipeline, supporting in-market brands and looking to deploy capital responsibly, with a focus on initiatives that can solidify our long-term revenue and earnings growth outlook. With that, I'll turn it back to Chuck. Chuck: (36:10) Great. Thanks, Frank and Albert, for your prepared remarks. At this point, operator, let's move to our Q&A session, please. Speaker 1: (36:18) Ladies and gentlemen, if you would like to ask a question, please press star-one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Louise Chen from Cantor. Louise Chen: (36:34) Hi. Congratulations on the quarter and thanks for taking my questions here. So first question I had for you, what are your thoughts on the slowing vaccination rates in the U.S.? Do you anticipate things to pick up again? And will we reach that level of herd immunity in the U.S. here? And then second question I had was on vaccine sales and how you think about it beyond 2021 and 2022. What gives you confidence that there's going to be a tail here, and how does that tail look relative to the $26 billion that you're going to potentially have this year? And then last question I had for you is just on how you're thinking about FDA concerns around JAK safety? Thank you. Albert Bourla: (37:14) Thank you very much, Louise. Let me make some comments on the slowing vaccinations and maybe a little bit on the '22/'23 revenues. I will ask Mikael Dolsten to add some comments over there, and then for also JAK, I will ask him to make some comments about the same. Look, I think the U.S. has done a tremendously good job and they have reached vaccination levels that we didn't think that they would. The truth is that as we are vaccinating more and more people, the people that are reluctant to get a vaccine are enriching the remaining pool. So it's normal to expect that we will see a drop in the vaccination. But I believe that the entering of additional pools like younger people, mostly expected approval of our 11 to 15 years old vaccination also will provide an additional increase in the vaccination rates. All in all, I think U.S. is doing a very good job and their focus of all should be to convince those people that they have still fear about the vaccine, that they must do the right thing. Albert Bourla: (38:29) Now beyond '22 and '23, first of all, we believe, as we said multiple times, that there will be a need for boosters. And there is a need likely from now all the way to [inaudible 00:38:43] and then we believe that likely annual vaccinations or, let's say, regular vaccinations would be required. Clearly, this belief is based on the totality of the evidence and not on studies that they have read out right now to convince that this is the case. And the totality of the evidence are having to do with the fact that we still have very high efficacy of above 90% in our six months, but it is slower at 91% than 95% that we had in the beginning, so there are some indications that there is a drop in the efficacy over time. There need to be studies of neutralizing antibodies [inaudible 00:39:37] that also is a drop on these antibodies, and that affects not only people that they are vaccinated but also naturally infected. Albert Bourla: (39:45) We also know that after six months, the increase of reinfections to people that they had previous infections is increasing, and we also know that we are, right now, our vaccine at least effective against all the variants that we have seen, but there is a drop in neutralizing titers, which means that to maintain good efficacy against the variants, you need to increase the immunogenicity, and this is why we are doing the strategy with the boosters. So the totality of the events are pointing out to this, and this is the reason why basically all governments of the world are now discussing with us about procurement agreements for '22, '23 and '24. But I will ask also Mikael Dolsten to make some comments on why we think that the boosters and repeating vaccinations is a likely scenario and also comment on the JAKs safety. Mikael? Mikael Dolsten: (40:53) Yeah. Thank you, Albert. I thought you outlined in an excellent manner that we have identified a handful of key points related to immunity where induced by convalescent after injection of vaccine that will, over time, as expected, show some decline, antibodies will show some decline as their half-life are limited. Of course, protection contains other immune mechanism. When you put all of this in context that SARS-CoV-2 is globally circulating to extent we have rarely seen or ever seen in our lifetime of a virus, and the inability to control across the globe will, of course, lead to numerous changes in the viral mutation rate, so it just punctuates what Albert said. We need continuously to keep up a very high immune pressure against the virus to stay ahead of the curve, and the best way to do that is with ... Mikael Dolsten: (42:03) ... ahead of the curve, and the best way to do that is with regular boosting. Finally, herd immunity, while we would like to see it established, what you hear from a lot of public health data and global health data emerging, is that it will be really difficult on a large continent to establish such a high immunization rates across all ages and to ensure, as you immunize one part of the continent, that immunity is maintained at another part. Mikael Dolsten: (42:38) I think we would really need to rely on regular immunization, and of course, other public health measures, rather than hoping that part of immunity across the globe can be established. Mikael Dolsten: (42:51) Finally, on the JAK safety, already in February '21, if they made it public about our data in 1133 related to increased risk of serious heart-related problem and certain cancer when compared to another type of medicines, the TNF inhibitors. These dates are clearly not new. FDA, EMA and other agencies work in dialogue with us to finalize the outcome of this review. Mikael Dolsten: (43:29) On the other hand, I think that JAK has shown to be an important contribution as an oral alternative for many patients, and you avoid other issues, such as anti-drug antibodies with the biologicals. We continue to wait for finalization of the outcome of the 1133 trial. Mikael Dolsten: (43:53) We think each JAK inhibitor is unique and need to be assessed by itself. We continue to believe that with the proper labeling and given the tremendous experience of salience since 2012, it will continue to have a potential to be an important medicine. Speaker 2: (44:14) Thank you, operator. Next question please. Speaker 3: (44:17) Your next question comes from Terence Flynn, Goldman Sachs. Terence Flynn: (44:23) Great. Thanks for taking the questions and thank you for all the work on the vaccine front. I just had a follow-up on the booster question. Do you think that will be uniform across different groups or will there be any differences by baseline characteristics, such as age, in terms of the timing or of a need for a boost? Then, would you expect FDA and CDC to issue a recommendation on the need for boosters sometime this year? Terence Flynn: (44:49) Then my second question for Albert or Frank is just would welcome your perspective on the potential impact of tax rate changes in the US, and then any thoughts on how that might change your capital allocation strategy and/or views on inversions. Thanks. Albert: (45:04) Michael, why don't you take the question from the boosters? Mikael Dolsten: (45:07) Yeah, I think we cannot, of course, predict what CDC and CDC will do, but what seems to be the general public dialogue, and which of course builds on experience with other viral epidemics, and this is of course a pandemic, is that you would likely to start with those that are most susceptible, older adults, those with chronic diseases, such as cardiovascular, obesity, COPD, asthma, many that are immune impaired. Mikael Dolsten: (45:42) Of course, that constitutes a very large population. While you may start with those, if we are to really maintain control of the virus, it will be very reasonable to assume the importance of also vaccinating younger groups. Mikael Dolsten: (46:01) Although severe COVID is less common in younger groups, some patients may software severely from such infection. They are at risk also of acquiring long COVID syndrome, which can cause significant impairment or participation in functional life for young individuals, as well as old. Mikael Dolsten: (46:24) All in all, yes, regular boost of entire population is a clear possibility, priorities to start the course with a many vulnerable from age to chronic diseases, which is a large number of the adult population. Albert: (46:46) Thank you, Michael. Frank, would you like to take the question about the tax? Frank D'Amelio: (46:51) Thank you, Albert. I think it's premature to comment on what impact the proposed tax rate would have on our [inaudible 00:46:59], how we view capital allocation and inversion, simply because these of proposals typically go through multiple iterations, multiple discussions, multiple negotiations. Obviously, we're staying very close to this, doing all the analytics that you would expect us to do. Frank D'Amelio: (47:16) I think what's really important is how we think about tax, taxes and tax policy. 2017 tax reform leveled the playing field for US multinationals against foreign competitors, and that was an enabler from my perspective of much of what we've done with capital deployment, particularly in the US. Frank D'Amelio: (47:37) We committed to 5 billion of CapEx investment between 2018 and 2022. We committed a few billion of that risk capital in order to develop the COVID vaccine, funding of our US-qualified pension plan that we did last year to the tune of over a billion dollars. All of those, from my perspective, were enabled by the level playing field that we now get to compete on against our foreign competitors. Frank D'Amelio: (48:03) What we want from tax reform, when all is said and done is, we want that level playing field to continue so that we have the ability to compete on a level playing field. That's my answer on it. Speaker 2: (48:16) Thanks, Frank. Next question, please. Speaker 3: (48:19) Your next question comes from Geoffrey Porges from SVB Leerink. Geoffrey Porges : (48:21) Thank you very much [inaudible 00:48:26] Again, congratulations on a remarkable quarter and really tremendous progress. Geoffrey Porges : (48:33) Some quick questions. First on pricing, you mentioned the 5% [inaudible 00:48:37], could you give us a sense of what that looks like for the rest of the year? Is that something that we should be expecting for the full year, or is it just a Q1 phenomenon? Geoffrey Porges : (48:47) Then related to that, Albert, you disclosed your view on the pricing policy and regulatory and legislative update, but it's what you described a realistic case, or is that a best case? Then a couple of questions for Michael. Michael, I've asked you this before, but given what we're seeing in India and in other geographies, is it your view that COVID is going to be a case of convergent evolution or continuous evolution? Are we seeing new mutations beyond E484K that have additional resistance mechanisms to the first generation of vaccines and antibodies? Geoffrey Porges : (49:28) Then just lastly, you mentioned mRNA, you have a maternal RSV vaccine. Are you planning to apply mRNA as a more efficient approach to getting neo natal and infant coverage against mRNA? Thanks. I guess RSV, sorry. Albert: (49:47) Thank you, Geoff. A lot of questions, very important. Let me speak a little bit about the policy of the prices. Then I'll ask Frank to comment a little bit on the pricing and [inaudible 00:49:57] to add something, at least for free. Then on the two other areas, clearly Michael would speak about the resistance and the mRNA. Albert: (50:06) On the pricing reforms, these are our standard positions, but I will try to explain how I feel about the pricing reforms. I have said it in multiple occasions, we don't think that a status law is good for anyone. I don't think it's good for the industry. I don't think it's good for the Americans because there is a problem with the current way of the current system. Albert: (50:28) This is a problem, but basically every American is paying for their medicines, and this is unique to medicines, not to other medical interventions, is paying out of the pocket, like if they don't have insurance, although they do have insurance. Albert: (50:42) This is the fundamental thing that needs to change, because of the medicine's contribution to the overall healthcare, it is 20%. So, by definition, cannot be the big issue, but it is becoming the big issue in the discussion, because everybody has to pay this thing from out of pocket, almost, unlike other interventions. Albert: (51:03) What a change could look like, and for us, it saints could take different forms. It could be consistent from different areas, may not be very bad, the reform, which I think is one of the sustained issues, what you are having with drug pricing, but it could be that out of pocket comps. Albert: (51:24) The fundamental thing it is that there will be a cost to the industry, I'm sure will be willing to take our fair share. As long as all the savings, all the contributions, what we are doing right now, from this industry will go to the pockets of the American patients. Albert: (51:40) This is a fundamental difference with people that are discussing right now, because we are hearing a lot of suggestions that they want to tax the pharmaceutical companies or tax the insurance companies, but the process would just fall in the black hole of the federal budget, which is not what we want. If our contributions go to the patients, we are sitting down with all of the parties, trying to do a decent price reform in the way that the Americans are experiencing the cost when they go to the pharmacy to collect their medicines. Albert: (52:17) Is it realistic or optimistic? I believe it is realistic. I believe that there is room for agreement, both with two sides of the aisle and with this administration. We will continue working on finding the solution, but we'll, I repeat, make medicines affordable for the patients and not throw money to the black hole of the federal budget. Albert: (52:42) Now, Frank, if you can take the price increase and then Michael. Frank D'Amelio: (52:46) Okay, so you've heard Albert and me talk about pricing and that pricing has been a headwind. We expect it to continue to be a headwind for the foreseeable future, and that's obviously what we saw this quarter with pricing being a negative 5% on a global basis. I should also mention there's a negative 5% in the US. Frank D'Amelio: (53:05) Now in terms of our guidance, which is what you asked, Geoffrey, our guidance to assume the pricing decrease, negative impact, I'll call it in the range of low- to mid-single digits. That's 5% reduction that we saw this quarter is consistent with what we assumed in our annual guidance. Albert: (53:24) Thank you, Frank, and by the way, I wanted to add that this, mine was 5%, but it is the reality of the numbers. I'm sure that many Americans have an experience during this quarter, a 5% reduction in their out-of-pocket, because it's the system that works in a way. But no matter what you do on the top, their price that they have to pay is derived from very different rules. Albert: (53:49) Michael, can you speak a little bit about the resistant mechanism in mRNA or RSV? Mikael Dolsten: (53:55) Yeah. Thank you. I'll start with mRNA. As you discussed here, Geoffrey, of course there is tremendous viral amounts across the globe fueled by the spread in large population areas like India. We do see several different lineages of source code to establish. They, however, seem to share the most critical mutations. Mikael Dolsten: (54:28) Most of the variants have up to 10 mutations and they can combine on different way. So far, we believe that our B2, the current vaccine, is very effective in controlling all known mutations, but as Albert alluded to, we believe it's very important to keep up very high utilizing antibody levels in addition to the nice T cell immunity. Mikael Dolsten: (54:54) That's why a possible outcome of this tremendous spread, including India, is to have regular boosts. As the pandemic continue, up to now, mutations have been selected mainly because the virus is trying to spread more quickly. The virus will now face vaccinated immunity in maybe 22, 23 increasingly. So we need to be prepared that there could be new unexpected mutations to come. Mikael Dolsten: (55:25) That's why Pfizer is leaving no stone untouched and also have a variant vaccine developed and could be an alternative later, if that scenario would emerge. But right now, it seems like the current vaccine is very effective against all these variants, despite each having up to 10 different mutations. Mikael Dolsten: (55:49) On the RSV, well, we had very robust [inaudible 00:55:54] with our protein-based, RSV vaccine maternal vaccination, very good tolerability and antibodies crossed efficiently through the cord blood. We are enrolling now well in phase three. Mikael Dolsten: (56:07) We also have initiated a phase two challenge study with RSV that will read out mid of the year, and that could possibly lead to progression swiftly into phase three. We're [inaudible 00:56:23] advance with a protein-based. It looks very good, but of course, we have now mRNA platform that we would like to use for multiple opportunities. Mikael Dolsten: (56:36) We expect to put into the clinic to first in humans, novel vaccines every year for the next few years, certainly RSV could in the future be one alternative, whether it could be as a supplement to the protein base in order to add some T-cell immunity. These are things we'll continue to explore and then prioritize among the many exciting opportunities for our mRNA platform. Speaker 2: (57:06) Great. Thank you, Michael. Next question, please. Speaker 3: (57:10) Your next question comes from Steve Scala from Cowan. Steve Scala: (57:14) Oh, thank you so much. I have two questions. Regarding the DMD gene therapy is the potency assay issue related to concerns around correlation of biomarkers to motor function efficacy, or is it simply a technical issue with no bearing on relevance of the endpoints? Steve Scala: (57:34) Second question is a little bit more broad based, but in the COVID vaccine, Pfizer has built the world's largest global pharmaceutical franchise in six months. I imagine that it is creating a substantial stress throughout the organization, similar to the disruption of a major acquisition. Steve Scala: (57:55) What metrics do you monitor to ensure that these stresses are not going to show up in one to three years or so as, say, subpar product performances, clinical trial failures that otherwise would have been successes, and maybe missed M&A that would have otherwise made sense for Pfizer. Thank you. Albert: (58:17) Thank you very much, Steve. Michael, would you like to take the D and D question? Is it a technical issue? What is the [inaudible 00:58:23] Mikael Dolsten: (58:24) Yeah, so the D and D trial, first of all, and I think Albert mentioned that in his introductory remark, is enrolling in many different countries and in each of those, we had a matrix of assays that were cleared by the regulatory authorities. Mikael Dolsten: (58:45) The particular discussion with FDA is more of a technical issue on how to do a quantification in one supportive assay, but not really as per our view in any of the main assays. We continue to work with them and aim to resolve it. Mikael Dolsten: (59:04) I want to point out that to the best of my knowledge. We were first to start the D and D phase three now enrolling well outside the US late last year. We are probably, by now, entering May, six months ahead of anyone using immune therapy, as it [inaudible 00:59:25] needs public. It hasn't been disclosed, and the other having been cleared with the FDA yet. Albert: (59:34) Thank you, Michael. Steve, it's true in order to achieve what was achieved with this vaccine, the ingenuity of our people was a key component, but also a lot of personal sacrifice had to be involved. A lot of the people worked day and night. A lot of these people worked days or nights to make sure that this happens, and that clearly has taken a toll on them. Albert: (01:00:04) No matter how proud they feel, because the passion that they had can keep them going forever, I am concerned that we need to find a way so that these people will not be bent out. But then I need also to emphasize that Pfizer is run in the form of business units since 2016, when I was running the business that basically [inaudible 01:00:30] running right now. Albert: (01:00:31) We have organized the hole operations into six business units, and that involved the R and D, the commercial and the clinical development. The work for COVID happened in one of the six business units, and it happened predominantly in the R and D domain of this clinical units. Albert: (01:00:54) At the same time, the oncology business unit and the rare disease business unit and the internal medicine business unit and all the other business units that we're having, kept working on their normal, let's say, workload. Let me put it that way. They had to, of course, also to overcome diseases related with the COVID-19. That didn't make their work very easy. Albert: (01:01:22) But again, they were being able to rise to the occasion, because I believe everybody in Pfizer right now is so strong believer of the [inaudible 01:01:33], but patients come first and this is not about us. It's about them. This sense of sacrifice that we see in the vaccines, we have seen it also in the other units. People are very passionate about what they do and they feel very proud. Albert: (01:01:51) I'm giving the answer to say that there is a very intense, let's say, disruptions that happen in part of the organization, not in the entire organization, but has been offset by an incredible sense of pride, that those people are taking because of what has been achieved, so which I can't control them in terms of how hard they are working right now on all the other vaccines, for example. Speaker 2: (01:02:19) Right. Thank you, Albert. Next question, please. Speaker 3: (01:02:23) Your next question comes from Vamil Divan from Mizuho Security. Vamil Divan: (01:02:28) Great. Thank you guys so much for taking the questions, and like others said, thanks so much for all of the efforts around COVID. A couple of questions that I have. One, I guess, there's obviously some debate around the durability of your vaccine sales and cash flows, but you clearly have a lot more sales and a lot more free cash now to venture invest and you've probably envisioned a couple of years ago because of the vaccine. Vamil Divan: (01:02:50) I'm just thinking that you are obviously investing more behind the COVID vaccine and therapeutics, but can you just talk about your priorities for the capital allocation perspective now? I don't think you mentioned you don't want to do share repurchases, but- Vamil Divan: (01:03:03) ... you mentioned you don't want to do share repurchases, but are there priorities that you could maybe look to, whether it's bringing in external assets or maybe doing larger deals given the extra cash that you now will have? And then maybe the second one, I guess for Albert, and maybe a little bit more of a personal angle here, but I appreciate your comments you made around the COVID crisis in India, recently. I'm just wondering if you can provide some clarity on the status of getting your vaccine to the market there. I think you filed back in February and then there are some questions about maybe doing a trial in India, I think some question around indemnification around side effects. Can you just clarify where things stand there and what might be reasonable in terms of timing to get the vaccine available to the patients there? Thanks. Albert: (01:03:43) Yes, thank you very much. In terms of ... Let me start with that. In terms of the vaccine in India, we applied months ago as you know. We applied exactly the same file that we gave to the entire world, FDA, EMA, Japan, everybody in the world. India wanted to do additional studies in order to approve this vaccine over there, which clearly we were not ready to allocate resources doing something like that when we were allocating all the resources to do things into the variants, the kids, pregnant women and that can go on, things that we haven't done it before. But the Indian government is really very good in having discussions right now with us about all these issues that we have raised, so we are hopeful that they will change this policy about conducting some local trials, and we will find a path forward so that we can provide the vaccines. Albert: (01:04:52) That being said, the key right now today and in the next one or two months, it is that people are dying in hospitals in India, and vaccines will not change that in the next one or two months. I think that would be a reality that we have to live with right now. And what is more important is to make sure that the Indian government has enough medicines to treat the people that are going to the hospitals right now, and this is why yesterday we announced that for four of our medicines that they are in their governmental protocol, because the authorities have developed a protocol of treating COVID patients, and there are four of our medicines involved in these protocols. We will provide enough of these medicines for every patient in every public hospital in the next 30 days. And as we speak, we are ramping up production of these medicines in Europe, in the U.S., in Asia, and we are ramping up distribution channels so that we can ship as quickly as possible those medicines to India because the need is immediate. Albert: (01:06:03) Now on the capital allocation, I will ask also Frank to make some comments here, but very few things are changing because of that. Our strategy on capital allocation was not driven with how much capital we had. It was driven with how much opportunity we had. So we never say never to anything, so we maintain the right to be flexible. But clearly, Frank spoke about it, a growing dividend, it is a part of our investment thesis, so that will be maintained. And also, we said that our investment in research, our investment in manufacturing, our investments of our capital are all aiming to improve the longevity, how durable it is, our growth in the second part of the decade. So you should expect to see a larger Phase II, Phase III business development deals that will allow us to bring in-house a lot of potential medicines that could become medicines in this timeframe. Frank, anything to add? Frank D'Amelio: (01:07:20) Yes, Vamil, you're absolutely right. Obviously, the COVID business is generating incremental free cash flow for us, but from my perspective, not material enough to have any major impact on our capital structure. And to Albert's point, the term I would use is we will stay the course in terms of how we deploy our capital. And then Albert obviously mentioned the key areas where we would deploy it, right, the dividend, investing in the business and you saw that with the R&D guidance increase this quarter and then M&A, and M&A really focused on growth the second half of the decade. Chuck: (01:07:52) All right. Thanks. Thanks for those insights, both. Let's move to our next question, please. Speaker 4: (01:07:59) Your next question comes from Umer Raffat from Evercore ISI. Umer Raffat: (01:08:04) Hi. Thanks so much for taking my question. Frank, there was a comment you made back in March, which got a lot of attention, and I thought perhaps you could elaborate a bit more on how you're thinking about the durability of COVID revenues and perhaps lay out sort of the volume and price element of it beyond 2022? And if you could also perhaps speak to the pricing scene in your Canadian contracts, whether it's consistent in 2023, '24 versus where it was in the '21 contract? Umer Raffat: (01:08:34) And then I had a quick R&D one as well, if I may. I know there is these additional FDA technical requests on the gene therapy assay for DMD. I recall you guys were using ITR in Phase I, and then you switched to a transgene assay in Phase III, because there was a little more low variability. Is FDA now thinking the variability is higher than they want in the transgene assay as well? I'm just trying understand what the word "matrix" means? Is it still just the transgene assay with different methods or are there multiple assays at play now? Thank you so much. Albert: (01:09:03) Frank? Frank D'Amelio: (01:09:07) Thank you, Albert. So on pricing, Umer, I really want to not get into detail on pricing other than obviously there are certain contracts where we disclosed with the prices. In terms of the way I think about this, what we're really focused on now is getting doses to the patients that need doses around the world. So getting people vaccinated, that's been our focus. We're acutely focused on that. You heard in our prepared remarks we said we can make approximately 2.5 billion doses this year. We can take that up to three billion doses next year and that's what we're really focused on, right, getting those made, getting them delivered and getting vaccines at the patient's arm, so that's the focus. Frank D'Amelio: (01:09:48) On the Canada contract, we didn't discuss pricing on that contract. What we did say it was up to 125 million doses in 2022 and 2023 with an option for more doses in 2024. And then in terms of the durability of the franchise, I'm going to try to not to repeat what Albert said, but I thought Albert went into a lot of detail on why we believe the COVID revenue franchise has a significant durability and why we think we see that is something that's going to take place for the foreseeable future. And Albert went through a lot of the details how we believe that is. Albert: (01:10:27) Thank you, Frank. Mikael, about the technical question? Mikael Dolsten: (01:10:32) Yeah. The core assays that you alluded to related to AAV and transgene effectiveness are all without any really comment by FDA, so they're all fine. This is what I call the supportive assays, an adjunct assay that was more related to co-localization of the DMD protein and discussions on various technologies how to measure that. And as I said, in Europe, as this was an adjunct assay in other countries, we have cleared and then enrolled efficiently and progressing towards the next step of the trial very well. So it's a very technical issue how to do a detection, but not related to the core potency assays. And obviously, we're working to resolve it. But what I understand, currently there is no other potential gene therapy in U.S. that have cleared yet to Phase III, and we obviously would like to be first, not just ex-U.S. where we have been going for six months, but also in U.S. and work diligently to resolve these very technical questions. Chuck: (01:11:48) All right. Thank you, Mikael. Next question, please. Speaker 4: (01:11:54) Your next question comes from Tim Anderson from Wolfe Research. Tim Anderson: (01:12:00) Hi. Couple of questions, please. On mRNA and your flu vaccine plans, how would a trial be constructed and really what's the goal? Are you looking to show superiority on efficacy or just hoping to achieve parity with existing vaccines? And you talked about yours being quadrivalent, so presumably, if there is a comparator that would be something like Sanofi's Flublok? Also, what would be the likely development timeline? I'm guessing it's not as fast as a COVID vaccine that it would take something longer maybe a couple of years. And then a separate question on your five-year guidance, just to make sure I understand your earlier comments on pricing. What does your five-year guidance assume about drug pricing, especially in the context of there possibly being European drug pricing austerity measures due to COVID? Albert: (01:12:58) Thank you, Tim. And Mikael, do you want to take the question about the flu? Mikael Dolsten: (01:13:04) Yeah. With the flu vaccine, given the strong immune response we have seen for our mRNA platform, we certainly hope to be able to show substantial differentiation versus current flu vaccine. This is, of course, the aspiration we have. Technically, there will be two components. One is to look at immune response on antibodies that have certain standards reported related to increase in titer, and we will be able to compare to the current protein-based flu vaccines. And then we are also planning to run a vaccine efficacy study, where we think it's not just what we hope to be a very potent antibody response, but also the T-cell response. Mikael Dolsten: (01:14:03) So I would certainly aspire to that we would have a vaccine that needs to be substantially meaningful, better than the current vaccine, based on the platform by itself, but also based on that we are able to pass to align the platform with the sequence of the emerging flu strains, while, as you may know many years, the protein base are misaligned and that's why you get very modest vaccine efficacy on maybe just 50% and similar for immune responses. So given that we saw 95% efficacy against COVID, we think there is a large margin for us to improve in the current flu vaccine. Mikael Dolsten: (01:14:52) On the timing, Albert said we are moving to start human trials in Q3. And we will obviously, early on, generate data on the immunogenicity. And if that continue to go as well as our aspiration, we think we can move very fast with this vaccine and also utilizing the type of approach, where you establish a large number of the sites in the regions to study in order to enroll very fast, and we will look at various ways to register this vaccine and also how that could coincide with the recommendation by ACIP. So while we don't give at this early time an exact date, but anticipate that we will move very fast. May not be as fast as the pandemic development, but much faster than a traditional flu development. Albert: (01:15:59) Thank you, Mikael. And then, Frank, I know you did answer the pricing, but do you want to say a little bit more about it? Frank D'Amelio: (01:16:04) Sure, Albert. And this was more about the five-year CAGR through 2025? Albert: (01:16:07) Correct. Frank D'Amelio: (01:16:08) So I think, Tim, the way I think about it is we really look at pricing by geographic region, and we consider we're going to continue to believe it's going to be a headwind by geographic region. What would be examples of that? The U.S. would be one, emerging markets would be one, developed Europe would be one, just as an example. They all range in I'll call it negative pricing increases in the ranges low-single-digits to high-single-digits. And obviously, we blend that all together into an overall global rate. And that's what we've assumed in our category assumptions through 2025. Albert: (01:16:48) Great. Thanks, Frank. Operator, we can take one more question and then we'll have some closing remarks from Albert following that. Speaker 4: (01:16:56) Your final question comes from the line of Navin Jacob from UBS. Navin Jacob: (01:17:01) Hi. Thanks so much for fitting me in here. Just a couple on the mRNA vaccines that you're pushing forward. You had been working with BioNTech for your flu vaccine. I just want to confirm that you're using the Pfizer mRNA technology for the flu vaccine that you're moving forward with, and I'm curious as to why you going with that approach beyond just the economic benefit of using your own tech versus something that you're collaborating with on. Is there something different about your mRNA technology, whether it's in the non-COVID portions of the vaccine or the LNP? And then secondly, again on the flu vaccine, what is your ability to co-formulate it with the COVID vaccine? Wondering why you're moving forward at the co-formulated Prevnar 20 plus 162b2 and not looking for the flu vaccine co-formulation? Thanks for your thoughts. Appreciate the time. Albert: (01:18:05) Thank you very much. As regards the flu vaccine, we had a collaboration with BioNTech that goes back to 2018. At the time, we had announced also publicly some of the terms of this agreement, and the developments are based on the work what has been done so far by both companies on the flu. As regards to the question of co-formulated, we didn't announce a co-formulation with Prevnar right now. We announced co-administration with Prevnar. Clearly, we are looking at options to co-formulate the BioNTech-Pfizer mRNA vaccine against COVID with other, let's say, vaccines. But this is not what we spoke about it today and we haven't made final decisions on co-formulations. And I think, Chuck, we do not have time for another question, right? Chuck: (01:19:05) That's right, Albert. [crosstalk 01:19:08] closing remarks. Albert: (01:19:09) Okay. Just I wanted to thank everyone for joining us today and for your continued engagement with Pfizer. I think the pandemic has been the ultimate test for Pfizer's and, in truth, the entire pharmaceutical industry's capabilities and credibility, and in my view, we have thus far passed with flying colors. The success of our COVID-19 vaccine has led to an important question: if we could do this for COVID-19, why not for other diseases? There are so many people suffering from other serious diseases and their needs aren't less urgent. We now see an opportunity to take the lessons learned and new ways of thinking and apply them across our entire portfolio. The speed with which we interact with regulators as well as the continued acceleration of digital solutions, such as artificial intelligence, electronic diaries, advanced analytics and electronic health records are just some of the things we plan to bring to all of our clinical trials, so we can continue to move at the speed of science. Albert: (01:20:13) And now before we end the call, I want to take a moment to extend my thanks and very best wishes to our colleague and good friend of mine, Chuck Triano, who will be retiring at the end of September. Chuck has been interacting with the global investment community for nearly 35 years, including the past 13 years here at Pfizer, and I think all of you would agree that during the time, he has elevated Pfizer's Investor Relations function to a best-in-class. That's because he values clarity, integrity, and transparency in the way you communicate. It is because he has a passion for our company and our industry that makes him an outstanding champion for both. The good news is that he will be around for at least one more earnings cycle and perhaps another, as he has agreed to stay on us as advisor during this transition. Chuck, thank you for being a valued colleague and friend. Pfizer will miss you, but on behalf of all of us, I wish you all the best in the next part of your journey. Thank you, everyone, and have a great rest of your day. Speaker 4: (01:21:19) This concludes today's conference. You may now all disconnect.