Great. Well, thanks for joining us, everybody. I'm Terence Flynn, the U.S. Biopharma Analyst here at Morgan Stanley, and we're very pleased to be hosting Pfizer today. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. Today from the company, we have Angela Hwang, who is, CCO and President of the Biopharma Segment at Pfizer, and Suneet Varma, who is Global Oncology and U.S. President, also within the Biopharma Group. Thanks so much, both, for joining us today. Really appreciate the time.
Thank you.
I thought, you know, maybe to start off, a question we get a lot from investors is just the 6% revenue growth guidance that you guys have put out there. And so maybe, Angela, you could just talk about kind of the key drivers that you see as you think about achieving that guidance?
Sure. Well, thanks for having us, Terence, and hello to everyone. The 6% guidance is, you know, the way I would think about it, Terence, is to think about it in these three buckets. It's growth that is coming off of three contributors. One, the products that we're bringing in through business development. Two, the products that we are launching, right? We've talked a lot about the 19 launches that Pfizer has over the next 18 months. And then the third comes from our in-line portfolio, the portfolio that we have today. And so certainly when I think about just 2023 and the 6%-8% guidance that we've given for growth this year, that's where the, that's where the growth is gonna come from.
Now, in terms of breakdown of that growth, about 40% from the products that we acquired through BD, about 40% of the growth will also come from the launch products, and about 20% from the in-line. So you see the importance of the BD products as well as the launches in terms of contributing towards our growth. You also know that many of these launches happen in the second half of 2023, right? So in our earnings calls, we've talked a lot about how the second half of the year is when you should anticipate to see our growth pick up. And so, that's consistent with how our budgets are running today and how we are seeing things. So that's for 2023.
Good.
That same, sort of logic applies between now and 2025 as well. If you're looking at our growth over a longer period of time, so in the midterm between now and 25, right, we've also talked about that. It's a multiyear, you know, it's a growth rate for multiyears. I would think about the growth in exactly the same way. How much growth is coming from BD? how much from launch products? how much from in-line? In between now and 2025, you're gonna see the same impact of many of these products. The big in-line products that you know, ones that you know well today, the Eliquis, I mean, the, Vyndaqel. You know, those products continue to contribute significantly as we move on, you know, between now and 2025.
And same with our business development as well as for in-line, except between now and 2025, we also launch additional products. So you see the growth continue to pick up there as well. And so, and then we've also talked about from 2025 to 2030, the same 6%. So I would say that, you know, if you look at the BD that we've done, the launches that are taking place, the launches that we're anticipating, these are all, you know, they're all the same contributors. But through time, you know, you have different weights of each of these, bringing growth to Pfizer.
Yep. And maybe just one follow-up there, the 40, 40, 20. I know it's for 2023.
That holds for the out years as well, 'cause I thought you guys used to talk about a third, a third, a third, or is it still, is that just for 2023, or what's the-
This is just for 2023.
Okay.
Just for 2023.
As we think about the mix of growth from those different buckets, is it still a third, a third, a third?
I mean, with everything, right, you have to look at what else we acquire. We have big Seagen hopefully coming up soon, so that's gonna shift the percentage. So I think you have to look at, you know, when did we say that? What changed since the day we said that? And then, what does that look like? I mean, clearly what has changed is there's a greater, right now, in this moment of 2023 and where we are, the BD products and the launch products are driving a larger percentage of that growth. So I think you'll have to look at what else we buy, what do the launches look like, what else we launch.
You know, all of those will sort of change the percentages, but they're pretty even percentages, and I would just, you know, I would say that definitely keep thinking about it in those three buckets.
Okay. Okay, great. I think the other, you know, big picture topic is the IRA, just given the, the list, the initial 10-drug list was posted about a week ago now. Pfizer had two drugs on there, Ibrance and Eliquis. So maybe just any insight in terms of kind of how we expect this negotiation process to unfold here over the next, you know, year and a half or so?
Yeah, sure. Well, we all know that, you know, in September of 2024 is when the actual negotiations will complete. So we have about a year, as you say, to go through the negotiations. As you correctly said, in fact, only one of our current products, which is Eliquis, is in the IRA price negotiation for this season. And that is, because it's Eliquis, it's also being driven by BMS, so they'll certainly be the leaders in driving that negotiation specifically. But I think that there's a lot to learn, honestly, in terms of, well, what is that negotiation going to look like? You know, what are the inputs and the parameters that the CMS is going to be using to determine some of these prices?
As all of us know, this is the first time that it's being done. It is not entirely clear yet, right, what all the inputs are going to be. So I think that this is a conversation that we're gonna have to have over the course of the next several months as we go through the negotiation and actually really learn about what data are they asking for, how are they thinking about what are, you know, comparable therapeutic alternatives, as an example, that we know will weigh heavily into how they think about pricing. But it's just a slew of things that we don't know and haven't had the experience yet. So you know, it's a complex-...
I would say, still a relatively opaque process, and it will take maybe one round of us going through it to really learn what does it actually mean? What are the inputs? What data are they looking for, and how do they finally calculate the price?
Okay.
Terence, can I add one point?
Sure, yeah.
Just to be clear, as Angela clarified, there are no oncology products on the Pfizer list in the first round of IRA.
Right.
We don't see any material impacts in this, let's say, decade between now and 2030, either on the Pfizer oncology side or on the Seagen oncology side, as we've modeled it.
Okay, great. What will we learn in terms of the actual discount? Is that going to be something where on September first, there's, like, a press release out from CMS? Or do you think we're only going to have to wait till we see, like, a company's results, and we'll see the discount show up there?
No, I think that-
Do you think it'll be disclosed?
I think they said that they're going to publish it.
Okay.
They're going to publish it.
Okay
September 1, 2024.
Okay.
To be implemented January 1, 2026.
Okay.
So again, that's sort of what we're hearing, so we'll have to wait and see.
Got it. Understood.
The other, you know, segment I want to move to before we move to oncology is vaccines. Obviously, Pfizer has a broad portfolio here. You have been a leader in pneumococcal vaccines, RSV launch coming up, obviously COVID. So maybe just as we think about... We'll start with RSV here. Just, you know, as you think about the launch prep, you know, competitive positioning, what are you doing as an organization? And then the second part of the question is, what's going to be required to move away from the shared decision-making to a more routine recommendation for RSV?
Yeah. Yeah. I mean, look, certainly RSV is an incredibly exciting area for us, and we're just so proud of the fact that not only do we have a vaccine for older adults, but we also have the indication for maternal. And that's, you know, that's really a unique attribute of the Pfizer RSV vaccine. And so I think that that is clearly a, a competitive advantage for us and something that we're going to leverage over the course of the next several months. First, to launch the, older adults, but, maternal is coming, you know, straight behind that. And, and we're going to learn a lot from this market. I think we have a very attractive, clinical profile. As you saw, our efficacy is, is excellent, but equally as excellent is our tolerability.
In a world where, take older adults as an example, right? In this respiratory, in this fall season, where we know that for adequate protection of older adults, they're going to need multiple vaccines. You want a vaccine that has excellent tolerability, because often now, people are doing co-administration of vaccines together, getting two or three at once. So, I would not underestimate, you know, the importance of an excellent tolerability profile when it comes to choosing your vaccine. But right now we're in the moment of, obviously, stocking, right? So you're getting wholesalers now. We've stocked all the wholesalers. The wholesalers are in the throes of stocking their pharmacies, and so that is what has been going on, you know, throughout the month of August and until now.
I think that you'll, you know, slowly start to see the demand pick up. Obviously, between the two companies, we have different stocking times, different ordering times, so it's very difficult until you kind of get to a bit of, you know, for next few months to get to a steady state. But obviously, you know, we're going to leverage the incredible footprint that has been created for our respiratory vaccines through our work in Prevnar, through our work in COVID. I mean, all of this is completely synergistic with RSV. So you get the same machinery applied to RSV. But also, I think it's also unique for Pfizer, the only company to have all three respiratory vaccines from one company.
So the relationships that we have, the contractings that we're, you know, the contracting that we're doing, all of this is sort of, like, leverage one another. So I think that we're coming into a very exciting fall season, for the Pfizer respiratory vaccine portfolio. And certainly, I think the advantages of this portfolio will be played out across all three, not just RSV.
Okay. And on the shared decision-making-
Any color in terms of what's going to be required to move away from that to a routine recommendation?
Sure. I mean, I think the CDC was very clear that they want to see more data into sort of at two levels. One was just increasing our confidence on building a robust safety database. And secondly, to really understand the performance of RSV in diverse populations, right? And so on both of those fronts, our trials are continuing. Our phase III trial that we began, that is going to continue, and we're going to be able to follow that to better understand, you know, just get additional efficacy points and additional safety points. We also have studies in immunocompromised that will help us to understand you know, the utilization and the efficacy of our RSV vaccine in a younger population.
As you know, today, it's 60+, but we're going to be studying it 18-59. We're going to be continuing to look at subpopulations through the long-term safety studies that we're—I mean, the post-marketing commitment studies that we conduct. We'll be able to analyze that and really look at different populations and really understand sort of this diverse population, how are they receiving it, what does it mean to them? And so I think it's this, this composite and this, you know, this, this full package of data that we will be able to bring to the CDC, you know, in a year or so, is what we're anticipating, that will enable us to have another conversation.
Okay. So you'll have that data in a year from now, and then they would make their recommendation subsequent to that?
Yes.
Okay. Okay, got it. Great. And then maybe, again, before we move to oncology, just on COVID, obviously, you know, everyone's seen the kind of uptick in cases here. I know, XBB.1.5 is the current kind of go-forward strain composition right now. So maybe just talk to us about kind of the work you're doing right now to prepare for the next rollout. And then how are we going to be able to track this launch? Is there going to be CDC data available, or is it IQVIA data? You know, we're used to having a lot of visibility, I guess-
Yeah
... In the launch historically, but how should we think about tracking this launch? So a two-part question there.
Yeah, yeah. Well, first of all, you know, we are very much looking forward to receiving the approval for our, our booster this fall, and, it's anticipated, you know, very, very shortly. And then we'll have ACIP, you know, the usual will happen, right? You get the approval, then you have the ACIP recommendation. That will then set the parameters for who gets vaccinated this fall. And then it's really happening very, very shortly. I think second to that, it's looking at the, you know, the, the vaccinations and how we're going, sort of our go-to-market to really drive vaccination rates. As you just heard me say, you know, this is something that we've been doing for the last several years now, right? We started off with Prevnar, adult vaccinations, and really built our capabilities with COVID.
And, I think the machinery is working very well, and that will be, what will drive the vaccination rates and the uptake, both from an education perspective, but also, you know, access in various locations to be able to, to, you know, administer the vaccine. So we, we're definitely leveraging that, that machinery to do that. And, you know, I think we've learned a lot about, you know, how to educate people, where- you know, which populations, which populations need more attention. So we'll be, for sure, identifying, you know, what are the different targets and making sure that we have an education plan that gets out to everyone. So I think it'll be an exciting fall season. But your first point was also about the XBB and our, particular, our particular vaccine.
And what we were able to do is to actually confirm, and through our mouse studies, that not only does the vaccine of this season work against XBB, but also other variants thereof. So the new EB variant that also emerged, it's efficacious against that. So I think that what we have is a monovalent vaccine this season that I think will serve the needs of the population very well. And then you had a second part?
Sure. It was just about the, how to think about how we're going to track this. Again, we're used to having a lot of visibility and metrics, but how easy is it going to be to track the launch?
Yeah, you're right. I mean, typically, you know, we've relied heavily on CDC data over the pandemic, but at the end of the pandemic, they declared that they will no longer be tracking it. So we'll just track it the way we normally track Prevnar and all of our other vaccines, right? It will be a combination of IQVIA, but also our own databases and our own analytics. So, you know, we'll continue to get a good sense of what the infection rates look like and also vaccination rates.
Okay.
Yeah.
Are you also having a build at the wholesaler? Some of you talked about a stocking build for RSV. Is there going to be a similar build for COVID?
Yes.
Okay.
That's usually what happens.
Okay.
Right? Like, your wholesalers will place their orders, and then from there, they will redistribute to all the different points.
Great.
So it just turns into a process like any other launch.
Right. Okay. And, and how are you thinking about, you know, back half of the year? I think there's still some debate about, you know, the guidance for second half in terms of how it plays out, because there's so many moving pieces on the COVID franchise.
As you think about that, I mean, you know, how confident are you in hitting those, that guidance that you outlined?
Do you mean the vaccine?
For COVID, the COVID franchise broadly for back half of the year, both Paxlovid and-
Vaccine as well as Paxlovid.
Yeah.
Well, I mean, I think that, again, what we've been saying all along is we'll provide you guidance as soon as we know what it is. We're now in this moment of, you know, getting the approval, so I think we have to watch it for a little bit. Certainly, you can look forward to our next earnings call, when, you know, when we can see whether it will be the right time to provide you with guidance. But, on the commercial side, that moves to a normal sort of commercial launch of the vaccine. So very much that's going to be dependent on, uptake and vaccination rates, right? That will drive what that looks like for the rest of the year.
For Paxlovid, we've talked a lot about how we really need to have the agreement from the U.S. government as to when they plan to exit the market and when they want us to enter, and we're still in the middle of that discussion with them. So, I don't have more to provide you on that front. That's just guidance we'll have to receive, to receive from them. But what I will say is that, you know, COVID infection rates have really picked up, and you can tell, and you can really follow COVID infection rates by just looking at Paxlovid doses and how much is prescribed every single week. And, you know, we went from a high of, in January, of, like, over 300,000 doses a week of Paxlovid, 350, 370.
Then it went all the way down to 50,000 several months ago, and now we're back to 200,000. And so, you know, what the U.S. government has purchased, that inventory is definitely being used and being used well, particularly now in a relatively high COVID infection time.
Okay, great. Maybe, Suneet, over to you on, on oncology. I know one of the, the key launches here is, your BCMA bispecific, and again, I can never pronounce the, the new name, so apologies. But, I know you recently received FDA approval. There are, you know, two other bispecifics that have reached the market now. So maybe talk to us about differentiation and go-to-market strategy for your BCMA bispecific.
Yeah, absolutely. And by the way, you can keep asking Angela questions. I'm fine with that. I'm very relaxed up here. But the brand name is Elrexfio, and the molecule name is elranatamab, so you might hear it referred to both those ways. But you're right, super exciting. We got that approved in mid-August, and now we've moved out into the marketplace with launch and stocking and REMS. So the initial signs are showing it's going very well here. And in Europe, I should say, it's also going well. We have the Accelerated Access Program in France, which even has more patients started than we have in the U.S. because it got going earlier. And we got the Swiss approval last week, which is one of the Orbis countries, so that allows us for it to have accelerated approvals in more markets, faster, essentially.
So we're really happy about that. I think when it comes to your question, Terence, about the differentiation, I really look at it in three domains, which is the efficacy domain, the safety or tolerability domain, and the third is the convenience domain. And I think what we see first in the efficacy space is deep and durable response, and we're really happy about that. The overall response rate we're seeing is about more than 60%, and the, let's say, complete response rate is in the mid-thirties. So we feel really good about those, and those are good numbers. Keep in mind that not only 10 years ago, but not even five years ago, were there any treatments for patients in this space. So this has really been sort of a renaissance in with the BCMA-targeted activities.
But more importantly, when you think about progression-free survival and overall survival, at our 15-month readout, we had not achieved maturity. That means we have not reached our median PFS or OS, which means we're still going, and that's essentially the longest that we're seeing in this space with bispecifics or BCMA or even non-BCMA. So we're very excited to see what the next time point readout will be, and then, hopefully, we'll see some new data before the end of this year. So pretty excited about that, that efficacy data. On the safety and tolerability side, of course, we feel good about where we are in terms of the manageable profile, the CRS, the grade of the CRS being lower and manageable. I would go one step further and say we're also happy about the hospitalization that we see.
At the initiation, three doses, a few days apart each. Other products require 48 hours, 48 hours, and 48 hours each for each dose. We are 48, 24, and 0, so literally half the hospitalization time at initiation of other bispecifics. So really good about that, and that makes it very, let's say, broadly accessible, even in community spaces and other places where hospitalization could be a hurdle to initiation. And then the third domain, which is the convenience in the dosing, flat dosing, no weight-based, off-the-shelf, and really happy about that. And then after six months, every other week dosing. And that every other week dosing allows for longer duration of use, management of infections with good efficacy, robust efficacy we're seeing. In fact, 80% of patients maintain their their response through or past that 6-month point.
I will say that the hurdle for switching to every other week is not as high. For us, it's if you have a partial response for two months, you're eligible to switch to the every other week dosing. You don't require a complete response. We don't require six months of response. So it's really built into our study design, and it's going into our label as well. So we're really happy about those points of differentiation across those three domains.
Okay, great. Maybe just in the interest of time here, I'll switch over to one on Seagen. You know, been getting a lot of questions on the EV-302 trial and how that compares to kind of the phase II trial. And so as you think about, you know, confidence in the readout of EV-302, maybe just you could provide your perspective on that.
Yeah, absolutely. Super exciting. And one of the products in the portfolio, this is Padcev in combination with pembro, and it's in the bladder cancer space for folks that are following it. We got the... In spring of this year, we got the first line metastatic urothelial cancer approval, so that was a big move. You know, as we know in oncology, we move up in the earlier lines of use, and being in first line is a great outcome for that. However, that was limited to cisplatin-ineligible patients. And so in EV-302, which has a study design modification, we are including ineligible and eligible patients. So basically, our belief is that this would broaden the application of the product to all patients, regardless of cisplatin eligibility status, and essentially double the applicable patient population.
So that's really, let's say, good news. We've also Seagen, I shouldn't say we. We're two separate companies, so to be clear, but through the course of integration planning, I've learned quite a bit about Seagen and how they're operating. What I would say is that they've also augmented their sample size for frontline maintenance with avelumab, with additional patients. And essentially, that means that when this reads out, if successful, it would also be applicable to more or all frontline maintenance patients. So if you can think about this, you say, well, great news on the first-line metastatic, but now applicable to all patients, frontline maintenance, regardless of eligibility status, and that is a dramatic uptick in the value and the impact of that medicine.
I'll just make one more comment, which is when we modeled the deal, we look at all the knowns and the available public information, and we say: What's going to happen? However, we don't know everything that's going to happen, so we also put in risk adjustment factors for unknown events in clinical programs and other pipeline assets. And of course, this would be in that pool of unknowns. But what I can say is that we've appropriately accounted for those variables. Some will be a drop ahead, some will be a drop off, but net-net, our model holds, and we feel good about where we're going.
So, that comments then to say, if 302 doesn't pan out, you still feel good about the return on Seagen?
We do.
Okay, understood. The other one that I want to touch on quickly is just the lung cancer space. Obviously, you know, a lot of developments here. Seagen now is moving B6A into phase III for lung cancer. Maybe just how do you see that market evolving? Because we have TIGIT on one hand, we have Trop-2, now you've got B6A. So where does that fit in the paradigm, I guess?
Yeah, absolutely. Let me just say this, that lung cancer is still the biggest cancer out there, and worldwide, the most patients and the most... A lot of R&D activity, a lot of R&D-directed targets in this space. And by the way, Pfizer Oncology is no different. We have Talzenna for ALK-positive, and now we have Lorbrena, which is also an exciting product. What I would say is that it's so it's not a surprise, and it's only a validation that other companies, including Seagen, would be pursuing areas in lung cancer. And actually, there's a lot of, let's say, expansionary work in this space.
What we like about B6A in their pipeline is that essentially this is, I want to say, agnostic to the patient type, and therefore, will be broadly applicable to many different patient types, not limited to ALK-positive. But in fact, you can look at all the variants of patients and all the precision medicine applications or approaches that are being taken, and B6A could work theoretically with any of those other treatments on any of those types of patients. So we see B6A as being, frankly, of not only a blockbuster potential in terms of the new combined oncology business, should this eventuate, but rather a medicine that would be available to treat many types of patients across the lung cancer spectrum.
So as we watch that evolution and we see the different modalities emerging, we see that B6A could have a role in many of those, approaches.
Great. So should we expect more phase III trials, like a broader program here? I know the first one was a second-line trial, but I assume you're going to broaden.
Yeah. I think for that one, we're going to have to talk to Seagen until the deal closes, and after it closes, we'll be happy to share with you what our future plans are for that. But I'll say that we're excited about the pipeline there and elsewhere in Seagen.
Great. Well, I think we're up against time, but thank you so much.
Thank you.
Appreciate the time.
Thank you, Terence.