Good day, everyone, and welcome to Pfizer's Third Quarter 2026 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Francesca DeMartino, Chief Investor Relations Officer and Senior Vice President. Please go ahead, ma'am.
Good morning, and welcome to Pfizer's earnings call. I'm Francesca DeMartino, Chief Investor Relations Officer. On behalf of the Pfizer team, thank you for joining us. This call is being made available via audio webcast at pfizer.com. Earlier this morning, we released our results for the third quarter 2026 via a press release that is available on our website at pfizer.com. I'm joined today by Dr. Albert Bourla, our Chairman and CEO, Cecile Guegan, our CFO, and Chris Boshoff, our Chief Scientific Officer. After their prepared remarks, we will open the call for questions. Members of our leadership team will be available for the Q&A session. Before we get started, I want to remind you that we will be making forward-looking statements and discussing certain non-GAAP financial measures.
I encourage you to read the disclaimers in our slide presentation, the press release we issued this morning, and the disclosures in our SEC filings, which are all available on the IR website on pfizer.com. Forward-looking statements on the call are subject to substantial risks and uncertainty, speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements. With that, I will turn the call over to Albert.
Thank you, Francesca. Good morning, everyone, and thank you for joining our call. I'm pleased with another strong quarter for Pfizer. Our excellent commercial execution, including 32% operational revenue growth in the quarter for our launched and acquired products, shows the underlying strength of our business. Financial discipline and ongoing productivity improvement are driving efficiency and contributing favorably toward our margins. With continued progress of our high-value R&D programs, we believe that we are on a pathway to the next stage of meaningful growth. Before going further, I want to welcome Cecile Guegan as our Chief Financial Officer. Cecile brings more than 25 years of finance leadership and the proven ability to deliver new sources of growth.
She stood out in a global search for her expertise, her deep knowledge of Pfizer and our industry, and the strategic vision that I believe will help Pfizer unlock sustained long-term value for patients and shareholders. I'm looking forward to Cecile's partnership, and I'm confident she will help us execute with the discipline and ambition this next chapter requires. Now, let me cover several highlights of our progress in this quarter. As you know, over the last few years, we have invested close to $80 billion in transactions that have equipped us with key products, contributing to current commercial momentum and platforms with transformative potential. About 80% of this investment was for Seagen, Metsera, and Biohaven, and we are making good progress in maximizing the value of each one. We are pleased with the overall performance of our acquired products, which grew 37% operationally in this quarter.
Our legacy Seagen portfolio grew 39% year over year in the U.S. in the quarter, driven by the strong performance of Padcev. Bringing Seagen's medicines together with the strength and reach of our commercial organization has deepened our presence in the oncology community. We now offer physicians and care teams a broader set of options and more expertise, helping patients and driving growth for Pfizer. Seagen did more than strengthen our commercial position. It also expanded our ability to discover oncology breakthroughs, doubling the size of our early-stage pipeline at the time we closed the acquisition. In our late-stage development programs, we are advancing potential antibody drug conjugates that could bring meaningful improvements for patients with cancer. I'm pleased with the pace of progress over the past year with our expansive clinical development program across our obesity portfolio.
We plan to advance 10 active and planned phase III trials in 2026, including one evaluating a switch from approved weekly therapies to our investigational monthly GLP-1 peptide, berobenatide. We have made significant progress with enrollment across our pivotal berobenatide program, as well as our amylin combination program, where our phase IIb study is now fully enrolled. We are working toward the first in a series of potential approvals for berobenatide in 2028, with planning of our go-to-market strategy well underway. Biohaven also has been a strategically important addition for Pfizer. In the quarter, Nurtec grew by 33% operationally, driven by underlying demand and excellent commercial execution. We see real opportunity to help patients with migraine and for the oral CGRP class to be a key growth driver, even as we manage market dynamics in a competitive field.
We are leading the oral CGRP class in the U.S. and are working to extend that position internationally. We are seeing international growth as more patients can now get this treatment in key countries, including the U.K., Italy, and Japan. We are also encouraged by strong adoption when we are able to expand access. 2026 execution in R&D has been strong, and we continue to prioritize the highest value opportunities for patients and future growth across our four therapeutic focus areas. Our excellent progress showcases our momentum in advancing our strategy. In recent months, we achieved two key regulatory decisions, one key pivotal readout, and eight key pivotal study starts, alongside strong data we presented at several recent medical congresses. We are excited by the pipeline opportunities in areas of strategic focus and commercial strength.
This includes late-stage programs across tumor types in oncology, including multiple myeloma, breast cancer, and lung cancer, within inflammation and immunology, and of course, in pneumococcal vaccines. Chris will share more detail about our recent advancement in the recent months. Our pipeline strategy is grounded in disciplined prioritization and accelerated execution, and we are confident that we are advancing our most significant opportunities for future patient impact and growth. Today, we are raising our guidance for full year 2026 revenue and adjusted earnings per share. This reflects our strong performance through the third quarter and confidence in our ability to execute our strategy. Along with our financial discipline and the progress we continue to make with our R&D pipeline, we believe Pfizer is well-positioned to drive growth toward the end of the decade and create sustained value for patients and shareholders over the long term.
We have deployed AI in our business with the goal of improving efficiency in manufacturing and sharpening how we engage physicians and patients. In R&D, we are working to accelerate innovation with faster target validation and better molecule and biomarker selection. The recent launch of GENESIS, a new pharmacovigilance platform, shows our commitment to harnessing advanced AI and intelligent automation for global safety monitoring. This typically involves a lengthy manual process for more than 600 products in over 120 countries. GENESIS takes on the administrative burden so our safety scientists can spend their time where it matters most: assessing causality, detecting safety signals, and protecting patients. With that, I will turn it over to Cecile.
Thank you, Albert, and good morning. I am proud to speak to you today as Pfizer's CFO. I am looking forward to continuing to work alongside the executive leadership team and lead our world-class finance organization. I am genuinely excited about what we can achieve together, and I will approach this role with financial discipline and a focus on translating Pfizer's scientific and commercial progress into durable shareholder value. I am confident in our strategy and that as a team, we can deliver durable long-term value for our shareholders with rigorous capital allocation and disciplined execution. Now, I am pleased to share our third quarter results, which demonstrate continuous commercial execution and financial discipline. Revenues from our non-COVID product delivered solid growth, while product mix, productivity, and cost management supported margin expansion and enabled continuous investment across our robust pipeline.
This year performance gives us the confidence to raise our full year 2026 revenue guidance, as well as raise and narrow our adjusted diluted EPS guidance. Now, onto the results. Third quarter 2026 revenue of $16.6 billion came in ahead of our expectation, with strong 7% operational revenue growth of our non-COVID products, driven by key brands in the U.S. and select international markets, offset by lower revenues from our COVID-19 products. On the bottom line, third quarter 2026 reported diluted EPS was $0.56. In addition, adjusted diluted EPS of $0.87 exceeded our expectation and includes the $0.10 charge related to the Innovent transaction. This outperformance reflects cost discipline and improved productivity across the organization, even as we increase investment towards future growth drivers and advance several phase III study starts.
We saw solid revenue contributions in the quarter from Eliquis, Paxlovid, the Vyndaqel family, Nurtec, and Lorbrena. While our COVID-19 products and the Prevnar family declined in the quarter. Our launched and acquired product contributed $3.8 billion in revenues and grew 32% operationally in the quarter, primarily driven by Padcev, up $255 million, Nurtec, up $175 million, and Lorbrena, up $114 million. We continue to invest behind this group of products to mitigate LOE headwinds over the next several years. In addition, this quarter's performance demonstrates clear progress against our objective of returning to growth towards the end of the decade. Cost discipline and continued optimization across the company, including our manufacturing footprint, remain priorities.
We are making meaningful progress with our productivity initiatives and remain on track to deliver nearly all of the anticipated $7.2 billion of net savings by the end of 2026 for our ongoing cost improvement programs. As we announced last quarter, we are initiating the next phase of these programs to deliver an anticipated additional $2.5 billion of net cost savings from 2027 through 2029. These savings support increased operating efficiency and contribute favorably to our margins. At the same time, we continue to prioritize investment in pipeline programs that we believe have the greatest potential to deliver meaningful breakthroughs for patients and create long-term value for our shareholders. Adjusted gross margin for the third quarter was 77%, primarily reflecting favorable product mix and continued cost management.
When we look at the components of adjusted operating expenses of $6.8 billion, adjusted SI&A expenses increased 2% operationally, reflecting in part an increase due to a lower favorable adjustment of U.S. healthcare reform fees year-over-year, offset partially by lower and targeted marketing and promotional investments toward growth drivers and ongoing cost productivity and improvements. Adjusted R&D expenses increased 18% operationally, which includes planned investment in priority oncology and obesity programs, including several phase III study starts. Acquired in-progress R&D decreased 52% operationally, primarily reflecting a $650 million charge related to the Innovent transaction this quarter, compared to $1.35 billion charge in the prior year quarter related to the 3SBio transaction.
Third quarter 2026 adjusted operating margin was 36%, reflecting effective cost management, strong non-COVID revenue performance, higher investment in the business, and I will note, was tempered by the AIPR&D charge related to the Innovent transaction. As I mentioned earlier, third quarter adjusted diluted EPS was $0.87. Based on our year-to-date performance, including continued growth across our non-COVID product and disciplined execution, we are raising our full year 2026 revenue guidance by $1.5 billion at the midpoint to a range of $62 billion-$64 billion. We are reaffirming our expectation of approximately $4 billion for the COVID products, with the majority of the COMIRNATY revenues expected in the fourth quarter, consistent with the vaccination season. Paxlovid utilization will continue to be influenced by infection rates and treatment demand.
In addition, we now expect full year 2026 R&D expense to be in the range of $10.8 billion-$11.8 billion. We are raising and narrowing our full year 2026 adjusted diluted EPS guidance to a range of $2.95-$3.05. This represents an increase of $0.10 at the midpoint while absorbing the $0.10 per share impact of the Innovent transaction. We are reaffirming all other components of our financial guidance. Our updated outlook reflects our confidence in the non-COVID product progress across our cost improvement initiative, an expectation of full year adjusted gross margin in the mid-70% range, and continued investment in our priority pipeline programs. Turning to capital allocation. Our capital allocation priorities remain unchanged. We invest in the business at appropriate returns, maintain and over time grow our dividend and deliver shareholder returns while preserving flexibility for future value-enhancing actions, including share repurchases.
Following the Innovent transaction, which closed in the third quarter, our current BD capacity is approximately $6 billion. In the first nine months of 2026, we invested $9.2 billion in internal and external R&D and returned $7.3 billion to shareholders through our quarterly dividend. Our third quarter year-to-date 2026 operating cash flow was $8.8 billion, and leverage ended the quarter at 2.6x , slightly below our 2026 target of 2.7x . Given the impact of upcoming LOEs, we expect leverage to remain around current levels or modestly higher during the LOE transition period. We remain focused on maintaining a strong financial position while continuing to invest in innovation and support shareholder returns. In conclusion, I want to leave you with two key takeaways. First, operational excellence.
The non-COVID products continue to perform well, growing 7% operationally, and our launched and acquired products grew 32% operationally, providing further evidence of our strong capabilities and consistent execution. Second, financial discipline. We are improving operating efficiency while enabling increased pipeline investment in programs we believe offers the greatest potential for patients and shareholders. Together, this performance demonstrates that we are executing our strategy, managing the upcoming LOE transition, and strengthening the foundation for a return to growth towards the end of the decade. With that, I'll turn it over to Chris.
Thanks, Cecile. Across our four therapeutic areas, we made strong progress last quarter. I'll provide color on recent developments for some of these programs, starting with Elrexfio, our internally discovered BCMA bispecific, which has now delivered two positive phase III readouts in double-class exposed multiple myeloma. Most recently, in MagnetisMM-32, Elrexfio monotherapy demonstrated a statistically significant and clinically meaningful improvement in progression-free survival versus investigator's choice of three established standard of care regimens. This is important because the choice of three standard of care regimens provides a robust representation of how CD38 refractory multiple myeloma is treated today in a patient population that is growing as anti-CD38 therapy moves in the first-line setting. The results themselves were strong.
At the time of the interim analysis, more than 75% of patients receiving Elrexfio had not experienced disease progression or death from any cause, and the estimated 18-month progression-free survival rate was approximately 68%. Safety in MagnetisMM-32 was consistent with Elrexfio's known profile and also potentially differentiated. With infection prophylaxis measures incorporated from the start of MagnetisMM-32, rates of grade 3 or higher infections were lower than those observed in MagnetisMM-5, Elrexfio's first positive pivotal trial in double-class exposed multiple myeloma. For context, such infection prophylaxis measures were not in place at the start of MagnetisMM-5. These were instituted following early deaths due to infections that were concentrated in China and two other countries during a COVID wave, impacting the overall hazard ratio of MagnetisMM-5. MagnetisMM-5 data are expected at a medical meeting before year-end and will provide further information on efficacy and safety.
Taken together, these positive phase III results from MagnetisMM-32 and MagnetisMM-5 strengthen our confidence in moving Elrexfio into earlier lines of treatment. We are building a compelling case of fixed-dose Elrexfio monotherapy from first relapse, regardless of prior CD38 exposure. With additional pivotal studies in newly diagnosed multiple myeloma underway, Elrexfio's eligible patient population could grow approximately fivefold, pending clinical and regulatory success. Moving next to atirmociclib, our potential first-in-class, highly selective CDK4 inhibitor. Building on the leadership we established with Ibrance, we are advancing atirmociclib as a potential next-generation backbone for first-line and early HR-positive breast cancer. Our KAT6 inhibitor, prifetrastat, is being developed in later-line settings. Atirmociclib was designed in-house to improve upon CDK4/6 inhibitors, the current standard of care backbone for HR-positive breast cancer. A key limitation of this class is safety and tolerability, with CDK6 inhibition being a key contributor to adverse events.
We designed atirmociclib to maximize efficacy through greater CDK4 inhibition while improving tolerability by minimizing CDK6 engagement. Atirmociclib is 33 x more selective for CDK4 versus CDK6, comparing favorably versus the standard of care. Here are two datasets fueling enthusiasm for atirmociclib. On the left are data presented at ESMO from the phase II FOURLIGHT-1 study of atirmociclib plus fulvestrant in patients with HR-positive, HER2-negative breast cancer. All participants had previously received a CDK4/6 inhibitor, and notably, 92% of atirmociclib participants were randomized within three months of discontinuing a CDK4/6 inhibitor. The atirmociclib regimen reduced the risk of disease progression or death by 40% compared to investigator's choice of fulvestrant or everolimus plus exemestane. These results in a population with highly refractory or resistant disease increase our confidence in our ongoing phase III trial of atirmociclib versus investigator's choice of CDK4/6 inhibitor in the first-line setting.
On the right are data for atirmociclib's phase II study in early breast cancer. With a combination of atirmociclib plus letrozole, 88% of participants' tumors demonstrated complete cell cycle arrest compared to only 18% versus letrozole alone. These results support our plan to combine atirmociclib with the selective estrogen receptor degrader giredestrant in a phase III early breast cancer trial expected to initiate within the next few months. This study design has been aligned with regulators, building on the expected approval for giredestrant in this setting. This slide shows FOURLIGHT-1 safety and tolerability data alongside results from pivotal studies of the three approved CDK4/6 inhibitors plus fulvestrant. These are cross-trial comparisons. Therefore, definitive conclusions cannot be drawn. These data further suggest that high CDK4 selectivity drives improved safety and tolerability, enabling continuous dosing, excellent adherence, and potentially greater efficacy.
Grade 3 or higher neutropenia was numerically lower with atirmociclib than with any of the approved agents, with no grade 4 or 5 neutropenia reported. Any grade diarrhea was lower than with abemaciclib and comparable to palbociclib and ribociclib. Dose reductions due to adverse events were 14% with atirmociclib compared to 32%-43% with the approved agents. Turning to tivunatamig, we are advancing an extensive program for this potentially best-in-class PD-1/VEGF bispecific antibody, with over 1,200 patients treated globally and a consistent safety profile. This includes two ongoing phase III trials, with two additional phase III trials expected to begin this year. Updated results at ESMO strengthen our confidence as we expand tivunatamig's development.
Since SITC 2025, confirmed response rate for the pivotal dose of tivunatamig plus doublet chemotherapy from the ongoing phase II study have risen by roughly 20 percentage points in non-squamous and squamous first-line non-small cell lung cancer. They now stand at approximately 80%, exceeding those of tislelizumab plus chemotherapy in this study. Median progression-free survival was nearly 14 months for both histologies, an improvement of roughly four to five months versus the comparators. Notably, tislelizumab's efficacy was consistent with historical phase III results for the leading PD-1 antibody pembrolizumab, which supports the relevance of the control arms. We are also encouraged by how tivunatamig efficacy and safety results compare with phase III data for the PD-1/VEGF bispecific antibody ivonescimab, while recognizing the limitations of cross-trial comparisons. Now for I&I, tilrekimig, a potential first-in-class trispecific antibody.
Tilrekimig was designed in-house to simultaneously target multiple complementary drivers of type 2 inflammation IL-4, IL-13, and TSLP. Phase II results in atopic dermatitis provide compelling proof of concept. At the top monthly doses, tilrekimig treatment led to placebo-adjusted response rate of about 50% for EASI75 to find a 75% or greater improvement in the eczema area and severity index. While cross-trial comparisons have limitations, these phase II data suggest the potential for superiority over dupilumab, the current standard of care biologic. These secondary endpoints in our ongoing phase III program are powered to test this hypothesis in a head-to-head setting. For safety, tilrekimig demonstrated a favorable profile. At subcutaneous doses up to 400 milligrams once every four weeks, the observed frequency of conjunctivitis and injection site reactions were lower than rates reported with dupilumab and comparable to placebo.
Beyond atopic dermatitis, tilrekimig offers a pipeline and a product opportunity, targeting pathways that are validated by approved therapies across nine different diseases. Late-stage studies are underway in severe asthma and moderate to severe COPD. Moving to our potential best-in-class pneumococcal conjugate vaccine program, building on Prevnar's 25+ year legacy of effectiveness and safety, we're advancing next-generation candidates designed for leading serotype and invasive disease coverage. In pediatrics, PCV25 delivered strong phase II results. All 20 serotypes shared with Prevnar 20 met the twofold post-dose four IgG criterion historically used to establish non-inferiority. Since the pediatric licensure of Prevnar 20 in 2023, the FDA established an updated, more stringent 1.5-fold non-inferiority criterion that is incorporated into our phase III design.
Given the phase II results and tighter confidence intervals expected with a much larger sample size in phase III, modeling predicts this criterion will be met for at least 22 of 25 serotypes in our pivotal study. Taken together with seroresponse data, functional OPA titers, and the totality of evidence approach to licensure, these results provide confidence as we aim to deliver a best-in-class pediatric pneumococcal vaccine protecting against serotypes that collectively cause an estimated 84% of invasive disease cases in U.S. children under five. This would represent an incremental increase of approximately 25 percentage points versus Prevnar 20. Our phase III program is well underway with the phase III lot-to-lot consistency study already fully enrolled. In adults, PCV35 extends the enhanced serotype three technology we validated with PCV25 to other key ser jobotypes, with a phase I start expected this year.
Looking ahead, we expect a strong cadence of regulatory decisions, data readouts, and pivotal study starts over the next 12 months. These include a readout from MEVPRO-1, which, based on the current event rate, is now expected in the first quarter of 2027. If successful, MEVPRO-1 could support approval for mevrometostat, our in-house discovered potential first-in-class EZH2 inhibitor for prostate cancer, expanding our franchise. With that, I'll hand it back to Albert.
Thank you, Chris. In closing, operational excellence is driving a commercial momentum across our key growth brands, and I would say importantly, with our launched and acquired products. Our capital allocation strategy, on the other hand, is designed to create long-term shareholder value. Our late-stage pipeline progress, with a significant number of pivotal readouts expected near term, is strengthening our opportunity to extend our leadership in key areas and make a difference for patients. I'm confident Pfizer is well-positioned for growth towards the end of this decade and for long-term shareholder value creation. We have line of sight to our aim of delivering a risk-adjusted high single-digit revenue CAGR from year-end 2028 through year-end 2033. Now we will move to Q&A, and operator, please assemble the queue.
Thank you. If you'd like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question. Our first question today will come from Chris Schott with JPMorgan. Your line is now open.
Great. Thanks so much for the questions. I just had two pipeline ones. Maybe first on the trispecific, tilrekimig. How are you thinking about the positioning of this one in atopic derm as we consider, I guess, first-line versus second-line usage as we just think about the very strong data you presented versus a very well-entrenched standard of care? Maybe just a second part of that, could you just talk about the timelines for the indications beyond AD that you're pursuing? The second question was then just pivoting over to the upcoming phase I/IIa amylin and berobenatide combo data that we're going to see. Here, can you just help set some expectations about how you're thinking about that data and then the type of titration schedule that's being used in that study, just to help us kind of frame out what we're going to see with that readout?
Thanks so much.
No, thank you. Chris, would you like to cover the timelines of trispecific and, of course, the amylin and berobenatide questions? Then maybe, Alexandre, you can speak a little bit about the commercial positioning.
Thank you very much for the question. So, as you know, we've now started the phase III program for tilrekimig in atopic dermatitis, two studies. One of those studies include a head-to-head against dupilumab, and we also started the phase II/III study, a continuous design for COPD, and phase III studies for severe asthma, with expected readouts in 2028 and 2029. Regarding amylin GLP-1, as you're aware, the SOLIS-1 study has now completely recruited. That is the robustly designed phase IIb study for amylin single agent and amylin plus berobenatide in different doses and different titrations. We expect the readout for that study for efficacy the second half of 2027. The ongoing phase I/IIa study, we'll give an update at the end of this year, recognizing that study was designed for safety and PK, clinical pharmacology, not for efficacy.
Thank you. What about the positioning of the trispecifics? How do you think about it?
Yes, Chris, thanks for the questions. I think we all know that this is a very large category. What we have learned with our Cibinqo and overall dermatology franchise is there is a lot of patient profile that requires different type of therapy, and we see that very much with the JAK versus the mAb, and we see that there are some patients that actually move from one to the other, the drop-offs. There is a lot of circulation of those patients. We are building capabilities across U.S. and internationals, and we see that we are making good progress. For instance, as you saw in this quarter, in international, we reached $100 million combined between our two assets in dermatology for the quarter. So, we start having a nice phase.
As I said, as we move into the result of the study, we will be able to actually capture some of those lapsed patients and naive patients with a very specific profile that we are defining. So, first in class, strong efficacy, and clearly unmet medical need in this category.
Thank you very much. Next question, please.
Our next question comes from Dave Risinger with Leerink Partners. Please go ahead.
Yes, thanks very much. I wanted to say congratulations to Cecile Guegan on your new role as CFO of Pfizer, and look forward to working with you. My question is on U.S. net price in the third quarter and going forward. Could you comment on any gross-to-net benefits to net sales in the third quarter, including from any 340B scrubbing, and discuss U.S. net price prospects looking forward in the near term? Thank you.
Thanks very much, first, for your good wishes. I think related to the pricing in Q3, with the exception of, as we were expecting, the impact on Eliquis, which started in Q3, of the January price decrease, I would say there is not really any very material change into our gross-to-net dynamics during the third quarter. The performance that we are seeing is, for the most part, driven by strong market performance and volume, rather than dynamics around the gross-to-net.
As we are looking into the future, obviously, I'm not commenting today on 2027, but we will obviously reflect into our guidance for 2027 the various dynamics that we are seeing, being IRA, with two of our products entering into the MFP in 2027, and any of the dynamics around the 340B impact and changes, including the credit rebate model implemented starting in January, and also, obviously, some of the MFN impacts that we have following the agreement we have with the government. But as a summary, the performance into Q3 is really a reflection of the strong execution rather than dynamics around gross-to-net that we don't see.
Very well. Thank you very much. Next question, please.
Our next question comes from Umer Raffat with Evercore ISI. Your line is now open.
Hi, guys. Thanks for taking my question. Albert, there's clearly been a lot of progress on SG&A improvements over the last couple of years, and I acknowledge that. It's not step function, but there's been improvement. I recall Dave, before he moved on, had mentioned that majority of the total net cost savings of $7.2 billion will be delivered by the end of 2026. When I look now back at the Pfizer P&L, I'm seeing SG&A and R&D was about $24.5 billion back in 2022. It's about the same in 2026 as well. I acknowledge R&D's gone up a bit, SG&A has come back a bit, but the broader dynamics on OPEX are still broadly in that $24 billion-$25 billion camp. I guess, how do you think about that heading into the dividend integrity, the cost lever heading into patent expiries? Thank you.
Cecile, why don't you take this question?
Yeah. As I mentioned earlier, we are on track to delivering the $7.2 billion of savings that we had implemented as part of our first phase of the cost improvement programs. Those savings were in different places. It is one, in our manufacturing footprint or cost. Two, in R&D, but reinvested. We are indeed increasing our R&D investment in order to support the pipeline product and programs that we have, in addition to, obviously, the acquisition that we made. Then on the SI&A side, mostly coming from the commercial and marketing expenses, as well as G&A. What we are seeing today in our operating expenses, and I would then relate to just the third quarter, which had some one-time dynamics that drove the SI&A up. We are still expecting, based on guidance, to see a decline in SI&A versus last year.
That is the first piece that I would say. Going forward, we have announced our second phase of the program with a $2.5 billion of savings, both in SG&A and in our cost of manufacturing. Those will translate into savings. We are expecting to see those translating and mitigating the margin erosion as part of the LOE transition in 2027 to 2029.
Thank you very, very much, Cecile. Next question.
We will go next to Akash Tewari with Jefferies. Your line is now open.
Hey, thanks so much. Just a couple. I know in the spring, you had a kind of 45, 50 patient biomarker analysis on your STAT6, and you were going to make a decision on whether to go from stage one to stage two. Is there an update on that program, and really, how do you think about TARC reduction and biomarker reduction to what we've seen with some of the degraders? Then, on your GLP-1 amylin, I think your phase I/II, you just updated on ClinicalTrials.gov to 201 patients. I think it was originally planned to be closer to 400. Any color on what drove that decision with the amylin GLP-1 combo with Metsera? Thank you.
Chris, both questions go to you.
Okay. Thank you very much. So the first on STAT6, potentially first-in-class on STAT6 programs. Thanks for the question. This is an area very important for us for the I&I portfolio. As we previously stated, we've adapted the program to incorporate some additional DDI studies, so we should give you a readout for the STAT6 later this year. Regarding the amylin and berobenatide, as I stated earlier, the SOLIS-1 study is fully recruited. That study is for efficacy reading of end of next year, and the phase I/IIa study was adapted for the additional PK studies we are doing, but there's nothing really, nothing material changed to the trial.
Thank you. Next question, please.
We'll go next to Vamil Divan with Guggenheim. Your line is now open.
Great. Thanks for taking my questions. Again, maybe on the pipeline. One, we noticed that you posted a new phase I trial for your PI3K inhibitor on clinicaltrials.gov last week. Heard what you said around atirmociclib and your CDK6. Curious if you can maybe just talk about how you see that asset fitting into your broader breast cancer strategy. Then the other question maybe coming from ESMO, we saw the VOLGA data that AstraZeneca released that could suggest maybe less need for the use of fewer cycles of Padcev in patients with bladder cancer. Curious if you have any sort of reactions to that data set or how it might impact how you think the use of Padcev may play out in the future. Thanks.
Yes. So firstly on the PI3K, we started a phase I study on an internally discovered PI3Kα inhibitor. Reminder that mevrometostat with enzalutamide is also Pfizer-discovered medicine. We have an ongoing clinical trial with Relay with the PI3Kα alpha, pan-alpha isoform-selected inhibitor called zovegalisib, also in combination with atirmociclib. The advantage of atirmociclib is we do not see DDIs, which has been experienced with all the other CDK4/6 inhibitors combining with the PI3Kα. So it's a potentially significant advantage, to your point, up to 40% of breast cancer, ER-positive breast cancer, up to 20%-25% of HER2-positive breast cancer will harbor a PI3Kα mutation. So it's an important area for us. The second question was on the VOLGA data. I'll start briefly. Firstly, this reinforces the use of Padcev for muscle-invasive bladder cancer. It reinforces the use of Padcev in combination with the PD-1 for muscle-invasive bladder cancer.
It also reinforces the confidence we have in the study we've just started, EV-309, which is bladder-sparing Padcev, pembrolizumab in a bladder-sparing setting, as well as the ongoing planned phase III trial with Padcev plus cabozantinib, which should also start later this year. I just want to remind on the VOLGA study, this was a no-cisplatin-eligible population. Pathological complete remission was lower than what we've seen with pembro plus Padcev, which is important, including slightly lower event-free survival. Most importantly, this is a curative intent setting, so we're not clear yet which patients can be de-escalated. So that's important for physicians, who can you actually give less therapy to? Thank you.
Thank you very much. Next question, please.
We'll go next to Evan Seigerman with BMO Capital Markets. Your line is now open.
Okay. Hi, guys. Thank you so much for taking my question. Cecile, as you inherit the capital allocation framework established by your predecessor, how do you think about the marginal dollars that you can invest from here between internal R&D and other bolt-on? You talked about BD capacity, deleveraging, and eventually restarting buybacks. Where do you currently see the highest prospective return for shareholders?
Yes, Cecile.
Thanks, Evan. Our priorities are clear, and they are not changing versus what was in place. I think we have a solid plan to get us through LOE and post-LOE. Our priorities, invest for growth, maintain and grow our dividend over time, and then keep a strong balance sheet. Through the LOE period, our operating cash flow, financial asset, and access to capital market will give us the ability to continue to invest and maintain the dividend. As we go post-LOE period, our operating cash flow grows with the levers, and we have other options to continue to increase shareholder value. In that situation, share repurchases become, again, one of the levers that we have in order to be able to continue and enhance that shareholder right.
Thank you very much. Next question, please.
We'll go next to Steve Scala with TD Cowen. Please go ahead.
Oh, thank you. Two questions. Given the pushout of MEVPRO-1, were there any changes to MEVPRO-2 and -3 timelines? That's the first question. Second question is for Cecile. You started at Pfizer when Warner-Lambert was being consolidated, have been through the acquisitions of Pharmacia, Wyeth, and Seagen, and many BD deals, including that for Eliquis. I think it could be argued that Pfizer's most successful products have come through deals. In each of those years, as it is now, Pfizer viewed its pipeline as very good. Given this history, why doesn't Pfizer make another big deal its primary focus? Or would you say that the pipeline is significantly better now than at any time in the last 25 years? Thank you.
Good question. Cecile, what do you think?
Thank you. Just for the record, I came with Wyeth. I do not have the history on all the deals, but I think Wyeth was one of the best acquisition that we did, and I have seen since then a transformation of Pfizer and the strengthening definitely of our pipeline over the last 25 years. What I would say is, in terms of our priorities, Albert reiterated earlier, we have invested very significantly over the past few years in a key transaction and key acquisition that are today already driving success. We are talking about Padcev, we are talking about Nurtec, and we see a lot of opportunities that still remains in the pipeline in Seagen, in Metsera. So we have a lot to execute both commercially and on an R&D side and on the commercial side.
Really, as we look at BD going forward and considering our capital allocation priorities, our focus is really on more bolt-on acquisitions that are going to complement the large and rich portfolios that we have in the four therapeutic areas that we are adding. Looking at a BD acquisition is obviously strategically aligned, building upon our expertise, and then obviously providing the financial returns, appropriate returns that we would be expecting.
Thank you, Cecile. Chris, you want to comment a little bit on the timelines of MEVPRO, and given the interest on the product, maybe Aamir also you say a few things about the potential.
Thank you very much. I'll be brief. Since we last spoke about it, the timelines have been updated for MEVPRO-1 and MEVPRO-2. A reminder, these are event-driven studies, so it's based on when we expect events to happen. So MEVPRO-1 will now read out Q1 2027, and MEVPRO-2, Q3 2027. As you've seen at ESMO, we've got additional data, including compelling 8.9 months PFS. Just to correct, MEVPRO-2 is actually Q4 2027, the updated in clinicaltrials.gov. Thank you.
Yeah. I think MEVPRO-1 you expect around February.
Around February, correct.
The readouts. This is the projections right now based on the way that events are accruing. Aamir, why are we so excited about MEVPRO in terms of the commercial opportunity?
I think three things are probably why we're excited. One, I would just remind everybody that our current commercial footprint is anchored in the U.S. alongside Astellas, but MEVPRO for us is a fully global opportunity in the U.S. and outside the U.S. So that is very significant and exciting. Second, as Chris mentioned, MEVPRO-2 and 3, across MEVPRO-1, 2, and 3, I think we have the potential to position MEVPRO as a multi-indication franchise. That gives us lots of surface area to compete in. And finally, if we just think of the total patient populations, we're talking about over 50,000 in the U.S., close to 50,000 in the EU4 and U.K., another 14,000 in Japan, and 30% of that population could be addressed even with MEVPRO-1. So there's a significant patient population, a global opportunity, and clearly an area that we have deep commercial expertise.
Those are the things that get us excited about it.
Thank you, Aamir. And sometimes people forget that Xtandi, which is one of our very big and strong products, we basically have half of the Xtandi in the U.S., and that's it. Here, we are going to have the whole U.S. and the whole global international market. Next question, please.
We'll go next to Geoff Meacham with Citi. Please go ahead.
Great. Morning, everyone. Thanks so much for the question. Just had two. The first bigger picture, Albert, from a policy perspective, I know obviously hard to have certainty on, especially given today, but as you look to 2027, what are your thoughts on the potential risks of changes to MFN or perhaps greater scrutiny on the prior OUS agreements? The second question for Chris on berobenatide. You guys have started a lot of studies across metabolic indications and beyond obesity, diabetes. Want to get your thoughts on expanding berobenatide as a combo strategy into inflammation or neuroscience or even oncology, for example. Obviously, the science is really evolving here on GLP-1 synergies. Thank you.
Thank you, Geoff. On the policy perspectives, clearly policy affects a lot our industry, and we are monitoring it very carefully. We are waiting to see what will happen today in the elections. I think that in any case, it looks like we will have a split government. I do not think that many things can move legislation-wise. I do not expect any changes in MFN. I think the agreements are signed and are going until the end of the term of this government. I expect that there will be a renewed interest in the Congress to investigate several things. I do not expect policy changes, frankly. It is a very big contrast vis-a-vis what I was telling you a year ago. In 2025, I was really scared about the implications that either tariffs or MFN could have.
I think through the successful navigation of those issues, we brought the stability that it is now projected to last, and has brought, I think, this confidence back to the investors to invest in the industry in our sector. Now, with that, I will turn it to Chris to comment on the GLP-1 and other things.
Yeah, I will just quickly start. Our goal is initially to establish berobenatide as a potentially best-in-class monthly subcutaneous GLP-1 for obesity, and this is globally. We are starting, as you have seen, additional studies now for knee osteoarthritis, as well as for obstructive sleep apnea with or without PAP. We also will announce additional phase III studies in the coming months. In 2027, you are absolutely correct, we hope to announce some additional studies looking at the backbone of our portfolio, including I&I, potential in oncology, you are right, this is an interesting area. You will also see the acceleration of phase I programs and current programs that is pre-clinically that is highly differentiated in this space. Thank you.
Very good. Next question, please.
We'll go next to Alex Hammond with Wolfe Research. Your line is open.
Thank you. Two from me. As you look at Sciwind Biosciences' GLP-1 launch in China, how are both the obesity and the diabetes markets playing out so far, and how is that shaping your thoughts on the commercial opportunity for berobenatide OUS? On the Lyme disease vaccine, can you update us on the regulatory path forward following the recent submission in Europe? How are your discussions with the FDA progressing, and are there any meaningful differences between the FDA and EMA? Thank you.
I'm not sure I understood the second question.
Lyme disease. Lyme vaccine.
The Lyme vaccine. Okay, yes. Alexander, thank you, Alex, very much. Alexandre, maybe you speak a little bit about our GLP-1 in China and what we expect from it.
That is right. Thanks for the question. As you said, Alex, we have introduced ecnoglutide in China at the end of April of this year, and we are satisfied with the way we are progressing. We are learning a lot through the launch of ecnoglutide in China. The things that we are clearly understanding is, there are very different segments within these overall chronic weight management categories, with patients that are all qualifying for the definition of chronic weight management, but some of them have more an aesthetic-driven purpose with a very different profile of product that they will be looking. Their way of acquiring this product is actually very different than the way on the other opposite direction, which are very heavy people looking for much more efficacy, tolerability, it becomes a second point.
Clearly, what we are learning is, it is confirming our strategy that if we want to be successful in chronic weight management, you need to have a portfolio. You need to have a portfolio also because you will need to activate all those different channels, and the cost of activations of those channels will be amortized across the portfolio. Those are very, very key confirmation of our strategy. Now, specifically to ecnoglutide, as you know, we also understood from the get-go that to be successful in chronic weight management in China in particular, you need two things. Of course, you need a good profile, and we have a very competitive profile, but you also need to have type 2 diabetes, because it opened up the hospital channel, but it also opened up for local regulations, the e-commerce channels.
I am very happy to say that since the end of October, we actually got the approval for type 2 diabetes, which opened up that channel. Second thing, our competitors have also access to reimbursements, this is very important to compete effectively. I am also very happy to report that since June, we passed the NRDL committees, now we are expecting the final review by the end of this month, so that hopefully we can introduce our product into the overall hospital reimbursement system. The combination of those two things will really be the start of our penetration of the market.
Thank you. From my perspective, it is fascinating to see how the commercial model around the obesity is so different than anything else. For us, it reminds us really the times of the VIAGRA launch, because there are a lot of similarities. People are willing to pay out of pocket for products that they value, irrelevant if they are reimbursed or not. That creates dramatically different size in the international markets. The second was that because of the consumer nature of this launch, the e-commerce and the internet, as happened with VIAGRA, that was the first product that was available basically on internet, plays a key role. Of course, we are pretty much into that space already, relevant if we have already launched an obesity product, because our vaccines and our Paxlovid and our-
Nurtec.
Excuse me?
Nurtec.
-our migraine products, they are really having significant channel through the PfizerForAll, which is our consumer, let us say, web port to the website. I think we are learning a lot right now in China, after we have learned a lot in our VIAGRA thing. To add another dimension, AI is changing the way that promotions are happening right now. Not only at the physicians level, actually, even more importantly, at the patients level. So, we are learning a lot, and we are very happy that we are entering this market, because I think it is cut for our capabilities. With that, I will ask Chris to comment on the Lyme disease.
Thank you for the question. We all know Lyme disease incidence is now the burden of the disease is increasing globally. The EMA has validated the MAA for Pfizer and Valneva's Lyme disease vaccine candidate. With the validation, the CHMP will now begin its assessment of the MAA. The CHMP is expected to issue an opinion on marketing authorization 2027. We have also now filed in Canada. We continue our discussions with the FDA and should provide an update regarding this in Q4 this year. Thank you.
Alexandre, any comments here?
Yeah, no, I think it is a very exciting opportunity. Just to remind you that we already have an FSME franchise in Europe. We know how to activate tick-borne populations in those endemic area because we have a sales force, we have a commercial play with pharmacies. We are very excited with the opportunity. The level of awareness of the population is significantly higher than what we have in FSME. As we have built these muscles commercially, once we have the approval, we are very much looking forward for the opportunity to commercialize this vaccine.
Yeah. The awareness of the disease, of course, in the U.S., it is skyrocketing right now because we do have an increase of severity and incidence. We are looking forward to concluding the discussions with FDA and submitting our file. Let us go to the next question, please.
Our next question comes from Michael Yee with UBS. Please go ahead.
Great, thanks. Maybe two quick pipeline questions for Chris. On mevrometostat, you guys continue to be pretty bullish. I know there was a formulation change to lower the Cmax and improve the tolerability. Maybe you could comment on how you feel about dropouts and the change in formulation to drive your effect. On tilrekimig, your trispecific, again, something you're pretty bullish on, can you just comment on neutralizing antibodies or ADAs, things that can be tricky for bispecifics and trispecifics, and how you feel about that? Thank you.
Thank you very much. On the first question on mevrometostat, as you pointed out, we did, for the phase III study, adapted to have a more tolerable dose with food, where we decreased the Cmax, but see similar AUC to what we've seen in phase I. So we're very confident in the PK data and the dosage was selected for the phase III study. Regarding tilrekimig, we have not seen functional neutralizing antibodies or functional ADAs thus far. You're absolutely correct, for any bispecific or trispecific, that's a long-term risk, but so far, we haven't seen anything impacting efficacy. In fact, longer-term follow-up on the studies we previously demonstrated or show is that we do not have an impact on efficacy. So, so far, so good with-
Very good. Let's keep it that way, if you can, please. Next question, please.
Our final question today comes from Asad Haider with Goldman Sachs. Your line is now open.
Great. Thanks for taking the question, and congrats on the quarter, Cecile, and also many congrats and best of luck to you. A couple for you. First, just on 2027, appreciate the context provided earlier on price dynamics with respect to IRA and 340B, et cetera. But just any additional high-level qualitative framing on other pushes and pulls next year to be aware of ahead of formal guidance, and how should we be thinking about your guidance philosophy relative to Dave's broadly speaking? Then looking out longer term, you are reiterating line of sight to high single-digit revenue CAGR towards the end of the decade off of a 2028 base, as well as citing operating leverage and margin expansion given the cost realignment initiatives. But consensus numbers are not really modeling that.
There does seem to be a disconnect on both revenue and the earnings lines versus your own expectations. So, as you examined street forecasts, what are the key assumptions that you think are getting most mismodeled in the P&L relative to your own internal expectations as you look out towards that period? Thank you.
Cecile, please make the comments on both.
Thanks, Asad, for your question and also for your good wishes. We will provide 2027 guidance around middle of December, like we did last year. I will only for now provide high-level key drivers that we are seeing in 2027. This one obviously is the LOE impact, not only in the U.S. with Ibrance and Xtandi and some other products, but also in international, where we are seeing Eliquis being LOE at the end of 2026. The other thing that I would say is obviously offsetting that is the ramp-up of our launched and acquired portfolio, which again, as you have seen, is having a very strong performance and still opportunity for growth. Then obviously, pricing and including MFN and IRA, which we will reflect in our guidance.
On our cost initiative program that will allow us to continue to, one, invest towards the growth drivers that we have on the SI&A marketing and commercial space, then increase the productivity and deliver savings, both on the commercial spend and as well on the general and administrative spend. That is kind of like the key trends for 2027, but again, more to come as we release guidance later in the year. As it relates to our high single-digit growth aspiration versus the street, is if you look at where that difference is coming from, it is not really coming from one place on one product, and so is our growth trajectory either.
What we are seeing as a building block for our growth trajectory, obviously, one is a continued growth of our new and acquired product, not only because the market is still growing, our penetration is still increasing, but also on top of it, we are bringing new indications onto those products in order to be able to continue to address more patients and grow our presence on the market. The second thing is on the pipeline. While there are some obvious products that are making a key difference in our view versus the street view, obesity being one, some of the oncology product being one, what I will say is our growth trajectory does not rely on one single product or one single therapeutic area.
We have a broad portfolio of products, several phase III ongoing, as well as upcoming catalysts over the 18- 24 months, which should give confidence to the outside world also to see the opportunity that we are having in bringing breakthrough to patients in significant area of unmet need.
Thank you, Cecile. I would add that me as a CEO, when I see the difference between our internal projections and the street projections, that of course creates to me the urgency to check our assumptions to make sure that in light of different opinions from the analyst, we are correct or not. So we have done that repeatedly. We came to the conclusion that we tell you that we expect to have a high single digit from 2028 to 2033, and we know very well where are the discrepancies between the products. As Cecile said, there are not only on the pipeline, which many analysts, they do not cover. So you have the phenomenal that from 12, 13 analysts that are forming the overall performance of the year 2031, for some products, only five analysts, they have this one and the others they don't.
This is something that it is expected in pipeline. But we see also very big discrepancies in already launched new products, that there is big difference. I will mention two as just examples that I think people need to reevaluate their assessment. One, it is regarding Nurtec, that we are already close to $2 billion this, the way if you annualize it, and the street has us almost two and a half by year 2030. So I think there is a discrepancy there. I will also mention another example of Elrexfio, where for a competing product, the street is forecasting $5 billion and for us $600 million. We are to present a profile that is very similar in efficacy and better in tolerability and in side effects.
Now, remains to be proven, but I don't think the $600 million versus the $5 billion, it is justifiable, even with the current information. I think that as more information is coming for our pipeline and results, I think as more information is coming for the performance actually of the new products, and that includes new launches and acquired products, I think the street probably will start adjusting their numbers and there will be a conversion possibly. But with that, I think that we come to the end of our call. I want to say that I'm very proud of our performance through the third quarter and the execution. My thanks goes to my Pfizer colleagues.
As I visit with our people, and I do that in our labs and in manufacturing sites and in markets across the world, I see a team with tremendous talent, dedication, striving for breakthroughs that change patients' lives. We look forward to sharing additional updates about our progress. Thank you for joining our call today, and thank you for your interest in Pfizer.
Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.