The operator introduces the Pfizer Second Quarter 2024 Earnings Conference Call and turns it over to the Chief Investor Relations Officer and Senior Vice President, Francesca DeMartino. She welcomes everyone and introduces the participants, including the Chairman and CEO, CFO, and other executives. She reminds listeners of the forward-looking statements and non-GAAP financial measures that will be discussed. The CEO, Albert Bourla, then gives a brief overview of the company's strong performance in the first half of the year.

In the second quarter, the company saw progress and strong execution, reaching 192 million patients with their medicines and vaccines. They also achieved regulatory approvals and pipeline advances. The company's financial results were strong and they announced changes to their leadership team and Board of Directors. Mikael Dolsten, who has had a significant impact in his 15 years at Pfizer, will be departing and a new Chief Strategy and Innovation Officer, Andrew Baum, has been welcomed.

The company is pleased to announce the addition of Cyrus Taraporevala to their Board and their commitment to strong governance. The five strategic priorities for the year remain unchanged and the company is confident in their progress towards achieving them. They are also raising their full-year guidance for revenue and adjusted diluted earnings per share. The company is focused on achieving world-class oncology leadership through their partnership with Pfizer and believes they are well positioned for long-term sustainable growth.

In 2024, the company is on track to achieve their vision and has had high rates of colleague retention. Their acquired products, such as Padcev, are contributing significantly to their revenues. Other key products, like Xtandi and Lorbrena, have also been successful. The company has received FDA and European approvals for several products and has received positive opinions for others. They are also focusing on developing new breakthrough therapies, such as danuglipron for obesity.

The company's Phase 2b study showed competitive tolerability profiles and they are now focused on developing a once-daily formulation. A pharmacokinetic study strengthened their confidence in delivering a competitive once-daily pill. Dose optimization studies will be conducted to inform registration-enabling studies. Obesity is a key focus for the company's R&D programs. They have made progress in their Oncology Innovation Day and had positive Phase 3 readouts, including data showing Lorbrena's position as an emerging standard of care and a clinically meaningful improvement in overall survival for Adcetris in combination with lenalidomide and rituximab.

The company has made significant progress in its oncology and vaccine programs, with several Phase 3 studies underway and plans to enroll more patients in the future. They also received approval for an Act-O-Vial presentation of their RSV treatment and have submitted for label expansion in both the United States and Europe. Progress is also being made in their malignant hematology programs. The company aims to deliver eight or more blockbuster medicines and double the number of patients treated with their cancer medicines by 2030.

The company has reported positive results for their gene therapy candidate for hemophilia A and is expecting updates on their other products later this year. They are focused on protecting and growing their core product portfolios and have seen strong performance with their product Nurtec. Prevnar 20 is also performing well, while Abrysvo is in line with seasonal trends. The company remains confident in their full-year performance and is encouraged by the demand for their product Litfulo.

The company is optimistic about Velsipity, a treatment for ulcerative colitis, and has secured preferred coverage with a national payer. They are also seeing positive results from their core products, such as the Vyndaqel family, and are working to identify more patients who could benefit. Eliquis and other products are also contributing to their success. The company is confident in their business and is focused on delivering breakthroughs for patients. They are on track to meet their financial commitments in 2024. The company's CFO, Dave Denton, will discuss their financial performance and strategies for expanding margins and enhancing shareholder value.

In the second quarter, the company saw strong results with a focus on protecting and growing core brands and investing in key areas for long-term success. They also made efforts to reduce costs and improve efficiency. Revenue was impacted by the post-pandemic environment, but excluding COVID products, there was a 14% operational revenue growth driven by key products and geographies. Acquired products and in-line products also contributed to this growth, while Xeljanz and Ibrance had a dampening effect.

The adjusted gross margin for the second quarter was 79%, an improvement from the previous year due to favorable sales mix and cost management. The company has announced a new Manufacturing Optimization Program to improve gross margin and return to pre-pandemic operating margins. The first phase of this program is expected to deliver $1.5 billion in savings by 2027. Adjusted operating expenses increased by 5%, with higher marketing and promotional expenses for new and acquired products. Reported diluted earnings per share was $0.01, while adjusted diluted EPS was $0.60. Unique one-time items included in GAAP results, but excluded from adjusted results, were a $1.3 billion charge for the Manufacturing Optimization Program and a $230 million charge for discontinuing a DMD program.

In the third quarter of 2024, the company expects to record a charge of $400 million due to the sale of one of their facilities and the discontinuation of their DMD effort. Their capital allocation strategy includes maintaining and growing their dividend, investing in their business, and making value-enhancing share repurchases. They have returned $4.8 billion to shareholders, invested $5.2 billion in internal R&D, and paid down $2.25 billion in maturing debt. They plan to resume monetization of their Haleon stake and expect operating cash flow to be lower than usual this year. Revenues are expected to be heavily weighted towards the fourth quarter and may carry over into the first quarter of 2025.

The company is facing short-term pressure, but their objective is to return to a balanced capital allocation strategy. They have updated their full year earnings outlook, raising their revenue range and adjusted diluted earnings per share. They expect operational revenue growth excluding COVID products to be 9% to 11%, with COVID product revenues of $8.5 billion. Their adjusted SI&A and R&D remain unchanged, and the effective tax rate on adjusted income is expected to be 13%. They anticipate adjusted diluted earnings per share of $2.45 to $2.65, which includes expected earnings dilution from the Seagen acquisition. The company is on track to deliver $4 billion in net savings from their cost-realignment program and is focused on margin expansion and improved financial returns.

Pfizer's strong quarterly results are attributed to their commercial business and cost-cutting measures. They are focused on delivering improved performance in the second half of the year and are laying the foundation for generating shareholder value in the future. The company is currently working on optimizing the dose and formulation for their potential drug danuglipron and expects to share data in the first quarter. During the Q&A session, they were asked about cost measures and margin expansion for the rest of the year.

The company is focused on improving their manufacturing processes and generating savings by 2027. They expect margins to improve in the near future and are confident in their new product cycles, such as the upcoming RSV season and the launch of Elrexfio and Myeloma. They are well positioned for the fall season and have strengthened their contracting position.

The decisions made by the ACIP in June have been confirmed and will take effect in August. The ACIP guidance recommends a single dose of Abrysvo for adults over 75 and those at increased risk. Abrysvo has strong data and advantages, including a needle-free reconstitution kit and a new active biosystem. This makes it a preferred option for healthcare providers and pharmacies. Abrysvo is also making progress in international markets, with positive recommendations in the UK, France, Canada, Australia, and Saudi Arabia. The UK has selected Abrysvo for RSV prevention in older adults and maternal immunization for pediatric use, with the possibility of an additional two years. Canada has also selected Abrysvo for adult vaccination.

Pfizer's CEO Albert Bourla and Chief Medical Officer Chris Boshoff discuss the company's recent success with their drug Elrexfio and its potential as a backbone treatment for multiple myeloma. They also mention the growth of Nurtec and their strategy for expanding its usage in both acute and preventive cases, as well as in international markets. This includes efforts to increase physician awareness and improve patient access.

The company has implemented various strategies to increase the clinical value proposition and improve communication about their product, Nurtec. They have also realigned their field forces and reduced barriers for patients to access the medication. As a result, there has been a significant increase in Nurtec prescriptions and revenues. In addition, the company has expanded access to Nurtec in international markets, with a focus on increasing reimbursement in key markets. They see significant growth potential for Nurtec due to the low percentage of diagnosed patients currently being treated with prescription medication.

In a recent interview, Pfizer CEO Albert Bourla discussed the company's progress in international markets for their drug Nurtec, with 55 countries registered and 15 already receiving reimbursement. He also addressed questions about the next generation of their Prevnar vaccine and their ability to maintain a strong market position. Pfizer's Chief Scientific Officer Mikael Dolsten emphasized their focus on optimizing serotype coverage and their confidence in their ability to defend their leadership position. In response to a question about the implications of the IRA on revenue outlook for 2025 and 2026, Bourla did not provide a specific answer.

The CEO of Pfizer, Albert Bourla, responds to a question about the impact of the new IRA legislation on the company's portfolio. He asks Aamir Malik to speak about Eliquis specifically, and Dave Denton to cover the general impact of IRA. Aamir and Dave both express confidence in the company's ability to navigate the impact of IRA, and mention that Eliquis will continue to be an important drug in their portfolio. They also mention that Pfizer is fortunate to have only one product selected for IRA and that the impact on the company is somewhat muted due to the selected products nearing the end of their patent protection. However, they also express concern about the harmful effects of the legislation on research and development in the sector. The call ends with the CEO thanking Dave and moving on to the next question.

The speaker asks for comments on expectations for obesity candidates and the $1.5 billion in COGS reductions. The response mentions other drugs in development and clarifies that the cost reduction effort is only the first phase of a larger program. The $1.5 billion savings is a part of the story and the cost improvement effort is based on a $16 billion cost of goods sold platform. The next question is from Kripa Devarakonda with Truist Securities.

A question was asked about Pfizer's traction in the maternal market and potential setbacks. The company has seen high interest in maternal vaccination and has exceeded expectations with 11% of eligible mothers taking the vaccine. Education is necessary and the company has used the first half of the year to invest in this. The vaccine has received positive recommendations in various countries, including the UK, France, Australia, Belgium, Austria, Argentina, and Latin America.

The paragraph discusses the progress of Padcev in accessing markets and its competitiveness, as well as the growth of Prevnar and its potential impact from the approval of a new drug. It also mentions the excitement surrounding KAT6 data in breast cancer and the potential for future studies.

The change in demand for vaccines in the U.S. is due to lower adult demand and the timing of pediatric vaccine orders. The pediatric market is growing, while the adult market is shrinking due to fewer eligible adults and difficulty in activating younger populations. In the international market, there is expected growth in Prevnar 20 due to its registration and validation, with significant growth seen in Germany. The KAT6 medicine is a first in its category.

The speaker, Albert Bourla, is proud that a new medicine was discovered at their Ohio laboratories and they plan to initiate a Phase 3 program in the next six months. They are also excited about another medicine, KAT6. A question is asked about the timeline for danuglipron and the speaker, Mikael Dolsten, responds that they will present comprehensive data on PK at a later time and have aggressive timelines for the program. Albert Bourla adds that they will move forward quickly if the data supports it. Another question is asked about danuglipron and Mikael Dolsten responds that they will present comprehensive data on PK at a later time and have aggressive timelines for the program.

The speaker is being asked about the potential for improved tolerability with a once-daily formulation of their product compared to the current twice-daily one. They clarify that the ongoing studies will only provide PK data and not additional efficacy or tolerability data. The speaker also discusses the market for RSV and balancing the potential growth with the challenges of targeting and coverage.

The speaker discusses the competitive profile of the DANUBE drug and its potential to be the second oral GLP-1 drug on the market after Lilly. They also mention the expanding market for RSV and the opportunity for growth. The speaker cannot comment on when CMS will disclose negotiated prices for the first list of ten drugs.

The speaker discusses the impact of a recent decision by CMS on the pharmaceutical industry and how it will affect innovation and the Life Science Technology business. They also mention that they are working to minimize the impact and that the NPV at stake is small for the next few years. The next question is about the growth of VYNDAQEL and potential competition, to which the speaker responds that the drug is currently growing at a healthy rate and they are focused on expanding their target market and improving diagnosis rates.

The company expects continued growth with VYNDAQEL, although it may not be at the same pace as the first and second quarters due to a large number of enrollment patients at the beginning of the year. There is competition in the market, but the company is confident in VYNDAQEL's clinical evidence and will provide further guidance as things evolve. The potential for RSV has become more promising since the last projection of $2 billion due to increased emphasis on the disease. There is an aggressive timeline for obesity and it is assumed that PCV next-gen will have a similar timeline.

The company is unable to give a specific timeline for the release of their next-gen product due to the nature of the studies. However, they do comment on the increase in Paxlovid utilization, which has been driven by the recent surge in COVID infections. This has resulted in increased treatment courses being used and has contributed to the company's decision to raise their guidance for the quarter. The company also notes that managing utilization around the unpredictable nature of the disease has been a challenge for wholesalers and end customers.

The company entered Q2 with higher than normal inventory levels, but the increase in utilization and successful commercial model for Paxlovid has helped normalize inventory levels. The company is confident about Paxlovid utilization and the guidance was driven by multiple factors including the core business doing well and cost management programs. The next-generation vaccine program is not event-driven but based on immunogenicity and regulatory discussions are expected next year. The last question was about VYNDAQEL and the company exceeded consensus expectations.

During a conference call, a question was asked about the continued growth of VYNDA in the second half of the year and into 2025. The speaker, Albert Bourla, answered that they do expect growth to continue, although it may not be at the same level as the first half of the year. He also mentioned that it may be difficult to maintain market share once generics enter the market, but they are confident in their execution and ability to deliver on financial commitments. The call concluded with closing remarks and a thank you to participants.

This summary was generated with AI and may contain some inaccuracies.