Pfizer, Inc. (NYSE:PFE) Wells Fargo Healthcare Conference September 8, 2022 9:10 AM ET
Company Participants
David Denton – CFO & EVP
Christopher Stevo – SVP & Chief IR Officer
Conference Call Participants
Mohit Bansal – Wells Fargo Securities
Mohit Bansal
Okay. Great. Thank you. Thank you, everyone, for joining us today. My name is Mohit Bansal. I’m one of the biopharma analysts here at Wells Fargo, and I have great pleasure to start with Dr. Dave Denton from Pfizer.
David Denton
I love it.
Mohit Bansal
And Chris Stevo from Pfizer. So Dave is the CFO of the Pfizer and he recently started in May of this year.
David Denton
Yes, exactly. Exactly.
Mohit Bansal
And Chris, I think it is almost a year for you.
Christopher Stevo
Correct. Just over a year actually.
Mohit Bansal
Great. Great to have you here. And Chris, maybe you want to be started with the disclosure.
Christopher Stevo
Sure. I’m just going to make a quick forward-looking statement disclosure. We’re going to make forward-looking statements in the course of the call or the webcast, sorry. We don’t undertake any duty to update those statements. They’re valid only as of today. And if you have any other questions about our forward-looking statements, you can see our SEC disclosures under Forms 10-Q and 10-K.
Question-and-Answer Session
Q – Mohit Bansal
Great. Thank you. So maybe, Dave, maybe we can get started with your read of the company. You come at the company at interesting times where COVID is getting over. And then — but the company is in this acquisitive mode, and cash is not an issue. But how do you — what is your read of the company in the last 4 or 5 months you’ve been here?
David Denton
Yes. It’s interesting. I’ve been — as you just said, I started the first week of May. So I’ve kind of gone through basically a quarter, and actually through that quarter, we’ve actually done 2 acquisitions from a business development standpoint. It just shows the commitment and the urgency that we have behind us as far as deploying capital in a way that makes sense.
And I think what’s — as you said, the company is really in an interesting evolution at this point in time if you look at it that way. Coming through COVID — by the way, COVID’s not anywhere close to being complete. But coming out of, I’ll say, the first phase of the COVID pandemic, I think — I do think the company is really well positioned long term for both growth and enhancing shareholder value.
And I think about that as us deploying capital into fundamental R&D into our pipeline. And if you look at that, think about if you look forward for the next roughly 18 months, the company’s pipeline and our launches are probably more robust than they’ve been in over the last decade. So we’re really nicely positioned as we’re beginning to get yield out of the pipeline.
Secondly, demonstrated through the COVID launch of the new BA.4/5 variant literally over the last week, we still have a lot of work to do in COVID, both from a vaccine perspective as well as a therapy perspective, and we continue to invest in that franchise. I do believe that from a BD perspective, there’s a lot of opportunities that we have to not only invest internally from an R&D perspective, but also externally from an R&D perspective to really drive growth in the back half of the decade. Really, we’ve been very vocal in the sense of looking to put $25 billion of risk-adjusted revenue by 2030 on to the Pfizer platform.
And then finally, I would just say that Pfizer as a franchise, we have a lot of capabilities. I think — think about the manufacturing strength that we have. We’ve been able to ramp up very dramatically in the vaccine platform. We have a very highly engaged, productive commercial arm that allows us to take medicines that other people can’t get to the market as rapidly that we can really deploy effectively to make those medicines won the market more quickly and more effectively once they’re launched.
So again, I think the company is very nicely positioned. We continue to be very, I guess, planful but very expedient to make sure that we can invest appropriately to grow the company long term.
Mohit Bansal
Great. Maybe talk a little bit about the vaccine plus the COVID-related business at this point. As we — I mean, as we move towards the closing of 2022, so 2022 guidance you have already given, but 2023, it’s like every time I look at the model, it’s just my head hurts because it just — there is so much uncertainty.
So when you think about it, I’m sure you’re thinking about 2023 already. When you think about how to guide us about what 2023 would be, what are the puts and takes and how you’re thinking about it?
David Denton
Yes. Really good question. Obviously, I think, first and foremost, I think the COVID environment is going to be with us for years to come. I don’t think this is going away. It could potentially ebb and flow.
But this is a disease and a virus that is highly contagious. It mutates rapidly, and it goes up and down in the sense of severity. So we’re kind of one turn away from it being more severe versus less severe.
It is hard to predict year-over-year how the COVID virus is going to behave. I think what’s important for us is despite how the virus is going to behave, Pfizer is getting ahead of, I’ll say, managing the situation, both thinking from a vaccine perspective but also continuing to evolve our thinking around a therapy perspective.
We are discussing around how we’re going to think about 2023. A couple of things are important. I think the vaccine, the — I’ll say the volume around the vaccine and the purchasing patterns in the vaccine is different than the purchasing patterns that we’re seeing from a PAXLOVID perspective, from a treatment perspective.
The vaccines, many governments are out creating inventory so that they can vaccinate their population. So they buy in big bulk, if you will. I think from a treatment perspective, we’re seeing governments buying more closely to demand patterns at this point in time. So not as much of a stockpile situation, if you will. And I think that behavior is going to translate into how we think about 2023 and ’24 and ’25 as we look forward to the COVID franchise.
But I don’t think — it’s not going away. This is something we’re going to have to deal with and manage. And I think it’s an opportunity for the company to really demonstrate our strength in this category, if you will.
Mohit Bansal
Got it. And super helpful. And so in terms of — if you take your businesses like the core business versus the noncore — I mean, COVID is also a core business at this point. But the uncertain part of the business, I mean, do you think you can guide in some way at some point which is more helpful?
David Denton
We will. We definitely will guide to ’23 and beyond. I think what’s important is the — you almost need to think about how is the company managing in the environment of which it’s dealt because I think we’re going to have to pivot and be effective and respond to what happens with the virus.
The virus is going to dictate how the market behaves in many respects. But we have to be very successful in that market and be ready to lean into and respond to different variants or different disease patterns or indications as they come about in the marketplace.
Mohit Bansal
Got it.
Christopher Stevo
Maybe if I can briefly add to that. I think one of the things that’s going to be important for us and for you when we think about moving forward into 2023 is seeing this first seasonal fall COVID season. Obviously, next year, we will likely have commercial markets in some countries, right? So it won’t exactly be the same, but just seeing how the first seasonal uptake looks like for vaccines and therapeutics will be very helpful to all of us.
Mohit Bansal
Got it. And do you expect 2023 to be more contract-driven or more hybrid? Or how do you think about it?
David Denton
Yes. It’s a really good question. We do expect that both the vaccine and PAXLOVID will become commercialized at some point in time around the globe. It’s hard to tell exactly when that might happen.
My current thinking is that, that may happen sometime in ’23, but it’s kind of uncertain. I think as we get closer to the end of ’22, we’ll at least have a better perspective and outlook on how that might behave. And we’ll share with investors our thinking from that perspective.
Mohit Bansal
Got it. Any PAXLOVID-related or COVID-related questions before I move on to — okay. Please go ahead.
Unidentified Analyst
Maybe just digging beyond COVID [indiscernible].
David Denton
Yes. I think a really good question. I think we do think there’s plenty of opportunities to leverage mRNA and other platforms. We have several studies underway to — and partnerships and collaborations that we’re undertaking to investigate that, particularly with BioNTech. We’re working specifically on influenza and working specifically on shingles as kind of 2 really near-term potential utilizations of that platform into our — into the Pfizer infrastructure.
Christopher Stevo
Yes. And then we certainly intend to explore in other vaccine opportunities beyond those. And then even beyond that, as Dave suggested, look at therapeutic opportunities, mRNA.
Mohit Bansal
Got it. Super helpful. Maybe moving on to the business development space right now. So you have been quite active so far. And I mean, with the recent GBT acquisition, we are probably at 40% of the targeted $25 billion goal roughly.
So how do you think about the pace of dealmaking going forward? And I’m sure it is a multiyear target, the $25 billion. So how do you think about that?
David Denton
Yes. A couple of things. One is I think if you look at our projections of trying to get to $25 billion of risk-adjusted revenue by 2023 — or 2030 rather, we’re probably about 1/3 of the way through that if you look at it just based on how revenues are going to peak across those time frames.
So I think we’ve made really nice progress. We are working very much with a sense of urgency, but we’re also working very much with a sense of discipline in the sense that, one, we want to make sure that as we invest our capital, we’re putting it to work in areas that we understand from a clinical perspective.
Secondly, we challenge ourselves from a risk-adjusted perspective like how much risk are we taking because nothing’s for certain, if you will, but we want to make sure that we do a thorough analysis to make sure we understand the — both the potential of the acquisitions we made but also the risk that we’re undertaking as we do these. And I think we’ve been very disciplined from that perspective.
And I think finally is you’re going to see us do likely a mix of business development activities in either — probably closer to the, I’ll say, the midsize to the smaller size. We’re going to take a portfolio approach as we deploy our capital into, I’ll say, external research and development, all again with this notion of improving shareholder value over time and ultimately hitting this $25 billion revenue target by 2030.
Mohit Bansal
Got it. Got it. So I mean, in terms of deal sizes, I mean, you have the cash to be deal-size agnostic at this point. And in terms of size, I mean, I think Biohaven was the biggest in recent history you have done. So I mean, you have been saying never say never, but I mean, how do you think about deal sizes? And is this the sweet spot, this $5 billion to $15 billion range?
David Denton
Yes, we are a little agnostic to size. I would say that I would never say never to a kind of a big transaction. But by the same token, that’s not probably a focus of ours. I’d say we’re probably in the Biohaven size space is probably, again, maybe the sweet spot, supplemented with what I would consider maybe smaller bolt-on acquisitions that are in lower value from a total size perspective versus Biohaven.
Mohit Bansal
Got it. Got it. And then some of the deals you have done were born out of collaboration, the Biohaven or Trillium. So I mean, is it like — is it how you operate in terms of you collaborate with these companies, and then you’d learn about — learn more and how they — and then what are the top of the mind collaboration [indiscernible]?
David Denton
Well, I think what’s interesting is that when I think about business development, it’s not just about acquisitions. This is about collaborations as well. So in those cases, some of those collaborations yielded — ultimately yielded an acquisition at the end. In many cases, we’re going to do collaborations that’s not going to yield in an acquisition, and it’s not — maybe not important for us to have a position in that space.
So I think we could be — this is about us deploying our capital in the most effective way possible and getting kind of, I’ll say, many shot goal, if you will, in the therapeutic areas that we choose to play in.
Christopher Stevo
Yes. And we really want to have value-creating opportunities for our partners and collaborators. So we want it to be a win-win situation for everyone.
Mohit Bansal
Got it. Got it. That is super helpful. Maybe — I would love to talk a little bit more about the Lightspeed program. And I think you have RSV in the Lightspeed program. Obviously, COVID drugs are all Lightspeed, and now the oral GLP-1 is also Lightspeed. So can you talk a little bit more about the framework? What’s the decision-making process behind Lightspeed and then — yes.
David Denton
Yes, I’ll even step back and say Lightspeed beyond a program, I would say, is a philosophy that we’re trying to adopt kind of across Pfizer. And this is really about taking what we learned through the COVID vaccine development process and saying, hey, we did that in a very condensed period of time. And we were successful because we were incredibly focused. We were really decisive on making decisions very rapidly and using the data and the science to drive where we head next. And I think what we’re trying to do is embed that culture throughout Pfizer in general.
Having said that, there’s a handful of programs that we think are really critical to us. And so we’ve designated specifically Lightspeed programs. And this just gets, I’ll say, management’s attention more rapidly on them and such that basically, on a weekly basis, we’re having an update on how we’re progressing, both from a science perspective but also a commercialization perspective and a market perspective. So I think this is just us getting more disciplined, more structure and process and more active management of these programs kind of day in and day out.
Mohit Bansal
Got it.
Christopher Stevo
Absolutely agree. I would say that every program can benefit from Lightspeed philosophy. But by the same token, not every program can be a Lightspeed program. We really want to focus our resources on where they can make the most impact.
Mohit Bansal
Got it. So I mean, let’s just talk about one of those programs, the oral GLP-1 program. I think the speed at which you’ve moved with the once-daily 1532 program was quite impressive because we just learned about it last year, and now we have data as well. So talk a little bit about what are the next steps there and how soon we could be moving into Phase IIb and how [indiscernible].
David Denton
And I think I’ll start, and Chris, add to this. I think what we’re doing in that space is really progressing 2 molecules and understanding the effectiveness of both of those molecules as — and we’re going to have the science dictate what the ultimate outcome is going to be. But at some point in time, we’re going to choose the molecule that is the most effective for the patients that we’re going to serve in this space and progress that into Phase III.
Mohit Bansal
Right.
Christopher Stevo
So as Dave said, we have 2 molecules, danuglipron, twice-daily oral and 1532, our new one, which is a once-daily oral. And we’re having data presented on both those molecules at EASD in Stockholm soon this month. And we’ll be starting Phase IIb trials for each of them soon. And then the results of those Phase IIbs will allow us to take one of them into Phase III.
So given that we have 2 very good molecules, we want to take the best one forward with the best dose and the best titration to really make the Phase III as fast as possible.
Mohit Bansal
Got it. All right. No, that’s super helpful. Maybe if we can talk a little bit about the RSV. So how do you view the data? And there has been a lot of talk about, I mean, versus competitor, how the data look and the safety aspect of it. So how are you internally thinking about the RSV data you generated and the potential there?
David Denton
Yes. Well, a couple of things. Again, I’ll start, and Chris, he’ll opine on it. We’re actually working really on kind of 2 programs, if you will, from an RSV perspective in the pipeline. One is RSV for adult that actually has breakthrough designation at this point in time and RSV for maternal to protect infants in the first months of life from the RSV condition.
I think we’re very optimistic about how we’re progressing here from that standpoint. And maybe, Chris, I’ll let you opine on that.
Christopher Stevo
So the older adult RSV data that we just got recently, I would say internally and objectively, it’s nothing less than extraordinary, right? We showed extremely strong data. And just like with COVID, with COMIRNATY and with PAXLOVID, what we saw is that the goal of a vaccine is not necessarily sterilizing immunity, rather the goal is to prevent the worst outcomes, hospitalization, death and things like that, right?
So with that 86% efficacy that we showed in the more symptomatic patients with the 3-plus symptoms, that’s going to be a really, really game-changing vaccine in older adults if it’s approved, which we don’t have any doubt it will, just to be clear. And then we’re waiting for the maternal data to come out in the near future as well. Very hopeful of those. And again, if approved, we’re very excited to be able to get both to market.
And then on top of that, we have the RSV antivirals that we have from ReViral. So we’re excited to see those develop. And just like we did with COMIRNATY and PAXLOVID to have both treatment and prevention together to have the same for RSV.
And then in the new commercial organization that we created for primary care to really be able to push these platforms to their maximum potential. So building on what’s already the #1 primary care sales force in the U.S., adding in vaccines, adding in the antivirals, we’re very excited about that.
David Denton
I think what’s interesting, what Chris just said, and I don’t want this to get lost, is we’ve actually kind of reorganized a little bit within biopharma within Pfizer really with the fact that now COVID is an ongoing program within Pfizer. It’s not really standalone anymore. It’s becoming core. And so now we’ve reorganized ourselves such that we can maximize our commercialization of these efforts across all the platforms, whether it be hospital, primary care or oncology, really putting our assets more and our field force more aligned to these programs.
Mohit Bansal
Got it. That is super helpful. And then, I mean, talking about field force, I mean, let’s just go back to the GBT and Biohaven acquisitions again. With Biohaven, you planned to use your primary care sales force. And so, I mean, talk a little bit more about what you can add because the launch has been going pretty well, so what you can add as Pfizer, which can — which attracted you towards that particular…
David Denton
Yes. Well, I think you hit the nail on the head a little bit. We look at NURTEC in the Biohaven acquisition as a primary care asset. I think some people think about it as being neurological. I don’t — we don’t look at it that way.
We really can leverage our really strength in the primary care market to improve performance of that medicine across both the U.S. and across the globe. So we’re excited about where we stand. Yes, I think NURTEC is going well under Biohaven. So I think we can improve that performance over time with our field staff, field force.
Mohit Bansal
Got it. And I have one question from — in my e-mail, which is regarding GBT. It seems like from the press release as well, a big part this was 601 as well. You’re confident with 601. So could you talk a little bit more about that and the data that we have seen so far?
David Denton
Yes. Maybe I’ll start. Obviously, they have a product in the market that’s been successful. 601 is a product that we’re optimistic about. But it’s pretty early in its stage from a development standpoint.
I think it’s been tested in just a handful of patients at this point in time with the results although that — just a handful of patients look very promising. And I think we, based on work that we’ve done historically at Pfizer, have spent a lot of time from a science perspective and feel good that the fundamentals around that molecule are solid. But we’ll continue to progress the molecule. We think it’s going to be successful, but time will tell on it. I don’t know.
Christopher Stevo
Yes. We’ve talked about this before in general, right? One of our real strengths at Pfizer is we are very strong at translational medicine, very strong at structural chemistry and rational design, right? And we’ve been developing our own polymerization inhibitor in-house as well. I’m not sure if you’re aware of that.
So we understood the chemistry of these molecules very well. And in our due diligence, obviously, we looked at Oxbryta’s chemistry, and we looked at 601’s chemistry, and yes, the clinical data are relatively limited. That’s fair. But there’s a lot that we could do to get comfortable with the risks here being reasonable.
Mohit Bansal
Got it. Another question is regarding the launches you have upcoming in 2023 and beyond. You have talked about in the next 18 months, you’ll have many launches. So could you talk a little bit about what you are most excited about? And how do you think about next 2 years for Pfizer outside of the COVID business?
David Denton
Yes. Well, I think as I — we started out this conversation today, if you look over the next 18 months, we have probably the largest pipeline of launches that the company has seen probably in really 15 to 20 years at this point in time.
And so I think partly of why we reorganized a little bit in biopharma is to make sure that we can appropriately staff and focus ourselves to be successful in these launches. And I would say there’s kind of all hands on deck to make sure that we’re successful in that space. There’s not a day that goes by that we’re not focused on it.
I do think we’ve talked about this before, we’re excited about ultimately approval of RSV. We think there’s a big opportunity from a revenue generation perspective and a patient unmet need in that product in those categories.
Prevnar 20, I think you’ve heard the data on that, really exciting opportunity for us. Elranatamab, if I can say that correctly, is also, I think, a big opportunity for us in multiple melanoma space. We’re optimistic about that product. Those are just a couple of 3 areas that I think we feel good about, and we’re focused,
Christopher Stevo
Maybe if I can just add a couple of things there. When Dave talked about those 14 or 15 products that we’re going to be launching in the next year to 1.5 years, I think some people might think, well, that was all because of BD, right, because Pfizer doesn’t have discovery and development capabilities internally. But if you look at that list, you would see that probably the majority of them actually came from Pfizer in-house discovered and developed drugs.
Mohit Bansal
Got it. Got it. One question I wanted to ask you because, I mean, I’m sure at CVS, you have seen Pfizer from afar, right? So what — so I mean, drug development and science is one thing, but a business as well.
David Denton
That’s right.
Mohit Bansal
So how do you think about the pricing dynamic at this point? And real innovation will be priced appropriately at this point, but I mean, what is the bar for success now and how things have changed now and what you bring to the table?
David Denton
Yes. Yes. Well, listen, I think as maybe Chris has indicated, Pfizer is on the leading edge of a lot of development from a new drug perspective. And from a pricing dynamics perspective, the market will dictate pricing to some degree, but the sense that we’re adding a lot of value into the marketplace.
I think as you well know, prescription medications is the most cost-effective way to treat health care in general. And I think Pfizer and other pharma companies create a lot of value in the health care system by bringing these medicines to market.
Having said that, we — I understand the PBM dynamics and understanding access into formularies and making sure that we have appropriate access. And we’ll continue to work with the payers in the marketplace to make sure that, one, we can get access into the formularies, but importantly, reach patients who really need these medications.
And I think it’s really critical for us to come up with ways that we can create value for ourselves, the health care system and importantly, the patient and the patient’s family. I think there’s a lot of different ways in which we can contract into these spaces and partner in these spaces that can create value for everyone in the space.
Christopher Stevo
And Dave is very modest so he wouldn’t say this, but I’ll say this. He was instrumental in creating the transformation in the health care system, right, putting together a pharmacy with a PBM and then with an insurer, right? So the whole philosophy of pricing in the U.S. has changed, right?
The model was giving the greatest discount, and it was getting the lowest ingredient price. And now when you have all those elements combined, it’s all about what’s giving the best and lowest total cost of care. So there’s a lot of ways, as Dave said, that we can create value in that system.
David Denton
And I think what you’re seeing, you’ve seen this in the marketplace really on the payer side, you’re seeing a combination of the pharmacy benefit and the medical benefit kind of coming together under kind of one corporate entity. And so the idea here is how do you create value in totality, not just on the — in some cases, spending more in pharmacy actually creates value across the total platform if done correctly. And I think you’re seeing that dialogue become an important discussion in the health care space.
Mohit Bansal
Do you have any question?
Unidentified Analyst
Question around [indiscernible] digital. So if you think about this ramping up [indiscernible] like the global field force is going to kind of grow in aggregate or [indiscernible]. And then, I guess, same question on the R&D side is like CROs are just getting more [indiscernible].
David Denton
Yes. The answer — the short answer to both of those is yes. We’re using digital from a commercialization standpoint very aggressively. We actually have a very major initiative that’s been underway for now a couple of years that’s being rolled out across the globe to really, I’d say, digitize, you will — our engagement, if you will, with our health care professionals around the globe.
And what’s nice about that is it actually enables us to have more of a physician-to-physician conversation because we can do that digitally and leverage that resource across multiple markets, if you will. And then certainly, on the R&D space, we’re using AI tools and simulations from a data perspective very aggressively at this point in time.
Actually have a couple of collaborations with leading firms in this space to really enable us and inform us of how science might play out but using kind of the digital platform to very rapidly accelerate development. And we actually use much of that as we thought about the development of the COVID vaccine.
Christopher Stevo
And another big part we’re using it is even on the back end after drugs come to market. A big part of what we did with COVID was real-world evidence partnerships in Israel, in Europe and in the U.S., and that’s something we’re going to try to implement those types of tools more and more. They’re very helpful.
Mohit Bansal
Great. With that, thank you very much for joining us today. I really appreciate it.
David Denton
Thank you very much.
Christopher Stevo
Thank you.
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