Pfizer (PFE) Q3 2020 Earnings Call Transcript

Speaker 1: (00:01) Good day everyone, and welcome to Pfizer's Third Quarter 2020 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Chuck Triano, Senior Vice President of Investor Relations. Go ahead, sir. Chuck Triano: (00:18) Thank you, operator. Good morning and thanks for joining us today to review Pfizer's third quarter 2020 financial results, our updated 2020 financial guidance, Pfizer's role in helping find solutions for the COVID-19 pandemic as well as other relevant business topics. I'm joined today, as usual. by our Chairman and CEO, Dr. Albert Bourla; Frank D'Amelio, our CFO; Mikael Dolsten, our Chief Scientific Officer and President of Worldwide Research Development and Medical; Angela Hwang, Group President, Pfizer Biopharmaceuticals Group; John Young, our Chief Business Officer; and Doug Lankler, our General Counsel. The slides that will be presented during the call were posted to our website earlier this morning and are available at pfizer.com/investors. You'll see here on Slide 3, our disclaimer regarding forward-looking statements we will make during the call regarding, among other topics, our anticipated future operating and financial performance, business plans, and prospects and expectations for our product pipeline and in-line products, which of course are subject to risks and uncertainties as well as the use of non-GAAP financial information. Additional information regarding these forward-looking statements and our non-GAAP financial measures is available in our earnings release, including under the disclosure notice section and under risk factors in our SEC reports 10-K and 10-Q. Forward-looking statements on this call speak only as of the original date of this call and we undertake no obligation to update or revise any of these statements. Albert and Frank will now make prepared remarks and then we'll move to Q&A session. With that, I'll now turn the call over to Albert Bourla. Albert? Albert Bourla: (02:15) Thank you, Chuck, and good morning everyone. Great day here in New York. During my remarks, I will discuss our strong third quarter business performance, speak to the progress we are making in the battle against COVID-19, provide an update on our pipeline and how it is setting us up for an anticipated period of sustained growth and briefly touch on the topic of affordable access to innovative medicines and vaccines. Albert Bourla: (02:44) Let's start with an update on our biopharmaceutical group. For the quarter, revenues in our biopharma business grew 4% operationally, driven primarily by the ongoing strong performance of Vyndaqel/Vyndamax, growth from our leading portfolio of biosimilars and the continued strength of key brands including, ELIQUIS, IBRANCE, XELJANZ, Inlyta and Xtandi. These results include an estimated unfavorable impact of approximately $400 million or 4% due to COVID-19. Year-to-date through three quarters, the biopharma business grew revenues by 7% operationally, which includes an estimated unfavorable impact of approximately $600 million or 2% due to COVID-19. Our global oncology business was particularly strong, up 18% operationally, compared to the year ago quarter. Global IBRANCE revenues increased 6% operational to approximately $1.4 billion in the quarter. In the US, IBRANCE revenues grew 9% in the quarter and IBRANCE continues to be a leader in the CDK 4/6 inhibitor class for metastatic breast cancer. In fact, more than eight out of 10 patients in the US who are described as CDK 4/6 inhibitor receive IBRANCE. This should serve as a testament to the continued benefit it delivers to patients as well as its overall clinical profile. Albert Bourla: (04:32) The international markets deliver robust 26% volume growth in the quarter. The volume growth was offset by price reductions in certain EU markets, which resulted in 1% operational revenue growth outside the US. The price reductions occurred last year as a result of the renegotiation of long-term agreements, and we expect the impact will continue through to the fourth quarter of 2020 where the price changes annualize. While we were disappointed by the outcomes of the PALLAS and PENELOPE-B trials, for the new combination therapies, we remain confident in IBRANCE's strong positioning and expected future performance for the currently approved treatment of metastatic breast cancer. This confidence is driven by data in HR+ HER2-negative metastatic breast cancer. IBRANCE is supported by an extensive body of evidence, including strong clinical data, evidence from re-award analysis, over five years of use in everyday clinical practice, as well as by continued positive patient and physician experiences. Albert Bourla: (05:54) For Xtandi alliance, revenues in the US were up 18% for the quarter and when combined with our royalty income on ex-US sales, total $374 million. Growth in the US was driven by a continued increase in utilization in the metastatic and non-metastatic castration-resistant and metastatic castration-sensitive prostate cancer indications. Xtandi continues to lead in new patient starts across all approved indications, which tends to be a very good leading indicator of future performance. Global Inlyta revenues increased 41% operationally to $195 million during the quarter. In the US, Inlyta performance was driven by the strong uptake following last year's FDA approvals for two immune checkpoint inhibitors in combination with Inlyta for first-line treatment of patients with advanced renal cell carcinoma. The international markets also contributed to the performance of Inlyta, with 55% operational growth. Albert Bourla: (07:11) Now turning to certain key products from our other therapeutic categories. ELIQUIS has continued to deliver strong performance. Pfizer's 50% share of the global alliance revenues, including direct sales markets, was up 9% operationally to $1. 1 billion in the third quarter. In the US, strong volume growth was partially offset by a lower net price, due to an increased number of lives in the Medicare coverage gap and the expansion of that gap as well as unfavorable channel mix. Vyndaqel and Vyndamax continued their very strong performance. Our disease awareness efforts helped drive the estimated diagnosis rates to more than 17% in the quarter, when compared with only 1% to 2% prior to launch. Albert Bourla: (08:09) At the end of the quarter, more than 17,500 patients have been diagnosed, more than 12,000 patients have been received a prescription, and more than 7,300 patients have received the drug. For the quarter, we estimate the average number of patients in the US taking Vyndaqel was approximately 7,000. These numbers include patients who are receiving the drug at no cost through our patient assistance programs. I would also point out that in Q3, we've begun to see a rebound from the slowdown in new diagnosis that we had expected and so in Q2 due to stay-at-home orders, and we will continue to monitor. Global XELJANZ revenues were up 10% operationally in the quarter to $654 million, primarily driven by 6% growth in the US and 18% operational growth in international developed markets. The underlying prescription demand in the US grew 13% compared with the third quarter of 2019. We have invested in formulary access in the US, which has played a vital role in enabling this volume growth. Revenues from our global biosimilars portfolio grew 18% operationally to $424 million. This was driven primarily by our oncology biosimilars, which generated revenue of $261 million. Albert Bourla: (09:58) Global Prevnar 13 revenues were down 3% operationally to $1.5 billion. Revenues outside the US, grew 14% operationally driven primarily by increased adult uptake in certain international markets, resulting from greater vaccine awareness arising from the COVID-19 pandemic, although we should note that Prevnar 13 is indicated for the prevention of pneumonia resulting from pneumococcal bacteria not SARS-CoV- 2, as well as continued strong pediatric uptake in China. In the US revenues were down 14%, primarily reflecting timing of government ordering patterns compared with last year, and the impact of a shared clinical decision-making adult recommendation, meaning the decision to vaccinate should be made at the individual level between health care providers and their patients. All of this was partially offset by the recovery of a portion of missed doses from same quarter. Albert Bourla: (11:07) Now a few words about Upjohn. Upjohn revenues totaled $1.9 billion in the quarter, down 18% operationally. The decline that was expected, was driven primarily by three factors that we had anticipated: the significant volume declines for Lyrica in the US, due to multi-source generic competition, that began in July of 2019; lower revenues for Lipitor and Norvasc in China, due to the impact of the volume based procurement program which was initially implemented in March 2019 and expanded nationwide in December of 2019; and lower volume for Celebrex in Japan, resulting from generic competition, which began in June of 2020. We continue to expect the closing of the Upjohn transaction with Mylan to occur this quarter. Albert Bourla: (12:07) Now I will turn to our R&D pipeline, beginning with an update on our COVID-19 related efforts. The global Phase 3 study for our mRNA vaccine candidate that we are developing with our partner, BioNTech, is ongoing at approximately 150 clinical sites around the world, including the United States, Germany, Turkey, Brazil, South Africa and Argentina. Today, the trial has enrolled more than 42,000 participants, with nearly 36,000 of them having received the second dose. We expanded our industrial planned enrollment in the study from 30,000 people to approximately 44,000 people. This has allowed us to include additional populations in our study, including people as young as 12 years old and people with chronic stable HIV, hepatitis C and hepatitis B. As we reiterated in an open letter, we may know whether or not the vaccine demonstrates efficacy soon. In case of a conclusive result, positive or negative, we will inform the public as soon as we complete the necessary administrative work which we estimate to be completed within one week from the time we know. I can start today, but the Data Monitoring Committee has not been unblinded to efficacy date, nor as it conducted any interim efficacy analysis today. But I want to be clear that after today's earnings call, we do not intend to speak publicly about interim analysis until we have a conclusive readout from the Data Monitoring Committee. Albert Bourla: (14:12) For emergency use authorization in the US for the potential COVID-19 vaccine, FDA is requiring that company's provide two months of safety data on half of the trial participants following the final dose of the vaccine. Based on our current trial enrollment and dosing pace, we estimate we will reach this milestone in the third week of November. And finally, Pfizer has been investing at risk since the early days of the pandemic, in an effort to perfect our manufacturing processes and rapidly build up capacity. We expect to have our manufacturing data ready for submission before the safety milestone is reached. So assuming positive data, Pfizer will apply for emergency use authorization in the US soon after the safety milestone is achieved, which we expect to be in the third week of November. Regarding our anti-viral candidate, we believe this is potential first-in-class protease inhibitor may give us the opportunity to demonstrate meaningful antiviral activity to help treat COVID-19 patients. We initiated a Phase 1B study in September, and we are planning a pivotal Phase 2/3 study start in late 2020, early 2021 with the hopes of submitting for approval in the second half of 2021. Albert Bourla: (15:52) Now, let's look at some highlights from the rest of the pipeline, which continues to be one of Pfizer's great strengths. During our virtual Investor Day event in September, we presented data from our Phase 1B Duchenne Muscular Dystrophy gene therapy program. Since our updates at Investor Day, we had dosed an additional boy at the high dose bringing us to a total of 16 treated with a high dose and 19 boys treated overall. Importantly no serious adverse events were observed among the 10 additional boys who were treated using a modified immunomodulatory regimen and monitoring regimen. Additionally, on October 1, we received Fast Track designation from the FDA for this program. We plan to begin dosing participants in our Phase 3 clinical study before the end. Albert Bourla: (16:57) On October 7, we, along with our partner Sangamo, issued a joint press release to announce that we have dosed the first participant in the Phase 3 AFFINE study of SB-525, which is an investigational gene therapy for Hemophilia A patients. The primary endpoint is impact on annual bleed rate through 12 months following treatment compared with Factor VIII replacement therapy collected in the Phase 3 leading study period. On October 8, we issued a press release with our partner OPKO announcing that our Phase 3 randomized, multicenter, open-label, crossover study evaluating Somatrogon dosed once weekly in children 3 to less than 18 years of age with growth hormone deficiency met its primary endpoint of improved treatment burden, compared to Genotropin for injection administered once daily. No serious adverse events were reported. We plan to file our biologics license complication with the FDA this quarter. Albert Bourla: (18:19) Our next generation CDK inhibitor programs built on our IBRANCE leadership and our deep knowledge of metastatic breast cancer. Our CDK4-selective inhibitor has been shown pre-clinically to target CDK4 with more than 10 times the potency of IBRANCE and without the neutropenia sometimes seen with CDK6 inhibitors. This improved therapeutic index may provide more opportunity for potential save combination test in breast and other cancer types. Our CDK2-selective inhibitor has been shown in preclinical models to combine with IBRANCE to prevent or overcome resistance in HR-positive breast cancer, and has the potential to drive efficacy in a variety of tumors, including CDK2 activation, especially in combination with standard of care first. Because of these preclinical results, we have started dosing patients in Phase 1 study for these two programs for both. Our BCMA/CD3 bispecific monoclonal antibody generated Phase 1 data supporting a strong clinical signal of efficacy with very high response rate in heavily pretreated multiple myeloma patients. We plan to soon expand the program into a pivotal study and multiple clinical drug combination projects. Albert Bourla: (20:04) Our new drug application for Abrocitinib, for the treatment of moderate to severe atopic dermatitis in patients aged 12 years old and up has been accepted by the FDA with a priority review PDUFA date in April of 2021. Additionally, the European Medicines Agency has validated for review of the marketing authorization application. Our Phase 3 clinical trial program has shown that Abrocitinib demonstrated statistically superior improvements in skin clearance, disease extent and severity as well as improvements in itch versus placebo. Albert Bourla: (20:51) Lastly, our partner Valneva announced positive initial results for its second Phase 2 study of Lyme disease vaccine candidate VLA15. Compared with the first study, which had a dose schedule of months zero, one and two, this study investigated the vaccination schedule of three months, zero, two and six based on matching doses. The VLA15 vaccine candidate displayed an encouraging immune response profile with zero conversion rates of greater than 90%, including in older adults and the serum bactericidal assay demonstrated antibodies were induced against all studied serotypes. VLA15 was found to be generally well-tolerated across all doses and age groups tested and the tolerability profile including fever rates were comparable to other lipidated recombinant vaccines or lipid containing formulations. Most important, no related serious adverse events were observed in any treatment group. Given these two positive Phase 2 studies, we feel increasingly confident about this line vaccine candidate and are eagerly awaiting the final Phase 2 study to define Phase 3 dosing regimen, followed by an expected pivotal event study. As you know, following the expected closing of the Upjohn-Mylan transaction, Pfizer will be a smaller but focused and innovative biopharma company. Following the Upjohn separation, we expect a five year revenue CAGR of at least 6% on a risk adjusted basis and continued growth beyond that time frame from the next wave of our patent protected portfolio. Our adjusted EPS during that same five year period is expected to grow approximately ... Albert Bourla: (23:03) During that same five-year period is expected to grow approximately 10%. I would remind you that these projections exclude any potential impact from our COVID vaccine and antiviral programs. We believe that during our investor day, we provided a clear path to these growth projects. In fact, we indicated, that by 2025, we need only about 40% of our non-prescribes [inaudible 00:23:32] projected pipeline revenue to achieve the expected 6% five-year CAGR. So we believe we have a very good, safe margin of error. Abrocitinib is the one potential near term compound where we see the biggest difference compared with consents. We see a procedure name and docs in general, serving to increase the number of patients treated, and that this is not a zero sum game with the biologics in the treatment of moderate to severe atopic dermatitis. Lastly, we are finalizing our enabling functions review and related actions, and to expect the anticipated financial benefits from these actions to begin, being realized in 2021. Albert Bourla: (24:27) Before I close, I want to say a few words about affordability. As we have said in the past, our breakthrough medicines and vaccines won't do anyone any good if people can't affordably access them. We are committed to working with both parties in Washington to put patients first. That means prioritizing policies that take aim at better aligning insurance design with patient needs, like reforming Medicare part B, to create an out of pocket cup, and ensuring that the rebates are passed on to patients, instead of being kept by the middleman. Regardless of what happens in November, we will be ready to take a seat at the table and play a constructive role in shaping the debate for the benefit of a patient. Now, I will turn it over to Frank. Frank: (25:29) Thanks Albert. Good day, everyone. I know you've seen our release. So let me provide a few highlights regarding the quarterly financials. Our biopharma business, which will become New Pfizer, following the close of the Upjohn transaction, generated $10.2 billion in revenue for the quarter, which represented 84% of total company revenue. On an operational basis, biopharma revenue grew 4% in the quarter, and 7% for the first nine months of the year. The 7% year to date revenue growth for biopharma was driven by continued solid volume growth. And our price to volume mix was a 9% increase in volume and a 2% negative impact from price. For Upjohn, although the year over year comparison is skewed again by the impact of generic Lyrica and changes in the China market, the business continues to perform in line with our expectations, and assumptions already reflected in our Upjohn guidance for the year. Frank: (26:27) Now, moving down the income statement. I'll touch quickly on gross margin, which saw a slight negative impact during the quarter, mainly driven by lower sales from Lyrica, Celebrex, Liberatory Norvasc, which are all part of our Upjohn business, as well as some incremental costs due to COVID-19. There was some offset to this impact due to low inventory write-offs compared to the year ago quarter. We had another quarter where we saw a significant year-over-year decline, and adjusted as SINA expenses, which were down 10% operationally. There are two obvious factors at work here: the exclusion of consumer health expenses and lowest selling expenses due to COVID, but also a third factor, which is a planned reduction in spending associated with our corporate enabling functions. We're in the midst of aligning those functions to the new Pfizer structure, which will be a smaller and less complex organization. Frank: (27:24) We are finalizing this initiative and we'll be able to better quantify the expected financial benefit when we provide our 2021 financial guidance for New Pfizer. Reported diluted EPS for the quarter was down significantly compared to the year ago quarter, mainly driven by the non recurrence of a one-time gain from the consumer joint venture formation in the year ago quarter. And adjusted diluted EPS was down 3% compared to the prior year quarter, excluding the 2 cents negative impact of foreign exchange rates in the period. Adjusted diluted EPS was a penny lower compared to the prior year. Foreign exchange also negatively impacted revenues in the quarter by about $100 million, or 1%. Consistent with last quarter, we are providing three sets of financial guidance. Frank: (28:13) A few points here regarding our assumptions. The guidance continues to only include the at-risk spending on our COVID vaccine candidate, but does not include any potential revenue we may receive this year if the vaccine is authorized and we deliver doses to various governments where we have agreements. In terms of our broader COVID related assumptions, we expect the gradual recovery in healthcare activity for the remainder of the year. I'd also note that upon the closing of the Upjohn transaction, we will treat the Upjohn business as a discontinued operation. So assuming the completion of the Upjohn transaction before December 31st, the financial guidance we are providing will not be aligned with the ultimate numbers we print for the year. I'll start by saying, there were no changes made to either the New Pfizer up Upjohn 2020 guidance factories, and only slight refinements to total company guidance. For total company, we are tightening our guidance range for revenues, which results in a small decrease in our mid point. And this is mainly a factor of reducing the top end of the range, as opposed to a change in our forecast. Cost as a percentage of revenue is slightly increased, mainly due to COVID related costs. While the SINA range is lowered a bit at the mid point, mainly COVID and enabling function driven. And R&D increases slightly, mainly due to additional COVID program spending. This nets out to a slight increase in the midpoint of our adjusted diluted EPS range. Frank: (29:47) Moving on to financial guidance for new Pfizer and Upjohn, which is shown here. As I referenced, we are not making any changes to either New Pfizer or to Upjohn. Moving on to the key takeaways. In the third quarter, our company performed well, driven by strong revenue growth from our biopharma business. We narrowed ranges for our 2020 total company guidance for revenues, cost of sales, SINA, R&D, and adjusted diluted EPS. And we reaffirmed our existing guidance components, for both New Pfizer ended Upjohn. We also achieve multiple product and pipeline milestones since our last quarterly update, some of which are listed here. A more complete listing can be found in this morning's press release. Finally, we paid 6.3 billion to our shareholders in the first nine months of this year. As always, we remain committed to delivering attractive shareholder returns in 2020 and beyond. Now I'll turn it back over to Chuck. Chuck Triano: (30:46) Great. Thank you, Frank and Albert for the prepared remarks. So time now to start our Q&A session. And operator, can I ask you to please pull for the questions? Operator: (30:55) Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypads. Your first question comes from the line of Ooma Rafot from Evercore. Ooma Rafot: (31:08) Hi guys. Thanks so much for taking my question. I know there's a ton of questions that everyone has, but let me just ask, one, Albert for all the generalist investors listening in, which I think all the specialists understand, but can you just remind everyone how a blinded trial works and how you guys don't have any visibility on where the trial is tracking, for the generalist? Ooma Rafot: (31:29) But let me get to my question now. In your trial, the definition of positive COVID revolves around one general symptom and one positive PCR. However, the general symptoms could be very broad. So I guess my question is the fact that there wasn't any sterilizing immunity in the non-human primates, isn't it reasonable to assume that we could see some positive PCRs on vaccine, even though there's a good amount of neutralizing titers? And if you could remind us, what's the cycle threshold for PCR you're using? Thank you very much. Albert Bourla: (32:00) Thank you, Ooma. And I will ask Michael to comment on that. Just a couple of words before. Usually, the people of a study needs to be blinded. So nobody knows if has received the vaccine, or the placebo, that includes the doctor or the nurse that administer the vaccine, or the patient who is receiving it. And of course, all are going to the database, so that is locked with a code. So no one can has access from the Pfizer, except a very small team that it is protected with Chinese walls. And of course, the DMC is receiving, periodically, information unblinded, but they didn't start yet. So the data monitoring committee is composed by independent experts. But they haven't seen any unblinded data yet, and they haven't performed any internal analysis yet. And with that, we'll ask Michael to speak a little bit about the specific technical question. Michael: (33:13) Yeah. Thank you for the question. So Ooma, we have, as you know, two primary endpoints. First relates to the impact of the naive patients to the first infection, and the second one relates to the same, but also adding re-infection in those that were previously infected with the SARS-CoV-2. We use PCR machines on a commercial platform that we have thoroughly validated and feel very comfortable with, and use established criteria for positive cases. The central read in our large laboratory is the crucial one here. We are also able, at the end of this study, to look at the patient that did not develop symptoms, since, as you said, we are particularly focused on illness cases. So we use a serology test for the nucleocapsid protein that allows us also to look at impact at the end of the trial for patients that were symptomatic. The symptom [inaudible 00:34:25] scale that we use was established in consultation with many KOL and FDA, but we also have secondary endpoint that uses CDCs symptom scale. So I think, hopefully, that covered many aspects of your question. Chuck Triano: (34:42) Thank you, Michael. How can we move to our next question please, operator? Operator: (34:50) The next question comes from the line of Vamil Vaughn, from Mizuho. Vamil Vaughn: (34:55) Great. Thanks for taking my question. So if you've won [inaudible 00:35:01] back on COVID-19 vaccine, Eliquis has centered their commentary around the net price being lower due to the coverage gap and also the channel mix. I'm wondering if you can maybe just sort of quantify that a little bit more for us, and maybe any sort of sense of how we should think about the pricing dynamic for that product going forward, since it is obviously an important product for you guys? And then on the COVID-19 vaccine, Albert, appreciate your comments today around communicating when you have to include some information. I think one thing that's just sort of been a little bit confusing, and maybe you're trying to address that now is, the [inaudible 00:35:36] that you'll have conclusive results on an interim analysis. And so maybe can you just sort of talk to that, or maybe Michael, comment on sort of the confidence you have that an interim analysis in this trial should be sufficient to show conclusive efficacy, as opposed to waiting for the final result. Thank you. Albert Bourla: (35:53) Yep. Thank you. I will ask Angela to speak about the Eliquis. Let me take, first, a little bit of this COVID- 19. Look, we are cautiously optimistic that we will have results, and possibly in the interim analysis. You never know before you have the final analysis. This cautious optimism is coming from the very strong immunogenicity data that we have, very strong neutralizing titles, and very strong T-cell response, including city A, which is one of the important. But as I said, you never know until you have a study readout. And we have a race the last mile here, right? So we expect that these things will start coming soon. So let's all have the patience that is required or something so important for public health and global economy. And with that, I will ask Angela to comment on Eliquis. Angela: (36:55) So thanks for the question. So this gross to net adjustment is clearly a key feature of Eliquis because of the large number of Medicare patients that we have. And that every year, not only are there a different number, or an increasing number, of Medicare patients, but also they are changes in the coverage gap. And as we mentioned, the key change this time is the length of time that patients are in this catastrophic coverage gap, which is longer in Q3 of 2020 compared to Q3 of 2019, by about 25%. And this is sort of the level of impact that we saw this year. And so obviously, this increases our expense and is the reason for the unfavorable impact. But hopefully, that gives you some sense of what happened between Q3 of this year and Q3 of last year. Thank you. Albert Bourla: (37:47) All right, thanks Angela and Albert. Operator, let's move to the next question please. Operator: (37:54) The next question is from Greg Gilbert from Truist. Greg Gilbert: (37:56) Hi, thanks for the question. First, Albert, you noted that there's still that gap on abrocitinib versus street estimates and what the company sees. I was hoping you could provide a little more detail behind your bullish view beyond what you offered on the call about it not being a zero sum game. And the second part of my question is, Albert, you've expressed a lot of confidence in Pfizer's ability to hit that revenue CAGR, and you did so again today, without COVID and without deals, but how focused are you and the team on bringing in assets to buttress that growth and or add growth drivers that come later in the decade? Thanks. Albert Bourla: (38:35) Oh, thank you very much. So I will answer the second part and then I will ask Angela, actually, to walk us through the abrocitinib projections that we are having. We are very confident on the 6% CAGR, and I think we have broke it down to what we believe will take to reach there. Right now, if you take the middle ponder for guidance with 41.6 billions, we will need 14 additional billions by 2025 to achieve a 6% growth. We believe 8 billion dollars are projected to come from our inline portfolio, and we put that during our earnings release. So what that means, we are having six billions that need to come from our current pipeline, based on our projections on the revenue. This requires only 40% adjustment, so six of the 15 billions, but we are expecting to have non-risk adjustment in that year. Albert Bourla: (39:38) There's a very good safety margin. That being said, also we generate a lot of cash, and we want to invest this cash. And right now, our business developing strategy, it is to invest in something that we believe can generate significant value for the shareholders holders. And this is to our R&D machine, an R&D machine that has completely turned around its productivity, and right now, it's having industry leading metrics in the multiple fronts. So our business development will be invested in phase two, phase three ready programs, that could become medicines in the period, '23, '24, '25, '26. And those will, from one hand, can enhance their 6% growth, but even more importantly, will allow us to maintain and sustain this growth beyond 2026. So with that clarification, and thank you very much, Greg, for the question, I would like to ask Angela to just speak a little bit about abrocitinib. Angela: (40:49) Thank you, Albert, and thanks for the question and giving us the opportunity to follow up since our discussion during R&D day. We are really excited about this opportunity and we're enthusiastic about it because it is a condition that has a large number of patients, a significant unmet need, and both of these things is what we believe drives the size of opportunity for abro. So let me unpack that a little bit. First of all, there are significant number of AD sufferers. Globally, they are 60 million AD suffers, age 12 and up, and 27 billion of those are in the US. And just for a bit of context. That is 10 times the number of RA suffers today. Of those 60 million, only 7% of them today are being treated with a systemic agent. And so this systemic market opportunity has the real potential to more than double with the introduction of better systemic treatment, because the patient need is just so high. Angela: (41:50) And let me just also put that in context with a market that we know very well today, which is psoriasis. The market was systemic in psoriasis doubled over the last 10 years with the introduction of that bond systemic biologics, and also, more recently, the IL inhibitors. So we step back and take a look at those numbers, even at a modest 1% share of the 60 million patient population, or if you think about the future systemic market, all I need is 8% of that systemic market for abro to reach a $3 billion revenue at peak. And so when you think about all of that, and think about the advanced systemic markets that are also in place today, of which there is just one, and 60% of those patients who are on this product on not reaching clear, or almost clear, skin at 16 weeks, it demonstrates that there really is a lot of room for additional systemic options. Angela: (42:51) So to Albert's point earlier about the fact that this is not a zero sum game, we don't see the opportunity for abro as only being about gaining market share from competitors. Actually, the way we see it is that it is an opportunity to grow the advanced systemic market through the introduction of excellent treatment options. And we believe that the differentiated profile that abro has will allow us to be a leader in this growing market. And also don't forget, market development and creating new markets is a real sweet spot for Pfizer. So we are very excited about the launch and look forward to bringing this important medicine to the market. Thank you. Chuck Triano: (43:33) Thanks, Angela. And Greg, yeah, just one comment on your second question about the deals. Reminder that Valneva, in the Lyme disease vaccine area, is going well. Rick's deal we just announced in the antibiotic segment. So clearly Pfizer is still going to remain active in bringing in assets that can help bolster the long-term revenue growth of the company there. With that, let's take our next question please, operator. Operator: (44:01) Your next question comes from the line of Terrence Flynn from Goldman Sachs. Terrence Flynn: (44:06) Hi. Thanks for taking the question and thanks again for all the work on the COVID treatment and vaccine front. I know you can't provide a lot of commentary, but I think what people are trying to understand is just if there've been any changes to the mandate of the DMC with respect to some of the new FDA guidance. So regarding the timing of the interim efficacy analysis. So essentially, is the DMC mandated now to wait for either a certain number of severe cases that have to happen, or two months of safety follow-up data, to kind of, at that point, take a look at the efficacy basis? Because I think you guys have been pretty confident about reporting data by the end of October. And so just trying to understand kind of the timing of the analysis and maybe any new inputs there. Thank you. Albert Bourla: (44:52) Thank you, Terrence, and then understand how the whole world is looking for any possible information. And we tried to make sure that we maintain a very responsible way of, from one hand, being transparent, and from the other hand, not feeding speculations. So what I can tell you to your very specific question is, until now, as we are speaking of today, no, DMC has not been changed their mandates. There have not been any changes like that. And I can still repeat that we haven't performed any interim analysis yet, and that we believe that the analysis will start soon on efficacy. And if the efficacy is positive or if the efficacy is negative, we will announce it. And that will happen a few days after the DMC announces that to us, which usually takes five, six, seven days. And that, if it happens before the third week of November, which is very likely, because as I said, we're expecting it soon, few days before- Albert Bourla: (46:03) We're expecting it soon, a few days before the end of October, a few days after the end of October. But if it happens before the 15th of November, we will announce it before the 15th of November. As I said, right now no analysis has been performed. DMC is completely blinded in any data. Of course, we are completely blinded in any data. And once we have the conditions met, they will unblind their data and they will start informing us. So let's all be very patient. I know how much the stress levels are growing. I know how much a vaccine is needed for the world. We are seeing right now the worst fears that we've had before during the fall are becoming true, the COVID is coming back in Europe and the US and globally. And we are working very diligently, very carefully to make sure that we will bring this project through the finish line. Thank you. Chuck Triano: (47:09) All right. Thanks, Albert. Very helpful. Next question please, operator. Operator: (47:15) Your next question comes from the line of Jeffrey Porges from SVB Leerink. Jeffery Porges: (47:21) Thank you very much for taking the question, Albert. I'm sorry to keep pushing on this COVID readout, but you seem very bullish that you will have a positive efficacy readout I think you've said by the end of October, and that you will disclose it. Now it's clear it'll be within five to seven days after that. So that suggests that you believe that I think the hurdle for the first interim is something in the range of 75% to 80% efficacy. Is that your expectation? And then secondly, could you comment on the realistic timing for the first dosing, given that the FDA has said they need to convene an ad comm, presumably you also need to have an ACIP recommendation, then you need to distribute the vaccine. Can you comment on whether it's realistic in your planning right now that anyone will be vaccinated outside of clinical trial by year end? Thank you. Albert Bourla: (48:23) Thank you, Jeff. And no apologies are needed to be asked. I understand that this is very important for the whole world. But let me clarify, I'm not bullish that a vaccine will work, I'm cautiously optimistic that the vaccine will work. What I said very clearly, it is that we may know by the end of October if it works or not. And I think reiterated this statement today, it could be, as I said, the October is not for us... I know it's compared with the elections many times, but for us the elections is an artificial milestone. This is going to be not a Republican vaccine or a Democratic vaccine, it will be the vaccine for the world. And this is how we see it. So I hope that it is going to be effective, I hope that it is going to be effective with very high protection ability, but we have to wait to see the results of the study. Albert Bourla: (49:31) Now, when it comes to distribution, assuming we have positive data, assuming that means that we will be ready to apply in the US for emergency use authorization as soon after we receive the safety data. So the safety data are expected to mature in the third week of November. So let's say we apply around that time, third, fourth week of November. Then it is up to FDA to take as much time as they need to make their approval. It's not up to us, so I cannot comment on that. What I know it is that we will be ready with a product available, again, if all goes well, but we are very well undergoing through our plans. We will be ready to distribute an initial number of doses. And I believe that in the US that you are asking, we have a contract with the US government that we should provide them 100 million doses by March, and we are feeling very good about our ability to do it. Albert Bourla: (50:40) But also there's a provision that we should provide 40 of these million doses in this year. So I think we should be able, 30 to 40, to be able to provide if we receive approval and if the US government distributes their vaccines. Just to put things into perspective. Let's say 30 million doses, it's 15 million people. So if we make available in the US the vaccine, that will be for 15 million people by the end of the year, which is a very small part of the population. So it's not going to be massively available, it's going to be targeted in its availability. As we move into the first months of 2021, then we are going to have much more massive distribution of the vaccine around the world. So I hope that helps put things into perspective. Again, thank you for the interest. We all keep our fingers crossed that science will win. Chuck Triano: (51:39) Right. Thanks, Albert. Next question please, operator. Operator: (51:43) Your next question is from Louise Chen from Cantore. Louise Chen: (51:48) Hi, thanks for taking my questions here. First question I had was, is there any way to help us think through if you've reached these 32 events yet? I know there's a lot of investor interest here, so just trying to get as much color as we can. And then can you provide an update on how many actual doses of vaccine you've already manufactured? It sounds like you're obviously very positive on your goals here. And the last question is, will you continue to look at potential adjuvant opportunities for adjuvant for IBRANCE or are you really just going to focus on next generation CDKs? Thank you very much. Albert Bourla: (52:20) Yeah. Again, let me take this question. So far, we have produced hundreds of thousands of doses and we are moving very rapidly with both sides to start initiating a much larger production. When it comes to thinking through, I don't think I can help you think more than what we have said so far. We are blinded, events will accumulate, we will unblind the data, DMC will tell us negative, positive, or continue. If it is negative or positive, we will let you know if it is. And then if it is continued, we will continue on until the next milestone is reached. There's nothing else to think. But as I said, we will start this process very soon. Now for IBRANCE, I will ask Angela to comment. Angela: (53:13) Yeah, thanks for the question on IBRANCE, in terms of our focus for IBRANCE, where we've been, as you know, was really looking at the early breast cancer indications, which disappointingly did not pan out for us in Pallas and Penelope- B. We are very much focused on metastatic breast cancer as our opportunity with IBRANCE, and here we continue to feel really confident about what we've seen without data as well as what we're seeing from a market share perspective. So first-line use of CDKs in metastatic breast cancer as a class is still only at 52%, so we have a long way to go in terms of our ability to grow this class. But actually for IBRANCE itself, it has a very high market share, 87% in fact, and we've had this leadership position in first-line treatment for many years. Angela: (54:14) And in fact, since May, even post the announcement of the monarchE data, we have seen this consistent market share. So I think that our focus on metastatic breast cancer and our focus on growing the use of the CDK class in metastatic cancer will continue to provide us a tremendous amount of opportunity. I think just as a followup to your question, in terms of, are there other ideas and other thoughts for IBRANCE? Just to remind you that we do have still the Patina trial that is ongoing, which we'll read out in the second half of 2022 for a different population, the HR positive HER2 positive populations. So it's a slightly different question, but really touches on additional expansion opportunities for IBRANCE. Chuck Triano: (55:03) Right. Thanks, Angela. Thanks for the question, Louise. Let's take our next question, please. Operator: (55:09) Your next question is from Navin Jacob from UBS. Navin Jacob: (55:14) Thanks so much for taking the question, and I will be very in line with my colleagues about questions on the COVID vaccine. Let me try this a different way. Versus your original assumptions when you were designing the trial and based on the literature and the data that are out there, not necessarily in the trial but just from what you're seeing outside of the trial, how do you think the symptomatic rate for folks that are infected compared to when you originally designed the study? That's question number one. And similarly, I suppose, also with infection rate itself. When you enhanced the size of the study from 30,000 to 44,000 patients, at the time one of the reasons, rationale for increasing the size was because of what you deemed to be a slower infection rate. But I'm wondering about that as well as the symptom rate relative to your original assumptions. Thank you so much. Albert Bourla: (56:22) Yeah. Thank you, Navin. And again, I understand the interest the here. I don't want to comment much more, but what we see is our infection rates align with what we see in the country. That's not supposed to be a surprise because it's a large study that we tried to position geographical in multiple sites that represent basically the country of the US where we have the bulk of the patients. The increase of 30,000 to 44,000 anyway wouldn't make any difference in the early readouts, would only make the difference, because of the larger numbers, in delivery late readouts. Albert Bourla: (57:02) So I don't think that was the reason that we did it, it was mainly because we felt very good about the safety profile. So we opened our vaccination to kids of 16 years old in the beginning, then we went to 12 years old, and then we went to people that are suffering from HIV, from hepatitis B, from hepatitis C. So this is what, and also we used it to improve the diversity of the study, which we have made it public. So it's very, very good right now. We very good about the diversity of our study. So Navin, thanks for your question. Let's all keep our fingers crossed that we will have positive results. Chuck Triano: (57:52) Great. Let's to the next question please, operator. Operator: (57:56) Your next question is from Chris Schott from JP Morgan. Chris Schott: (58:00) Great. Thanks so much for the questions. I guess my first was on Abrocitinib and market development. Thank you for the earlier comments. I guess my question is, if I look at the RA situation, it took some time for the JAKs to gain traction. Obviously now the class is doing really well. Do you expect a similar situation in AD? A launch that eventually gets very large but maybe it takes some time to build momentum, or are there differences in this market that could allow for faster uptake here? And then my second question was on Vyndaqel and how we think about growth from here. Should we think about the ratio of diagnosed patients to those who received drug to shrink significantly over time, or should we think about there being a persistent gap between diagnosis rates and those who actually receive the product? Thank you. Albert Bourla: (58:49) Yeah. Excellent questions, both I think are appropriately to be answered by Angela. So Angela, why don't you start with Abrocitinib and how you think the market will evolve given the experience on RA and JAKs? And then of course Vyndaqel, how the change between diagnosis and treatment can evolve over time. Angela: (59:12) Great, thank you. I think in all the I&I areas, what we're dealing with here are very complex diseases, chronic diseases where there is a tremendous amount of debilitation for our patients and a lot of suffering. So first and foremost, I think both RA and atopic derm share that. But maybe the difference that I see the greatest between the two is that RA is a pretty well established disease for whom, even at the time when we launched Xeljanz there was a lot of treatments. There was a lot of biologics. There was not an oral but there was a lot of biologic. That in fact is quite different when we think about where we are with atopic derm, in that in atopic derm today there are just not great treatments. We talked earlier today in the opening about the systemic treatments. Angela: (01:00:04) There was a lot of use of steroids, there is Dupixent that has been a great solution for many patients. But even with all of that, there's just not a lot of solutions at all. And today there is still a high, really a significant unmet need in terms of what patients are being able to do. So I think with all market developments, with all new treatments it takes time for you to reach peak. But we believe that given the significant unmet need, and in particular for atopic derm patients where I think typically we've been focused on skin clearing. But what we also know for patients is that the number one condition they're suffering from is pruritus. And When you have agents that can really resolve that and resolve that very quickly, it will open up opportunities that didn't previously exist before in AD. So that's how I see the market. I think we're really excited about it. We see a great ability to meet patient's unmet needs, and that is going to drive our growth. Angela: (01:01:10) Your second question was around Vyndaqel and how to think about diagnosis versus the people that receive the drug. And I think on this regard, what you should expect to see is there will be some gap between those who are diagnosed. There is always a difference between those that are diagnosed and those who are deemed eligible to receive treatment. And then there's a difference or a gap then, the next step that you have to take is, for those that are treated, how many of them actually get the prescription and receive a prescription? And I think that actually on that front we've been doing rather well. This quarter, in Q3, 82% of those who were deemed treatment eligible were able to receive a Vyndaqel prescription. Angela: (01:02:04) And that is in fact up from last quarter where it was actually 78% of those who were deemed eligible for treatment received a script. So the gap is not all that wide, and we've seen improvements from last quarter to this one. So I think along the entire patient funnel for Vyndaqel, we have great opportunities to improve how the patient flows from diagnosis to treatment, treatment to receiving a script, receiving a script to actually getting the medicines in their hands through a specialty pharmacy. It's still a new condition and one that's early in its launch, so I think that we have great opportunities to improve every step of the way. Thank you. Chuck Triano: (01:02:47) Great. Thanks for the comments, Angela. Next question please, operator. Operator: (01:02:54) Your next question comes from Steve Scala from Cowan. Steve Scala: (01:02:58) Thank you. Albert, with all due respect, could you please be absolutely clear whether the 32 events have been reached already? It seems that the answer is yes, Pfizer has the 32 events. Otherwise I think you would say no. And onto the DMD gene therapy, will phase three start this year, and has Pfizer and FDA agreed on a potency assay? Thank you. Albert Bourla: (01:03:31) Yes, Steve, I appreciate the curiosity and I appreciate the creativity. And everybody can try every possible angle, but I think I have answered this as fully as we are prepared. You used very asking, so I will going to tell you clearly. No, we don't have the 32 events right now. That's what I can say. And I have to say... Chuck, can you remind me what was the second part of the question? Chuck Triano: (01:04:06) Yes. Question was, in DMD, has the FDA agreed on a potency assay? Albert Bourla: (01:04:12) Michael, maybe you can take that. Michael: (01:04:15) Absolutely. I think, Steve, you first asked, will phase three start this year? We expect, and I believe phase three will start this year and relatively soon. As you know, the profile through modification of the steroid dose from one week [inaudible 01:04:35] to two week [inaudible 01:04:36] looks really great now. And Albert spoke in his introduction to the 19 treated boys in which, in recent after the steroid change we have had no cases with compliment activation, so we're very excited about the current plan. Michael: (01:04:53) Now, for the assay. Yes, as part of our final protocol development with FDA we changed from an initial inverted terminal repeat methodology to a transient method as suggested by FDA along with the weight of the patients to determine dose. And that's all in place, and made the initial dose of what was expressed as 3e^14 go down to the 2e^14. Then it's the very same dose that we use all the time, it's just that the different test gives a different readout. But all of that is in place. We have a terrific technology platform that I think is the leading in this field, how to measure the various endpoints including the concentration of the virus, gene therapy. Chuck Triano: (01:05:49) Right. Thanks, Michael. Thanks for the question, Steve. Let's move to our next questioner please, operator. Operator: (01:05:56) Your next question comes from Tim Anderson from Wolfe Research. Tim Anderson: (01:06:01) Thank you. I have a non-COVID question which is, following the initial news where you said you'd spin-out Upjohn, you described the company is likely to pay less of its free cash back to shareholders in the form of dividends and buybacks. And I'm wondering if that's still the current view, especially if you can achieve the revenue growth targets you've given of at least 6% of the next several years. And that question ties into another question on M&A, what's the upper limit on the size of the deals you might be considering? Should we assume these will likely be sub-$10 billion transactions, or are larger deals also potentially on the table. Albert Bourla: (01:06:46) Thank you, Tim, for asking a non-COVID question. Appreciate it, really. And also it came at a time that I thought that Frank will not have a chance to speak. But now we are giving him the exact right forum. So Frank, take it from here. Frank: (01:07:00) Thank you, Albert. And Tim, thanks for the question. On M&A, we always say we never say never because one of the nice things about being part of Pfizer is we have the firepower to pretty much do any kind of a deal we want, and I think we've been able to demonstrate that in the past. So I wouldn't limit us or cap us on some specific dollar amount, given the fire power that we have. Albert mentioned earlier, our focus has been mid-phase, phase two, phase three, things that would impact our revenue base '24, '25, '26. But in terms of capacity, quite frankly, we're very much unlimited. Strong balance sheet, strong capital structure, strong investment grade, we generate lots of operating cashflow. So we're in a very good position, quite frankly, to be very proactive as we need to be on M&A. Frank: (01:07:51) And then in terms of your Upjohn question, from my perspective, we get the Upjohn deal done, we formed Viatris. We're going to get $12 billion in cash. Our intent with that 12 billion in cash is to pay down debt, given we're transferring give or take about $4 billion of EBITDA to Upjohn. But our capital deployment priorities don't change as a result of that transaction. We'll still return capital to our shareholders, as we have been doing. We'll continue to invest in the business and our pipeline, obviously, and capital, and then we'll continue to invest in M&A. So from my perspective, capital priorities don't change. And in terms of M&A capacity, we're fortunate enough where we really have lots of capacity, lots of firepower. Chuck Triano: (01:08:37) All right. Thank you, Frank. Thanks, Tim. And can we move to our next question, please? Operator: (01:08:42) Your next question comes from Randall Stanicky from RBC Capital Markets. Randall Stanicky: (01:08:47) Great. Thanks, Albert, you guys. Can you talk about the post-EUA or post-approval plan around communicating safety data to the public on the vaccines to get people more comfortable? Because one of the concerns is going to be the percent of people willing to take a vaccine early... Randall Stanicky: (01:09:03) ... is going to be the percent of people willing to take a vaccine earlier may be lower than it had been in previous months, and obviously those numbers would be higher to get to herd immunity. And then a second question for Frank, going back to the enabling function costs, you guys called out in January $4.5 billion there. Maybe just help frame that for us? How much of those savings have you already realized? How quickly can you realize additional savings in 2021? Just trying to understand the margin opportunity there? Thanks. Albert Bourla: (01:09:32) Yes, let me take the first before I pass it to Frank, and virtually I will ask the help of Angela here also in answering this question. I do see, because we are watching the polls and also I speak to people, my neighbors, my friends, and I do see that there is some skepticism that has been mainly because of the politicization of the vaccine. So this is real, and I think we need to address it. But we started addressing it long-time back. We are doing for this disease, for this vaccine things that we have never done before, and those are, first of all, things that have to do with transparency. We have published our protocol. We are publishing real time our Phase 1 data for community and the public, but also the other side, the other companies that are developing COVID vaccines can see them and learn from that. Albert Bourla: (01:10:27) We have announced the first the results of our pivotal study unblinded data of course on the safety. We signed a pledge but made very clear to the world that we are going to follow the higher ethical and quality standards, and we will continue being very transparent and very quality science driven, which I think it is the best way to overcome the public's opinion. In a way, we didn't even take money from the government to make sure Pfizer will stay out of the politics and this vaccine, at our financial risk, would not be characterized as the Republican vaccine or the Democratic vaccine. It is a vaccine for the world that we're developing. Albert Bourla: (01:11:19) Now going forward, I think also we will continue doing things that are safety data according to the FDA. There will be a review to publicly by an Advisory Committee, so that will be another additional and good step towards transparency. Angela, do you want also to add few things that we are planning to do? Angela: (01:11:39) Sure. Well, over and above what Albert said, obviously, having clear public education and a well supported public education effort is going to be critical, right? We need to educate the public on the importance of actually getting the vaccine, and then of course around the safety processes and creating confidence around the development process that has gone into developing these vaccines. And so this happens sort of at two levels. First is about how Pfizer is working through intermediaries and opinion leaders to provide this education, and then secondly, what we can do ourselves. And on the first front, we have already been and are continuing our efforts to work with industry partners, patient organizations, government and other public health institutions to share with them our expertise so that they can create and build content and also deliver education as they need. So as I said, this is well underway. There's a multi-channel approach that includes DTC and these experts are already deploying a wide range of channels and forms of communication to educate and to educate specific communities. Angela: (01:12:56) On the other hand, for us, once we have authorization and once we have a label, we will be able to do additional communication or education around our vaccine specifically. We also recognize that, of course, there are certain communities that have been minority communities specifically that have been more affected by this disease and others, so we're also supporting the development of specific content and education that can more effectively reach these communities and be more customized with sort of the approach in the content that we are sharing. So this is a very big effort that is already underway, and I think you're going to see more and more of this build-up towards the end of the year. Albert Bourla: (01:13:42) Thank you, Angela. And before I ask Frank to take the question about the cost of enabling functions, I would like also Mikael to comment about our pharmacovigilance program that we have put in place and how that also could play a significant role in ensuring about the vaccine is safe. Mikael? Michael: (01:14:01) Thank you, Albert. So we have the pharmacovigilance platform in the industry that has experience to handle the largest number of adverse events reporting by far, and we have started very proactively being an open dialog with Operation Warp Speed and FDA about putting this pharmacovigilance platform to a play to monitor sophisticated participant, whether during in potential EUA and later approval, and that includes building control cohorts already now for understanding spontaneous disease reporting of what we expect to be the first group of responders such as healthcare workers and first line responders. We also recognized a big need for many stakeholders from pharmacies, nurses, patients, physicians to have access to rapid information. We have a very strong medical information platform across the globe and we have now augmented it both with staff and with self-serving WebEx platform to be able to respond to many aspects of how we store, distribute the vaccine and expect, so far, mild to moderate tolerability issues, et cetera seen with this vaccine and similar vaccine, and so I think we feel we are very well prepared for that. Thank you. Albert Bourla: (01:15:36) Thank you, Mikael. Now, Frank, back to you. Frank: (01:15:38) Yes, and Randall, the way I'll do this, let me run some numbers and provide some I'll call it financial context and then I'll drill down and I'll answer your question. So just first, on SI&A, I'm talking about enabling functions. So in SI&A for the quarter, we were $2,870 million, we were down 10% year-over-year. It's really driven by three things, and the consumer separations which was give or take about half the reduction. We do spending in enabling functions and some of it was COVID-driven. I call that out because a piece of that is enabling functions, which is probably what triggered the question. Now, let me run the overall numbers and I'll drill down and answer the question. Frank: (01:16:15) So our previous guidance on SI&A for the year was $11.5 billion to $12.5 billion. We tightened the range to $11.5 billion to $12 billion, and that was really driven by COVID savings, because obviously we knew about consumer. We had enabling functions spending already in our plan, so it was really driven primarily by COVID spending. Then of that $11.5 billion to $12 billion, think $4 billion to $4.5 billion is the enabling functions, which is now getting to your question, the way I think about this is if you look at that $4 billion to $4.5 billion is that E to R an expense to revenue ratio of the total company as it exists today and the new company when we're a smaller company, because of the revenues that move to Viatris. We want that expense to revenue ratio to be the same or less than what it currently is today. So that's kind of a simple way to think about how we are thinking about this and how we are planning in terms of what to do with our enabling functions. Frank: (01:17:10) Then the question you asked was in, Frank, you asked me a pacing question in terms of, '21, '22. We will obviously go as fast as we can and get as much of it as we can into 2021. Obviously, some of that will flow into 2022 just because of the nature of some of the places where we do business and certain things take more time than others. I'll provide more clarity on this when we provide our 2021 guidance including the SI&A guidance on our next earnings call. Chuck: (01:17:40) Thanks, Frank. Albert Bourla: (01:17:41) Thank you, Frank. To be more clear ... Yes, excuse me, Chuck. Chuck: (01:17:47) Yeah, sure. Let's get another question here. Please operator. Speaker 2: (01:17:51) Your next question comes from Geoff Meacham from Bank of America. Scott: (01:17:56) Hi, guys. This is Scott on for Geoff. Thanks for taking my question. You disclosed last quarter that the FDA indicated in AdCom meeting was not anticipated for Tanezumab, but it seems like they want one now in March '21, so that will push up to December PDUFA. So what changed that? Maybe you can give us some more insight into your discussions with the FDA? And then maybe as a follow-up. The assay itself wasn't highlighted as an assay to the fixed sales was from Investor Day. So what do you expect kind of internally to pick sales upside could be here if you received approval. Thanks. Albert Bourla: (01:18:30) Angela, why don't you take those two and then also maybe Mikael can comment later on the Tanezumab FDA, but you first, Angela. Angela: (01:18:40) Sure. So the Tanezumab represents probably one of the biggest submissions that Pfizer has ever provided the FDA. Our data are extensive. I mean, there's a lot to understand, so we're not surprised by the request to have an AdCom and in fact we're looking forward to having this opportunity to really review and to discuss what we have seen in our data and in our clinical trials and to discuss this opportunity with the Advisory Committee, so we see that as something that will be a good discussion. Angela: (01:19:23) In terms of the way to look at the opportunity, this is how we see it. It is really like many conditions, but this one in particular, a significant unmet need and the treatment of osteoarthritis. There are about 27 million Americans that suffer from this, 11 million of whom have moderate to severe OA, and in the US, 80% of those moderate to severe OA patients have already trialed and tried and failed three or more analgesics. So we know that these patients are unable today to achieve adequate pain relief, and so while there are options out there, what we also know is that the options are inadequate. So when you look at the patient population that's ahead of us, the opportunity to provide a novel and a non-opioid form of pain relief, we think that this is the kind of opportunity that I think patients will be very interested in. Albert Bourla: (01:20:26) Thank you, Angela. Mikael, anything to add about our about our Tanezumab filing and on FDA's request for Advisory Committee? Michael: (01:20:32) I thought Angela answered great. Maybe I'll punctuate two things. As a potential first-in-class treatment, it's not uncommon for the FDA to hold an AdCom to discuss the submission, so in a way, it was expected. And of course the discussion will be focused on those many patients that are not well-controlled or unresponsive, not eligible or do not want to take any of the existing pain medication, and as an alternative to longer use of opioids. That's what the discussion would be and as Angela said we always welcome outcomes in order to share our experience and get the external perspective. Albert Bourla: (01:21:14) Thank you, Mikael. Chuck, back to you. Chuck: (01:21:17) Thanks for the insight, folks. Next question please. Speaker 2: (01:21:21) Your next question comes from David Risinger from Morgan Stanley. David Risinger: (01:21:27) Yes, thanks very much. So I have one question for Albert and one for Frank. Albert, thank you for the updates today. Could you please define what you mean when you say you will disclose results when there is a conclusive read out? Does that mean interim efficacy success on the primary endpoint, or does your definition of a conclusive read out include more than just the primary endpoint? And for Frank, regarding enabling functions, you've been talking about that for a couple of years and my understanding is that you've already been driving efficiencies in the corporate cost structure of Pfizer, so could you just update us on where the run rate stands today versus the $4 billion to $4.5 billion you were discussing a couple of years ago? Thank you. Albert Bourla: (01:22:23) Thank you, David. My definition of conclusive result, positive or negative, it is futility or demonstrated efficacy read-out in the primary endpoint. That's how things work. So Frank? Frank: (01:22:43) Yes. Thanks, Albert. So, Dave, we had been reducing the enabling functions over the years, and that's obviously been reflected in the guidance that we've provided over the last year or two. That $4 billion to $4.5 billion should be thought of as a base for 2025 and obviously, we'll go to work on that base, and we are going to work on that base as we move into '21 and '22, and the intent is obviously to generate, to capture as much of those savings as we can as quickly as we can. But the $4 billion to $4.5 billion, think about that as the base that will come off of. Chuck: (01:23:17) Thanks, Frank. And operator, can we take our last question for the call, please? Thank you. Speaker 2: (01:23:23) Your final question comes from Andrew Baum from Citi. Andrew Baum: (01:23:28) Thank you. Couple of questions. Firstly, out-of-pocket caps seem to have been proposed twice once by the Senate and then more recently by the president prior to the most favored nation executive order. I'm thinking about Vyndaqel, another high price molecules. Obviously, this could be very helpful to your business if this comes to pass. Do you think there is a high probability that regardless of which administration out-of-pocket caps for Medicare patients is likely to feature the central part of health care reform? And then second, just to clarify on COVID, the interim analysis, we're receiving questions from our clients repeatedly about the level of disclosure. Will it be a simple look forward to sharing the data or would you actually disclose the data at the time the efficacy readout is given? Albert Bourla: (01:24:24) Thank you. Thank you, Andrew. Now about the out-of-pocket caps, Pfizer repeatedly, and the industry as a whole, has pointed out that right now the way that the insurance benefits are working is not sustainable anymore. Right now, the Americans pay out-of-pocket for their medicines like if they do not have insurance, although they do have, and they do have very expensive and likely very good insurance if they had didn't have to pay from their own pocket. So this is something that needs to change, and it seems like there is a general recognition both sides of the aisle. We will continue working with all, and we hope that we will see a change in the design of these benefits that will reduce the cost that the Americans have to pay out-of-pocket when they go to collect their medicines. Albert Bourla: (01:25:28) This is not something that needs to be done because it will help the financial bottom lines of the industry. It is because needs to help the patients and the healthcare system costing generally. Right now, the fact that some patients don't have the out-of-pocket to take their medicines has a result that we have significant number that they do not take their medicines, but medicines that are needed, medicines that have been prescribed by their physician, and as a result, those patients are ending up in the healthcare system in hospitals and they cost the healthcare system much more. So there is a need any way you see it cost-wise or human pain-wise, but this needs to be reformed. Albert Bourla: (01:26:16) Now, in terms of COVID-19, and I think that was the last question that we have today, so it looks like it is going to be a COVID-19, the last question. I think right now, we are planning to, as always, with this things to have a press release that will speak about top line met endpoint or not, and then of course we plan to publish data in a peer review magazine, so they will be all available. But keep in mind, when once we submit data, if things goes according to plan by the third, fourth week of November, and that there also I think we plan to make them public during the Advisory Committee that they will have. So I think that concludes our call Chuck, isn't it? Chuck: (01:27:15) That's correct, Albert, back to you for closing remarks. Albert Bourla: (01:27:18) Yes. So I just want to thank all of you for joining us today, of course, your continued engagement with Pfizer. As we just heard, our continued strong performance speaks to the resiliency of our business and the strength of our portfolio, the ingenuity and the resolve of our people, and I think the power of our patents. As we indicated during our Investor Day, we are very confident in our pipeline. We like its breadth. We like its depth, and we will continue to be opportunistic about bringing in additional promising assets where appropriate. Now, we need to continue to execute and deliver for patients. Albert Bourla: (01:28:04) Of course, we continue to monitor global economies related to COVID impact. COVID is affecting not only our business [inaudible 01:28:13] quantify the opportunity today, opportunity to us, but if we try to quantify the opportunity to what it's doing to the global economy, we are speaking about three years. And now, it has become more obvious than any time that many things needs to be done to control this pandemic. Vaccines are expected, if successful, to play a key role, to become a very important tool. We are working very diligently. I understand and appreciate your interest that became very obvious. I just ask everybody to be a little bit patient, and we all cross our fingers that science will win. Thank you very much, everyone. Speaker 2: (01:28:57) Ladies and gentlemen, this concludes Pfizer's third quarter 2020 earnings conference call. Thank you for your participation. You may now disconnect.