Pfizer Aktie

[Audio Gap] de Germay, EVP and Chief International Commercial Officer of Pfizer; interviewed by Christopher Schott at JPMorgan.

Great. Well, thanks, everyone, for joining us today. I'm Chris Schott, and Alexandre, thanks for joining us for a lot of different topics we can dig into here.

I thought I might just start the conversation bigger picture on Pfizer, and then we'll dig into the international business. But the company obviously has gone through a period of significant change in the past few years. Portfolio has evolved beyond the COVID assets. The pipeline is maturing. You've got new commercial structure. So can you just talk a little bit about your confidence in the overall Pfizer portfolio and pipeline today and its ability to address some of the patent expirations and kind of grow over time?

Sure. Yes. Thank you for having me. It's a great pleasure to be here. Yes, I mean, the past 3 years, we've been through major changes at Pfizer. It's probably just interesting to step back and remember, so we went out of our kind of saving the world moment with COVID and the incredible job that the team has done. And after that very transformative moment, we needed to actually refocus on our portfolio pipeline and understand where we can win and redeploy the resources behind those territories and behind those products.

That's when we started to refocus on our new product. Because if you remember, back in 2024, we already had a vast majority of the new product we just have finalized the acquisition of Seagen. So we had the Seagen products. We have launched a bunch of new products and vaccines into the market. But we were fragmenting our resources and in our ability to actually deploy those products and vaccines appropriately into the market. What we did is we cut some of our investments that were unproductive because we were spending too much in some area. So -- and they were in point of diminishing return.

We reallocated those resources in our key country. So in my world, the top 4 countries make 40% of my business. And so spreading the resources everywhere makes 0 sense. So we've stopped launches, we stop organization commercial structure so that we can reallocate those things into the right spots. And Aamir did the same thing in this portfolio in the U.S., kind of reallocating the efforts behind the future growth. And the outcome is actually quite remarkable. If you think about -- in my world, the new product and newly acquired product, we were making $0.5 billion in 2023. Now they do $4 billion.

And at the same time, we cut OpEx quite significantly because we were spending inappropriately. We had a real problem of efficiency in commercial execution. So we were able to kind of relook at every dollar we spend, where is it returning returns, where is it not and reallocate. So we stopped, as I said, some clinical study in some small products, in some small countries, reallocated those resources in key markets and where we could grow. And so you see that those new launches product is now the platform, the base for future growth.

And the reason why I'm confident is because once you establish a commercial model that works, you build muscles in commercial effectiveness. And we will use those muscles for the pipeline because at the same time, of course, we reduced our COVID franchise quite significantly during those periods. Just remember, 2024, we're making $11 billion on COVID between the vaccines and the antivirals. 2025, we made about $6.7 billion. 2026, we guide for $4 billion. So at the same time where we were extracting the most potential out of our new product, we also reallocated out of our COVID franchise so that we could double down on our new product.

So I feel like we have less exposure on COVID. We have platforms on new product and acquire a product that is going extremely well. And there is room there. It's not like we all depend on the pipeline. We know we are going into a phase of LOE product. But at the same time, we have built this platform. And of course, at the same time, the pipeline is maturing. I mean if you think about -- we have 31 Phase III clinical study happening right now. And I often get the questions of are you drying your business by actually making all those efficiency. We are not because we were inefficient in the way we were deploying our capital.

And by having more rigorous and more focused approach, you have a much better impact. If I just look at what we did in international, the productivity of our sales organization triples in 3 years, just by having this very focused deployment of resources in key markets on key product. And those key products are very different. When you are in Brazil, we had almost no vaccine business, which makes 0 sense. Vaccine is -- Brazil is one of the most efficient in deploying vaccine and protecting their population. It's extremely impressive. We had no business, no Prevnar, no ABRYSVO. Now Prevnar 20 is in, and we have vaccination rate of 80% of those 2.5 million babies in Brazil.

But of course, it's different when you are in China. I don't have the new generation of pneumococcal vaccine yet, but I have 1 million cases of non-small cell lung cancer in China. So guess what? I mean, LORBRENA has a huge potential because there is unfortunately a very high prevalence. So picking the winner, deploying capitals behind those winners solidify our base and we have significantly improved our commercial model. Aamir in the U.S., that's the same thing with his DTC and also with sales force deployment. So I am very confident with we've rebuilt our excellence in commercial deployment. And now we are maturing our pipeline. And the pipeline is coming where we have the strength. In oncology, we are very strong in oncology. It's coming in vaccine. It's coming in primary care with our internal medicine and barobenatide. So we have the skills and the capabilities to actually optimize this portfolio. So I feel good.

Great. When I think about the company returning to growth as we look out to 2029 plus, I guess how much of that is going to be driven by the pipeline, as you mentioned, versus commercial execution against products we're already seeing today? And maybe as part of that, when you look at how we are all sell-side is modeling the business, are there any particularly large disconnects that you see versus how we're all thinking about the company?

Yes, there is quite a bit. So the first one is where the growth is coming. The growth is coming on the new baseline that we've discussed, right? So if you look at the Q2 earnings release, we show that we were producing $3.2 billion on the new acquired at the global level, $3.2 billion on the quarter, growing 18% after a 22% growth in the first quarter. If you just take that as a totality of new acquired and new launch product, that's about $13 billion right there, right? So that's a very strong foundation. It's not like we are done with this portfolio.

If you -- I'm going to give you a couple of kind of examples. In vaccination, so we go back to vaccine, for instance, in older adults, both on Prevnar and ABRYSVO, it was very striking to -- I was looking at the numbers before coming to London. The vaccination rate in France is 25% of the targeted population, 25%. So that means that you have significant room to increase, and that is 65% and above. So it's not like it's a very big range of population, 65% and above. Clearly at-risk population, we only vaccinated to 25% of that population, 28% in Germany. 3% in Japan. And imagine the growth that you have there, right there. Same thing in pediatric, same thing in ABRYSVO, older adult against RSV. So a vaccine has huge potential to grow.

If you look at LORBRENA in thoracic cancer, in 2 years, we went from nowhere in first-line new patient start to 60%, 70%. In France, we have 77% market share in new patient starts. But there is still -- remember, in the CROWN-7, we keep people alive, thank God to the great quality of this molecule, 7 years. And we've lost only 2 patients between CROWN-5 and CROWN-7. So the duration of therapy could be significantly longer and you add all those new patients every year. So it just gives you the sense. LORBRENA this quarter, international, we did a $0.25 billion. So that means that this product is already $1 billion and can continue to grow significantly. So my point is this block of product is underestimated in the ability to actually continue to deliver growth. And that has nothing to do with that read, because those products just got introduced very recently.

Two is on the pipeline. As I was just closing in the previous question, the fact that we are entering -- the pipeline is structured around the place where we can win. And I think that's a big shift that Chris Boshoff has done with his team in the recent -- the last 3 years. The last few years is if you look at -- yes, okay, we have our 4 disease area, category area. But more than that, now after that, in oncology, we pick the zone, the tumor type that has big impact and where we have the capability to win. So thoracic cancer, $70 billion market. This is the most lethal cancer, first cause of death in cancer, prognosis is still very low. And so it's a huge unmet medical need, is projected to be $70 billion by 2030.

We go with 3 candidates in Phase III with the most promising platforms, right? We have 2 ADCs and with defined -- well-defined payloads effectiveness with vedotin and with 2 markers that are well documented. Those are the 2 ADCs. And we have our bispecific with a combination of VEGF and PD-L1. So it's well established. We have proof point into the Phase II, and we have the commercial and the medical capabilities in place. We have been discussing that, Chris, together. You don't enter into oncology tumor like this. I mean it takes decades both internally to build the scientific knowledge to actually have the capability to pick the winner and then in the connection with medical society, in connection with hospital, university and treating physicians to actually pull through the medicines. We have that.

We just I was discussing the LORBRENA case. We have that in thoracic. We have that in breast cancer. We created the CDK4/6 class, remember, with IBRANCE. And now we have 2 assets in development in Phase III, CDK4 and KAT6 that are coming also there, and we have the infrastructure to host that. Same thing in prostate cancer. So why I'm excited is that there is a complete coherence. And I'm not sure the financial community is completely seeing this, is there is coherence between where we play and where we are currently winning and how our pipeline is actually being structured to leverage our knowledge inside R&D and in commercials and make a success out of those products.

Now the second one is, of course, categories is of high potential is, of course, chronic weight management and berobenatide in our GLP-1 and the following assets. As you know, Chris, we've commercialized recently our first GLP-1 at Pfizer in China, ecnoglutide. And so it gives us actually, it's -- we learned tons out of those introductions because it gives us a very good understanding of how the market is operating and how we see this evolving. The clear learnings is it's not one market. It's like tens of segments. And we know it's going to be between $120 billion, $150 billion by 2030.

But there is a very different profile between a patient that has a high body mass with concomitant disease, diabetes versus somebody that qualify for chronic weight management, but it's more like aesthetic driven or more self-confidence driven because that person will need a very different type of product. The access to the product will be very different than that person's, where it's more medically driven, more hospital management and so forth versus this one, which is more e-digital hospital, e-prescription, e-commerce and the follow-up and supporting elements that will surround utilization of GLP-1 for that person is going to be very, very different to this one.

But -- that's why I feel Pfizer has a great opportunity here is because this is going to be an expensive category. You need to build trade. You need to be good at physician management. You need to be good at direct-to-consumer online platforms. You need to master all those different platforms that we have. With vaccines, we are very big in trade. In vaccine, we are very big in direct-to-consumer, not just in the U.S., but outside of the U.S. We have built up a digital companion to make sure that we provide the right support for that longitudinal utilization of those treatments. So it's -- of course, it's a question of product profile. And of course, the product profile for this person here is going to be very different for the product profile of that person.

That's why it's a portfolio play. Because this person may be fine with an average efficiency so long as the tolerability is very, very good versus that person is willing to actually go for more side effects because the effectiveness of the medicines is really a core thing. But maybe this one is more looking for long-term therapy. So monthly is going to be more appropriate than this one where maybe oral or weekly is going to be.

So that's why you will need to have monthly, very effective monthly, weekly, well tolerated weekly with good efficacy, orals and a combination of all those things and a combination of all those commercial levers to actually optimize. Otherwise, it's going to be too expensive to have one asset. So that's why I'm excited. Those 2 examples of this portfolio is maturing. We have the play to win. We have the commercial elements in place. And we have the expertise in-house to pick the winner. So I feel quite good.

Excellent. Can I talk a little bit about most favored nation and drug pricing. Obviously, Pfizer kind of led the charge here last year. Can you talk a little bit about how you're thinking about your business, what you've seen from some of the developed markets in response to MFN and generally how Pfizer is thinking about this?

Yes. No, I think it's an important point. I think we had a breakthrough because 1 year ago, we were stuck with the tariff risk that could actually have exposed the whole industry. And in a way, we took the lead. Albert did a kind of a leader's behavior, and then he went and actually framed the MFN agreement that everybody followed through, which allow us to remove this whole question of tariff threat. Now on the international side, what is the effect of that is, of course, the willingness to align at the parity of purchasing power, the price of the U.S. with international. And frankly, this is long-term due in a way because if you look at the real willingness of government to pay for the real -- the fair price of innovation, this has been undermined the past decade.

And there are many ways by which governments were attacking this real fair market value of this innovation through clawback or annual price cuts and so forth. And I think what we're trying to say is there is an opportunity for us to actually go back and have those discussions with the governments to align those prices. Some governments have already made moves, right, in this country, in particular, if you remember, the government had an agreement between the U.K. and the U.S. in terms of the quality of the NICE that have never taken in consideration. Inflation has been embedded immediately, reflecting 10 years of inflation. Two, the clawback mechanism that exists in the U.K., which was brutal and very high, has been reduced. And there is a commitment to go to 0.6% of GDP for allocated innovative medicines.

So there is clearly already movements from some of those countries. I was in Japan 2 weeks ago and had discussions with the Ministry of Finance and different response leaders of the governing party, same kind of willingness. And it's not the MFN that is triggering this, I believe. What is triggering the change of behavior with innovative pricing is the fact that -- if you look, if you step back in 2000, 30% of innovation were coming from Europe, 10% were coming from Japan. You move forward 2022 and this year, 30% of innovation come from China. China kind of overpowered Europe and Japan like this. And now we all recognize that there is a -- it's not a question of brain power in Europe or in Japan because discovery is extremely good here.

The problem is those researchers are creating those biotech in the U.S. because they know they have access to a fair pricing and recognizing innovation. So if we want -- government wants to kind of reignite the contribution of innovation from Europe and Japan, they need to do something on pricing because otherwise, there is no path forward for that innovation. And that's what I see is coming. The threat of China has woke up those organizations, those countries to actually build up an environment that helped. And there are some good signs also above market, right? The European package, the pharma package that passed 1 year ago, yes, about 8 months ago, was actually quite good in terms of patent protections and orphan drug status and the Biotech Act that is in development is also very good. The first draft is actually also very positive with speed to approvals, willingness to open the centralized reviews and so forth. So it's going in the right direction. It's going to take time, but I'm confident it's -- we're going in the right direction.

Do you think about portfolio development any differently in light of maybe some of these global markets supporting a bit higher price than what we've seen historically?

For the time being, we are not thinking portfolio development in a very different way because, as I said, we hope that these notions of paying for innovation at the appropriate price is going to win. And so we play for that. Let's see.

You mentioned China and the rise of the biotech industry there. Can you talk a little bit about what you see that meaning for the broader biopharma landscape and the type of opportunities as well as risks that this maybe entails for Pfizer?

I mean the -- what is remarkable, if you step back, is the scientific power that is emerging from China. Just to give kind of a sense, China produced about 300,000 PhD in science and technology every year that are working in our industry. So of course, with this incredible power of young talents and university centers that have built the level of capabilities that equivalent to what we had in Europe and the U.S., we will see emerging science. And we start to see massive science. Just to give you a sense, the 2 big platforms, right, in oncology that I was describing, ADC and bispecific, I was looking at Phase I, Phase II, Phase III combined, 50% of every clinical study on the planet is run in China, 50%, 5-0, on those 2 platforms, ADCs and bispecifics. That's massive.

So of course, we will produce more science. And what it comes from China is the fact that the infrastructure allow the ability to run fast clinical study, pre-poc study and fail fast because hospitals are very large hospitals, right? You have neuroscience hospital for 3,000 beds. A couple of months ago, I was in Shanghai, and I was visiting a hospital have 3,000 beds in ophthalmology. So I mean, this is -- so you can run clinical study very, very fast and turn the assets very, very fast to fail. And that's one of the scales of China is the ability to screen and test and fail. And because they have so many of those PhD, the combination of those 2 things in biology, in chemistry to design those new molecules and test them very quickly, that combination is magic.

It doesn't mean that we can't do that outside, but we need to unlock a lot of red tape that exists between those different institutions and continue to unlock science. So for us, as we did, we did deals -- we did Innovent deals recently. We did 3SBio with our 4404 and other deals because we see an opportunity to actually untap these innovations that come from China because it's fast. But at the same time, we also are preparing ourselves because guess what? The Chinese company at some point will come to our markets, and it's -- we need to be prepared for that. And that's why we also are building our commercial and our R&D organization to compete.

And so we -- one of the drivers of that, for instance, is by embedding AI capabilities into a division. So for instance, in the International division, I have the ability to build strategically what are my top priority for AI? Is that improving segmentations, improving district manager analytics of the most performing brick in this territory? Or is it in medical to accelerate study reports or whatever. So we have in our division the ability to prioritize our resources on AI, test those tools and then roll and pull them through into our commercial. That has a big move that allow us to remove -- to increase productivity of our organization. Chris does the same thing and so forth. So we are essentially preparing.

And remember, my biggest country outside of the U.S. is China. And I'm competing against the Chinese organization. Innovent is one of my top competitors in many categories. It doesn't mean that I'm losing against them. LORBRENA has 5 TKIs of the next generation today in the market where I have 2 in most countries in the world. I still have 50% of first-line new patient start in China. So it's not like we will give up. Absolutely not. We have the ability to win, but we just need to be better.

You mentioned AI. How -- I guess, broadly is Pfizer kind of embracing AI right now? How much is that affecting your business in terms of efficiencies, et cetera? And I guess the question is like, are we at the early stages of this or on your part of the business on the R&D side, it might be a bit different.

I mean we are not in the early phase of that. We are already full in the sense that if you look at -- I was telling you the productivity of commercial organization tripled the sales force in the last -- in the past 3 years. A lot of that is driven by advanced analytics and AI. So what I used to have is in the -- when I came back 3 years ago, we had almost no data on impactable sales and the qualities of the connection with health care professionals. Now I have that at the brick level, at the district level, and it's all in the same platforms. And AI can actually inform a district manager, you didn't go to the right doctors with the right frequency, the impact is not good. Your selling skills are suboptimal because we do selling training online with AI capability.

So you can start seeing the effect of that. So improving the current business model is already happening, and it's increasing the productivity and the impact of what we have so that physicians have the right information for their patients. So I think that is really good, and I'm very happy with that. Look, in medical and regulatory, we are also deploying those type of tools. And study report can be produced a few days after the last patient last visit now because thanks to AI, which it took -- used to take 3 months to have the study report, right? We can do regulatory. This industry is a very regulated industry. Every time you move one product from one line to the other, it's a type 2 variation, what we call it, and you need to file that variations into every regulators across every country in the world.

We are in 120 countries. So every day, we do a lot of paperwork, huge bureaucratic work. You can do those things automatically now. You don't need to have those. So that has a huge potential to increase the effectiveness of our organization. So that is today. Now what the future is, and that's where it's more exciting is countries have building electronic health records. This country, for instance, in the U.K. is one of the most advanced electronic health record country in the world. We have like all the data per patient. Of course, it's anonymized, but you have the data.

Down the road, you can see the evolution of those disease, you can predict, you can see where the patients are when you can run clinical study, you don't need to open 25 centers. You can run a few centers because you have identified the patients are already into this hospital. You can completely transform the way we operate from development to commercialization. That is not here yet, but that's where we're going.

Excellent. I know you've recently taken over some additional responsibility within Pfizer, chairing the portfolio management team. I guess can you talk a little bit about what that new role entails and how maybe you're approaching that role differently than it's been handled in the past?

That's right. So the PMT is the portfolio management team is a team that takes all the decisions when you move into Phase III, every major capital allocations, either being BD or Phase III start goes into the committees and get the approval for -- to access the cash. Around the table, of course, we have our scientists, we have our finance, we have our manufacturing, commercial folks. Albert, as our CEO, is there, and we review all those opportunities. The way -- of course, we had always and we continue to do that, look at every opportunity in its entirety. So of course, we look at IRR, we look at peak sales, we look at probability of technical success, probability of regulatory success. And then we take our decisions.

But in the past, we used to take those decisions as one, as an isolated case as they were coming through those committees, we were looking at those entities for the merit of their entirety. We continue to do that. But what we do now on top of that is we always look at portfolio maximization. What it is that exactly we are -- we want to achieve? Is the start of a new early phase is the right thing to do at this particular time? Or is that derisking this program that is advancing fast is where we should spend our next dollar. Is the ability to do another Phase III study the way we should play now? Or should we derisk this asset with that ongoing Phase III and then start the next one?

Because if we pull the trigger from the Phase III and the PTRS, the probability of technical success goes from 61 to 75, that's a game changer, of course, in terms of capital allocation and return to shareholders. And that's always how we do it. And then the second thing that we do is we have -- like I run my business, we have to have early signals on the key swing factors because if you wait for the clinical study to run out and then you see the results, then you may not have done what you should have done to maximize these assets. So what we do, we have swing factors from an access, from a competitive standpoint, from a regulatory environment.

And we see those swing factors for each of those indications. And we say, okay, this is interesting because if we were to do this, -- now that these competitors read out, actually, the profile of our asset is better, we should accelerate this asset. So as we see those evolutions, we take different type of decisions in the committee. So that's how we try to activate our resource so that we can deploy our capital the most wisely and return to our shareholders better.

The outcome of that, do you see this being Pfizer is going to have maybe a more targeted portfolio with bigger drugs? Is it -- you're going to have just more drugs get through the pipeline because you have a better probability of success? I mean how do you think about that?

No, I think as I was saying, Chris, earlier, I think what is shaping is that a fully integrated. I don't think we had that in the past is like fully coherent strategy from discovery to development to commercial. You can see that, right? As I was saying, thoracic cancer is a place where there is unmet medical need. We are deploying our discovery, our medical. We have incredible capability. Jeff Legos that came was a key driver of Novartis Oncology in the past. He's in the company. And Chris Boshoff is also historical leaders in oncology. So in oncology, I really feel like we have an amazing team, and it's consistent, and we are aligning on which therapeutic area, which tumor type we want to focus. And so it's very consistent.

So I think how we are shaping this company is really to align end-to-end and not having independent houses or fighting for different things in different places. So I feel like we've made a huge progress in the last 3 years in actually in a very coherent and aligned strategy across all the different components of that continuum. Now what I see is doubling down in the places where we know how to operate. That's really what I see.

It's not -- as I said, thoracic cancer, all those assets, let's say, out of the 3, let's say, maybe the 3 of them come in, we have the backs to actually host them. In breast cancer, same thing, we have the plate to host them. Vaccines, we have already organization deployed. So by having this coherence, you increase the impact. I mean, immediately, the impact of your commercial dollars are exponential because it's the same course. It's the same rep. It's the same investment. But this time, you have 3, 4 assets. It's very different.

Yes, absolutely. Maybe just time to jump in a couple of specific product ones. I know you mentioned obesity earlier. The international piece of the obesity market, I think, for all of us has been kind of surprising how quick it's built out. When -- within Pfizer, how are you thinking about how that international market evolves? Does it stay very cash pay centric? Is it fragmented? Does it kind of coalesce around a couple of products? So just how are you seeing that evolving? And then specifically, how does Pfizer navigate that?

Yes. No, Chris, I think we are -- we -- first, we all recognize it's underdeveloped, right? I mean we were all surprised by the cash market, how fast it moved. And remember, in my world, after approval in Europe or approval in some of our big markets like in the U.K., Europe, Japan, it takes me 1.5 years to actually get access. When you are out of pocket, I mean, the day we got European approval, we will be launching those products immediately. That's a big difference. So that has a huge opportunity for us. Now is it going to be 100% out of pocket as it is today? Probably not. I think as I was saying, I mean, this market is shaping to be 10, 15, 20 markets, 20 different markets.

And of course, you will have probably more reimbursement in the heavy population with concomitant disease and having a product that have demonstrated strong efficacy, very strong efficacy and acceptable tolerability profile, we probably will go in those things. But of course, if you have a product that is there in the reimbursement, you need to have a different product in the out-of-pocket. because you can't be in both places with the same product at a different price point. That doesn't work, right? So that's why also a portfolio will allow you to actually untap and address the needs of those different populations.

So I think today, the average out-of-pocket price on the monthly treatment is around EUR 300, EUR 350 per month. That's what we see in most markets. It's been stable so far. Let's see when sema goes generic. But the profiles are very important. I mean that population is not just -- we've seen that in many other categories where it's not because you have one of the early entrants that actually goes generic that the whole market disappear, absolutely not. I mean if I'm going to use some medicines and I want to have a monthly treatment, so a 13 injections versus once every week, I mean, it's a very different profile in terms of tolerability and utilization. So there will be opportunity. We will have to have the portfolio and Europe will have some in reimbursed, some in non-reimbursed. And as I said, the ability to play all those different levers will be the -- what will make the difference between the players.

Right. And maybe just one follow-up. You mentioned portfolio. Pfizer's portfolio today? Do you feel like you've got the breadth you need in obesity? Or is this an area...

I mean, remember, we have berobenatide Phase III, and that will know -- and we have, as we said, several ongoing clinical studies. As you know, the weekly are already fully recruited. We started the monthly and we started the switch study, and then we're going to do some concomitant disease associated with that. So that's kind of berobenatide. But we have our combo with amylin that is going to be reading out at the end of this year. So the amylin GLP-1 will potentially be more kind of on the more severe population, higher impact. And it could be a monthly treatment for that population with very high impact, could be really a very highly differentiated profile.

As I said, when we acquired Metsera, we acquired a team actually here based in London of researchers that were focusing on the chronic weight management, and they have several products in different phase in orals and ultra-long and all those different peptides, and they were specialized in peptide research and those guys are developing our pipeline. And of course, we continue to look outside to see if there are something in China that is being in development that will complement our portfolio. So we know we will need to kind of continue to develop this portfolio.

Excellent. Well I think we're just about time. Alexandre, thanks for joining us today and appreciate your comments.

Thank you very much. It was a great pleasure.

Thank you.

Great. Good morning. Thanks for joining us. I'm Terence Flynn, Morgan Stanley's U.S. biopharma analyst. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

Well, I'm very pleased to be hosting Pfizer this morning at our conference. Thanks so much to Albert Bourla, who's the company's CEO and Chairman. I'm very happy to be here with you, Albert. And maybe I'll turn it over to you just make some opening remarks before we launch into Q&A. But again, thanks for taking time out of your day.

Thank you for the invitation. Good morning, everyone. I mean, a very few comments in the beginning. I think that Pfizer is in a good place right now. We had 3 serious headwinds in 2025, but I think we resolved all of them in a quite satisfactory way. The first one was affecting the entire industry with tariffs and MFM. We led the industry in creating agreements that I think put that behind us, and it was a very good compromise and settlement. I told my peers, the other CEOs that they don't have to send me part of their check, a bonus. It's fine if they send me thank you notes.

Then the other 2 were specific to Pfizer, the challenges. One was the COVID uncertainty and the fact that the COVID was going down and what does this mean if COVID did subside for the EPS. We, I think, put also that to rest. This is the year of the smallest COVID season we could even imagine. And there is nothing happening in our EPS because actually, what is happening is that we are beating expectations because everything else is performing very well. So I think already, I can see that COVID is not a concern of investors anymore. Nobody is asking me about it, and they all see it more like an upside versus the guidance that we are giving.

And the third was, of course, the LOE period that starts and it is ahead of us. And that's something that together with COVID, that was taking the attention of our pipeline completely off. So everybody was focusing what is your growth and what happens in the LOEs. For that, I think we were preparing for a long time. We did a significant amount of business development acquisitions, and we launched a significant amount of new products. And during that period, all of them are doing extremely well.

In addition to that, we were very successful in reducing our cost base. And I think testament to the ability of Pfizer to execute it is that we did that without affecting the top line. We were able to take $7.2 billion within 3 years out of our cost base. And in the last 10 earnings, so '24, '25 and the 2 earnings of '26, we beat expectations for revenue $9 out of $10 and for EPS, 10 out of 10. And all of that while we were reducing our cost base. And we announced now another cost initiative that also will help us in the next couple of years to offset the LOEs.

But the fundamental for setting the LOEs, it is that the new products and the business development products, they are running at around $13 billion annualized rate if you make the math, and they are growing at the 20s. So I think that's something that it is very important.

And I will finish my comments with -- now because all of that is very clear, I think, to investors, if you see our earnings calls and also my meetings with investors, most of the attention now it is not in COVID, not in MFN, not in LOEs, pipeline. And the pipeline is doing extremely well. During all these years, we refocused our R&D. And we had significant readouts. We are having significant catalysts ahead of us in 2027 that I think could help investors realize the depth and breadth of this pipeline because clearly, there is a disconnect between what the Street is projecting for our longer-term growth and what we are certain that we will achieve vis-a-vis our long-term growth.

Great. Perfect. So we'll get to a lot of the pipeline questions soon. But the first one I wanted to ask you, I'm not going to ask you on MFN or who sent you thank you notes of all the other companies. But what I do want to ask is just you guys are obviously very plugged into Washington, D.C. And so a question we get a lot ahead of the midterms, is there any other policy area that you're focused on or that you're watching ahead of the midterms? Or given that the MFN agreements have been signed, that's kind of all behind us now at a sector level?

I think in summary, I don't expect much to happen until the midterm, of course, they are in a couple of weeks, but also a post the midterms because probably there will be -- we will see how that goes if there's a split government or not. And so you should expect in cases like that, only things that they have bipartisan support to move in the legislation way.

So one, of course, it is the PBM reform. That there is bipartisan reform. There are already 3 significant steps that have been taken, one, with the regulatory act and, two -- two actually with regulatory act and one with legislation. I think that will continue. 340B, it remains a major issue. I think there is bipartisan appreciation of the issue, but I'm less optimistic that we will find a way to resolve it because it involves hospitals that create a lot of political sensitivities around that.

On the vaccines front, I think it's pretty much now -- it's a little bit behind us on vaccines policy. I think we went through a period of FDA and CDC having a leadership that did not align with the medical community, the medical guidelines out there. But now I think that's fixed. I think now both in CBC and in FDA, we have normal people that they are scientists, and they are focusing now in doing their job, and I'm very pleased about that. So pretty much that's in the policy front.

There are some things here and there, but also in the U.S. are affecting. International pricing, for example, that has moved the goalpost to the U.S. trade representative, Ambassador Greer, who is an excellent ambassador and he's very knowledgeable about the issues of our industry, and he's highly sensitized in trying to fix them. And he does the negotiations with all these German, France, U.K., et cetera, et cetera. So I think that's -- also, I can expect something positive there.

Okay. Great. One more just on the policy side. You mentioned 340B is a major issue. I know the industry has been focused on this for a long time. I think a number of companies saw a benefit from a tailwind in 2Q. And so as you think about that, is that something we should expect to continue in 2027? Or how are you thinking about it for the impact on your business, I guess?

I wouldn't count much on that. I think our experience was that we had some positive headwinds but also had some tail -- excuse me, positive tailwinds, but also had some headwinds. And probably it was a net marginally positive. And I think we'll continue like that. I don't think that it's too premature to say that, okay, now we should assume that the industry will have a major 340B benefit going forward.

Actually, connected to 340B in the previous question that you asked me, one of the important things to watch out, it is the pilot that the HHS is launching for 340B. That has a starting day in September -- in January of '27. So in '27 will be applied, affects 2 significant projects of Pfizer, Eliquis and Ibrance that they are part of this program. And so there will be what we can see for the impact, but also the long-term consequences of that. Actually, that was something that Pfizer worked very hard to make sure that happens.

Great. We'll stay tuned for next year. The other area is you mentioned this in your opening remarks, Albert, is just Pfizer has been very active on the business development front over the last several years. I looked at your leverage, it looks about 2.7x now, and hence, your capacity is at the lower end of the spectrum, about $6 billion is what you guys have guided to. So as you think about kind of the activity levels, is it fair to assume you're going to be fairly subdued until that leverage comes back down and the capacity increases? Or is it going to be more opportunistic if there are assets that you guys want, do you think you can still lean in?

Yes. I think actually will be quite strategic because usually, you are much more careful and strategic when you spend your last $10 billion than your first $10 billion. We know that very well. I also want to make sure that if you see the 6, 7, 8, whatever is the number that we are mentioning that we have in front of us. If you see it in isolation, that looks less than other companies that they have maybe 20 or 25. But if you see in the last 3 years, how much the companies have invested, nobody has invested as much as Pfizer in business development.

We have invested close to $80 billion, of which 80%, it is in 3 business deals that they are all doing very well. One, it is Seagen, that it is doing very well ahead of our expectations right now every quarter. The other one is Biohaven with NURTEC, Again, it is doing very, very well and is contributing to the growth significantly. And I would say that NURTEC is a product that there is a disconnect between our projections and the Street, and I think it's doing very well. And Metsera, right? So we invested significant amounts. And no one has invested even half the second one than that.

So right now, going forward, all of the focus and emphasis is on maximizing the value of these investments, unlocking the value. Those products need to do well, needs to deliver their pipeline because one of them was not -- we didn't buy a product. We bought a platform, Seagen, right, which was the most expensive of that. So it is a host of intellectual properties, know-how, people, labs, projects, research projects, all of that, right? And that is, I think, doing quite well.

So yes, if you put it into perspective, I think we are very good in the business development and very active. Now going forward, clearly, we will be very strategic, very careful. We will -- I would expect that we'll do a lot in China as we are doing. There's tremendous opportunities there. And I expect that we will be more on the earlier stage, both the peri-IND and Phase I, Phase II.

Great. That's a good segue. Next question is you have looked to China for some innovation. I think 3SBio is one of those examples of the deals you guys have done. I guess just talk about the opportunity set there outside of oncology is a question we get a lot. But also, is there a risk do you think that the U.S. government does step in and try to limit these deals? Because I know that's been a question some investors have raised to us as well.

I think China has impressed all of us. They are a tremendous source of innovation right now. They are doing things 3x faster, half the cost, and they are investing significant amount. So they have a lot of productivity. And they can't utilize it themselves. They are not in a position neither to do global development or global commercialization right now. So the only way to utilize this innovation is through out-licensing, and there is a lot of offer right now.

You need to be very careful in China. You need to know what you select. I'll give you an example in Pfizer, in all the BD activities that we do, if it is a company in Seattle or in Boston or in Copenhagen, we do due diligence in the data room. We go there. We look at the numbers. If they fit, it's fine. For China, we send people on the ground, but they spend weeks, and they go patient-by-patient record. They will go to the hospitals that the studies were done. They will take the X-rays and they will make sure that the X-rays before and after the treatment are massive. So that's the level of due diligence that we do.

We can because in China, we are probably among the biggest multinationals and clearly the most famous and the most entrenched. We have 1,500 R&D people in China, R&D, 15. So it's a significant amount of resources that we have that allows us with the local resources and with the people that we send to do due diligence. So I expect that Chinese will become better and better and better in providing innovation, and I think that we will see a lot of opportunities there.

Now is there a political risk there? I think, yes. And the political risk is from both sides. It's from the U.S. that there are some voices that they are wrong that they are saying we should stop licensing -- getting, let's say, biotech in China is becoming a very big problem, right? I think they overlook the fact that we are getting their technology. It's not like NVIDIA chips that the U.S. is trying to avoid, that Chinese to get their hand around our technology. The opposite that is happening right now. So I don't think that, that justifies the concern why you get their technology because they give it to us.

And also, it's a very different topic if it is nuclear capacity or, let's say, technologies that can be used for national security and different thing now for cancer medicines. For God's sake, right? There's not the same sensitivity of national security. But there is -- there are voices nevertheless on that, that we try to explain. And the most reasonable people and quite influence in this administration, they understand and they listen. The same is I spent a lot of time in Congress to explain that.

But I am also concerned on the other side because the Chinese government, they already in July, they started the first measures, and they are having the opposite concern. So why do you give our technology to Americans. And I want to make sure that you develop it in-house all the way to the end rather than make a quick buck by giving the technology to the Americans. So also, they are wrong. And also, I'm trying to explain to the Chinese government, but they should stay the course and to the U.S. politicians that the name of the game is not to slow down China. The name of the game is to become better than them. So they should focus on policies that they are allowing the U.S. biotech ecosystem and biopharmaceutical ecosystem to thrive. And right now, they do the opposite. They create constant challenges.

What -- as you think about that -- the likelihood that you see the rise of a Chinese multinational large-cap pharma company, what's the time frame, something -- I mean, you mentioned China is going faster, investing in a lot of innovation. They have government support. What's the time frame that something like that could happen over if you had to use a crystal ball to look out?

I am preparing for that. I don't know if that will happen, but it is a likely scenario. And that will bring a new competitive situation where my competitor will not be Lilly or AstraZeneca or Merck, but we are pretty much one league, the same league. Someone is better in R&D, someone is better in cost, someone is better in marketing. Chinese are, as I said, 3x the speed, half the cost, right? So -- and when you bring this new league, if they bring global players, you better be 3x the speed, half the cost. And that's what I'm preparing the Pfizer too.

I think by the end of the decade, I would be surprised if we don't have global Chinese players. And the biggest lever that we have to do something as audacious as what I'm speaking, half the cost and 3x the speed is the deployment of AI, successful deployment of AI in addition to many other things. It is what can allow us to become faster and productive and secure.

Yes. What -- I'll go out of order here, but that was one of my questions is AI. And I want to get to the pipeline, too, because it's important. But just maybe just one near-term nonobvious use case of AI at Pfizer. So again, we've seen a lot of the obvious ones, which is like regulatory correspondence or identification of clinical trial sites that maybe are better at enrolling, patient identification based on some genetic data. But what is like one nonobvious case that maybe we wouldn't be aware of that you're like, wow, this is really exciting. This is something that gives me confidence that we're going to be able to do things quicker for less money.

The truth is that most of the AI debate is focusing on R&D and rightly so because I think it represents a huge opportunity. And we are doing tremendous amount of work there. And you mentioned some of the things. I would mention also the safety and pharmacovigilance. And so all of that are there, right? But people, I'm not sure I understand how AI is changing marketing. It's tremendous. Physicians, now they are getting their information mainly from LLMs. And there is a whole new marketing capacity to make sure that the LLMs include your data, and which we are in the forefront of doing it. That can change, and that's one in Salesforce, right now, you have a specialization of field forces.

You need to operate with 4, 5 different Salesforces because you need depth of knowledge in the hands of the rep to be able to speak with specialists. That depth of knowledge, AI can cover it. So you can have, let's say, reps with much broader portfolios that they could be and more actually, frankly, effective and with coaching that comes in real time. So these are some of the cases. And I will finish with the one that nobody is watching. It is probably one of the largest opportunities in AI manufacturing and how it can enhance the whole supply chain from cost, reliability, speed, and I can go on and on.

Okay. Great. Really exciting and definitely a big focus over the last several months or so. I guess now maybe just to pivot to the pipeline because you mentioned, again, that's where you're -- Pfizer has been doing a good job. You're really excited about. I think the next upcoming readout that a lot of investors are focused on is Mevro, the EZH2 inhibitor, where you have 2 Phase III trials ongoing in metastatic prostate cancer. So maybe just talk to us about your confidence level in the upcoming data sets here and frame that market opportunity. I know you guys have a long history here in the space with XTANDI, for example.

Correct. And I'm very happy because that it is a good example that a good franchise of Pfizer with XTANDI will have something to continue it. The same is with our CDK4 and some of our oncology pipeline on Ibrance. I wish we had the same as a parenthesis on on our [ ATTM ] in cardiomyopathy franchise, we don't. But over there, we have. So let's focus on the positive there. I'm optimistic. You never know until you see the results. And all of that, they have probability of success. It's higher probability of success than we had, for example, in SV but didn't make it on the later stage. We are very optimistic on SV, on the combination trial in first line. And also, we are very optimistic about the potential in second line because we had very good results in that study that failed, but was not powered for.

So that's -- with Nevro, there are 2, and it's a very big market. And for us, it's extremely significant because Nevro, we own 100% globally. In XTANDI, we had half of it, right, and half of it in the U.S. and because we were sharing. So for us, it's a significant way to move and increase to cover the lost revenues from XTANDI and increase them. And we -- as you know, the study is delaying the readout. I once more emphasize the delay is for one only reason that we have less events than we anticipated. If you see the glass half empty, you will think that placebo is doing very well on the placebo, the XTANDI arm is doing very well, and that's why you don't have many events. If you have half full the glass, you will say that the treatment arm is doing very well. That's why you don't have events. But reality is that you can only have strong performance if you have delay in events. You can't have it if things were coming normal.

Great. So you say you're more optimistic as a result is kind of what...

No, I think I'm reasonably optimistic. And the proof is in the pudding. We'll know before the end of the year, probably, as I said, it's event driven. We estimate that we'll know before the end of the year. The phase -- the randomized data of the earlier phases were impressive, right? They had 50% improvement. This study, even with 30% improvement will be a very meaningful and statistical significant...

Great. Maybe I want to go over to the Metsera acquisition. Obesity has been a big focus for the company for a while now in terms of the efforts. So maybe just talk to us about that portfolio at Metsera and what it does for your strategy in obesity, and then we'll get into some of the upcoming data readouts.

One thing I want to remind everyone is that Pfizer before Metsera had a serious interest in obesity way back in the day. And we had recognized the importance of GLP-1s way back in the day, and we had 2 candidates of our own, which was in the oral. But if the studies were successful, we will be ahead of home. Guess what, they were not. And that's the price that we paid heavily. But why I'm saying that? Because we had the resources to be able to understand and manage R&D-wise GLP-1 portfolio.

And of course, commercially, we all know that this is our cup of tea. It is a market that behaves identically to the Viagra when we launched it. So there is a lot of out-of-pocket business. There is a lot of counterfeits and there is a lot of e-commerce business. All of that were the characteristics of Viagra that we master. And of course, in primary care, we are the kings, I think. So I think all of that is good.

Now Metsera is a very good portfolio of products. I consider the best proof that the portfolio is valuable is that Novo tried to get it out of our hands and sacrifice all their portfolio to get to that, which gives me reassurance that was a good acquisition. We have seen data since we made the acquisition. The data that we saw that we didn't know before, we can only predict were the monthly, and that was a significant milestone because we were pretty much certain that we had a product with the Metsera acquisition that it is weekly, zeroed out and to you that it could be maybe bimonthly, so every 2 weeks, certainly. But we were expecting to be monthly and that was derisked that we achieved.

Now we are running a very aggressive portfolio of studies. 10 Phase III, 20 studies in general in obesity this year, 10 of them Phase III in Metsera portfolio. The weekly in diabetes and nondiabetes and the monthly already started. And pretty much, I think they have all recruited fully right now. So they are record time in recruiting. The sweet study, which is a study that will check if people already in other GLP-1s, Lilly or Novo and they have reached, let's say, a certain plateau of their weight loss, if they can switch to monthly maintenance which is instead of staying in the weekly injections that they have already, a very important study, as you can understand, because it can -- unlocks dramatically more bigger market. It's not only that the new scripts that we want to get based on the differentiation, that's weekly, that's monthly, and then you hope to get a good market share of the weekly.

But you can go and get all the bulk of the weekly, which is right now in maintenance to get also a market share over there, which is significantly important. And because that's not a study to beat anyone, it is a study to be non-inferior, but monthly. The bar, of course, is lower. So that's what is going on. There are other studies. This study will start also in this year. And there are other studies that are starting this year.

Then the next thing in our obesity is the combination with amylin. We have already initiated the Phase II study, which is a monthly amylin plus GLP-1 combination will read out next year. This year, we expect to show some of the Phase I data towards the end of the year of that combination. Of course, the Phase I data, they were designed to see tolerability to see different doses. So we will wait to see the data, but I would emphasize what I'm looking for this data is to see if at the end -- because I haven't seen them all. At the end of the Phase I if there is plateau or continued weight loss, that's an important thing.

The second is if we see meaningful additive weight loss because you put the 2 of them. And the third, it is to see what was the tolerability of those combinations, right? The Phase II is very large and is examining several different doses, and that will inform the final Phase III that will start next year.

Okay. Great. Maybe just going back to a single product, the GLP-1. I think one of the questions we get a lot is tolerability profile of the monthly. I think you guys are working on a longer-acting. Amgen is working on a longer acting. It looks like the rates of GI AEs are somewhat higher than the weekly products. And so as you think about the steps you guys are taking to kind of improve that further, are you confident that when you implement these titration strategies into Phase III, you will result in a lower or improved GI tolerability profile? Because I think that's one of the pushback areas that we hear a lot of times from investors.

We are very optimistic about that. There are 2 things that in our Phase III, we have incorporated that we are not doing. We didn't do in the earlier studies. One, it is it was 3 steps to go to the maximum dose in the other studies, right? I remind you that with Mounjaro 6, so they have much gradual, let's say, increase. Now we have much gradual increase in the Phase III. So we have introduced additional titration stage. That includes the monthly because we are going to the monthly from an interim of suddenly 4x the dose, right? Now we are having twice the dose and then we go back to 4x after an additional step. So that's one thing that we do, more titration.

The other thing that we also do in the earlier studies that were designed by Metsera, and I think I understand why they did it. It's not that they are stupid. They wanted to accelerate the development of their portfolio, but they didn't allow step down in the dose. So if you have a tolerability issue in those studies, either you suck it up or you drop out of the study. Now we have in the protocol build that if you have in a higher dose tolerability issue, you can step down to the previous dose and continue your study, right?

So with all of that, we are quite optimistic that we will have monthly product with very good tolerability profile and same efficacy like the weekly GLP-1s, which is, I think, a significant differentiation and good value proposition in the hands of a company that knows how to market primary care products.

Okay. Great. Maybe one follow-up on the amylin program as well. So you mentioned the Phase Ib combo data. It sounds like that must be good enough to support a move into Phase II, which is a pretty large Phase II. As you think about the profile of amylin, is it about better efficacy? Is it about better tolerability? Is it about just, again, a different access here? Like what are you solving for, I guess, by adding the amylin strategically?

First of all, Phase II already started, right? So we had preliminary, let's say, indications of these combinations, and that was good enough for us and for FDA to allow us to go to a Phase II. I think both. I think with that in the higher doses, you can achieve way superior weight loss than the current GLP-1. So that's one. But also, you can say that with lower doses, you can achieve the same weight loss, but much better tolerability profile. And we are testing both in our studies, and we'll see how that ends.

Great. Any other mechanisms that you guys are focused on here? I know that's one of the other questions on differentiation. So obviously, you have GLP-1, you have amylin, but any other mechanisms that you guys are focused on?

One of the -- a lot of activity we are doing in our oral GLP-1. And I think that is showing very good results. It's a licensed one that we got, and it is very -- progressing very well. And then it is same scaffold like orphan like Lilly, that one, but much I wouldn't say better chemistry, but different chemistry, but allows it much, much smaller dose. The Lilly dose is very big, right? And pretty much the Lilly dose is making it impossible to combine with -- in a pill. That one, you can because it's very small, the dose that you need.

So that, I think, is something that we are -- it's quite advanced. Other than that, yes, there are emerging science in multiple new modes of action that exist out there, and we are looking at all of them. And again, here, but also China, they are doing a lot of stuff.

Great. Well, I think we're up against time, but always a pleasure, Albert. Thank you so much.

Thank you very much. Thank you very much.

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We had another strong quarter of execution driving continued strategic progress. Our revenues and adjusted diluted EPS in the second quarter once more exceeded expectations. This shows that our commercial teams are performing with excellence and precision and that we continue to operate with financial discipline. We also are building towards the future, advancing our R&D pipeline that provides multiple opportunities for success across our 4 therapeutic areas.

Previously, we announced that Dave Denton would be leaving Pfizer soon for another opportunity. Since then, Dave has partnered closely with Cecile Guegan to prepare for this transition. Cecile is fully ready to serve as our interim CFO, including answering your financial questions during today's Q&A session. I want to thank Dave for his leadership, his dedication to Pfizer and all he has contributed to our company's success. With Cecile's leadership, I'm confident we are in very good hands.

She has had a central role for years in shaping and driving Pfizer's financial and strategic direction. She's an expert in our industry and her field, and knows our company well. She has worked closely with Dave and our leadership team in completing key transactions, developing our approach to capital allocation and driving efficiency and productivity improvements across our company. Now, I'm confident in the years ahead because we have been purposeful in establishing a foundation marked by strong execution across our business, alignment among our leadership team and a clear strategy to guide our colleagues in working towards meaningful future growth and impact.

Let me go through our progress with our 2026 strategic priorities starting with maximizing the value of key transactions. In the quarter, revenue for our acquired products grew 25% operationally when excluding the impact of certain onetime items in the same quarter a year ago. We view our Seagen, Metsera and Biohaven transactions as transformative opportunities for Pfizer. We are focused on execution and pleased with the progress we continue to make with each of them. With the addition of Seagen, we gained an innovative platform, deep scientific expertise and a promising ADC pipeline central to our goal of growing our Oncology leadership. We also acquired a commercial portfolio that is delivering ahead of expectations.

In the quarter, we drove strong revenue growth with a 21% year-over-year increase across the legacy Seagen portfolio in the U.S. after excluding the onetime stocking benefit that we had in the second quarter of last year. With Metsera, we believe we are on a path towards unlocking a differentiated profile for patients with obesity and related conditions in a market expected to reach $150 billion. Data we shared recently at the American Diabetes Association Scientific Sessions reinforce why we are excited about berobenatide, which is an investigational ultra-long-acting GLP-1 receptor agonist with the potential to be the first monthly GLP-1 peptide approved for the treatment of obesity and related comorbidities.

We are targeting a first approval in 2028. And this year alone, we expect to advance an extensive Phase III program that includes 10 studies for chronic weight management and obesity related conditions. Finally, the acquisition of Biohaven positioned our company as a leader in providing treatment options for migraine, a disease affecting an estimated 1.2 billion people worldwide. Nurtec delivered strong year-over-year growth again this quarter and continued to lead the oral CGRP class in total prescriptions. Looking ahead, we are working towards expansion opportunities that would further strengthen our impact for this space.

We have a Phase III trial underway for menstrual migraine, an area of high unmet patient need, and another trial evaluating redosing for acute treatment of migraine. We also expect a pivotal trial start this year investigating Nurtec's use as a treatment for chronic migraine. Our pipeline progress through the first half of the year reflects our discipline in prioritizing programs where strong science, clinical execution and strategic investments can make the greatest impact for patients. Our R&D team already has been productive with our ambitious agenda, achieving critical milestones that included 3 regulatory approvals, 6 key data readouts and 8 pivotal study starts so far.

Oncology is a clear area of strength. In the past 2 years, we have initiated a dozen late-stage studies across our core tumor areas. We have unveiled data from 21 late-stage readouts and achieved 6 regulatory approvals. We also have clear line of sight to our aim of delivering a risk-adjusted high single-digit revenue CAGR from year-end 2028 through year-end 2033. This is supported by our bottoms-up analysis that included assessing our base of growing in-line products and 20 key potential new medicines and vaccines within our pipeline. We continue to prioritize investment in R&D, both on internal programs and selective business development with the potential to strengthen our position in key areas.

Financial discipline and cost management is allowing us to continue investing in growth. We now expect an additional $1 billion in savings from our ongoing cost realignment program. Powered in part by rapid advancements of technology, net cost savings from these programs are now expected to total $6.7 billion through 2029. We are also moving towards the next phase of our manufacturing optimization program. And with additional savings, we now expect total net cost savings of approximately $3 billion from this program through 2029. With our strong performance through the first half of the year and our ongoing productivity enhancement discipline, we remain confident in our business.

Today, we are raising the midpoint of our revenue guidance for full year 2026 and reaffirming guidance for adjusted diluted earnings per share. And we remain committed to maintaining and over time, growing our dividend. We view AI as the structural transformation opportunity for driving substantial acceleration of our R&D pipeline, greater speed and productivity across our business and an improved competitive position for Pfizer. We are already seeing benefits from AI in reducing cost and expanding yields in manufacturing. It's helping to make our commercial field force more effective and sharpening our commercial marketing approach.

Even greater opportunities are ahead as we apply AI to accelerate innovation in drug discovery and development. Our ambition is to build an AI-native R&D organization where every insight from target discovery through medical evidence, continuously informs the next decision. In summary, I'm confident in how our business is positioned. We executed well and operated with continued financial discipline through the first half of 2026. With our performance in the second quarter, this is the 9th time we exceeded consensus expectations for revenues in the last 10 quarters, and we have beaten expectations for adjusted diluted EPS in all 10 of the 10 past quarters.

And with that, I'll turn it over to Dave and Cecile.

Great. Thank you, Albert, and good morning, everyone. Leaving Pfizer was a difficult decision, but it's the right one for me personally. I'm deeply proud of what we've accomplished together, the team that we have built and the vision for the future of Pfizer. The results of the quarter show how well our company is executing and why we are confident in the strategy for returning to growth post 2028. We anticipated that a substantial portion of today's call will focus on our outlook for the remainder of this year as well as our strategy for creating long-term value for both patients and shareholders.

So with that in mind, we determined it would be best for you to hear directly from Cecile. I've worked closely with Cecile, seeing firsthand how she leads effectively with her deep financial knowledge, her expertise and the respect that she has earned from the entire organization. I leave knowing that Cecile will guide Pfizer's financial and growth strategy with both rigor, discipline and continuity. And with that, I'm pleased to turn it over to Cecile.

Thank you, Albert and Dave, and good morning. Before I discuss second quarter results, I want to underscore Albert's comments. I believe Pfizer is well positioned to return to growth from 2029 onward and create meaningful value for shareholders. We will continue to execute a disciplined approach to capital allocation, making targeted investments today to drive revenue growth later in the decade and beyond. We intend to do this while maintaining and over the long term, growing the dividend. Our business is performing well. Commercial execution is driving strong results, including 18% operational revenue growth in our launched and acquired products this quarter.

We continue to strengthen and advance our pipeline, with the continued growth of our launched and acquired products, we are laying the groundwork for high single-digit revenue growth towards the end of the decade. Our second quarter adjusted earnings performance reflects disciplined execution across our strategic priorities, the continued progress towards building the foundation for durable long-term value creation. I will now review our results from the quarter, productivity enhancement initiatives, capital allocation priorities and full year guidance. We are raising the midpoint of our revenue guidance range despite lower-than-expected COVID revenues.

We are also reaffirming adjusted diluted EPS guidance, which absorbs an approximately $0.10 impact related to the Innovent Biologics transaction that closed in the third quarter of 2026. We delivered revenue growth in the quarter through disciplined execution across key brands in the U.S. and select international markets. Second quarter 2026 revenues were $15 billion, ahead of our expectations and representing a year-over-year operational increase of 1%. Excluding COVID products, the underlying business delivered 5% operational revenue growth. Progress leveraging data and scaling AI across the company supported our field force in driving access and increasing uptake for new launches.

Our commercial performance has also helped mitigate the impact of currently low COVID infection levels. On the bottom line, second quarter adjusted diluted EPS was $0.77, also exceeding our expectation. This outperformance reflects continued cost discipline and productivity across the organization, while we still advanced several Phase III study starts across our pipeline. Our results this quarter demonstrates the effectiveness of our commercial strategy. We saw a solid contribution across the portfolio, primarily driven by Eliquis, Padcev, Vyndaqel family and Lorbrena, each reflecting focused execution in key therapeutic areas. We also expect post-2028 cash flow to benefit from the previously announced Vyndamax patent settlement.

Across international and U.S. markets, our commercial teams are focused on identifying patients, enabling access and supporting duration of therapy based on clinical data. This has helped us maintain leadership positions across oncology and vaccines and unlock new opportunities. We continue to drive value in key in-line products ahead of approaching LOEs, while our launched and acquired products delivered $3.2 billion in revenue, and grew 18% operationally in the quarter. Of note, this growth rate was tempered by onetime items recorded in the second quarter of 2025, mostly impacting the legacy Seagen in-line portfolio. Excluding this impact, the growth rate was 27%.

We continue to invest behind in-line brands and launched and acquired products to support their growth trajectory and help offset incoming LOE headwinds over the next several years. Financial discipline and strong cost management across the manufacturing footprint remain top priorities. Adjusted gross margin for the second quarter was 76%, primarily reflecting product mix and ongoing cost control measures. We continue to expect $700 million in savings from Phase I of our manufacturing optimization program this year with $175 million realized in Q2. Total adjusted operating expenses were $6.1 billion for the second quarter of 2026, an increase of 4% operationally versus second quarter last year.

Looking at the components. Adjusted SG&A expenses decreased 3% operationally, primarily reflecting lower spending in corporate enabling functions. Adjusted R&D expenses increased 12% operationally, primarily driven by an increase in spending in certain oncology and obesity product candidates. Second quarter 2026 adjusted operating margin was strong at 35%, reflecting effective cost management, strong non-COVID revenue performance and higher R&D investment in the quarter. Turning to the bottom line, Q2 reported loss per share was [ $0.04 ]and our adjusted diluted EPS was $0.77, which benefited from our strong non-COVID revenues and efficient operating structure.

Our second quarter GAAP results reflects the impact of the recent Phase III readout for SV in 2L+ non-small cell lung cancer and, to a lesser extent, the removal of revenue projections for Oxbryta following a recent discussion with the FDA. The updated forecast resulted in $4.3 billion in noncash intangible asset impairments recorded in the quarter. For SV, we continue to forecast significant risk-adjusted revenue in other non-small cell lung cancer indications, subject to technical and regulatory success. So far, Seagen revenue performance has exceeded our initial expectations, and we aim to continue delivering above initial expectations in the long term.

We remain disciplined in operating expense management and focused on long-term margin improvement. We have made meaningful progress on our productivity enhancement initiatives and remain on track to deliver most of the anticipated $7.2 billion in total net cost savings by the end of 2026. Building on that momentum, today, we announced the expansion of our ongoing cost improvement programs, which are expected to generate approximately $2.5 billion in additional net cost savings from 2027 through 2029. We now expect $1 billion of additional net cost savings from our productivity enhancement from technology and simplification efforts designed to further reduce SI&A cost.

Separately, the next phase, our multiyear manufacturing optimization program is designed to reduce cost of goods sold and deliver approximately $1.5 billion in additional net cost savings, and we expect to begin realizing a portion of this savings in 2027. This next phase focuses on network structure changes, product portfolio enhancement and additional operational efficiencies. We now expect total net cost savings from this program of approximately $3 billion through 2029. In summary, we now expect approximately $9.7 billion in total net savings from this program through 2029. These initiatives are expected to enhance operating efficiency, support continued operating margin expansion and strengthen our ability to invest in innovation and future growth opportunities.

Let me now turn to capital allocation. Our strategy is designed to enhance long-term shareholder value while preserving flexibility. It includes reinvesting in the business at appropriate returns, maintaining and over time, growing our dividend and preserving optionality for future value-enhancing actions, including share repurchases. In the first half of 2026, we invested $5.5 billion in internal and external R&D and returned $4.9 billion to shareholders via our quarterly dividend. The Innovent Biologics deal closed in July, resulting in an initial $650 million upfront payment, to be recorded as Acquired In-Process R&D expense in the third quarter. Following this transaction, our BD capacity is approximately $6 billion.

Second quarter 2026 operating cash flow was $3.45 billion, and leverage ended the quarter at 2.7x. Given the LOE impact over the next few years, we expect leverage to remain around current levels or modestly higher, through this transition period. Earlier in the quarter, we made our final TCJA repatriation tax payment of approximately $2.6 billion and closed on our exit of ViiV, providing approximately $1.65 billion in net cash proceeds. Based on our performance to date and continued execution, we are raising our full year 2026 guidance by $500 million at the midpoint to a range of $60.5 billion to $62.5 billion from $59.5 billion to $62.5 billion.

Our updated revenue guidance reflects strong non-COVID product performance and revised revenue expectations of approximately $4 billion, down from $5 billion for our COVID-19 revenues. We are reaffirming all other components of guidance, including adjusted diluted EPS guidance of $2.80 to $3. This EPS range now absorbs an unfavorable impact of approximately $0.10 related to the $650 million Acquired In-Process R&D charge on the Innovent Biologics transaction. This outlook reflects year-to-date performance, confidence in our business, progress with ongoing cost improvement initiatives, our expectation of adjusted gross margin in the mid-70s range and continued investment to support growth by the end of the decade.

Low COVID-19 incidence could continue to limit Paxlovid utilization. Our plan also assumes that the majority of Comirnaty sales will occur towards year end consistent with the vaccination season. And as always, we will continue to monitor currency fluctuation as the year progresses. Now I will wrap up with a few key points. Over the next several years, we will continue to position Pfizer for high single-digit revenue growth towards the end of the decade. We will invest in our business with focus and discipline, supporting continued progress with our R&D pipeline and driving commercial impact with our launched and acquired products.

We remain committed to disciplined capital allocation with a continued focus on maintaining and over the long term growing our dividend while preserving balance sheet strength and flexibility. We will continue to operate with rigor and strategic focus, executing with discipline today while building a strong foundation for the future. I look forward to working with Albert and the entire executive leadership team as we help patients around the world and position Pfizer for long-term growth and shareholder value creation. With that, let me turn over to Chris.

Thanks, Cecile. I will now provide additional color on the past quarter. Starting with the recent Phase III readout for Litfulo in nonsegmental vitiligo, a condition affecting more than 1 million adults in the U.S. alone. In the TRANQUILLO program, both the 50- and 100-milligram doses of Litfulo delivered significant clinically meaningful improvements over placebo on co-primary endpoints for the facial and total body Vitiligo Area Scoring Index, or VASI. Specifically, the program measured the percentage of patients that achieve a certain percent improvement from baseline, 75% for Facial-VASI75 and 50% for total VASI at week 52.

On the right, data for Litfulo, an internally discovered molecule with a unique mechanism of action targeting TEC family kinases and JAK3 alongside results from recent pivotal trials of oral JAK1-selective inhibitors. These data show placebo-adjusted percentages of participants achieving Facial-VASI75. At the 100-milligram dose, Litfulo induced a placebo-adjusted response rate of 19.5% at week 52. While cross-trial comparisons cannot support definitive conclusions, we're encouraged when viewing these Facial-VASI results alongside external comparator data. Management of vitiligo requires continued and durable treatment which is why we are particularly encouraged by emerging data from our extension study, demonstrating a sustained treatment effect with continued dosing at 100 milligrams out to 2 years.

Moving to oncology. I'll start with Padcev, the transformative bladder cancer medicine from our Seagen transaction. Last month, the FDA expanded the approved indication of Padcev plus pembrolizumab to muscle invasive bladder cancer regardless of cisplatin eligibility. The expansion was based on Phase III results showing a 35% reduction in the risk of death versus standard of care. Together with prior data showing unprecedented survival in the cisplatin ineligible muscle invasive and locally advanced or metastatic settings, these results established Padcev as a potential practice-changing medicine for more than 42,000 patients in the U.S. alone.

This quarter, we also initiated a Phase III trial in the bladder sparing muscle invasive bladder cancer setting, aiming to extend Padcev's transformative benefits even further and to offer an option for patients seeking to avoid cystectomy. Combined with our leading capabilities in small molecules and protein engineering, we are now advancing the next wave of potential ADC breakthroughs in the clinic, leveraging innovative linkers, payloads and targets. 2, I will highlight. GPS, which includes an auristatin S payload designed for improved tolerability and '3028 from Innovent, a bispecific dual-payload ADC integrating multiple clinically validated approaches. With these and other programs, we aim to cement Pfizer as a leading developer of ADCs, maximizing the value from recent transactions.

In June, we announced the primary overall survival endpoint was not met in the intention-to-treat population for our Phase III trial of sigvotatug vedotin, or SV, in previously treated non-squamous non-small cell lung cancer, though a disappointing outcome. We were encouraged that the subgroup of patients who received only one prior line of therapy showed a median survival benefit of 2.5 months, 13.6 with SV versus 11.1 months with docetaxel. This suggests a survival benefit that is meaningful for patients. For context, standard of care ramucirumab plus docetaxel was approved based on a survival benefit of 1.4 months in its pivotal second-line trial, though no definitive conclusions can be drawn across studies.

Together with updated Phase I data we are sharing today, these results reinforce that SV has the potential to deliver meaningful activity in earlier lines of lung cancer. On the right are updated Phase I data of SV plus pembrolizumab in first-line non-small cell lung cancer with high PD-L1 expression, the same regimen and indication as our ongoing Phase III trial. These data show robust activity with an unconfirmed objective response rate of about 82%, including a complete response. This compares favorably to historical anti-PD-1 monotherapy. These data align with the ability of vedotin ADCs to induce immunogenic cell death and thereby potentially synergize with anti-PD-1 agents such as pembrolizumab.

We've seen meaningful activity when combining vedotin with immune checkpoint blockers in our Padcev, Tivdak and Adcetris programs, and we aim to extend this finding in SV's ongoing Phase III trial. Moving to 4404, our PD-1 x VEGF bispecific antibody that has the potential to be a next-generation backbone therapy. Of note, the ongoing Phase I dose escalation study of 4404 in combination with SV is showing early and encouraging response rates. Since in-licensing from 3SBio about a year ago, we started 9 trials, including 2 Phase III studies. We have expanded the program's global reach with approximately 230 patients dosed outside of China to date and are encouraged that the safety profile has remained consistent.

Our goal is to develop 4404 as a potential best-in-class foundational therapy across multiple tumor types. Our ambitions with 4404 are supported by its differentiated profile recently presented at AACR, including in vitro data showing soluble VEGF-A affinity that is 30 to 60-fold higher than the PD-1 x VEGF bispecific ivonescimab and the VEGF monoclonal antibody bevacizumab. Our Phase II data remain encouraging as the selected pivotal dose in first-line PD-L1 positive non-small cell lung cancer 4404 monotherapy generated a confirmed response rate of about 68% and median progression-free survival of about 12.4 months. As you can see on the right, these data compare favorably with ivonescimab's Phase III results in this population, though cross-trial comparisons preclude definitive conclusions.

Moving next to mivrometostat, our potential first-in-class internally discovered EZH2 inhibitor. EZH2 is the core catalytic subunit of Polycomb Repressive Complex 2, PRC2. Mivrometostat is currently in Phase III development and the next potential breakthrough in our prostate franchise, including Xtandi and Talzenna. Mivrometostat targets the underlying epigenetic mechanisms that drive resistance to androgen receptor pathway inhibitors such as Xtandi. We are encouraged by the randomized Phase I data in post-abiraterone hormone-resistant prostate cancer showing radiographic progression-free survival, more than doubling with mivrometostat plus Xtandi versus Xtandi alone. This translated to a 49% reduction in risk of disease progression or death.

We are taking a comprehensive approach to mivrometostat's development with 3 studies underway, including MEVPRO-1, evaluating mivrometostat plus Xtandi vs. either Xtandi or docetaxel in post-abiraterone metastatic hormone resistant prostate cancer. Each of these studies is event-driven with the first readout expected in the fourth quarter based on the current event rate. In MEVPRO-1, our goal is to delay resistance to Xtandi, which has historically delivered radiographic progression-free survival of about 5 to 8 months in similar settings. Obesity is a core focus area for our R&D organization. In June, we presented Phase IIb data supporting berobenatide's potential as a first-in-class monthly GLP-1 receptor agonist peptide and foundational metabolic medicine.

Shown here are Phase IIb ADA data on monthly berobenatide at 4.8 milligrams, which is our median Phase III dose. At this dose, we achieved placebo-corrected weight loss of up to 12.3% in our VESPER-3 trial. Though cross-trial comparisons cannot support definitive conclusions, it is encouraging that berobenatide achieved week 28 efficacy that was similar to tirzepatide's medium dose of 10 milligrams in the SURMOUNT-1 study and potentially better than semaglutide's median approved dose of 2.4 milligrams in STEP 1. We also presented the first results at our high Phase III dose, 2.4 mg weekly or 9.6 milligrams monthly. From Phase IIb extension participants who escalated from placebo to 2.4 mg weekly berobenatide.

Participants achieved approximately 16% mean weight loss over 32 weeks of treatment. Importantly, there were no treatment discontinuations due to treatment-emergent adverse events in any of the arms evaluating maintenance doses moving to Phase III. On the right is a model-based meta-analysis of data from over 32,000 participants to project 72-week weight loss for berobenatide's high monthly Phase III dose relative to the highest approved doses of tirzepatide and semaglutide. As with our clinical data from the VESPER-3 monthly study, the analysis suggests berobenatide can deliver weight loss comparable to tirzepatide and potentially better than semaglutide. We see high concordance between the high-dose VESPER-1 extension data and the model's predictions, further increasing our confidence that berobenatide can potentially deliver robust efficacy and favorable GI tolerability with the convenience of a monthly therapy.

Since closing the Metsera transaction about 8 months ago, we've advanced berobenatide towards the first of a series of potential approvals beginning in 2028. Today, we have 3 ongoing Phase III trials. The now fully enrolled VESPER-4 and -5 studies of weekly berobenatide and the VESPER-6 study evaluating monthly dosing. We plan to advance 10 Phase III studies in 2026, including one evaluating participants switching from approved weekly therapies to monthly berobenatide. Our obesity portfolio includes injectables with the potential for monthly or longer dosing, once-daily orals and novel combinations. The most advanced combination is berobenatide plus the ultra-long-acting amylin analog '3945, which we are developing as a potential first in category monthly medicine.

We expect to report data from Phase I/2a studies of '3945 monotherapy and the berobenatide combination this year. As typical for small, early-stage studies, these were designed to inform starting doses and potential escalation regimens for further evaluation in Phase IIb. Our Phase IIb SOLIS-1 study has already enrolled more than half of the 900 planned participants. We expect data from SOLIS-1 in 2027, providing us with the first robust efficacy data from our monotherapy and combination programs. Looking ahead, our efforts in R&D will continue to be defined by focused execution. Here, we provide visibility into the steady cadence of milestones expected over the next 12 months, including 5 regulatory decisions, 8 key readouts and 19 pivotal study starts. With that, I'll hand it over to Albert.

Thank you, Chris. Very nice update. And let's move to Q&A. I'm sure there are a lot of questions. Operator, please assemble the queue.

[Operator Instructions] Our first question today will come from Evan Seigerman with BMO Capital Markets.

Ahead of the MEVPRO-1 data, Chris, I'd love if you could help us define how you view success. Does this study need to reproduce the Phase I magnitude of benefit, would demonstrating a clinically meaningful delay in AR pathway resistance be enough to validate the mechanism and potentially support broad adoption in the clinical setting?

Thank you very much for the question. We continue to be excited about the potential of mivrometostat to become a breakthrough therapy in prostate cancer. I want to also address the Q4 readout and how we are thinking about it. Phase I data, as you've seen, showed a hazard ratio of 0.5, doubling radiographic progression-free survival. And our data are now validated by some competitors with EZH2 or PRC2 inhibitor data in prostate cancer, although these are obviously earlier studies.

MEVPRO-1, 2 and 3 are event-driven studies, meaning control and experimental arm is where events could happen. However, the statistical analysis plan is based on a clinically meaningful benefit of approximately 30% over standard of care because that will be clinically meaningful. And it's hazard ratio based. And as I pointed out, we expect the standard of care to the control arm to be -- to perform at 5 to 8 months in this setting. So altogether, we are confident in the performance of the experimental arm in MEVPRO-1, and we're looking forward to share update of a potential next breakthrough for prostate cancer later this year.

Excellent. We can't wait to see the final results. Let's move to the next question, please.

Next question comes from Chris Schott with JPMorgan.

I want to dig into the $1.5 billion increase in the non-COVID guidance. Can you just comment on how much of this is coming from Eliquis versus the rest of the business? And I guess, specifically, what's in the guidance now for Eliquis growth? I think your partner is talking about 20% to 25% growth this year. Second question was just on Padcev, I guess, with the further label expansion. Just talk a little bit about how we should think about growth for that asset from here going forward.

All right. Why don't we start with Cecile on the guidance?

Thank you, Chris, for your question. So as I described, our performance on the non-COVID portfolio is definitely very strong, both in the U.S. and in international. And that's not one single driver. It's definitely strong execution in both U.S. and international businesses. The strength of our business led to the incremental $1.5 billion above the original guidance is a reflection of, one, exceeding our expectation in Q1 and Q2 on non-COVID portfolio, but it also reflects the confidence in the momentum across our overall business. It comes from our key products, Eliquis being one of them with the drivers that our partner, BMS has described, but it's also coming from our launched and acquired products.

As I mentioned earlier, 27% growth if you exclude the onetime impact that we had in 2025 and then some of the drivers that you have seen where we have very strong performance, especially on Nurtec and Padcev. I'll just comment on the COVID business, just to say that, obviously, the performance that we have to date reflects the low infection level, mostly impacting COVID, but we remain with our revenues for Comirnaty in the later part of the year, consistent with the vaccination season. And as a reminder also, our COVID Comirnaty business for international is mostly secured through the government contracts, including EU. So overall, very strong performance across the board on our non-COVID, which translates into the raise in revenue and also translate into EPS, which is then offset by the $0.10 linked to the Acquired In-Process R&D.

Thank you. Aamir, would like to take the second question?

Sure. Chris, I think what's exciting on Padcev is if you think about the data Chris shared, our indicated uses for Padcev and pembro now span the entire continuum, all the way from curative intent MIBC through to metastatic disease, all independent of cisplatin eligibility. And we've executed really well against that in the growing patient population that we have. Q2 was really strong. We grew over 20%. A very big part of that is a terrific commercial execution from our Padcev team. We've driven LAM UC new patient share to now above 60% -- and we're also really pleased with the uptake that we have in the MIBC setting.

So far, most of that prescribing is in the neoadjuvant setting. And obviously, we expect those patients to reach adjuvant treatment over time. To your question about what to expect, we obviously think Padcev is going to be a major growth engine for us going forward. We've had very accelerated growth to date. The pace of that growth, of course, is going to moderate from here as we reach the majority of eligible patients and prescribers in LAM UC, but we'll continue to drive that opportunity. And then the upside for us will come through MIBC and continue over time.

And I want also to emphasize that there is a very important study that we have initiated that if positive, will be very exciting, which is in bladder-sparing opportunity so that those patients will not have to go through this horrible operation. That will be a really big deal, if we will achieve it.

Our next question comes from Umer Raffat with Evercore ISI.

I wanted to focus on the EZH2 for a quick second and maybe a 2-part question for Chris and for Aamir, if I may. Chris, I appreciate the readout is not until 4Q, but I just wanted to confirm that the trial was fully enrolled as of May, not as of last December, and that you have not hit those 302 PFS events yet. And Aamir, in a scenario this trial hits, how large a commercial opportunity is this? Should we be thinking Xtandi-like?

Thank you very much. I'll start. Thank you for the question. This trial is definitely fully enrolled, and we have not reached the events for the study, just to confirm. So events not reach as outlined in the statistical analysis plan.

And Aamir?

Yes, Umer, thanks for the question. I think we're obviously very excited about this. If we are successful, I think the opportunity can scale across the entire disease continuum from post-abiraterone to earlier line settings. So I think that's exciting for us. The other thing I will point out is that mivrometostat will be a 100% global opportunity for Pfizer. So we have the opportunity not only in the U.S., but to capture share and value in markets outside the U.S. as well, which is distinct from our situation with Xtandi. So yes, we're very excited about this.

Our next question will come from Jeff Meacham with Citibank.

On berobenatide, what are you guys ultimately looking for in the combo studies? Is it quarterly dosing? Is it indications outside of obesity? Is it retatrutide-like efficacy? Just wanted to get some perspective on that. And then how are you looking at the tolerability bar from a competitive standpoint?

Thank you for the question. So as we pointed out, the amylin is unique. It's ultra-long. It's a potential monthly therapy. So the ongoing Phase I/2a study was really to determine the optimal dose that's tolerable to start the study, the safety and the clinical pharmacology, the PK. And that then informed the 2b study, which is now ongoing SOLIS-1, which is controlled for -- with placebo for efficacy. So we expect the SOLIS-1 study to read out in 2027. Monthly differentiated. We obviously want to see efficacy that's more than with berobenatide alone. And what we've seen so far with the combination early on is obviously well tolerated. So we hope to report that later this year and early next year.

Our next question comes from Akash Tewari with Jefferies.

Can you talk about the efficacy advantages showed versus CDK4/6s in [indiscernible]? Are we seeing signs of an early onset PFS separation that we might not see with the other molecules? And what's your current plan for first-line adjuvant with this molecule? And what's really gating you from starting that first-line adjuvant trial? And then if I could sneak in another one. There's been a proposal from the CMS to cut reimbursement for 340B hospital payments from ASP plus 6% to ASP minus 33%. How would that affect your oncology portfolio? And what are your -- what's your chance of this proposal ultimately getting enacted?

Thank you. I'll start with. Just a reminder that the CDK4, again, internally discovered and conceptualized, very well tolerated with very few patients discontinuing treatment, which partly may address your question because of the tolerability profile. We'll share the full data later this year at a conference. But as you've seen before, we said the hazard ratio is 0.6, which is a 40% reduction in the risk of disease progression or death and it's clinically meaningful and statistic for that randomized Phase II experience.

For, we're focusing on 2 indications, first-line ER-positive breast cancer and to your point, the adjuvant setting. A reminder for second-line ER-positive breast cancer, we are focusing on KAT6, another potential breakthrough internally discovered conceptualized medicine. For the early adjuvant setting, a significant opportunity. We believe could be highly differentiated here because of the tolerability. And we should release later this year the clinical trial design for the adjuvant study that should start by the end of 2026.

Yes. Also for your question on 340B, clearly, we have articulated multiple times that there isn't me saying this situation because the current situation of the program has nothing to do with the intentions of the program when it was established. And we are very active in trying to explain that to regulators and legislators. There is a mobility right now on that topic, and you have seen several announcements here and there, including some pilot programs that they are planning to implement. But I don't think it's for me appropriate at this stage to comment because we don't really know what will be the shape and form of all of that.

Our next question comes from Terence Flynn with Morgan Stanley.

Albert, I recognize your recent remarks on maintaining the dividend and growing it in the future as an aspiration. But just wondering what would have to transpire in order for you and the Board to consider a cut to the dividend. When we look at your BD capacity, you mentioned $6 billion in the prepared remarks. It seems like that's somewhat constraining as you think about the opportunity set out there.

No. Thank you. We feel extremely confident that we will -- even the most stretched scenarios that we are running, we will be able to maintain our dividend. So I want once and for all to make that clear to all that the dividend will be maintained and eventually through the -- after the LOE period will be start again growing it. So that's, I think, a fundamental statement that I need to reinforce.

We'll go next to Trung Huynh with UBS.

On the vitiligo program, you've disclosed some of the TRANQUILLO-2 data there in the slides. I didn't see the TRANQUILLO-1 findings. Perhaps you can summarize the data there. Is there a consistency between those 2 pivotal trials? And then it looks like you've listed 4 new potential starts for [ tilkumab ], the trispecific, 2 in AD, versus placebo, versus Dupixent. There's an asthma one and the COPD-1. Perhaps can you talk about your strategic thinking there? How quick can you start these, the trial designs, expected time lines? And perhaps can you remind us where you hope to differentiate?

Chris?

Okay. Thank you very much. So first question on TRANQUILLO-1 and the TRANQUILLO study and we obviously want to present later this year at a conference, the full data set, so we don't want to release all the data now. We focus on the TRANQUILLO data where 100 milligrams was the official co-primary endpoint and only shared that data today. But we've seen, as we stated in the press release for both 50 and 100 milligrams for both primary and co-primary endpoints, clinically meaningful and statistical data, which we hope to share at a conference later this year.

To go on regarding [ tilkumab ], again, this is an internally discovered conceptualized molecule. It's a trispecific. So it's IL-4, IL-13 and TSLP. A reminder that one of the main competitors is IL-4 and IL-13, and there's also an IL-13 only medicine recently that you would have seen. So [ tilkumab ] also includes TSLP, which is shown to enhance activity in allergic conditions, including in asthma and COPD. For IL-13 specifically, we believe we've got a best-in-class, especially if you look at the affinity for IL-13, the blockers of IL-13. Data previously released, which is the EASI-75 in atopic dermatitis for both the medium and high dose, where we showed 52% and 50% EASI-75 placebo-adjusted results for us that's -- I mean, that's differentiated data. It's highly encouraging. And as pointed out, we hope to 4 Phase III studies, one against placebo, one against Dupixent and also programs in asthma and COPD.

Yes. That's a very, very exciting asset for us. Next question, please.

We'll go next to Steve Scala with TD Cowen.

First, on [ tilkumab ], can you confirm that the trial versus Dupixent will be a true head-to-head trial powered for superiority on first-line or in first-line bio-naive patients? And secondly, given small changes in the risk section language of the release, it looks like Pfizer signed a Pfizer voluntary agreement with the U.S. government to lower drug costs, and that occurred sometime in the second quarter of this year. Just curious, were there any major changes in the final version versus earlier versions? And why did it take so long?

Let me take that one. That is the continuation of the memorandum of understanding that we had signed in the White House. You remember this memorable day that we resolved the MFN and tariffs altogether for the industry, I think. No, the agreements are very consistent with what you have seen for other companies and for us, and we are very pleased with the agreements. Now let me move to Chris about the studies with Dupixent and how you think about the protocol, whatever you can tell us.

Yes. Thank you for the question. Indeed, this will be one of the first Phase III trials that will be head against Dupixent and powered for superiority against Dupixent.

All right. And the last question, please.

And our final question comes from Asad Haider with Goldman Sachs.

For Albert or Cecile, back to COVID, just given that the trend has continued to be lower than expected and understanding that the lowered $4 billion for 2026 is somewhat secured by contracts and your expectations for vaccination rates. Just curious as to what you're expecting in terms of the long-term trajectory of the franchise since that will have an impact on the high single-digit growth algorithm post 2028 that you've highlighted? And then just a quick follow-up, Albert, on BD. Just would be curious to hear any updated thoughts on how you're thinking about utilizing that lever in terms of size in the context of your remaining capacity as well as where you'd like to build out further.

Yes. On the COVID, of course, we can ask also the commercial leaders and the finance to comment on that. But let me give it a very high level. We have this year a very low COVID season. For all respiratory seasonal diseases, this is something that we see constantly. So it could be a year that the flu is more acute and more spread than years that it is not. It could be years with RSV is more acute and years that it is not. Why we don't see big variation in the sales of the products when this happens is because they are mainly vaccines. And vaccines tend to be more independent from the infection rates.

It is based on the risk of infection and people that they are committed or they are in vaccination or they are feeling that they are at risk, we'll continue doing those vaccinations irrelevant if the season is high or low. Clearly, when it is a high season, moves more people to vaccination, but the variation is very small. When it comes to Paxlovid, this is now completely correlated with infection rates. If someone is not infected, it's not going to meet. And this is what we see right now. So what I want to say it is that the COVID revenues, which should split it into the vaccines and the Paxlovid and the vaccines will see more stability relevant of the fluctuations of the infection rates with the Paxlovid, you will see high correlation if it is a high season or low season.

So that's -- now can we predict what will be next year? It could be a very high season or it could be equally low the season. So that's something that you can't really predict very well. What I want to emphasize though, it is that -- this year, where we have the lowest possible infections that we could imagine as we were setting our goals, still we were able to offset every shortfall of COVID with the super performance of the remaining of the business. And I think that was the important thing. There was also another question business -- on the business development, also let me give a high level also Terence before he had asked, you have only $7 billion.

Look, guys, Pfizer has placed the business development that's already, right? And we are executing on that. If you see how much we have invested in business development, it is outpacing everyone else right now since 2022, let's say, after we came back from the high -- to the normality after the COVID years. We are having 80% of these investments that we did that exceeds $80 billion already been placed in 3 of the transactions and all 3 are performing very well. So still go, we are executing because in Seagen, we are developing further the pipeline to realize much higher value. In Nurtec, we are developing new claims so that we can further finalize the value.

And in Metsera, we are moving with the speed of light. As Chris said, 2 studies that we already initiated, they are fully enrolled. And the other one, it is about to be fully enrolled. So we are moving with the speed of light. So there is a lot that already we have done. With the $6 billion, $7 billion of remaining, we will be very strategic, of course. And you should expect something on the bolt-on with the size of these opportunities. The areas that we are looking are areas that we can make a difference. And clearly, oncology, it's one of them. Immune-inflammation is another one. Primary care with obesity, it's another one.

And vaccines clearly is another one, although in vaccines, you can't find much outside for business development. So I think that we have invested a lot, and we will continue doing small pieces. Those investments, we are confident will drive high single-digit growth after the LOE period, which is in '28. So that's my answer to that. And with that, I think it's time for -- to close the call. And again, I want to emphasize, I'm very pleased with what we were able to achieve. To start with, we really can prove that we know how to execute. Operationally, we are probably based on all these 3 years of results, one of the supreme companies in our ability to execute, reduce our cost base and still perform and overperformed on our top line.

I think with R&D, you will see the significant progress that we have. And if you've noticed in the chart that Chris put together in the next 12 months, we have significant catalysts that are coming. And we are remaining optimistic that they will be successful. I want to thank my Pfizer colleagues for their dedication. And I want to wish you all a great day. Thank you.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Okay. Terrific. Good morning, everyone. Welcome to our 47th Annual Global Healthcare Conference here in sunny Miami. Hopefully, it stays that way. My name is Asad Haider. I'm the Co-Head of the Healthcare Research business unit at Goldman Sachs. I'm most of the U.S. pharma analysts. I'm very pleased to open the conference with Dr. Albert Bourla, CEO of Pfizer, he kicks off our conference every year as you've been doing, Albert, very kindly over the past few years. Thank you very much for being with us.

We have a lot to get through, but maybe before I get into some of my specific questions, Albert, any high-level opening remarks from your end?

I think I'm quite pleased with the way that we are executing in a strategy that I think is very solid right now. Since the changes that we did in our commercial model in the post COVID, I think the word that stands out, it is consistency in delivery, consistency in delivering. If you see 2024, 2025 and the first quarter of 2026, we beat the expectations of revenues or EPS. And in most cases, we beat on both. And that we did in despite the fact that we were reducing cost dramatically, and we were able to do to reduce cost dramatically, because we employed AI and very targeted transformational things of changing the business.

The other thing that I will point out is that we were able to deliver these results in the face of a radically declining COVID business. COVID business in '24 was $12 billion, actually, $11 billion. Then it went to $6.5 billion. And this year, we gave guidance by derisking it at $5 billion, right? So despite that, we are doing well, and we are doing that well because the other parts of the business are performing very well. So that's on the financial front.

But the thing that excites me the most, it is, of course, the progress that we had in the pipeline that, you've noticed also in a lot of your reports. I will start very quickly with oncology, which is the crown jewel of our R&D business right now. We had with thoracic cancer with lornatinib, the new standard of care. I think it is probably the first thing that we see something like converting metastatic lung cancer into a chronic disease. We have 7 years, and there is no medium survival risk yet, and there are people, but there are many people that I have seen in the 10 years plus. We had with -- in urothelial with both Padcev, 56% improvement. We have with talazoparib, 56% improvement. We had in breast cancer with the new data that we presented for the CDK4 and they can go on and on with a multiple myeloma on the oncology.

On the vaccines front, also, we had two significant successes. One is a readout of Lyme disease at 70-plus percent efficacy. We are optimistic that we will get registration with this product and that will become the first and only -- actually, there was one, not the first, but we'll be the only of the new generation of Lyme diseases over there, but also there was a significant success with pediatric in Prevnar 25 that we are launching. And then we announced that we are going for Prevnar 35.

We are hot of obesity ADA. I'm sure we will have a lot of discussions. But the highlight for me is that we presented data that support our positioning that we will have a product in 2 years that, it is as good in efficacy as the current leading product better than the current lagging product. It will be excellent tolerability and will be monthly. And then, of course, in immuno-inflammation, we presented data on the trispecific. So with that, I will turn it to you.

So certainly a lot going on in terms of the rhythm of the business and the rhythm of the pipeline. But I guess maybe starting with a high-level question, and you sort of alluded to this. You've led this very significant structural transformation as you pivot from pandemic reliance on COVID-19 towards a more diversified portfolio focused on oncology and obesity and I&I, et cetera, right? You've done about $70 billion of M&A over the last few years. You've done sizable cost reduction programs, overhaul the R&D structure.

So maybe just talk to us about where we are in this arc, right? Is the substrate in place, so from here, it's going to now be about commercial and clinical execution? Or is there potentially more to do in terms of potential transformational moves at an enterprise level?

There were three things that needed to be restored after COVID when we had the very big shock that we lost half of our revenues. One was the commercial model, that I think it is up and running, and I feel very, very comfortable that this commercial superpower that Pfizer traditionally had in the marketplace globally, not only in the U.S., but all over the world, it's restored, and it's like a well-oiled machine.

The second was on cost of goods in manufacturing that with COVID, we had to do dramatic high investments that we're planning for -- to absorb over many, many years. That, of course, changed because COVID business reduced dramatically. So we had to take significant drops. So if you see the margins now are going up.

And the third, which is the most important was R&D. What was this R&D the concern? With R&D, the concern was never productivity in terms of technical merit. I challenge you and everyone else to go and see the data. Right now, if you compare dollars in of Pfizer R&D in the last 5 years and products out, how many approvals we had, we are top-top-top quartile. When I say we are in the top end of the top quartile. If you see a success rate in Phase II, Phase III, we are top quartile. But if you see dollars in dollars out, we are a mediocre. And that was what I needed to fix. It was a wrong choice of products. that we brought to the market, either because we've chosen wrong or sometimes we were unlucky with what competition did. But I think it is our responsibility to do that better. The good news is that if it was a question for me to fix capabilities of R&D, that will be a long-term journey years. If it is just to fix the focus or where we put -- where we turn the cannons, I think it's much, much -- which is simpler and faster, which is what we have done.

And part of that journey has been based on your BD strategy and the deals that you've done. I think just maybe high level on capital allocation. You've got about $7 billion in M&A capacity that's left. That -- by the way, after the [ Henry ] deal? Is that still the number?

Yes.

Okay. So -- and that suggests about earlier stage deals potentially from here. So as you think about scenario planning, are there circumstances in which you think you might need to do something bigger. And if those circumstances were to arise, you have levers, what levers do you have that you could shift around in terms of capital allocation priorities?

Of, let me say that we can do something bigger if we want because we have a very big balance sheet. So it's not -- the $7 billion, it is if we want without diluting our stock position to do deals. That -- already, we did $70 billion of capital deployment. That we did, as you said, three of the -- actually eight. Three of the deals represent 80% of the capital that we deployed. That was Seagen is performing extremely well in terms of the in-line product. Just to remind you, this quarter, we had 20% growth in the Seagen portfolio years after we did the acquisition.

The second was Biohaven which was the migraine product. That I remind you this quarter was 42% growth. And the third was Metsera, where we presented data and we are starting what we have already initiated a very big part of 10 pivotal studies, and we plan to compete very well. So I think that is doing very well.

So right now, what we need is to execute on that and then complement it not with bigger things, but with pipeline, bolt-ons that will help us enhance our position, which is what you saw with the Innovent deal that we did in China. You saw it with VEGF PD-L1, and you will see a lot of these things coming forward.

Maybe, Albert, just if we could talk a little bit about the external environment, the external operating environment for the industry. You have the midterm elections coming up. You've got attempts to codify MFN. You've got some regulatory uncertainty as it relates to an FDA leadership vacuum. So I guess from your seat, what are you paying the most closest attention to in terms of just external forces?

And I think you made some comments last week about drug pricing remaining an existential threat potentially to the industry. So I guess, what did you mean by that? I mean I thought maybe with MFN, we were sort of done with that? Is there something in your line of vision that would suggest this could become a nettlesome kind of variable for us to all think about again.

What I said, and I truly believe it is that, it was an existential threat in 2025. And that was not only the price adjustments, a radical price adjustment in the U.S., but also was the tariffs. That's why most of my time in '25 was allocated trying to resolve that for Pfizer and as a result for the industry. I think we did very, very well. I think the deal that we signed with the Trump administration, put an end to both the tariffs, threat because we have until the end of the term holiday of any tariffs and on the MFN, which is prospective only for the new products with Medicaid.

That deal was excellent. Everyone did the exact same deal, and I'm very pleased and proud that we led the way. Now in addition to this, which is the -- by the way. I think always, we had challenges in '25, I mean, with the FDA, with CDC, et cetera, I see tremendous steps towards the right direction. Things are going well, I would say there. I think changes that we had in FDA are very positive. Changes that we had in CDC are very positive. The new director is an excellent scientist that brings confidence to all that science will prevail. So I think over there, I don't worry much.

There are two things that I think are shaping this industry faster than what we thought. One is AI. AI will change dramatically, the whole value chain generation. And as a result, will create because of the disruption that will bring new winners and losers. So it's not something trivial. The ranking will change and people that are on top to go down and people that are on the bottom can go up if they get it right or get it wrong.

The second thing that is happening, it is the emergence of China as a scientific superpower. This is changing completely the equation. The geographies and the way that the medical innovation is produced is radically different. And everyone needs to have a strategy how to tap in, in this innovation, but also how to compete in 5 years with the, Chinese companies. But as I see it, my competitor will not be Lilly or AstraZeneca, but will be Chinese mega players to that time.

And that's a great segue into my next two high-level questions, which are exactly that. I think you made some comments a couple of weeks ago saying that AI and China are the last things you think about before you go to bed.

So maybe just double-click on your vision for AI as it relates to the transformation of the organization. You've highlighted it as a key strategic priority. But I guess the question that we often get from equity investors, Albert is what are we going to see tangible benefits in terms of quantifiable metrics on how AI is helping the pharma industry. So how would you respond to that?

First of all, I have to say that when it comes to Pfizer investors have seen some tangible benefits from the deployment of AI because all this cost reduction without touching the top line, it is because exactly we didn't just cut but we transform productivity to the next level with -- by employing AI. But still, it is scratching the surface right now.

I think when -- in our planning, if things goes well, we will start seeing the benefits in year '28 in a big way because we have right now in the second half of '26 scaling up big time, a lot of really scaling up and making decisions towards the end of this year for things that we will do in and things we will not do. All the plans are in place.

If things work, I think by the end of '27, we will have a very different Pfizer organization that will be an AI native to the degree that it can, and that should provide the benefits in '28.

Maybe just then going from...

Ready for the growth period that starts post '28.

On the cost line, do you think on?

Actually, that's the efficiency and the cost reduction because of AI, it is the least valuable thing. It's going to be significant, but it's the least valuable thing. I think the commercial model is changing dramatically with AI. So you can gain significant market share if you know how to deal with the big models.

Physicians are getting all their information from LLMs. So things will change dramatically. So if you get it right, you can have significant wins in the top line as well.

Let's talk a little bit more about China. It obviously is a big theme in the sector. You talked a little bit about it already. It remains a very fertile and dynamic source of innovation in your words, Albert they're doing things at half the cost at 3x the speed. You've been active there. You've done a number of deals, most recently with Innovent, as you mentioned.

So just update us on the developments you're seeing from a broad industry perspective and balancing this tension between doing these partnerships and deals versus what you said China's emergence as a superpower in clinical development that could be your competitors in [ 2026 ].

That has consequences. Right now, it is positive consequences. It's opportunity. Right now, there is a lot of new science that is generated, and you can tap into it and develop it. They can't do global development yet. So they need you. And there is an ample offering of excellent science right now.

So the first part of our strategy, it is how to tap into that opportunity and maximize. But there's a second thing on the consequences, which is negative, which is they will emerge eventually as a global competitor. They will start developing global capabilities. And we have seen that playbook with batteries. We have seen that with EVs. So it's no doubt in my mind. So that's why I said that they will come as our main competitors in end of the decade by year 2030.

Now what does this mean for us? They are introducing a different league of competition. If you compare Lilly and AstraZeneca and Merck and us someone is better here, someone is better there, but we are all within a margin and the same league. The same category, some year, someone wins, COVID we won, Lilly won now in obesity. So that will keep changing, right? They come with a different league, half the cost 3, 4x the speed is the new norm that they will introduce in this competition. So if you want to be able to compete. You need to do exactly that. You need to be able, one, to half your cost; secondly, to improve dramatically your speed; and third, to be able to invest significant amounts in innovation. Those are the three things that you need to do. And that's where Pfizer is going.

When I say the last thing I think is AI and China, when I go to bed, and the first thing, when I wake up in the morning because I dream about it. while I'm sleeping. It is how to deploy AI transform the company into an AI native company that will triple our speed and half our cost.

I'm going to...

Triple our speed, I mean in producing innovation, right? So way more innovation much faster.

I'm going to move to zoom in on some business-specific aspects. But before I do that, I just want to see if there are any questions, big picture at a high level from the audience?

Okay. Albert, let's maybe start double-clicking on just the business. Just in terms of current business trends, just a word maybe just given the revenue beat in the first quarter that you saw commentary from Dave on the earnings call, suggesting upside pressure to 2026 guidance. I think the words that we used is that, the philosophy is not to raise guidance in the first quarter, but the levers seem to be in place. So just level set us on the current trends.

Look, I think the quarter was very strong. We never raised guidance in the first quarter because it's first quarter and I was tempted this time because it was very strong. But the -- if you ask me, do I think that we have a significant upside probably in the non-COVID business. Yes, because this is the part of the business that did extremely well, not the COVID, right? But -- and do I think that we have derisked of COVID? I hope, because from $6.5 billion, which was the lowest ever we gave guidance of $5 billion. But still I keep the reservation. I want to see how COVID will evolve.

COVID has two components, the vaccine and the treatment. The vaccine, I don't think will be very variable. I think will come as we predicted it. because people vaccinations are at the lower level. This is what we calculated it, and I don't think that will change much. However, the treatment, it is highly correlated with the level of infection, not that much the vaccine. But the treatment is absolutely correlated with the level of infections. So if we don't have COVID wave infections, then perhaps will go lower than last year. If we have a high wave in September of August, September of COVID, then we'll have much higher than last year. So there is this uncertainty there. But the other part of the business is doing very, very well.

And then maybe just on the long-term guidance, your increased confidence that starting in 2029, Pfizer is going to enter a period of a 5-year period of high single digit revenue CAGR. So maybe just walk us through how you get there. There still seems to be a more to come of investors around that.

I'm highly convinced about that. And this is not a vision statement. I want to do that. It is a bottom up and how we do that. It is. We have the in-line products that were easier to predict. I remind you that our new launches and business development, business grew 22% this quarter at $3 billion, right? So that's already $12 billion annualized business that is growing exponentially. So we have that piece. And then, of course, we have the in-line products.

Hen we have the LOEs, that they are also easy to predict and certain. We know how the products to respond with archetypes. So we know exactly how that will go.

And then we have the pipeline. In the pipeline, there are multiple products, and they are all risk-adjusted when you do the bottom up. If it was five products, it is -- you can say that you can be lucky or you can be unlucky. But if it is [ 15% ], then the statistics should work. So the probability of success, some will fail, some will succeed, but should come to these numbers. So when we see that number, I have high certainty, but starting in '29 we will have high single-digit growth on the top line.

So let's -- that's a great segue then to maybe start talking a little bit more about the pipeline. Maybe just most recent developments coming off of ADA, Pfizer had a notable presence with detailed data for berobenatide, showing efficacy that's on par with the currently marketed GLP-1s, manageable tolerability, no new safety signals in the context of low investor expectations that was an incremental positive. And you're moving this program into 10 Phase III trials.

So just -- and you're sort of highlighting the convenience of monthly dosing. So help us understand how you're thinking about the commercial opportunity where you're going to come to the market with the weekly first as a sort of a bridge into the monthly that comes later. And by the time you -- at that time, there's also potentially going to be more competition, maybe Amgen's MariTide, maybe higher efficacy agents. So just maybe help frame those dynamics for us.

Yes. How I see it. We come with the weekly, but the monthly will follow very fast. So it's not that it's going to come after 2 years, right? It's going to come in months after the week.

Then the second one, it is that we will start by trying to get new patients that they want to start into this GLP-1 class and they would prefer us because they can get the same benefits, but they will get it with a monthly injection. So that's something that we will try to compete, and I understand is against the very entrenched let's say, a competitor, which is Lilly, but also I emphasize multiple times that when it comes to commercial capabilities, Pfizer is not Novo Nordisk. So we really got it a little bit easy with them in the competition.

Now on a very big opportunity, it is the switch studies that we are doing. When you reach your plateau with the GLP-1, we know that people either are getting off and most of them are getting significant weight back or they don't like that they have to do constantly weekly injections for the rest of their lives.

The switch studies, we have just to prove not that we are better. We just have to prove that we are not inferior when they switch so that people will not gain weight because now we are talking at a plateau situation. And when they switch to hour, they compare to if they continue to the Lilly or any other weekly option that exists over there. And I think we will achieve significant number of switches just because of this convenience.

So that's in the beginning,'28, we are launching, and this is how we see it commercially. I remind all that we have two major innovations. One of them certainly we will present this year. One, it is the amylin, amylin monotherapy and amylin combination that we expect to achieve very high levels of weight reduction. We are still haven't seen the whole game of the data. But what you will see this year probably will be 24, 28 weeks of weight loss, both in monotherapy and in combination. And that will be our answer to the high level of -- to the high level of weight loss or to using lower doses to achieve the same, but with very, very benign profile.

So -- and then the third innovation that is coming, it is -- we are having seen already data because we are working on every quarter, injection of GLP-1 that. So far, it looks promising, early days, but the pharmaco, it's in the clinic and the pharmacokinetics that we see are very positive.

So I guess just on the amylin combo, do you feel like that is the added efficacy that you could potentially see with that is needed to drive meaningful market share?

You need options because the market is having different segments. So the very high weight loss, it is for those that only need, which is the very high BMI is not for the masses, right?

For the masses, they want something that is comparable to 15% to 20%, 20%, 20 plus, which is the current offerings from semaglutide to tirzepatide, but we believe that they want it in a convenient way, which is coming now.

Also, you spoke a little bit about the competition from AbbVie that also could come as the monthly. Because when it comes to monthly, Lilly or Novo, I haven't seen anything, but they have...

Amgen you mean.

Amgen, not AbbVie, I'm sorry, Lilly or Novo, they don't have anything on the monthly. So it is only Amgen has something in the monthly. I haven't seen data, months from the Amgen but -- so it's not fair to make general statements. But what I have -- from what I have seen, the two weaknesses, it is once the dose that they need to use. It's very high. Don't forget that our injection, even in the high dose, the 9.6 milligram is half a ml subcutaneous. When you try to put the dose from Amgen, you need 2.5 at least. So it's very inconvenient, I think, an injection of 2.5 subcutaneously.

The second is they need to fix their tolerability profile was very big. So maybe they will fix both of and then they will compete with us. But so far, I feel very confident that we have the better product.

What can you tell us, Albert, on how you're thinking about pricing dynamics evolving in that area, just particularly with berobenatide significant COGS and API advantage that provides a significant scalability advantage over competitors. So how should we help us sort of frame that for us?

Yes. One, it is the scalability that you said. When you are a factor of 10 to 14 or 15 in terms of syringes that you need and in terms of API that you need you understand that the very high level of investments that we see at Novo or Lilly are doing in manufacturing capacity are not really needed from us. Actually, all are planning for very high volumes of these products with marginal improvements in our current manufacturing network, which is very, very big in the U.S. we should be able to do it. So the CapEx that we need to invest in order to make that happen is not as high as with everybody else.

Now the pricing of the product I think we saw prices going down in the U.S. That was in line when we did the Metsera deal with what we were expecting. What came as a positive on that was that we had the Medicare volumes that we didn't expect when we did the deal. But the big surprise for all of us was international markets.

In international markets, the obesity is taking off very rapidly. It's completely out of pocket the business. There is nowhere almost or very little reimbursement of this market. There's a huge difference when you launch a product in Europe, usually after the approval, you need from 6 months to the first country, a year plus most countries and then 2 years, the laggards to get approval. So reimbursement, you have approval, but you don't have reimbursement. When it is cash market, it is the next day. But you go and you sell. So that's one.

Also, the prices that we have seen in Germany, in France, they are high prices, but they are in -- of the market. So with all of that in mind, there were some -- I think we will continue with the pricing like that. And clearly, as you said, we have the cost of goods advantage.

We agree on the international market. We just took our TAM forecast higher for that market.

And keep in mind that Pfizer is probably among all the players the strongest commercial machine internationally, yes. There is no one that has international commercial infrastructure like Pfizer has in every single country basically.

Let's maybe Albert pivot to oncology. Sigvotatug specifically, that is a readout that's getting a lot of attention, given its imminence and the importance of this readout Phase III second-line non-small cell lung cancer. So maybe just level set us on your expectations both for this trial and the first line trial that's going to read out after this one, given that many investors are seeing this as highly consequential for broader sentiment.

Yes. And they are right. This is -- if it is positive, could be a very, very big opportunity because it comes to the lung cancer, which is the #1 killer in terms of cancers, and it is the largest market right now. There are two studies, as you said. One is second line and the other is first line. The potential of the first line is bigger than the potential of the second line, of course. The second line is now, first line is in a year. Second line, it is monotherapy. First line, it is combination therapy. Probability of success in monotherapy is lower than probability of success in combination therapy. I think combination therapy has pretty much derisked through the Padcev, and we see how the vedotin operates in conjunction with PD-1. And we feel very, very good about the probability of that success.

When it comes to second line, which is monotherapy against monotherapy no ADC so far was able to be successful. So the bar is much higher. And we will wait to see the results.

And the second-line trial is still on track for a midyear readout?

Yes.

Okay. Do you think the protocol amendment derisks that trial at all?

The protocol amendment was just because we wanted to provide more alpha power to the overall survival. So basically, it gives a little bit of a push to have a successful study. Because that is really what instead of betting if we miss overall survival, you can get progression-free survival. We said, let's go all in for overall survival, and we moved all the alpha there.

Okay. Maybe just sticking with oncology. Another big picture theme coming out of ASCO was just PD-1 VEGF bispecifics. We saw new OS data from SUMMIT and Akezo of ivonescimab as well as Phase II data from your own 4404 program. So I guess, high level, how does Pfizer view the ivonescimab read-through to the class broadly speaking and your own program? And then anything you want to highlight regarding 4404?

Absolutely. For us, it's a very, very big program with, again, eight Phase III studies, and it is high promising opportunity. It's the first time that you have a class that is challenging the dominance of the previous king, which was the PD-1s, the KEYTRUDA is going to go. So we didn't have anything that could come better or close to KEYTRUDA and now we have.

Now in our case, we have presented a small number of patients data, right? So it's not that we have an extensive. But the data that we have seen are best-in-class. I will give you a comparison. First of all, we all know you can do cross-trial comparisons, but it is important to understand the magnitude, if the whole thing holds, right?

But we had in the enriched PD-L1 population. I'm taking the maximum of the efficacy of all three. We had 77% response rate in our own, KEYTRUDA has demonstrated 45%, right, in this enriched 50% population. And that's their highest, right? Also our highest.

And Summit demonstrated 60%. So 45%, 60%, 75%. And the same superiority we have seen in the overall survival of the duration. So I'm very optimistic that the class could do well, and we can be first in class.

Now for us, this class has also a strategic advantage. Because it's not only that we go for the monotherapies of the PD-1 VEGF, but we go for the combination therapies with our Seagen ADC line. As you know, and I spoke about it, we have high synergistic effects when we use the vedotin, which is the payload of the Seagen ADCs. It is the same in Padcev. It is the same in SV in combination with PD-1s. So the studies that we are doing right now will be in combination with PD-1 with VEGF and the ADCs. So we see the synergistic effect. So we go all-in in this group.

Certainly looking forward to hearing more about that progress. Albert, thank you very much for your time. We're right at about the hour. I really appreciate all your candid conversation, and thank you for being with us.

Thank you very much.

Good day everyone and welcome to Pfizer Flash Live from ADA, spotlighting berobenatide, an investigational potential first-in-class monthly GLP-1 receptor agonist peptide. Today's event is being recorded. At this time, I would like to turn the call over to Francesca DeMartino, Chief Investor Relations Officer and Senior Vice President. Please go ahead, ma'am.

Thank you, and good morning, everyone, both here in New Orleans and on the web. I'm Francesca DeMartino, Chief Investor Relations Officer.

On behalf of the Pfizer team, thank you so much for joining us. Today's event will be recorded and available for replay on our IR website at pfizer.com. As a reminder, our Pfizer Flash series is intended to serve as an educational deep dive into our pipeline, products and people. Each event spotlights a specific product, therapeutic or growth initiative and gives you an opportunity to hear from our business leaders. Today's session will begin with a presentation followed by live Q&A.

As a reminder, this call is intended only for the investment community, including our sell-side analysts and institutional investors. I want to note that on today's call, we'll be making forward-looking statements. I encourage you to view Slide 2 in our presentation and the disclosures in our SEC filings, all of which are available on our IR website at pfizer.com. Forward-looking statements on the call are subject to substantial risks and uncertainties, speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements. With that, let's get started.

Obesity is a key area of focus for Pfizer. Last November, we completed our acquisition of Metsera and are now advancing a differentiated diverse pipeline anchored by the investigational ultra-long-acting GLP-1 receptor agonist, berobenatide, formerly known as MET-097 or PF-3944. Earlier today, key opinion leaders presented new data from 3 Phase IIb trials of berobenatide at the American Diabetes Association Scientific Sessions. Today's presentation will build off of that symposium. In the room, I'm joined by Pfizer's R&D leader, Jim List. Jim, who is our Chief Internal Medicine Officer, will review highlights of the new data as well as berobenatide's development plan and target profile.

I'm also joined by Navin Katyal, who leads Pfizer's U.S. primary care, including responsibility for translating Pfizer's global obesity commercial opportunity from strategy to launch. In addition to obesity, his portfolio also includes Eliquis, Nurtec, Paxlovid and vaccines. From Navin, you'll hear about what berobenatide's projected profile could mean for its market potential. With that, I will hand it over to Jim.

Thank you, Francesca. It's a pleasure to be here. Let me start with the key takeaways from the ADA expert symposium that you just saw. We believe berobenatide has the potential to be the first monthly GLP-1 peptide approved for obesity and related comorbidities. Based on our Phase IIb data, berobenatide has the potential to combine efficacy on par with tirzepatide with favorable GI tolerability in a patient-friendly presentation that provides convenience and scalability advantages. Informed by these Phase IIb data, we're executing an extensive pivotal program. 10 Phase III studies are expected to advance this year, and I'm going to review these later in the presentation.

Through these, we aim to develop berobenatide into a foundational metabolic medicine, both as a monotherapy and as the backbone for combination peptide therapy. Now a reminder of the purpose of Phase II. The objectives in Phase II were to identify the right doses for Phase III, to test titration schemes and to test both weekly and monthly dosing. And we have positive results across all 3 of these objectives. I'm going to go over the efficacy and the tolerability before handing it to Navin to highlight berobenatide's positioning, if approved, with our target profile of a first-in-class monthly peptide delivered with a simple subcutaneous auto-injector. Then I'll go over next steps and our development strategy before we open it up for Q&A.

Given that we just came from the ADA symposium, I won't rehash the entire Phase II data package. For anyone interested or who missed the symposium, on-demand viewing will be available through ADA's website starting on June 10, and details from VESPER-1, 2 and 3 will be available as an appendix to our Pfizer slides. Turning to efficacy. We believe monthly berobenetide can deliver weight loss that is on par with weekly tirzepatide and potentially superior to semaglutide. Supporting that belief are our Phase IIb results viewed alongside data from approved weekly therapies with the caveat that cross-trial comparisons have inherent limitations that preclude one from drawing definitive conclusions. A key point to make before discussing the comparisons, it's critical that these be made at match time points and across relevant doses.

So when we look at 4.8 milligrams of monthly berobenatide, which is our medium Phase III dose, it's viewed alongside the medium approved doses of semaglutide and tirzepatide, which are 2.4 milligrams and 10 milligrams, respectively. And even there, it's not quite apples-to-apples because we're talking about half of our top Phase III dose compared to 2/3 of the top tirzepatide dose. When we do this, here's what we see. For placebo-corrected weight change at week 28, berobenatide at the median Phase III monthly dose of 4.8 milligrams delivered 12.3% and 12.0% weight loss across the 2 VESPER-3 arms. Semaglutide 2.4 milligrams weekly in STEP 1 gave approximately 9%. tirzepatide 10 milligrams weekly in SURMOUNT-1 gave approximately 12.5%.

And again, that's looking at half the top Phase III dose of berobenatide, but 2/3 of the top dose of tirzepatide. In just a moment, I'll show you the first clinical data at our top Phase III dose.

VESPER-2 is our Phase IIb trial of weekly berobenatide in participants with obesity or overweight and with type 2 diabetes. In the trial, we observed placebo-corrected reductions in weight of up to 9.5% and placebo-corrected reductions of HbA1c of up to 2.0%, both at week 28. Those results were achieved with a maintenance dose of 1.6 milligrams weekly. This time, we're talking about 2/3 of our top Phase III dose.

So again, there's potential headroom above this dose where the results were generated, and we look forward to seeing our Phase III results. On a cross-trial basis, this compares well to both the 10 and 15-milligram doses of tirzepatide when you look at the same time point within their pivotal SURMOUNT-2 trial in the type 2 diabetes population, and those results are noted on this slide. VESPER-2 and VESPER-3 were only partially up the dose response curve for efficacy and neither study went up to the high Phase III dose of berobenatide, which is 2.4 milligrams weekly or 9.6 milligrams monthly. Our first clinical data with the high dose came in the extension of our Phase II VESPER-1 study.

As shown here, participants who escalated from placebo to the high dose of 2.4 milligrams berobenatide weekly had substantial weight loss with a mean change of approximately 16% at 32 weeks. And the curve continued its steep downward trajectory throughout the entire time period, suggesting, as you would expect, a greater magnitude of weight loss will be seen with a higher dose. This first glimpse of high-dose data conforms to our expectations. Based on modeling, we expect the high dose to drive meaningfully greater weight loss than the mid or low doses. Now perhaps the best way to make cross-trial comparisons in light of their limitations is to leverage as much data as are available and build the model-based meta-analysis, and that's exactly what we've done here.

We integrated a data set of 69 weight loss trials incorporating aggregated data from over 32,000 patients.

This approach integrates all the available data using a mathematical model that accounts for pharmacology and describes the weight loss trajectory over time and the dose response relationship. Now using this approach, we predicted weight loss at 72 weeks for berobenatide's high monthly Phase III dose compared to the highest approved doses of tirzepatide and semaglutide. The modeling suggests berobenatide can deliver weight loss similar to tirzepatide with point estimates less than 1% apart and potentially better than semaglutide. And that prediction holds whether we're talking about weekly or monthly dosing, which generate equivalent average exposure over the dosing interval.

At the bottom of the chart, you'll see we also predicted 72-week weight loss for monthly MariTide And it's honestly very hard to say very much there because there's limited data publicly available, and that's reflected in the wide confidence interval. What gives us a lot of confidence is that the data we generated with the 2.4 milligram high dose and the VESPER-1 extension align extremely well with the model predictions. It validates our approach, and it validates our expectations for Phase III. Turning now to tolerability. And remember, one of the purposes of Phase II is to understand the relationship between tolerability, dose and titration. That's the lens to keep in mind through the next few slides. We're quite pleased with what we've seen.

In the VESPER-1 extension, evaluating weekly, every other week and monthly dosing intervals, we observed excellent GI tolerability. 96% of participants reported no key GI treatment-emergent adverse events or only mild ones, and that's nausea, vomiting, diarrhea constipation. And in the arm that went from placebo up to our high dose in the extension, the vomiting rate was under 20%. And notably, in the extension, there were no treatment discontinuations due to treatment-emergent GI adverse events in any of the arms. VESPER-3, berobenatide was also well tolerated. 83% of participants experienced no or only mild key GI treatment-emergent adverse events with vomiting rates in the low to mid-20s across active arms.

Fewer than 10% of participants in the berobenatide groups discontinued treatment due to emergent treatment-emergent adverse events, and that's across the 215 participants who were randomized to berobenatide.

Now importantly, really importantly, these results were achieved in trials where down titration was not permitted. So if a patient experienced GI tolerability issues, they couldn't lower their dose. They had to muscle through it or they had to discontinue. So even though the data show a good tolerability profile here, in Phase III, because we allow for down titration, we expect to see an even better tolerability profile. And with our learnings from Phase II, we expect our Phase III titration scheme again, should yield an even better tolerability profile than the already very good profile that we've seen in Phase II.

Now this slide breaks down vomiting events in the VESPER-1 extension. All the events are shown here by week with severity color-coded, mild events in green, moderate in yellow and severe in red. The top 2 rows are participants who entered the extension after receiving berobenatide weekly for 28 weeks in Part A of the study. They continued at the same weekly dose for the first 8 weeks of the extension and then transitioned to monthly dosing for 24 weeks. The data shown here are for the 3.2 and 4.8 milligram dose groups, again, our low and medium Phase III doses. So this gives us insight into the expected tolerability profile of monthly berobenatide in participants switching from weekly to monthly treatment. The vast majority of events were mild, none were severe. And while there was a mild transient increase at the point of the monthly transition, it rapidly improved with continued dosing.

This, along with the VESPER-3 data, provides the critical insight that guides our Phase III strategy for the transition to monthly dosing and specifically, smaller increments in dose than were used in Phase II should help address any tolerability concerns that happen at the weekly to monthly transition. At the bottom, we see the placebo switch group escalating to the high dose. Again, the vast majority of events were mild and none were severe. Similarly, for our placebo-controlled VESPER-3 trial, which evaluated the switch from weekly to monthly maintenance dosing, we saw a slight transient increase in events at the monthly transition, which rapidly improved with continued dosing. And as we look ahead to Phase III, as I said, we learned from Phase II and implemented designs for Phase III that should help ensure a smooth dose and PK transition to optimize tolerability at the point of the switch from weekly to monthly dosing.

I'll talk more about Phase III shortly. But first, let me hand it to Navin to talk about what berobenatide's projected profile could mean in the obesity landscape. Navin?

Right. Thank you, Jim. So as Jim has covered, we've seen a competitive efficacy and tolerability profile with berobenatide. And combined with its convenient monthly dosing, we're very excited about the commercial opportunity that sets up for us. And I'm now going to spend a few minutes on what signals we have about the desire for a monthly product, where we think berobenatide could fit in a patient's journey and the commercial principles guiding our build. So starting with the market. It's clear that the prevailing focus in this category is on who's leading, but I think what gets less attention is how much of it has yet to be served. And the fact is that most eligible patients still are not on therapy at all and most who are on starting don't stay on.

And that's why we believe the commercial opportunity for berobenatide is so significant. It has a highly competitive profile, as Jim just outlined. It's designed for scale. There's a large and growing monthly market. It's well positioned across the full patient journey, and we have the commercial capabilities to serve this market from day 1. And starting with the molecule itself. Simply put, berobenatide is built to be supplied at scale with notable COGS advantages. The API requirements, as you can see here, is 125 milligrams per patient per year, which is significantly lower than the other monthly programs in development. Monthly dosing also means a lot less device, a lot less packaging, a lot less cold chain or waste than weekly therapies.

And so ultimately, that means we need a lot less manufacturing capacity to serve the same patient population and that we can distribute it more efficiently. And I think importantly, the 0.5 ml injection volume must us deliver it in a familiar auto-injector that patients and providers are very familiar with and very trust. So taken together, berobenatide is expected to be available in formats people already know, already trust, it's highly scalable. And that, of course, is really crucial in a massive growing category. Now turning to the market. We've actually done a lot of research with both providers and patients to understand what a profile like berobenatide with competitive efficacy and tolerability, but in a monthly regimen would mean for them.

And I think what's clear is that upon seeing that profile, that value proposition becomes super intuitive to them. We see that 51% of treatment-naive patients prefer monthly as their long-term destination when comparing it against the existing injectable and oral options. And on the provider side, 86% of those surveyed said they would be more likely to switch their patients to monthly berobenetide when shown hypothetical positive switch trial data. And that projected switching intent rises 1.7x. So ultimately, we believe berobenatide is going to have 2 distinct shots on goal. First, for new patients who want a highly effective therapy and who know these therapies are not a one and done and want something with less long-term burden.

And then second, for existing patients on weekly GLPs who want something that feels more sustainable than dosing every single week or every single day, for example, on the orals to maintain what they've achieved. And we've built Phase III trials designed to generate evidence to serve both, and Jim is going to walk through that shortly. So in addition to starting or switching, another substantial part of this opportunity and a critical need, I would add, is keeping people on therapy for the long term. Today, about 65% of people without type 2 diabetes who initiate a weekly GLP discontinue within a year. And there's real consequences of that, as we all know. In fact, 2/3 of the weight patients lost in the pivotal semaglutide trial was regained within a year of stopping. And then we also know about this market and are encouraged by that the vast majority of lapsed users say they would consider coming back.

But I think what is missing right now is a regimen built for sustainable long-term use, and that's exactly what we believe monthly is built for because what we've seen time and time again is that less frequent dosing has driven adherence improvements across multiple chronic conditions. And so when we put all of this together, we expect berobenatide to compete across the entire patient journey. And in a market expected to reach well over $100 billion, where there's fewer than 10% of eligible adults on therapy today, we're super excited about the potential to unlock real growth by bringing more patients in who haven't been willing to start, by serving those who want to switch to something more sustainable and, of course, keeping people on therapy longer. And finally, just a note about our commercial model. There's a number of principles that guide how we're approaching this. There's 3 that I'm going to pull out today.

First is our integrated direct-to-consumer experience, which will be in market and ready from the start, building on our Pfizer for all platform that today connects patients with treatments for migraine, vaccine deployment and more. And second, we're building a model that serves both reimbursed and cash channels. And importantly, we're going to be set up to compete in cash from day 1.

Third, we're designing for persistence, building for the long-term patient experience, not just for initiation. And behind all of this is, of course, the Pfizer primary care engine. A primary care field force that has been ranked #1 for 7 years running in the industry, existing relationships across more than 2/3 of the providers writing meaningful prescriptions today in the GLP class and of course, deep experience engaging hundreds of millions of people in large audience primary care markets. And finally, I'm going to note that we've been here before. We didn't invent the statin. Lipitor was not the first. Eliquis was not the first oral anticoagulant. Prevnar was not the first pneumococcal vaccine. But in each case, we built the evidence, we built the commercial model, and we built the franchise that came to set a new standard. And we're really confident in our ability to make a significant impact in the market with our obesity franchise as well. So with that, Jim, I'll turn it back to you to discuss our next steps.

Thank you.

Thanks, Navin. Let's talk about the Phase III program now. We have 2 Phase III studies of weekly berobenatide already underway, randomized patients and recruiting really, really well, VESPER-4 and VESPER-5. Both enrolled participants with overweight or obesity, VESPER-4 excludes participants with type 2 diabetes, VESPER-5 enrolls participants with type 2 diabetes. The primary endpoint for both is percent change from baseline in body weight at week 64. One design point worth flagging. VESPER-4 and 5 use a simple dose escalation scheme with 1, 2 or 3 titration steps to reach the low, medium or high maintenance dose.

That compares favorably to currently approved weekly chronic weight management therapies, which require 5 steps to reach the top maintenance dose. So we're evaluating a streamlined path for getting the maintenance dose, making it easier for patients while, as I said, incorporating the option to deescalate for GI adverse events. VESPER-6 is the pivotal trial for monthly berobenatide.

The study is now up on clinicaltrials.gov and open for enrollment. VESPER-6 includes 2 cohorts, a main cohort without type 2 diabetes and a parallel cohort with type 2 diabetes. And the primary endpoint is the percentage change in body weight at week 72 in the main cohort. The initiation of monthly dosing in VESPER-6 incorporates the learnings from Phase II. So going back to Phase II, In VESPER-3, participants moved directly from a weekly dose to a fourfold higher monthly dose, for example, from a 1.2 milligram weekly dose directly to a 4.8 milligram monthly dose.

And we saw good tolerability with that approach, but a detailed analysis of the data suggests that we can potentially do better. We can expect to decrease that small and transient increment in GI adverse events that we saw at the weekly to monthly transition point by decreasing the size of the dose step-up. So in VESPER-6 the evaluated weekly to monthly step-ups will range from 2 to 2.7 fold as opposed to 4 fold. So that's a much more gradual transition by design.

And you'll notice it's 3 simple titration steps to get to monthly dosing and 5 steps in total to reach the top monthly dose of 9.6 milligrams with flexibility in how you get there. And again, in Phase III, we're allowing dose deescalation in response to GI adverse events. We expect this combination, smaller upward titration steps plus allowing for down titration if needed, will make our really good tolerability profile that we saw in Phase II even better in Phase III. Now as you can see, VESPER 4, 5 and 6 are just the start. We're planning to advance a total of 10 berobenatide Phase III trials this year, and that includes a switch study to look at transitioning patients from approved weekly therapies directly to monthly berobenatide. We're targeting a series of potential approvals beginning with weekly dosing in 2028 with an approval for monthly berobenatide as a fast follow to that. Our pivotal program also targets obstructive sleep apnea and knee osteoarthritis to comorbidities where other GLP-1s have shown clinical success and where berobenatide has the potential to uniquely bring a monthly dosing option for patients.

As we've shown you, berobenatide has a potentially compelling profile as a single agent by itself and it's the driver behind which we're building out our research and development pipeline and metabolism. And we're also really excited about berobenatide as a foundational partner to evaluate combination therapy with other monthly peptides that we're developing. The most advanced of these combinations is berobenatide plus our investigational ultra-long-acting amylin analog, 3945, formerly known as MET233. 3945 is a very similar half-life to berobenatide and its solubility profile supports combining it with berobenatide. We expect to report early data on our ultra-long-acting amylin analog and on the combination with berobenatide later this year. We see the potential for this combination to deliver category-leading weight loss with the convenience of well-tolerated monthly dosing.

The Phase IIb study evaluating this combination SOLIS-1 is open for enrollment and it's up on clinicaltrials.gov. Looking beyond berobenatide programs, we recognize that not every obesity medicine will be right for every patient. And that's why we're building a differentiated pipeline with multiple mechanisms and modalities, injectables with the potential for monthly or even longer dosing intervals, oral agents and combinations. Our goal is to address the many needs of patients across weight management profiles and dosing preferences with our long-term commitment to obesity and to metabolic health. With that, I'll turn it back to Francesca.

Thanks, Jim, and thanks, Navin. To summarize, our Phase IIb data provide proof of concept for berobenatide as a potential first-in-class monthly GLP-1 receptor agonist peptide that we believe can deliver weight loss similar to tirzepatide and potentially better than semaglutide. Alongside robust efficacy, we aim to pair favorable tolerability and convenient monthly delivery to develop a foundational metabolic medicine as a single agent and backbone for future combination therapies. And with berobenatide scalability, Pfizer's leading primary care field force and a carefully designed commercial model, we believe we are well positioned to have a substantial impact on obesity and metabolic health, subject to clinical success and regulatory approval.

With that, we will begin the Q&A session with Jim and Navin. As a reminder, our Pfizer Flash series is designed as an educational deep dive into our pipeline programs. I'll therefore kindly ask that participants keep questions focused only on berobenatide's program covered today. Please avoid questions that would require us to provide forward-looking financial projections. While we're happy to clarify any information shared during the presentation, we will not be offering estimates beyond what has already been communicated. And I appreciate your understanding on that. With that, we're ready to take the first question, starting with those in the room. Please raise your hand, wait for the microphone and introduce yourself prior to asking your question.

All right. Chris Schott, let's start with you, JPMorgan.

I just wanted to talk a little bit about the higher dose that you'll be looking at in the Phase III. How do you think about the tolerability profile there? It seems -- I know you're trying to improve on the lower doses, but we're in kind of that low 20s percent vomit rate. I'm just wondering with that bigger step up to that higher dose, like what's your modeling suggesting what that profile could look like? And maybe just more holistically, it seems like one of the themes from this conference is this idea of not necessarily fully maximizing weight loss but getting kind of this balance of tolerability and acceptable weight loss. And I'm just going to think about the 3 kind of doses you're moving forward, like how important is that to the program versus some of the ones we already are seeing at the lower side?

So why don't I start with that? But I think it's also in part a question about the need for the flexibility in multiple doses on the market too. So maybe Navin can follow me. But -- so from a tolerability standpoint, the data are the data. The data that we have are from going up to 2.4 milligrams weekly. We don't have data right now on the 9.6 monthly. What we did see in the 2.4 milligrams weekly is there really was great tolerability there. So it doesn't seem that the dose per se is what drives tolerability. And that might actually be because once you get up to a certain dose with this potent of a GLP-1 with this long half-life and these pharmacokinetic properties, you might be essentially tonically saturating the GLP-1 receptor so that it doesn't really give you any more tolerability issues once your body has gotten used to that.

So then the question is, how do you get up there? And I will say just a note, the reason we have a dose that's 4x the weekly dose in monthly isn't just by multiplying by 4. It's actually based on very complex pharmacokinetic calculations to get the same average exposure over the time duration. It turns out to be exactly 4x the dose, which is convenient for us. So then the trick is what we have realized through both VESPER-1 extension and VESPER-3 is that when you make the step-up to monthly, if you're making that step up, there's a big jump, a fourfold jump, you get some tolerability signal. Not terrible, but you do get a little bit of a signal there. And so that's where going up to that 9.6, it's a gradual titration scheme up -- and there's 2 different schemes depending on if you already titrated up to 2.4 milligrams and you're happy at that high dose and you decide, hey, I want to go -- I want to switch to monthly.

There's one titration scheme for that. There's another one if you say, I want to get to monthly as fast as I can, and we'll see how high I want to go with that and you can titrate up to 9.6 that way. But in both cases, it's a gradual titration scheme. So the Phase III data will tell the answer, but for what we know now and the data we have, I think it's very promising to be very well titrated and very well tolerated.

Now do patients need all of this weight loss? As you know that the drug is on the market now. Most patients don't get to 15 milligrams of tirzepatide Part of that is probably because they don't tolerate it. And part of that is probably because they don't want that much weight loss or need that much weight loss. We may see a very different dynamic when it's more convenient to give it monthly and when it's very well tolerated. However, there's a lot of different needs for different patients. And so I think the low and medium doses are going to be very, very important as well. But on the market...

I mean I think that's spot on. I think the thing I would add is, to your point, there's efficacy, there's tolerability. The 2 things I would also add in terms of dimensions that are part of the considerations that are convenience and flexibility, right? And so if you think about the profile that's kind of emerging here from a clinical profile, as Jim highlighted, we've got a very competitive efficacy and obviously, tolerability profile that we described today that's just as good as the leading agent. But on the sort of flexibility and on the convenience front, what you get with berobenatide is the flexibility to sort of choose your own adventure, right? So you can do -- if you want to stay on weekly, you can stay on weekly. If you want to escalate up to monthly, you get to escalate up on the monthly and then there's multiple doses you can do that with.

I think when we look at the research, both with consumers and the provider base. What you hear sort of over and over again in spades is you want flexibility and control, right? So you can optimize that tolerability and that efficacy. And when we actually put the titration schedule in front of KOLs, HCPs, et cetera, that was sort of the theme that we got over and over again is, okay, I'm getting flexibility, I'm getting control. Now I can optimize this for my patient and sort of get them to the right sweet spot for efficacy and also for tolerability. And I think the sort of 3 themes that came out from that is, okay, I have now control over strength. I have control over titration schedule options, and I also have control over the frequency of the dosing. So that resonates, I think, really, really well with both consumers and with providers.

Okay. Thanks for the question. Dave Risinger from Leerink.

So I have 2 questions. The second one is quick. So could you just talk a little bit about -- sorry, could you talk a little bit about your vision for a commercial launch as a weekly and the messaging to consumers at that time? And then with respect to the China-only switch study, why is it China only? And can that be added to the U.S. label?

So I'll take the second one and then Navin. The Switch study is global. We are running a China study and a China program, a Japan program, but the Switch study is a global -- part of a global program. We see that as really important for patients who are -- a lot of patients already on weekly drug. And there one thing that, as Navin said, 65% of patients don't make it a year. So there's going to be people who are like, I can't do this every week. They're going to want to be -- have that option to switch. And so we want to bring that broadly worldwide.

Yes. And then just your question around the commercial model and the weekly. So maybe I'll just start with sort of the rhythm.

So as Jim described earlier, we're going to launch with the weekly, the monthly comes as a fast follow. The weekly on its own, as Jim described earlier, we see as competitive in its own right, leading efficacy aligned with sort of the top agent in the market today and the same on the tolerability front. I think the important thing about that weekly launch, though, is it gives sort of early experience to both consumers and providers about the product, the molecule, berobenatide. And then all those folks who get on to the weekly product are now eligible with the fast follow launch of the monthly, right?

That full base becomes immediately eligible base. to now make that decision, right, and provide that flexibility and that option to switch over. And then I go back to my point earlier, which is anyone who is on this product now, it's a highly differentiated product in the sense that you now have an option of doing this on a weekly basis or on a monthly basis. We expect most will move over to monthly because, again, that value proposition is so incredibly intuitive.

The minute you put the profile in front of both consumers and providers and you sort of show what the existing profiles look like from an oral perspective, from a weekly injectable perspective, there's sort of like a very intuitive light bulb that goes off because you think about the fact that, okay, this is a long-term chronic thing. If you fall off of it, you're going to regain weight again. And that sort of notion of, do I want to be tethered to something for 52 times a week for perpetuity? Do I want to be tethered to something 365 days a year for perpetuity? Or can I do this in a sustainable way, just 13 times a year. And if that light bulb goes off and then they sort of develop that preference. So that's sort of the way we think about the rhythm of this and the launch of this and how it will evolve.

Dave, I don't know if it was confusing that on the slide, you might have looked at Switch and China was next to it.

But just as a point of clarification, each box is its own trial. So you'll see that's the 10 Phase IIIs, just for clarification.

Okay.

All right. Vamil, let's go to you, Guggenheim.

Vamil Divan from Guggenheim. So maybe just 2, I appreciate getting your insights here today. And just building on the market research that you've done, just curious if you can share sort of how the market -- how you think the market is going to evolve from here, thinking about injectables, but also the oral -- so what percentage of the market do you think would be actually injectables? Yes. 5 years from now? And then related to that, obviously, you talked about your field force and the #1 ranking you've had for 7 years. How do you think about the commercial model from a field force perspective versus more of a direct-to-consumer that we're seeing emerging.

Absolutely. So in terms of the evolution of the sort of mix, it's hard to have a crystal ball and predict exactly what's going to happen. I do think that -- I think it's broadly believed that the injectables will be a larger part of the market. I do -- what we've observed about the marketplace so far, though, is, I guess, a few things. The first is we know that ultimately, people want flexibility, they want control. That's what we think are a big sweet spot and big strong suit that we have here. Obviously, you want to have a great tolerability and efficacy profile.

That's also what's emerging here. And then there's this very big sort of differentiation, which is I have now a sustainable option, right, where I don't have to be tethered to something 52 times a year or 365 days a year, right? So that's sort of like, I guess, the foundation of this. I think that the other thing that we -- when we look at our research that the light bulb that goes off is, yes, there is convenience with orals.

And by the way, that convenience with orals has unlocked more patients. We've seen that a big bulk of the patients that have come into this market are not switchers from injectables. They're sort of naive to GLPs. So that has become sort of a step change in unlock. We expect the same with a monthly injectable. But I think the key here is the life that also goes off is I can now get even more convenience because I just have to do this once a month. And by the way, I don't have to make a trade-off on efficacy like I do with the orals or a trade-off on fasting requirements like I do have to do with a certain oral as well, right?

So that becomes another unlock and I think becomes part of the value proposition. So it's hard to say like exactly what percent of the segment will be oral versus injectable. But as more innovations like this come along where the sort of dosing burden is a big step change reduction. We see that, I think, sort of persisting and sort of growing the market. Just in terms of where we believe berabenatide is well positioned in terms of the patient journey, I think we have a lot of conviction that this is going to unlock more initiation, just like the orals did because of what I just described. We think it's going to unlock switch when people see sort of the value proposition from that data. We think it's going to unlock maintenance because it's just -- there's this existential dread a bit of like being tethered to injecting yourself every single week for the rest of your life, right? So it's going to unlock that maintenance. And then perhaps even it stands to reason those who have lapsed. As I mentioned earlier, there's like 74% of people who are no longer on these things who have indicated that they're likely to jump back in.

And if you can think about a product where you don't have to do this again every single day or every single week, that becomes super interesting to people. So we think that's also going to happen. I think one last thing I'll just say in the commercial model, you asked about field force and sort of our consumer engagement. So as I said, the good thing about the Pfizer primary care field force in addition to it being ranked so highly is that we have a really long and sort of deep relationship with these prescribers, right?

So 2/3 of the prescribers that are writing meaningful GLP volume, we already know. We know them well. We call on them all the time, for example, with Eliquis. If you think about the tenure of our reps, the tenure of our reps in the primary care field force, 15 to 20 years. So these are folks who have seen the entire life cycle of Eliquis. These are folks who have engineered the shift from Eliquis being sort of a cardiologist-specific play to a broad primary care play. They really know this space. They've also carried Lipitor, right? So these are people who really know this space. They're experts in cardiometabolic. We think they're going to bring a lot to the table. And then on the consumer side, we are a powerhouse in this -- on that side as well. If you look at the ROIs on our advertising, it's double the benchmarks. I think really important, though, and beyond just sort of share of voice with engaging consumers, it's sort of how you bridge intent to action. And I think we've made a lot of, I think, great, great progress over, I'd say, the last 5 to 7 years in terms of how we engage consumers.

So you have to obviously have your DTC and all your traditional levers -- but you also have to be able to intervene and not just drive awareness, but actually move people and bridge people from intent to action. And if you look at, for example, what we've done in Pfizer for All, which is the sort of front door that we built a few years ago in migraine vaccines, et cetera, not only have we had 30 million visitors to that site, but we've built really specific high engagement interactions there. So for example, in the vaccine, just to give you a very quick example, we built an eligibility tool, so people can figure out what vaccine they're eligible for. We've also built an end-to-end way to book a vaccine. And what we've seen is a huge lift in terms of just, okay, I'm aware of these things, but now I'm actually bridging my intent to action, and we're going to plan to use that same sort of engagement model in obesity with Pfizer for All and all the other front doors that we built.

Let's go to Geoff from Citi.

A couple of questions. It's good to see some new indications into the mix in your developmental slide. How are you guys thinking about combinations even beyond that inflammation, oncology, neuropsych, et cetera? Can you take advantage of the monthly dosing and that in those arenas? And then I guess I get another commercial question. I guess the argument here is you have to compete with the weeklies to at least get people to start.

So how do you anticipate the differentiation on the weeklies? And then what is your assumption of the percent of people that move to monthly and the reason is it just because they want to -- is it pure convenience? Do they -- if they lose, let's say, 50% of their weight by -- is it just that they don't want any more.

They just want to maintain -- I just don't know if there's just not a lot of data on that on the folks that are averse to weekly injections, right?

Well, let me just take the first part very quickly. What we've disclosed here, obviously, isn't our entire Phase III program because some of these trials are called undisclosed, but we have our eye on all of these possible additional indications. There's over 200 diseases that are driven by obesity. We certainly have a great interest in some of the areas you mentioned, oncology, immunology, -- and whether it's combination approaches or even berobenatide as a monotherapy for improving these. We're looking at them all, but we can't do everything, obviously, and we need to be very thoughtful about where we bring differentiation. But as you pointed out, the monthly is a big differentiator because just like obesity, most of these diseases are also chronic diseases that need chronic treatment.

And so we have to find ways to keep patients on longer than just a year. Navin?

And then your point about the differentiation on the weekly piece, I think first and foremost, as we talked about earlier, we see the sort of efficacy and tolerability profile being as good as the best agent in the marketplace. In terms of differentiation, you could choose to initiate on a weekly product where you have no option to go to monthly like the incumbents, right, the products that exist today or you could choose to initiate on a weekly that gives you the optionality, right, to go on to a monthly. And I think that even for that short window of time where the weekly is on the market because monthly will fast follow. But even for that short period of time, right, it's going to be very enticing, I think, for a consumer or for a provider to say, you know what, I think I'm going to try this weekly because in just a little bit of time, I'm going to actually potentially escalate you to a monthly dose, right? You don't get that optionality if you start somebody on a weekly product that doesn't have the schedule.

Conor Mackay-- let's go over to BMO.

This is Conor here from Evans team at BMO. You guys made a few comparisons today in your slides to some of the other leading agents in the space. And we were just wondering, from a strategic perspective, as you think about competing with some of these assets, what are your views on potential head-to-head studies? And then thinking longer term for your combination approach, how would you think about potentially including an active comparator arm in some of those later phase studies?

So again, we haven't disclosed the entire Phase III program here. And for the combination, the next combination coming along, which is our combination with our ultra long-acting amylin analog -- we're just entering Phase IIb. So it's still early days there. We do anticipate that, that's going to have additive efficacy because that's what we saw in Phase I and a really good tolerability profile in monthly dosing. So then the question is, what's the advantage of doing head-to-head? And I'll tell you part of the thinking here is that we have great -- we have really great potential drugs here. And I think with showing very good efficacy and very good tolerability, I'm not sure that there's going to necessarily be a need to do head-to-head. It might be the other people's need to do head-to-head against us because we've got, in some ways, bigger fish to fry to go after other indications where chronic treatment with a monthly offering can really make a difference, again, across these many, many other things that are driven by obesity.

Okay. We probably have time for maybe one more.

Michael, you're here to represent Cowen, right?

Mike Nedelcovych from TD Cowen. I have 2, if that's all right. My first actually dovetails on something you just mentioned about the long-acting amylin. To what extent does Pfizer view amylin monotherapy as an important future category? I think the field is kind of excited about the possibility of perhaps lower efficacy but better tolerability. And then on the comments you made about weekly titration and transitioning to monthly, is there a potential path to monthly dosing from the start for berobenatide or perhaps for your prodrug? And if so, is that compelling? Or would that not be enough of an advantage to pursue?

So first of all, amylin monotherapy, it's early days in the sense of we're starting our Phase IIb trial where we will look at weekly and monthly dosing of monotherapy and combination therapy with berobenatide, and we're going to learn a lot there. I'm not sure I would characterize it as less efficacious because what we saw in Phase I with our particular amylin analog, which again is ultra-long acting was an incredibly high degree of efficacy for the duration that we dosed. So the question is, will it fulfill a need as a monotherapy in the market? We're going to learn more about what exactly it does through Phase IIb, and we'll make these decisions.

This again, are sort of investment decisions of where does this embarrassment of riches of this very large pipeline that we now have meet the actual needs in the marketplace. And then I'm trying to remember -- starting with this just monthly. So I'll let Navin answer it from its attractiveness commercially. From a standpoint of berobenatide itself, I think we've worked out through Phase II that it's optimal to do weekly dosing initially for the first 12 weeks.

Again, this has to do with the size of a jump that you're doing before you get, as you accumulate drug and exposure over time.

For the prodrug, it's an interesting question. prodrug is in Phase I. It's for those who aren't aware of it, -- it's an ultra long-acting version of berodenatide, again, in Phase I. So we need to learn a lot more about it, but there's a lot of potential advantages there to stretching out beyond monthly dosing and how you titrate there will be determined by the clinical data.

Okay. So in conclusion, I just want to thank my colleagues, Jim and Navin, for their contributions today. And also there are numerous Pfizer employees in the room that really helped bring this all to fruition. So thank you to all of you. And then last but not least, thank you so much for joining us live and on the phone. We really appreciate it. And the IR team is always available for any follow-up questions you may have. And with that, I'll just ask the operator to conclude the call.

And thank you.

Thank you, ladies and gentlemen. This brings us to the end of today's program, and we appreciate your time and participation. You may now disconnect.

Okay, everybody. It is my treat. I'm Rich Handler, CEO of Jefferies. I get the pleasure of interviewing my good friend, Albert Bourla, CEO of Pfizer.

Before we get going, the last time I interviewed Albert, and I was talking with him backstage, it was right in the heat of COVID when no one knew what was going to happen. And I had -- at the time, I think we had about 5,000 Jefferies employees on the Zoom. And quite honestly, I was -- I can't convey to you enough the calming, the sense of hope, the sense of purpose and the sense of strategy that you gave our firm at that point in time. So before we start, I want to give Albert and his entire company a big round of applause.

Give us just a little bit of you growing up and a little bit about your background so people know who you are. And it's a pretty interesting background.

I'm Greek. I used to say I'm Greek by birth, American by choice. I studied in Greece. I studied veterinary science. I did a PhD. All I wanted was to stay in academia to become a professor. Pfizer in Greece had an animal health group at the time, now it's Zoetis, that they were keen to hire me. They put an offer I couldn't resist. I said that I will go sabbatical a year or 2, and then I will go back to academia. But then once I joined Pfizer, I liked so much the energy of the private sector and entrepreneurship that was matching my personality, that I never looked back.

So that happened 33 years ago. I moved with my family in 5 different countries, in 10 different cities, and I worked with all the countries of the world.

So if you were to describe to the layman today, what is Pfizer in your mind? How do you see the company?

It's an iconic pharmaceutical company with a tradition that very few have. This year, celebrating 177 years of existence. New York company that bring -- comes with the competitiveness and drive that New York companies usually have. A company that has developed iconic medicines that changed the paradigm when it comes to treatments from the cardiovascular to -- from the Lipitors to the Viagras to -- I can go on and on. And a company that it is right now very much purpose driven. All we care is to develop breakthroughs that change patients' lives. And everything else will fall into place, including the stock price.

If you're talking about the competitive moats and the competitive advantages that you have right now on a global basis, what are they?

Pfizer has capabilities that basically none of the others have to that degree. We have probably the largest manufacturing network in the world and the capabilities of its network were able to be demonstrated in COVID. I remind people that during COVID, people were impressed that within 8, 9 months, we were able to develop a medicine. The biggest -- the most impressive accomplishment, which I know how challenging it was, was to make in the first year, 3 billion doses of a product that we had never manufactured before. The run rate of Pfizer was 200 million doses a year of all the vaccines that we were making.

Our manufacturing capabilities are enormous. We have -- we are a powerhouse in commercial. And this is not only in the U.S. where we constantly are ranked as the #1 primary care field force in the industry, constantly every year after year by physicians. But we have a global presence that no one else has. We have subsidiaries basically everywhere in the world with our own field forces and our own research teams in the world. And we have unparalleled R&D also capabilities.

So you focused the entire energy and passion of Pfizer during COVID successfully. But now your mission on the cancer side, you're taking all of the passion and energy to cancer. What does that mean? How does it look? And how -- the breadth of it, the geographics of it, the technology of it, how does that look?

You are right to use the word passion. It is really my passion in life to be able to advance significantly -- I don't want to say empty words and say, I want to find the cure before I go, but I want to advance significantly the fight against cancer, and I want to convert most of the cancers into chronic disease so that you can live with your cancer for years rather than receiving a death sentence.

Why cancer? One, it is a significant need for humanity. People -- cancer mobilize people like nothing else. Secondly, science, when it comes to finding solutions for cancer, it is very mature. We know way more about cancer than, for example, we know about Alzheimer's or we know about Parkinson's. It's well established.

Third, Pfizer had tremendous already capabilities in cancer, probably our most successful division with small molecules, which was our expertise, IBRANCE and ALK inhibitors, I can go on and on. And we invested pretty much everything that we made from COVID to buy Seagen, which has had and has the largest ADC platform, which is a very big large-molecules platform against cancer. So when I put together the need, the fact that the science is really breaking now and the fact that we are good at doing that, that was the obvious choice for us that this is where we go.

Any surprises on that acquisition, positive or negative?

Yes. So far, it's very positive. The acquisition had 4 products that were already in the market, but early introductions of them and had a significant pipeline, 13 different products.

And right now, we only have the results of the 4 in-market products that are doing extremely well. The Padcev, which is the, let's say, the crown jewel of the 4 and brings the vast majority of the sales has released data that are transformational. It's changing the lives of cancer -- bladder cancer patients. When I say change the life, more than double survival, not 10% or 20%, more than double.

Now we are studying -- we are initiating a new study that will be bladder sparing because usually, when you have this type of cancer, they remove your bladder and you have a terrible quality of life because of that. And of course, you will have metastasis that we need to treat with Padcev. So now we try to see if we can demonstrate that you don't need to remove your bladder. We will treat it while it is there. So the in-line products are doing very well.

Then there is the pipeline that is coming, significant amount of value about it. And the first of them, it is a very significant molecule. It's called SV. It is for lung cancer. It has 2 studies that are ongoing right now. Lung cancer is the biggest killer in terms of cancer deaths. There is nothing else that kills more people like that. In the U.S., 250,000, 260,000 new cases every year diagnosed with lung cancer. It's a very big problem. And as a result, it's the biggest market in oncology.

The SV, which is a very targeted technology, we are expecting this year results from a second-line lung cancer treatment as monotherapy. So alone SV against the current standard of care. No one was ever being able to beat the current standard of care in a monotherapy setting. We hope we will. It is riskier than the second one, which is combination therapy, and it is a bigger market. So the second one is first line, not second line. First line is much bigger, the numbers. And we studied in combination with immunomodulator. So we'll see how that goes. But if this is successful, probably that will become the biggest Seagen product and probably the biggest Pfizer product.

There's a lot going on in the biopharma world today, patent cliffs, AI, regulatory change. How do you view the climate right now for potential new acquisitions? Or if you were looking at the world right now, where would you hope to focus your attention? And where do you hope to see the biotech sector emerge?

There are several, let's say, things that are shaping right now, the industry. I've never seen a moment in that industry that so rapid change is imminent. The 3 things. One, I think, is behind us for the moment, but comes back and forth, it's the pricing, MFN, geopolitical tensions that was an existential threat for us in 2025, and I spent most of my time working this out.

You kind of embraced it, right? I mean, you went right at it.

We drove the industry. Some liked it, some didn't like it. They all did the same. We are 17 companies that -- they did 17 identical deals with the deal that we opened and we negotiated basically on behalf of everyone. And I truly believe it was a very good deal for the industry. And by the way, the investors believe the same because the first 2 days after the announcement of the Pfizer deal, the pharma went up 15%, 7% and 8% or 7.5% and 7.5%. So it was a very good thing. But right now, I think things are calm there because of that.

There are 2 things that are shaping the future. The first is AI. It's changing everything dramatically. It's going to change not only the things that people think, the drug discovery and how we are going to discover new medicines or develop them, that very much so, but it's changing our manufacturing, it's changing our commercial model, the role of a rep, the role of a marketer, the role of a medical liaison, the physicians already receiving most of their information through LLMs rather than through magazines and promotions from the reps. So the whole marketing process will change in addition to the whole manufacturing process, the whole research process.

And of course, there will be significant productivity gains because those 3 things that I said are -- primarily will drive sales, primarily will drive new products, primarily will drive less batches failed, but also cost will come in the form that you will have a much more efficient finance department, legal department, HR department, all the enabling functions. So that's one, AI. We can discuss...

While we're on that, so how is Pfizer directly being affected by all this? Like what are you doing internally in that regard?

Yes. We are all in. If you see the spectrum of the pharma CEOs in terms of how strong believers they are in AI, there are those that they believe that we will have some incremental changes, those that they believe that is changing everything and everybody is somewhere in between. I'm much more closer to I think everything will change. Our basic belief in strategy is that right now, AI cannot do everything. But right now, today, Tuesday -- or Wednesday...

I think it's Wednesday. Check AI, Claude?

Wednesday. AI can do much more than enterprises are using it for. So what is the bottleneck? Why they don't? It's not technological limitations. And it is not to make the right choice if it is Gemini or Claude, if you are going to build your own data center or if you are going to lease GPUs in Google or Amazon. The key, the secret, it is organizational ability to transform itself into an AI-native organization now that this unique powerful tool is available.

And that varies from company to company. Some companies will find it easier, nobody will find it easy, but some will find it easier to transform themselves than others. The reasons why that could inhibit something like that, it is inertia, it is fear of employees about their job, it is the unknown because it's a foreign language to many. It is the fact that so many people are proud for the way that they are doing things because they're extremely good in what they do, and they do it in the last 20 years, and they are the #1. And now you tell them you need to change completely how the finance department is structured and how the legal department is structured and how we look patent or litigations. But it's happening.

So our whole effort, it is on that second one. I don't worry that much if it is Claude or Gemini. I'm having the right people, making sure that we have the right computational power, the right infrastructure, that we are cleaning all our data in the way that we make them AI ready. But for me, it is more how the organization will endorse the idea that I'm changing. And not I'm changing by year 2030, I'm changing by year '27 because the speed with which things are moving is tremendous. So that's for me, the fundamental of the technology now.

I will take a caveat. There are some things that AI cannot do yet. Things that predominantly are in the research field, we have significant advancements, but we don't have it yet. We can't predict the right targets with high accuracy, biological targets. We cannot have the right molecules designed the way that we want. We still don't have toxicology in silico that it is well established, and I can go on and on and on. Things that could -- once we do, could save a tremendous amount of time out of the drug development and discovery.

For that, our strategy is to work with big players and niche companies to develop the tools. So we partner with them. I don't think any tech company alone will be able to develop a good AI model that predicts new compounds. And I don't think any pharma company alone by hiring engineers will be able to do it. We need the expertise of the two, and that's our strategy on that second domain. So the first one, more or less generic from my perspective, infrastructure, data and then training of the people, changing the organizational structure. The second one is still to come.

Okay. So back to the biopharma environment. AI is clearly one. Let's talk about regulatory for a second as one of the things that are changing -- actually, even recently, it's been changing quite a bit. So how do you see the changes? What -- is it going in the right direction? What do we have to make sure we protect and what needs to be improved?

If we speak about the U.S. on the front of significant institutions like the CDC, the FDA, et cetera, I think '25 was not a good year. We had a setback. But I think White House realized that. I think that they initiated corrective actions. We saw a lot of changes in CDC and in the FDA, and we continue seeing. CDC publicly said that it is a wonderful choice, the one that they did.

A decent high-ethical scientist that it -- is highly respected by the other scientists. That's what you need from a director of CDC. You don't need someone that every medical establishment is challenging it. We reached a level that CDC will make some vaccine recommendations and then the American pediatricians -- the American Association of Pediatricians, for the first time ever in the history of this country, will issue their own guidelines because they say, we don't trust the CDC guidelines. Terrible. But this is, I think, very rapidly moving to the right direction.

And what -- if you could have your choice on things that the regulatory regime would improve going forward, what would they be?

Before answering that question, because it's highly connected, it is, many are asking what about China. Because China, it is the area that it is, in addition to AI, the second driver that is shaping this industry. We have a phenomenon of a country that replicated the U.S. success model of building an ecosystem with NIH, universities, venture capital, biotech, big pharmas. And this is what the U.S. did in the last 2 decades and attracted the entire world research basically here. It was happening in Europe before that. And everything came here. And from Japan, most came here and most Europeans are doing here their research now.

So China is a very impressive example of a meteoric rise of a nation as a scientific superpower. They are not stealing patents because some people still are in this narrative. Actually, they are adamant in protecting patents. Why? Because they filed way more patents than U.S. companies last year. There is a true revolution that is happening there. And it is based on 2 things. One, it is they are investing in organizations that they operate with half the cost and 3, 4x the speed, and they are investing big amounts. When you have the...

Is that because they've embraced AI faster or because...

I don't think that the big changes that we see in China is because of AI. Actually, I'm concerned when they will start doing that, if -- how better they could potentially do it for us and going forward. There are multiple reasons, including some regulatory flexibility that they have there. But the reality is the people are hungry for success. And they are very driven, and they have set the goals. I've been to universities. And every researcher over there has in front of his computer screen, the words CNS, Cell, Nature, Science. These are the 3 top magazines of the world, the Cell, the Science and the Nature that they are obsessed: "We publish only there."

So we publish only there. That's China. They publish only on the highest quality magazines that an article to be accepted goes through the most severe scrutiny from peer groups. They dominate 70% of the publications in some areas are coming from Chinese authors right now. So when you have this type of a dynamic...

So is it a mistake for us to try to contain them versus make ourselves better?

That's the -- you're right, and that's the biggest mistake that U.S. bipartisanly is doing. They worry, rightly so. We want to maintain our superiority in the field. But the way that they are thinking about it and they are investing 80% of their resources and brain power and time, it is how to slow down China. They should invest 80% of our resources and brain power, how to become better than them. That's the only way.

It's like if you are in a race and you have win in your life, multiple races. So you are used to be the winner. And suddenly, for the first time, you feel someone approaching you from the back. What are the two things that you can do? It is to run faster, which is the sensible thing to do or to think that I'm going to push him to the side, which is what we try to do. Too late. They have scale with critical mass that we won't be able to slow them down. We should not even think about it. We should think how our biotech world will have 3x the speed and halve the cost to develop things.

So when you -- back to the regulatory side of it. So if that's the goal and to be the best, what help do you need from the regulators?

We need a lot of help from the regulators. And there are -- that's what I do every time I go to D.C. I speak about reforms that need to happen with Congress, with FDA, with HHS, et cetera, et cetera. But I need to say something. For us, to be able to compete with Chinese companies in the next -- in 5 years, let's say, when they will develop global players. So the way I see it, it is year 2030, my competition will not be Merck and Lilly, it will be Chinese companies. And I know that they are coming with half the cost, 3x the speed.

I don't think government will solve that problem for me. I don't think that we will be able to develop with the intervention or the protection of the government, half the cost, 3x the speed. We can develop it if we do the right AI development. We can develop if we do the right transformations. We can develop if we do the changes that we need to do so that we can become better. That's mainly on us.

However, the government, it keeps bringing the pricing issue of this industry is killing the industry. It's not helping because who is going to place his money in this industry when there is existential threat, maybe prices in the U.S. will be cut in half. Every time we have this debate, the funding for biotech comes to historical lows and the multiples of the pharmaceutical industry in extreme lows. That needs to stop. That's the help I want from them. The rest I'll do. I don't want their money. We have enough capital to do the things and to have the will and we have the expertise to transform ourselves.

Correct me if I'm wrong, I think you just did a recent deal in China with a 15-year maturity, a long term. What drove that? Was it worrying about the U.S. regulatory change or that you like the product so much, you wanted the duration...

You mean the Innovent deal with -- No. What drove that, it is that right now, the Chinese because of their very high productivity, they are developing significant medical innovation, new things, new stuff. And my passion is to find the cure of cancer -- but I am pretty aware, it's a very difficult thing because this -- [ cancer ] is very tough. You can't beat it, right? So we need to use the resources of all. And by finding a company that is very quick and good in some of the things and combine it with our capabilities that are very good in other things, we have better chances to develop the cancer medicine. So that's the deal.

Back to China for one last question. When -- you've been there twice in the last 6 months, is that right?

Say it again?

You've been in China twice.

Yes, yes. I've been...

Who do you meet with? Like small -- forget the big meetings, that pomp and circumstance. When you're in a small meeting, are you meeting with the CEOs of their -- of the pharmaceutical companies? Who are you actually having the conversations with? And what do you talk about?

I -- varies, changes. I always meet the political establishment. If I can, I will meet President Xi. It's not that easy to see him, but I have seen him several times, but I will see the premier always, I will see other members. You should -- also Shanghai, Beijing are the most influential right now. You see always the mayor and the party secretary. So you see, let's say, the political world.

Then I meet with a lot of investors there. There are a lot of either Chinese or Singaporean or other type of investors that they have a very good understanding of the China, and I'm closely connected with them. I'm meeting CEOs of companies, particularly if we have advanced deals, for example, the Innovent deal, I went and met with the CEO before we had an agreement, just not even a month ago, 3 weeks ago. And I think that helped because also when they look at you in the eyes, they feel very different level of trust to conclude the deal. And the same is for us. I wanted to see who is the person, right, before we commit years of co-developments.

So pretty much you get the feeling. Whenever I can, always I visit my people. It means a lot for them to see the CEO there and we have a lot of people in China. We are very big in China in terms of infrastructure and sales, and we are in e-commerce, we are in direct sales, you name it. We are the biggest name from international companies in China.

Okay. I think we're out of time, and we have a hard stop. But I want to ask you just one last question, you could answer as quickly or as long as you want. The purpose that you have in your life and the purpose for your company. How are you motivated? What is it about? And how do you feel about your job?

I feel very good about my job. And I think very few people have the luxury to work in an industry that doing good that -- good means that you are making good for humanity. There is a big misconception that existed for many years and was politically driven that what is the interest of the patients and the interest of the shareholders when it comes to pharma are fundamentally at odds. One is -- the reverse is true. There is no way that any shareholder will make a single dollar unless -- if the company creates dramatically significant value for the patients.

So morally, I'm so pleased to know that because what I need to do to serve my fiduciary responsibilities, it is to bring new medicines to patients, which is what I'm very proud of doing. And that's how we motivate our people. Very few people, as I said, work in an industry that they can claim that they can do so much good to humanity. And every time a neighbor, unfortunately, tells you that he got the diagnosis of cancer, this is the time that you remember why we need the Pfizers of the world.

Great. Albert, thank you so much. On behalf of everybody here, we greatly appreciate you.

Thank you very much.

Good day, everyone, and welcome to Pfizer's First Quarter 2026 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Francesca DeMartino, Chief Investor Relations Officer and Senior Vice President. Please go ahead, ma'am.

Good morning -- to Pfizer's earnings call. I'm Francesca DeMartino, Chief Investor Relations Officer. On behalf of the Pfizer team, thank you for joining us. This call is being made available via audio webcast at pfizer.com. Earlier this morning, we released our results for the first quarter 2026 via press release that is available on our website at pfizer.com. I'm joined today by Dr. Albert Bourla, our Chairman and CEO; and Dave Denton, our CFO. Albert and Dave have some prepared remarks, and we will then open the call for questions.

Members of our leadership team will be available for the Q&A session. Before we get started, I want to remind you that we will be making forward-looking statements and discussing certain GAAP financial measures. I encourage you to read the disclaimers in our slide presentation -- the press release we issued this morning and the disclosures in our SEC filings, which are all available on the IR site on pfizer.com.

Forward-looking statements on the call are subject to substantial risks and uncertainties speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements.

With that, I will turn the call over to Albert.

Thank you, Francesca. Good morning, everyone. Thank you for joining our call. It's a wonderful day here in New York. We've had a strong start to the year. Our business continues to perform well, and we are making strategic progress. One of our great strengths is the ability to execute. And we are delivering on our financial commitments while we also invest to strengthen Pfizer for future growth and impact.

In the first quarter, we exceeded expectations for both total revenues and adjusted diluted earnings per share. We have made progress so far this year in delivering our 2026 critical R&D milestones including 3 positive Phase III readouts and encouraging mid stage readouts for both approved and investigational medicines.

We are keeping pace with our robust agenda of approximately 20 planned pivotal study starts this year. We also had 2 significant legal developments that improved our growth profile post 2028 and of course, our cash flow outlook. Our recent settlement agreements resolving infringement of patent related to VYNDAMAX have the potential to change the growth profile of the company significant post 2028. This gives us greater confidence that starting in 2029 and we will enter a 5-year period of high single digit revenue CAGR.

Additionally, we use the recent Belgium court ruling regarding COMIRNATY contracts with EU member countries as a positive for future EPS and cash flow. The improved visibility into our cash flow provides is a positive for our longer-term capital allocation priorities including, of course, our ability to preserve and support the dividend.

As we look to the rest of the year, we are clearly focused on our most impactful opportunities to create value for patients and our shareholders. We previously served our strategic priorities for 2026, and I will walk you through the progress we are making -- our launched and acquired products had a tremendous start to the year with 22% growth. 3 of our business development transactions represent about 8% of the invested capital in the recent years, and they are all progressing very well.

Oncology represents our most advanced and concentrated area of research and commercial focus and our Seagen acquisition is a central reason one. Since beginning the -- since bringing the company to Pfizer, we have transformed our oncology organization unifying our team expanding our commercial portfolio and advancing a leading ADC platform. The 20% year-over-year operational revenue growth in the quarter of our Seagen products shows but we have made good progress in deepening our presence within the oncology community.

We continue to strengthen physician engagement and drive greater recognition of the clinical value homes. We are also executing with focus to maximize the value of our Metsera acquisition. This underpins the strategy intended to position Pfizer as the leader in the next generation of obesity there.

We intend to advance 10 Phase III studies this year, and we are targeting a first approval in 2028 from a portfolio that includes ultra-long active peptides with the potential, if successful, developed and approved for competitive efficacy and tolerability with a differentiated monthly maintenance dosing schedule.

The success we have achieved with -- no -- since our Biohaven acquisition shows the power of our leading field force and commercial capabilities have worked. Nurtec contributed in the first quarter with 41% operational growth, driven by robust, robust demand and both follow acute and preventive migraine treatments.

We continue to see a meaningful growth opportunity in the oral CGRP class of medicines for patients with migraine. Of course, 2026 is a pivot target for R&D, and I'm pleased with our early progress this quarter. While we have a large active pipeline, we rely on a rigorous and disciplined approach to focus resources where we see the greatest conversion. We are targeting approximately 20 pivotal study starts, 8 key data readouts and 4 regulatory decisions this year.

Our critical R&D milestones reinforce how we are concentrating investment in key areas such as oncology, metabolic disease and vaccines, where we have existing commercial infrastructure, scientific expertise and significant opportunity for competitive differentiation. Roughly half are anticipated key data amounts and regulatory decision in 2026 are expected to come from on where we are advancing multiple programs across areas such as breast, thoracic, gastrointestinal and blood.

During the quarter, we presented notable EV-304 study findings for PADCEV. The results show that PADCEV -- -- reduces the risk of recurrence or death by nearly 50% in patients with cisplatin-eligible muscle invasive bladder cancer. Combined with the recent compelling data from the EV-303 trial, this highlights the potential for this regimen to become the new standard of care patients with muscle invasive bladder cancer regardless of cisplatin visibility.

Bladder cancer is diagnosed in more than 600,000 patients a year ago, including an estimated 85,000 in the U.S. MIBC represents approximately 30% of all these bladder cancer cases. The positive top line results we saved last week from the Phase III MagnetisMM-5 study of ELREXFIO represent a meaningful step towards our goal of reaching more patients earlier in the course of their disease. In this study, ELREXFIO significantly improved progression-free survival for double-class exposed patients with relapsed or refractory multiple myeloma, who received at least 1 prior line treatment. This is a significant opportunity to address patiently. Multiple myeloma and aggressive and currently incurable blood cancer is the second most common type of blood cancer worldwide with 436,000 new cases each year in the United States, and over 187,000 new cases global.

During the quarter, we also served randomized Phase II data for tumors our potential first-in-class nDiKA4 inhibitor in patients with HER-2 negative breast cancer who received prior CDK4/6 inhibitor phase III. These data suggest that, has the potential to differentiate from the CDK4/6 inhibitor class with improved data center ability, reinforcing our confidence in the molecule.

Looking ahead, we remain focused on accelerating this investigational medicines development in first-line and early breast cancer, where it may provide even greater impact for patients. We view this as an important opportunity to deliver a next-generation backbone therapy building on Pfizer's long commitment to patients with breast cancer.

We have been working with regulators on the pathway for expanding coverage through our next-generation pneumococcal conjugate vaccine to extend our leadership in this competitive space. Yesterday, we initiated our Phase III program for our 25 valent pediatric vaccine candidate with increased balancing and next-generation serotype 3 technology.

I am also pleased to provide an update on our strategy in the adult market. We have decided to advance directly to our fifth generation adult vaccine candid. And today, I am proud to share for the first time, but it includes coverage for 35 times. We believe this gives us the strongest opportunity to maintain our current market leadership in the adult market over the long term, and we expect to enter clinical development this year.

In I&I, we announced a positive readout in March from a Phase II trial of --, our investigational trispecific antibody in atopic dermatitis. We intend to advance a broad clinical development program for this investigational medicine, which was discovered in-house at Pfizer and is currently being evaluated in atopic dermatitis and also in asthma and COPD.

We remain on track with our commitment and our continued focus on what matters most, maximizing the long-term value of our pipeline for patients. We are investing with strategic discipline and focus to build the foundational supporting our aim of high single-digit 5-year revenue CAGR. It's vital that our R&D has the resources to advance our robust pipeline, including both internally discovered programs and opportunities we have added through strategic moves such as our acquisition of Metsera and our in-licensing agreements with [indiscernible].

Our commercial teams are leaders in translating scientific progress into real world -- we are furthering investments to provide them with capabilities, technology and support, helping our medicines reach the right patients at the time so we can deliver sustained value. We also remain deeply committed to our shareholders. We intend to maintain and over time grow our dividend as we continue to deliver and build long-term value.

Embedding the use of artificial intelligence across our company is a key strategic priority, and we are driving continued progress in R&D, commercial, manufacturing and core enterprise funds. We are empowering our colleagues to accelerate innovation by pairing frontier AI tools tailored to find roll with comprehensive and continuously updated trend. One of the areas where we see the most substantial promise is the discovery development delivery of new medicines and vaccines.

Leveraging the power of AI to compress time lines and improve vision making is central to our innovation strategy. We are embedding AI into each functional line of R&D. Pfizer has a vast repository of small and large molecule translational and clinical data, and AI is creating the opportunity to along inside but to drive a significant impact on how we discover and develop medicines and vaccines. So with that now, I will turn it over to Dave to speak about the financial performance of the company.

Great. Thank you, Albert, and good morning. Let me begin by highlighting that our strong first quarter performance reflects the continued disciplined execution across our strategic priorities. and importantly, continued progress in repositioning the company for sustainable growth. We are making targeted investments today to drive revenue growth later in the decade and beyond.

Looking ahead, Pfizer is entering a new phase, our launched and acquired products, combined with the strengthening pipeline or positioning the company with the ability to deliver growth towards the end of the decade. While we remain focused on managing near-term LOE headwinds, we are actively building the foundation for durable long-term value creation.

And with that as context, I'll review our first quarter results discuss our capital allocation priorities and conclude with an update on our '26 guidance, which we are reaffirming today. In the first quarter of '26, revenues were $14.5 billion, exceeding our expectations and representing an operational increase of 2%. Excluding our -- -- products, the underlying business delivered approximately 7% operational revenue growth, reflecting solid demand across key brands and continued strong commercial execution.

On the bottom line, first quarter reported diluted earnings per share was $0.47 and adjusted diluted earnings per share was $0.75, also exceeding our expectations. In addition to our strong revenue, this outperformance also reflects our ongoing commitment to managing our cost base and to drive productivity across the organization. Our results this quarter demonstrate the effectiveness of our refined commercial strategy, solid contributions across our product portfolio primarily driven by PADCEV, Eliquis, Nurtec, Labrena and Vendee family, each reflecting focused execution in our key therapeutic areas.

Our launch and acquired products delivered $3.1 billion in the first quarter, and revenues grew by approximately 22% operationally. These results demonstrate the early impact of our portfolio transition and our investment strategies. We continue to invest behind these product groups to support their growth which we expect will enable the to partially offset upcoming LOE headwinds over the next several years.

Adjusted gross margin for the first quarter was approximately 76%, primarily the result of product mix during the quarter and ongoing cost control measures. I do want to note accrued royalty expense was higher in this quarter and dampened gross margin compared to the first quarter of last year. With that said, trust management across our manufacturing foot remains a top priority.

As a reminder, over the past several years, our adjusted gross margins have generally remained in the mid- to upper 70s when it's COMIRNATY, which has a 50-50 profit split with our partner by OnTech -- we continue to expect pro $700 million in savings from our Phase I of our manufacturing optimization program this year with approximately $175 million realized in this quarter. Total adjusted operating expenses were $5.5 billion for the first quarter of $26 million, an increase of 4% operationally versus the first quarter of last year.

And now looking at the components adjusted SI&A expenses decreased 5% operationally, primarily reflecting lower marketing and promotional spending on various products from more targeted investments and ongoing productivity improvements as well as lower spending in corporate-enabling functions. Adjusted R&D expenses increased 11% operationally, primarily driven by an increase in spending in certain oncology and obesity product candidates.

First quarter 2026 adjusted operating margin was strong at 38% and above pre-pandemic levels, demonstrating effective cost management as well as revenue performance. We have already made meaningful progress on our productivity initiatives and remain on track to deliver the majority of the anticipated $7.2 billion in total net cost savings by the end '26.

And looking ahead, we will continue to identify opportunities to further enhance efficiencies while prioritizing rents that support future growth. Turning to the bottom line. Q1 reported diluted earnings per share, again, was $0.47, and our adjusted diluted earnings per share was 75%. The $0.75, which benefited from our strong non-COVID revenue and efficient operating structure.

Now with that, we turn to our capital allocation strategy. Our strategy is designed to enhance long-term shareholder value while preserving flexibility. It includes reinvesting in the business at appropriate returns, maintaining and over time, growing our dividend and preserving optionality for future value-enhancing actions, including share repurchases.

In Q1, we invested $2.5 billion in internal R&D, returned $2.4 billion to shareholders via the quarterly dividend and our completed business development activity is minimal. We closed on the sale of our stake in Vive in the second quarter, providing us with approximately $1.65 billion in net proceeds after taxes and customary closing costs. Our BD capacity women in the proceeds is approximately $7 billion. First quarter '26 operating cash flow was $2.6 billion and leverage ended the quarter at approximately 2.8x and as just a reminder, given the LOE headwinds over the next few years, we expect leverage to remain around the curves or even slightly higher through the transition period.

I will also mention that we made our final TCJA repatriation tax payment of approximately $2.6 billion in April. Based on our performance to date and continued execution, we are reaffirming our full year '26 today, we continue to expect total company revenues in the range of $59.5 billion to $62.5 billion and adjusted diluted earnings per share in the range of $2.80 to $3 a share.

This outlook reflects our expectation of strong contributions across our product portfolio, adjusted gross margins in the mid-70s range, disciplined cost management and continued investments to support growth by the end of this decade.

As a reminder, sustained low disease levels of code would likely continue to weigh on utilization over the next several months. And additionally, our plan assumes that the majority of sales will occur towards the end of the year and consistent with the vaccination season. And as always, we continue to monitor currency fluctuation as the year progresses.

In closing, over the next several years, our focus remains on investing in key assets while managing upcoming LOE events, primarily from this year through 2028. As we look towards the end of the decade, growth is expected to be driven by our advancing AR pipeline and the continued progress of our launched and acquired products.

Following the VYNDAMAX settlement, we now have a clear line of sight to a high single-digit 5-year revenue CAGR post 2028. Furthermore, this event, combined with our legal win in the Belgium port regarding the EU COMIRNATY contract will enhance our cash flow post 2028. We continue to position Pfizer for durable long-term growth and shareholder value.

And with that, I'll now turn the call back over to Albert to begin the Q&A session.

Thanks, Dave. Nice quarter. Now operator please assemble the queue.

[Operator Instructions]

Our first question today comes from Vamil Divan with Guggenheim.

Great. I'll keep it to one. I think a lot of focus on the upcoming ADA meeting. I'm just curious if you can just kind of clarify exactly what we should expect to see the both vest per 3, any other data that we should expect from Pfizer perspective? I think in typical hosting an investor event in conjunction with the meeting. So curious if there's any other details you can share around ASCO?

So Chris, the question is for you how much of the data you're going to disclose given the ADA?

And thank you very much for the question. It's obviously a very important program. We're excited with the progress and since the close of Metsera, as you know, -- we had exceptional execution, not only the clinical development, but also on the commercial development side and as well as CMC and on the pharmaceutical scientists as well as the devices.

Detailed Phase III -- detailed data from Vest will be shared the top line data we presented last time, I think 4Q '25 earnings. Data from BSP1, the open-label extension will be shared as well as data from Vespa II which is weekly better Benoit, our new name for our GLP-1 with or without titration in participants with type 2 diabetes will be shared. We will not share yet at ADA date on Amlan mono. We expect 24 weeks monotherapy in 28 weeks combination with the Amling1 that will be shared in the second half of this year.

Next question?

Our next question comes from Dave Risinger with Leerink Partners.

Yes. So my questions are on your oncology reps this year that could move the needle for the company. Could you comment on your expectations for EE and MeVro pivotal readouts this year? And then separately, if you could just please provide an update on your restructuring of corporate strategy and business development operations at the company?

Thank you very much, Dave. Let me take the second one and the Chris will address the S and the member. We did some changes in our organizational structure that are aligned with our constant effort to simplify. We have reduced the members of my executive team by 4 over the next couple of years as the last 2 years.

So the business development moved under Chris Boshoff because most of the business development are right now related with R&D pipeline and sources. We see significant improvement in any friction that could exist and how smooth things could work by doing that.

We also moved the commercial development, which is all the commercial strategies that were sitting in that group into the global marketing of the organization. And that creates also a significant amount of synergies by having global and the new products, global market dealing with new products and with our own products. That went under me.

Alexander took over the responsibility to manage the portfolio management team. He is the new chair, and he is focusing on prioritizing the pipeline. And then the strategy group moved to my chief of staff, so in the offer the CEO, where I can have also a better supervision. So this is the change that happened into our organization. And we feel that they are consistent with everything we were planning, which is simplification of our business, Chris.

Thank you very much. So to start with SB, important program for us. Integrin B26 is a highly differentiated target overexpressing 90% of lung cancers and little express in normal tissue in the lung. And we were encouraged by the first-line data with -- I mean the Phase I data, which we shared, albeit a single-arm experience with a median overall survival of approximately 16.3 months.

The second line study, just a reminder is focused on non-squamous based on the signals we've seen Phase III study against docetaxel. The study statistically powered. Should it be positive for overall survival. It will also be clinically meaningful -- just a reminder, we also have an ongoing Phase III trial in the TPS high, TPS more than 50. Data will be shared at ASCO from the Phase I experience. This is pembro versus pembro plus A reminder that last year, we shared data for that combination of PD-L1 high and full of patients, but everyone responded in that population, so it was a 100% response rate in a small population.

And for mebrometostat, again, an important differentiated, highly specific differentiated EZH2. The first study that will read out is METRO 1, which is in patients post abiraterone, a significant unmet need of inzalidomide versus -- sorry, in inzalidomide EZH2 versus physician's choice of inzalidomide. And that should read out middle or second half of this year.

Operator, next question.

Our next question comes from Chris Schott with JPMorgan.

Maybe just 2 for me. First, maybe for Dave or the broader team. I know you typically don't raise guidance with 1Q, but it does seem like a very solid start to the year from a revenue perspective. Can you just talk generally about the business trends versus your expectations and just how you're thinking about the year progressing from here? And the second question for me was on BD capacity. You mentioned $7 billion. I guess just given the VYNDAMAX clarity, could the company look at larger transactions if the right deal were to present and sell? Or is the focus still much more on the internal pipeline and maybe smaller tuck-ins from here?

Yes. Chris, Dave here. Thank you. Yes, I think to your first question, company is off to a really solid start in Q1. If you look kind of up and down and across the board from a product perspective, -- we exceeded expectations on top line and bottom line and really strong cost control and cost management and very disciplined execution.

So yes, setting ourselves up really well for delivery for the balance of the year. As you well know, Chris, I have a philosophy of not really adjusting in Q1. I think as you well know, if you look at our COVID franchise, it will always be back half weighted because of the seasonality of the -- and so we are, if anything, have derisked delivery on that without raising guidance.

So absent that, we probably would be raising guidance, how is that again, strong performance. Secondly, as I said, we do have $7 billion in BD capacity. Obviously, this development from a legal perspective actually gives us more confidence in our cash flow delivery over the next several years. And we constantly look at BD and understand what is appropriate strategically to do from a BD perspective to support the needs of the company and to deliver long-term value.

Thank you, Dave. Next question.

Our next question comes from Kerry Holford with Berenberg.

Just on COMIRNATY, I wonder if you can just talk a little bit more about the vaccination rates you're expecting this year within the U.S. an international region. And then just coming back to the international region. Can you talk a little bit more about the European contracts reminder of those existing phase payments -- and in the context of that recent Belgian court decision, the 2 items that together, how should we think about the evolution of ex U.S. sales for that vaccine?

Okay. Let's start with international, and then we move to with Alexandre and then Amir will speak about the origination rates in the year.

Good question. just to put context, the decline that you see in Q1 on Comes nothing to do with vaccination. It's really the effect of last year we shipped our last contract elements of our contract with the U.K. So we don't have that contract in in 2026, and that's why you have the reduction but it hasn't really talked about the vaccination rate. Actually, we went through the vaccinations numbers in Europe in 2025 and mostly stable versus 2024. Of course, you have differences -- for instance, in brands, the vaccination rate is around 25% of the other adults in Spain, it's going to be around 35%.

But those rates are stable, and we see government will need to continue to invest and increase awareness of their order and at-risk population to get vaccination. In 2026, we will work with those government across the European unions to actually continue to execute our contract the same way we did in previous years.

Now with regard to the legal case and the court judgment on April 1, 2026. The court judgment is very clear, and we've started to work with the governments in Poland and Romania to actually execute the judgment, and we're discussing the best path forward to implement that jet.

Thank you Alexandre. So Amir, what about the U.S.

Vaccination rates in the U.S., obviously, it's very different for every segment. In COVID, with community, there was a narrowing of the label. So we did see a shrinking of the market a bit. In the case of RSV, we always see now going past our third season with a tougher to activate adult population but growing on the maternal space, and there's population dynamics with Prevnar both acute and adults.

So we see ups and downs in the vaccination rates as a result of those dynamics. But what I feel very good and very confident about is the way that we're executing in that market. So if you look at every single 1 of our vaccines, we have market-leading positions of at more than 60%, COMIRNATY, more than 60% Prevnar keys now at 84% and Prevnar adult even after many months of competition from Mark Holding share steady at 70%.

So I feel very good about the way that we're executing in a slightly turbulent market.

Thank you for the confidence Amir. I see it with you. Next question, please.

Our next question comes from Raffat with Evercore ISI.

And I appreciate some of the comments you made around maintaining the dividend. I just thought I would approach it from 2 different angles, if I may. First, I guess, what's the likelihood that Pfizer entertains a transformative M&A in near or medium term, which could end up impacting dividend as we've seen in history.

And then secondly, Albert, I guess, how are you personally, but also the Board thinking about your tenure at Pfizer and how it ties to dividend integrity beyond.

Look, we never say never. And we always look at every business -- possible business combination for M&A if you are asking me if right now, we think that we are going to go for something very big, a big measure.

No, we think that right now, in the next years, it is the time to execute on AI transformation of these organizations. And that requires not the disruption of mega merge. So I would say that open to everything, and we are looking at letting that can create shareholder value, but it is not right now very high in our list to find something like that.

The second question, how I see my tenure, I see it like continuing. And I said multiple times that I was very proud of what we were able to achieve with COVID. But then if you're spoiled with this feeling of satisfaction, you want to do it again. So I'm planning to do it again. And hopefully, with [indiscernible].

Next question.

Our next question comes from Asad Haider with Goldman Sachs.

Albert, just going back to last December's guidance call, you highlighted $17 billion of annual revenue impacted by LOEs by 2030 and now with the tafamidis statin settlement extending back to mid-2031, your comments that you are aiming to achieve high single-digit 5-year revenue growth starting in 2029. Just if you could double-click on that a little bit more, just looking at the decline in the current BD aperture that you just described, just level set us on any updated thoughts on bridging the gap around how we should be thinking about the levers to drive this growth against the stack LOEs -- and then just related, embedded in this high single-digit CAGR, what are the assumptions around your base business such as and the current oncology products?

Yes, it is easier to forecast the base business because it's constant. So that it is following the normal trends that we expect based on product by product. The alloys also are easy. -- to predict because they have the segment of currents. Right now, you're right, with this 2.5 years delay of the LOE of a product that is $6 billion plus. It is providing significant, as you can understand, opportunity for cash flows, EPS and changes the growth profile.

That's why we spoke now because with this uncertainty going about our projections about the growth profile, which we see is starting in '29. It's a 5-year high single-digit CAGR. How that is built is built with the current portfolio with the decline through the LOEs and with the additions of pipeline that they are heavily risk-adjusted. So it's not that we are having a binary events. So the pipeline are multiple, as you know.

We have a series of readouts right now that will affect the revenues in the '29. And so I think we're actually confident about that because when it is a large number of pipeline assets is adjusted, statistic usually work and those that we will fail will fail and both will succeed. But the risk adjustment takes into consideration about -- so very confident about the growth trajectory of the company starting in '29.

And I'm also very confident that we navigate the LOEs as you saw right now. very well started already this year, the alloys. I also want to emphasize that always the strategy for LOEs was new and acquired products. to do well because they were launched and acquired to offset the alloys. They are growing 22% this year. They are already on $3.1 billion in the quarter if you without saying that that's the guidance, but if you multiply it by 4, just to give you, we are talking about over $12 billion this year and growing. And the [ 17 ] billion of LOEs now after Vinda, they are more 14% to 15% rather than [ 17 ]. So I think it's -- look, let's do -- thank you.

Next question?

Our next question comes from Evan Seigerman with BMO Capital Markets.

I really want to touch on capital deployment, specifically when it comes to share repurchases. Dave, I know that, that's been a method that you wanted to employ now with clarity on Vyndamax and the CAGR post 2028, what other -- what else do you need to see to potentially start buying back shares, especially at these levels?

Yes, Evan, great question. We always look at our capital allocation strategy and balance between the 3 options that we have. At the moment, our focus is really on investing in our R&D platform and in business development to drive long-term value. With the development in these court cases, -- that does give us a bit more confidence in our cash flow over time.

So you'll see us the capital allocation, share repurchase lever will come back into greater consideration going forward. So great question. something we always work at, and we're always looking to do what's best for the company and shareholders long term.

Thank you, Dave very clear. Next question please.

Next question comes from Courtney Breen with Bernstein.

I just wanted to probe a little bit more on Sigvatata/vedotin and positioning in that frontline setting all comers relative to the symbiotic Lung01 study that you've already started with the PD-1 VEGF. I also note that you've got kind of a Phase I/II running combining these 2 assets -- and can you help us contextualize that new Phase III or comers that you intend to start this year for SV first line? And how that may be positioned relative to symbiotic?

All right, Chris.

Thank you very much for the question. Lung cancer is obviously a very significant unmet need and having a number of shots on goal now with a very differentiated portfolio. gives us confidence that we can continue to play important role in all cancer beyond just in the targeted therapies like lorlatinib. For SP, we are very encouraged by the data we've seen for the combination of pembrolizumab plus ASP in the PD-1 -- PD-L1 high population, where we previously showed in a small number of small code of patients that they all responded in the PD-L1 high to that combination.

So the Phase III study that's ongoing pembrolizumab versus pembrolizumab for SP. That study is recruiting well in the first-line setting. -- and we're confident for the readout for that study. And ongoing also is the second line study, which is against dose ease which was encouraged by the previous data we've seen, albeit in a single-arm experience with a medium overall survival of 16.3 months. So that study should read out mid-tier's dosing tax versus ASV second-line doled for, obviously, for overall survival. And it is positive as I said earlier, it will be clinically meaningful.

And then ongoing studies being planned also for the broader population in combination with chemo plus pembrolizumab, and we will share some of the data at later this year for the early data for that combination. In terms of 404, at ASCO, we will share the POCI data of 4404-monotheraphy in first-line PD-L1 expressing non-small cell lung cancer -- as you know, we recently shared data at AACR, where we repeated the preclinical and early data generated by 3SBio in China.

So we're really confident that this is a differentiated molecule. -- the binding against VEFF is we've shown at AACR is better -- is higher affinity ability than what's seen with a all that end with competitor PG/PD-1 molecules. So confident in the molecule, we'll share more data later this year with a broad program starting including in combination with chemo and just a reminder, ASCO will also share data and with 4401-plus chemo in first-line advanced recurrent endometrial cancer, another program that we plan to start a Phase III program.

Thank you, Chris. The next question. Last question.

Our final question comes from Louise Chen with Scotiabank.

I want to ask you which key products do you think will drive the reacceleration of your growth in 2029 and beyond? And then regarding the international obesity opportunity, just curious what you learned from the launch of your GLP-1?

Alexandre let start with you again at this time because the obesity international has, of course, the numbers have surprised how big the international market is. And then also to speak about key products that will drive your growth in '29 and then Amir U.S. key products that will drive growth in '29.

So a good question on the euglutide launch in China. Of course, it's very, very early days. We really launched the product Monday last week. So I mean it's only a week, so I can't really talk to you about the penetration of euglutide in China. But -- what is really interesting is actually the incidence of chronic weight in China is quite high, 15% of the Chinese population. And considering the size of the China population that makes it 1 of the larger market for chronic weight management.

And that's the reason why we decided on March and February of the to actually do this collaboration with win Bioscience for the commercialization of economy in China, -- and since then, we got the approval and commercialize these assets -- has a very interesting profile. And actually, he's generating in a placebo-controlled study, a 1.1 percent weight loss at 48 weeks, which is in part was the best Q1 with this bias mechanism of action of GLP-1. We think that we have -- we are bringing to market a very effective asset with a good tolerability profile.

And of course, we're going to leverage our very strong primary care capabilities in China that puts Pfizer China as 1 of the leading in primary care. So it's a combination of a very attractive clinical profile, plus our knowledge in this area.

Well, we believe makes a leader in this category. And we are not coming very late into the market because remember, really really introduce their asset in the beginning of last year. So it's not like we're coming many years after the introduction of those assets. So as I said, I'm very optimistic, both due to the profile of this asset and the capability that we have developed in China.

Now when it comes into the growth engine of the international. There are -- I just want to step back 1 second. If you look at the water and the fact that our non-Covprimary care group double-digit growth. We delivered $2 billion this quarter. Remember, we closed last year with double-digit growth on primary care. Now if you look at the specialty tier about $1.5 billion this quarter, we're delivering a double-digit growth again. That was on the back of a double digits last year.

And there are assets in those different areas that will continue to power our growth. If I come back to primary care, our vaccines are growing very strongly. And the reason why we are growing very strongly on vaccine is because both and on RSV, we have a large population. If you look at -- as you know, in -- this is a very -- it's a very large population and 2/3 of our vaccine business come from the atria. And of course, we have a large pediatric population to continue to grow.

So both in maternal immunization and optomocalco. So the vaccines have a potential to grow in pediatric and in adults. Of course, a big growth in the -- at the end of the decade will come from the Mercer asset in chronic weight management because there are 2 elements of that. One, it's an underserved category with a large epidemic across the world, right? In some of the emerging markets, we have a very high prevalence in Saudi, in Brazil and Mexico of obesity and our presence in those markets will -- with a strong primary care will allow us to actually anatispotential.

But also -- it is a cash market, which also is a big advantage in Europe and other developed markets where right after the approval, we can introduce those products which is not the case today in many of our categories because it takes a lot of time for reimbursement negotiation with the payer. So you see we have an in-line assets that will continue to power the growth, and we are bringing assets like the matter that will go straight to market. And of course, the oncology asset will come, but it will take longer for reimbursement negotiation.

Thank you, Alexandre. Amir for U.S.

Luis answer the question. There's many things that give us confidence about driving growth in the U.S. in '29. If you take the first category, we have products that are on the market today that have a lot of upside to them. You think about Padcev, all of our recent growth has been primarily driven by LAC -- we're at the high 50% penetration there. And we've got lots of upside in MIDC, 303 and 304. So there's a lot of headroom for growth there.

Secondly, you look at products like Nurtec, we've got a lot of tailwind behind us now, but only 60% of people who write a triptan have yet to write an oral CGRP -- so there's a lot of headroom for growth, and we're executing really well against that.

Second, you look at some of our existing large franchises. We have a lot of confidence in what's going to happen with Vinda now with years additional exclusivity gives us the opportunity to invest and to continue to grow diagnosis -- and we are doing a great job defending our existing patient base as well as ensuring that it is the choice, the top choice for new patient starts.

And so we think we have a lot of momentum on franchises like that as well. And then just to complement what Alexandre was saying, if I think about new areas of growth, we talked a lot about the oncology assets already, but obviously, we're very excited about what we have to bring to the market in obesity the assets speak for themselves, but what I'm particularly excited about is the fact that we have unique capabilities as a company to win in this area, both in terms of our ability to activate consumers and patients in very different ways as well as our legacy in this space and the fact that almost 60% of physicians who are going to write these products, we already touch today through a combination of our field forces. So those combinations are just some examples of what gives us top 10 to grow in '29.

Thank you, Amir. And thank you, everyone, for your attention. Our strong performance in the quarter reflects the impact of our continued focus and disciplined execution. We are engaging with precision to maximize the value of our commercial portfolio, and we are seeing the results in our financial performance.

In R&D, we are making meaningful progress with a robust slate of critical milestones ahead in 2026 that we believe will further demonstrate the strength and breadth of our pipeline. I want to thank my Pfizer team. I believe we have the best team Pfizer ever had. They are dedicated to ours, continue to deliver and embrace our commitment to creating long-term value for patients and for our shareholders.

Thank you for joining the call today, and thank you for your interest in Pfizer. We look forward to sharing further updates as we execute our priorities throughout the year.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Well, good morning once again, and welcome to TD Cowen's 46th Annual Healthcare Conference. We're delighted to have you here.

We're especially delighted to welcome Pfizer back to the conference this year and representing the company, Albert Bourla, who is Chairman and CEO. So Albert, thank you so much for making the journey.

Great pleasure.

Lots to talk about, so much going on internally to Pfizer, but also in the external environment. So I'd like to start out with the external environment. Albert, you were front and center through the whole process of negotiating deals with President Trump. You were the first person to be in the White House to sign the deal. What surprised you most about that process and the outcome for Pfizer relative to the deal?

What surprised me the most, it is the competence of the people on the other side of the table, which I didn't expect. Those are people from Medicare, basically, and under all this department, and they were like talking to a business partner. They knew their stuff. They were very pragmatic. They could find solutions. And usually you expect from government negotiators to be the opposite of that. So I think that was very, very surprising.

Eventually, I think we did absolutely the right thing, and that was rewarded by the market and that, of course, 16 other companies followed and now there are 17 companies. I think we put into rest two major uncertainties that existed at that time. One was the tariffs, but based on the structure of how pharmaceutical has been organized in the last 30 years, tariffs in imports could be catastrophic and patented products, products with high margins.

And the second was, of course, the fear for a drastic adjustment in the U.S. pricing across the board. I think those two went away. Now is the opportunity that remains. And the opportunity it is to see in the other originations to bring their prices to more reasonable levels.

I'm not extremely optimistic that we will see that, but the first agreement that the U.S. government has achieved with U.K., it's a significant advancement towards that. With U.K. committing to go from 0.28% of GDP in innovative medicines to 0.6 within a decade. And 10% of that will be next year. So it's quite -- quite positive.

Actually, I was too quick to go to the macro. I think you wanted to make a few observations about Pfizer's business today to kind of set the stage for the rest of the discussion. So let me turn that.

Thank you. I mean I was very pleased with year 2025. And if you want to take something out of it, what would be the conclusion? It is that Pfizer has proven that is a company that knows how to execute. We were able, after the crisis that the company fell after the COVID. Drastic adjustments from $60 billion to $6 billion. We were able to re-take out a lot of cost to reorganize our operations, to revitalize our R&D without affecting the top line. And to that, I think, was a significant achievement.

Going forward, we announced four major priorities, and I will be very brief on them. The first one for this year, it is to maximize the value of the recently acquired assets. We acquired several things, but there are three that they account for 80% of the investment, which was an $80 billion investment that we have done in new business. This is Zedesen this is Metsera, and this is Biohaven, so Nurtec. Those three account for 80%. And they have both pipeline products like Metsera. They have mainly in-line products like Nurtec, and they have a combination of both, which is the season with Padcev and other products that are meteoric growing and with SV, PD-L1, et cetera, assets that are in the -- so that's number one.

The second is, you've noticed our fourth quarter call in end of January that it was focused 0 on EPS. It was all our revenues. It was all about the pipeline. What's the reason for that? Because this year is a pivotal year of R&D milestones. And the second priority is to deliver on all of them. We spoke about regulatory approvals. Already, we got two of the four that we are expecting. We spoke about to initiate 20 Phase III studies, 10 of them in obesity. We spoke about 8 significant readouts that will come there. So all of that are important things that we want to deliver on.

The third is to invest so that we can have industry-leading growth post our LOE period. So as we move towards the end of the decade. And that and trails, maintaining the dividend. We are very clear about it. But also investing in the business in addition to that with R&D building commercial infrastructure so that can maximize assets, et cetera, et cetera. So I think those are the top 3 priorities that I would mention here. And I'm very optimistic that the year will be a very good year for Pfizer.

I'd like to drill specifically into point number two, that is the pipeline. So as you said, Pfizer is looking to achieve industry-leading growth. What are the must-win Phase II product launches and/or readouts to deliver on that?

Yes. I will start with oncology because that's probably the crown jewel right now of the industry. And I would say that important in the pipeline are SV, which is a seed compound that it is an ADC, that is under two Phase III studies right now. The first one is monotherapy and we'll read out this year. In second line. And the second one is combination therapy in first line together with KEYTRUDA that will read out next year. It's very important, but the two will fail, particularly in the phase that any other ADC failed in monotherapy. So if we are successful on that, I think it's a very big and good news.

We also have the CDK4 and that in general, the breast cancer franchise, but they are progressing very rapidly, and they are pivotal. Right now, they are doing the studies. I want also to emphasize that the Metsera portfolio, it is something that could help us significantly into that, given that we are aiming to launch them in year 28. So that, given the successes and the how fast market adoption of new products in that market surprised all of us. The ramp-up of sales is different than anything else we have seen. So very quickly, you are achieving very big sales. I think I'm also very optimistic on that. On vaccines, there are two vaccines that are very important. Actually, three because we have the Lyme disease, but it is expected to read out this year.

If successful, we'll be the first and only Lyme disease, and that's a significant thing. We are already running a study for C. difficile. And that's very important, let's say, unmet medical need, again, we'll be the first and only product for this disease. And we are marching to maintain our leadership in the pneumococcal because we are bringing the 25 valent into pivotal studies right now. But I will stop by saying that, it's not only the pipeline, right? Because we have, through these acquisitions, in line products that last year, in '25, they made $10 billion at a growth of 14%.

This double-digit growth of this group of newly launched products, either through acquisitions or through internal pipeline will continue growing double digit this year. So by the year, but we will reach the LOEs year '28, which is a onetime event and then will go away. I think we'll find it with a sizable part of business, but it is growing very high.

Okay. By the way, I should have mentioned at the outset, should you have a question and you're in the audience. Just raise your hand, and we'll call on you and get your question answered.

So lots to dig into on specific products, Albert. So let's start with the pneumococcal vaccine. What's Pfizer's level of confidence that you will be the dominant player in 2030 as you are today?

I think we will. Why I'm based that not only because I believe in our science and our products, but I know time lines right now, the biggest part of this. It is the pediatric. It is 4 doses for every newborn compared to 1 dose for everyone who goes to 65 years old. So that's a very, very big difference in the market with the same price, right? And on that one, the time lines are telling me that from 20 we will go to 25 will be the first one, and with a significantly improved product compared to the trend. I don't think anyone in pediatric is any close to us on that.

The adult also, I'm very optimistic. This is where competition is but we saw when competition came in the 13, we were able to hold very [ live ] our market share. And then immediately with the 20, we gained basically all our markets. Now we have dominant market share in this market. So I'm very confident.

Maybe we can move to obesity. And at least for me, it's so easy to be schizophrenic on this market because on the one hand, you see this big opportunity. But on the other hand, you see pricing under pressure, compounding lots of things to worry about limited growth in the market today. So why is Pfizer confident that by 2030, this is going to be a great market for Pfizer to participate.

Because the market in general will be very big, and we have been quite -- we are believers that this market is going to be very big, not now, but we saw it from the old days because we tried with the obesity assets, which was the first oral PD-L1 -- excuse me, GLP-1s that could come to the market. Unfortunately, science is not always what you hope and we -- both of them fail. The reason why we thought that Pfizer needs to be in that market, it plays exactly the characteristics of what makes a successful a company in this market. It is the primary care, the consumer brand equity, how you can approach the consumer direct sales.

These are things, but we have been extremely good. And the only analogy that I can bring up is the Viagra loans. There is also Botox, which is similar to that, although Botox is administered basically by not home, but by a physician. But the Viagra was identical. And there, when we launched Viagra we had all the issues that we see now with novel Lilly, the compounding, the counterfeits. We had significant out-of-pocket cash market that people were willing to pay for the medicine, although it was very poorly or not at all, REMBERT. So we had that. So what we didn't have was a portfolio because ours failed, the most advanced and the others were very new.

And this is what Metsera did to us. I think the assets are highly differentiated. We have right now the results that we presented in for the monthly. For me, it was a huge relief. Why I say it was a huge relief? Because until that day, we knew with a very high level of certainty, but we have a weekly product. When we did the acquisition, we knew that.

We also knew that the molecule have pharmacokinetics that is very likely to become a monthly product. I think what the study demonstrated is that we have a monthly product. Now let's discuss the profile, but the most important is we have a monthly product. That will be the only -- not the only because there is Amgen, but we'll be able to compete with the incumbents that they don't have a monthly product.

I think the studies was designed -- was designed by Metsera to make sure that they maximize very quickly the knowledge so that they can advance to Phase III, probably we would have done it the same way. But there were some characteristics in the way that we organize the studies. The study didn't have a lot of step-up dosing.

It was in the MAX dose, they reached after 1 or 2 step up doses to reach the maximum. And I remind you that Lilly's product to reach the maximum usually it is 5. So it is the sixth time that you come. So that's -- you push it a little bit. The second is that we didn't allow step down in dosing. So if someone had the vomiting, he had either to discontinue or to keep in the same dose and maybe vomit again. But of course, it's something that both of them, we won't do in the Phase III. But it was important to do in the Phase II because that gave us the valuable insights. And what are these insights? Monthly product, that probably will be better than any other mono agonist and will be comparable with the current dual agonist in efficacy. And we'll have a profile on the safety, but we hope it will be even better, if not the same, and it will be monthly. So that's a significant, let's say, competitive challenge to the incumbents.

Okay. So that nicely explains the discontinuations you've seen. But the root around them and how you get to a better place in Phase III?

Yes. And also I want to emphasize that in that study, they were test 2 doses the low dose and the middle dose. In the Phase III study, we are testing also a higher dose, which is basically double than the middle dose, right? So it is 9.6, will be. And I think that we have a very accurate modeling. It's a modeling, but it's proprietary. We developed when we were doing our [ danofloxacin ] and our oral it has 60,000 patients database across the industry and a lot of best sophisticated mathematics that predicts based on several criteria, what the efficacy would be.

And we predicted with a model, the actual results of this study, almost to the point, 9.9 compared to 10, for example, right? Or 12.2 compared to 12.3. That was the -- and those model projects that the 9.6 will be safe and more efficacy. So a lot of excitement about what can come out of these studies.

Okay. This is not dissimilar from the first question I asked, but, where does Pfizer see it fitting in the obesity market? Where will you play? Or is it irrelevant because of the size of the market will allow you to be successful. Do you think you can get differentiation in one shape or form?

Yes. We have differentiation because in the first product is monthly. Actually, the second generation that is coming, which is the Amylin and GLP-1, it's also a monthly product. And also in our pipeline, what we are testing now in Phase I, it is every 3 months product, which is quite promising as well. So there will be differentiation. I think the amylin plus GLP-1 could surprise us in efficacy also. So we wait to see, of course, the results. So there will be differentiation.

But when we analyzed what happened in the marketplace. And right now, I think the big differences that we see are not only difference is because of product profiles, it is big time, big differences in terms of go-to-market strategies that were different between the companies. And for us, it's extremely important also that we will be in the forefront of testing the most aggressive forms of being able to maximize this portfolio. There will be a lot of segments in this portfolio. there are people that they want really to lose a lot of weight. They go for high efficacy. There are people that really want to have some cash weight loss, so they go for tolerability.

There are people that they don't want the monthly injection -- excuse me, they don't want the weekend injection. They want convenience. And the convenience could come either with oral solutions after they achieve their weight loss to go to oral solution, but I don't think will be the segment very much as a switch because once you are used to once a week, you don't want once a day, even if it is appeal. But you would like once a month. So there are many other things that I can explain there is also the way that people are going through the doctor or people are going direct and through e-commerce and all of that.

Actually, I want to emphasize something that maybe -- I'm sure you have seen, but maybe some of the audience have seen that we licensed GLP-1 in China. I'm not talking about the molecule, but it is a GLP-1 agonist in Phase I that we will go to Phase II. I'm talking a product already approved for type 2 diabetes in China. And pretty soon, we expect to be approved for weight chronic weight management. The reason why we did it, first of all, China is booming now this market. So we want it to be part of it.

But more importantly, we want to get significant insights in commercializing in different segments with an opportunity that we have right now in China. I think that will give us significant insights into our already very good capabilities in the space to be able to compete also commercially in a very aggressive way.

Questions from the audience? I'll answer my own question. Oh, I'm sorry.

There are some people who see the takeoff in the current oral therapies and those curves and think, wow, in a couple years the world is just [indiscernible] market and congestions [indiscernible]. That's one question.

And then second question is, how is the results of the recent [indiscernible] affect [indiscernible] the capabilities of your [indiscernible]?

Yes. Excellent questions, both. I think the orals probably are absolutely in the right direction, and I commend them for doing that.

When investors think about policy and they always think about it in a bad way. But are there anything -- can anything come out of all the changes that we're seeing that could actually benefit the industry and/or Pfizer? And maybe the one we just talked about was one example, one trial, but are there other?

I think yes. First of all, it was really understandable why investors focused on the negatives because the negative could be existential. It could not be just a small problem. But I think we were able to march through them. And I think now we have much more clear situation. But there are some positives.

And let me start with one positive, but I don't think people noticed that much. The PBM reform, there was a significant decisions on the way that PBMs operate all within 1, 2 weeks this. Beginning of this year, and those will have, I think, very positive results. One was the law that President Trump signed that the past congress, both Senate and House on a bipartisan way, that speaks about transparency, and they need to disconnect their fees with the list price, basically taking away most of the incentives. But PBMs have to have a very high out-of-pocket and which is between the gap of the list and net price.

There was a decision of the Department of Labor that instructs that they should provide transparency to all because that was for Medicare, then the Department of Labor did it basically for commercial insurance by saying that they need to give to all sponsor plans of employers, full detail where the rebate went, again, big incentive. And the third one, of course, was the FTC settlement of one of them that basically calls very clearly that the price that the patients should pay, it is the net price and not the list price. That's the comment. So those by itself, I think, things that the industry is trying in the last 10 years to change.

And by the way, I'm very happy and proud that just before I switch my term in pharma, we were able to achieve also that, that took a tremendous amount of time of me and my peers in trying to explain to regulators and the administration, the importance of that. We spoke about prices in international that we could see a more positive environment going forward, particularly for the new products that I think is something that I truly believe we have a good sense of it.

I'm a very big supporter of these trade negotiations that the U.S. trade representative, Ambassador Grier is doing. I think he is the only U.S. trade representative that I worked with, but really cares about the innovation, maintaining the innovation of the U.S. in the biosciences. He's really impressive how you navigate the challenges but also more impressive, how committed he is to make this happen. So I hope we'll see good things coming out of it.

So we are out of time, but I want to ask one last question. And that is, when you look at the next decade, what do you think the biggest change or surprise to investors will be at Pfizer?

Change or surprise? I think there are two things that are shaping the industry big time right now. And one, it is AI that is changing the landscape in ways that we have not seen before and has the potential to completely transform not only the go-to-market, but to transform the way you do research, manufacturing, enabling functions, everything.

The second is the meteoric ascent of a new scientific powers, super power, which is China. This is changing completely the calculus. It changes the calculus because these are people that they have ambitions. They are very good. They want to come and become global players and to have seen their playbook in vehicles, electronic or in batteries, and we know how that goes. They start and then they go to conquer the market.

And I think for us, represents a talent and the opportunity to be able to bring our productivity to their level. because we characterize them, it is half the cost 3x the speed. That's what it is all about and significant investments. So what we need to do is to keep investing in research and innovation, big time. And then make our productivity, double the cost and triple the speed, and AI will be the biggest lever to do it.

I think either of those topics could have consumed a full hour, but we do need to stop time is up. So thank you so much, Albert.

Good day, everyone, and welcome to Pfizer's Fourth Quarter 2025 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Francesca DeMartino, Chief Investor Relations Officer and Senior Vice President. Please go ahead, ma'am. .

Good morning, and welcome to Pfizer's earnings call. I'm Francesca DeMartino, Chief Investor Relations Officer. On behalf of the Pfizer team, thank you for joining us. This call is being made available via audio webcast at pfizer.com. Earlier this morning, we released our results for the fourth quarter and full year 2025 via a press release that is available on our website at pfizer.com.

I'm joined today by Dr. Albert Bourla, our Chairman and CEO; and Dr. Chris Boshoff, our Scientific Officer -- Chief Scientific Officer; and Dave Denton, our CFO. Albert, Chris and Dave have some prepared remarks, and we will then open the call for questions.

Members of our leadership team will be available for the Q&A session. Before we get started, I want to remind you that we will be making forward-looking statements and discussing certain non-GAAP financial measures. I encourage you to read the disclaimers in our slide presentation, the press release we issued this morning and the disclosures in our SEC filings, which are all available on the IR website on pfizer.com. Forward-looking statements on the call are subject to substantial risks and uncertainties speak only as of the call's original date and we undertake no obligation to update or revise any of the statements.

With that, I will turn the call over to Albert.

Thank you, Francesca. So 2025 was a very good year for Pfizer. I'm very pleased with strong execution to deliver and, frankly, over deliver on our financial commitments. We exceeded expectations for revenues and adjusted diluted EPS while also returning $9.8 billion to shareholders via our quarterly dividend. We grew overall operational revenue for full year 2025 when excluding COVID-19 products, achieved solid double-digit growth in recently launched and acquired products and expanded adjusted gross margins.

Strategic actions in 2025 helped us resolve significant uncertainty, including achieving greater clarity on pricing and tariffs and demonstrating the underlying resilience of our business to deliver EPS despite the lowest ever COVID-19 season. We achieved 4 key approvals, 8 critical readouts and initiated 11 pivotal studies. And our Metsera, YaoPharma and 3SBio deals help strengthen our robust pipeline.

Overall, 2025 reinforced how well Pfizer can execute. We strengthened a foundation, positioning us for growth towards the end of the decade, continued impact for patient and long-term shareholder value. We have once again defined strategic priorities for the year ahead, which we presented at JPMorgan. 2026 is an important year in a pivotal investment period as we strive for industry-leading growth after several key products lose patent for regulatory exclusivity in the next few years. Seagen, Metsera and Biohaven are the most significant strategic acquisitions in recent years. They have transformative potential for Pfizer, and we are focused on maximizing the value of in-line product portfolios and accelerating pipeline development.

We made continued progress last year, integrating legacy Seagen products into our commercial portfolio. I'm also pleased with notable advances in our development programs, including a recent FDA approval for Padcev in combination with pembro for patients with muscle-invasive bladder cancer who are ineligible for cisplatin-containing chemotherapy. We are encouraged by the opportunity to build on this with an expected regulatory decision for patients with cisplatin-eligible MIBC.

If successful we will substantially expand the U.S. addressable population with up to approximately 22,500 additional patients across both cis-eligible and cis-ineligible muscle invasive bladder cancer, up from about 19,000 patients in metastatic urothelial cancer. We have a clear strategy aiming for Pfizer leadership in the next generation of therapies for chronic weight management with a highly differentiated Metsera pipeline portfolio, our YaoPharma exclusive global collaboration and licensing agreement and other Pfizer programs such as our oral GIPR antaagonist candidate.

Since closing our Biohaven acquisition a few years ago, we have globally scaled a leading migraine portfolio. It strengthened our product mix to drive significant impact both for patients and our commercial performance. Nurtec has a strong market leadership position in the oral CGRP class in 2025. In Q4, we captured 83% of new CGRP writer volume and remain the leader in new patient starts.

I expect 2026 to be also a very rich year for key catalysts and we intend to deliver on our critical R&D milestones. This year, we anticipate progress with approximately 20 recently initiated and planned key pivotal studies, with 10 of them in the Metsera portfolio; and 4, with our anti-PD-1 VEGF bispecific. Among 8 expected key readouts, we anticipate, 1, for SV, our novel potential first in-class integrin beta 6-targeting vedotin ADC. The readout will be in second line plus non-squamous metastatic non-small cell lung cancer, which affects about 50,000 patients in the U.S. and more than 200,000 patients globally.

We are also expecting key Phase III readouts for Elrexfio in double class exposed relapsed-refractory multiple myeloma and for our Lyme disease vaccine candidate. The foundation of our strategy in obesity and adjacent condition is targeting breakthrough medicines in what could be $150 billion mark.

Earlier today, we announced encouraging results from our VESPER-3 study, which previously was known as Metsera-097i, the ultra-long acting investigational next-generation injectable GLP-1 receptor agonist. In a few moments, Chris Boshoff, our Chief Scientific Officer will walk through additional details and our plans for advancing our obesity portfolio this year. Oncology is another source of strength, and I'm excited by opportunities for significant progress in 2026, that was built on our established presence in breast, in genitourinary, in thoracic and gastrointestinal cancer and of course, blood cancer.

In addition to promising programs, such as the SV, our oncology team is moving quickly with a robust program for '4404, the bispecific antibody licensed last year from 3SBio. We have 7 near-term plans or recently started trials for '4404, including 2 large global Phase III studies, anchoring our efforts to establish this investigational medicine as a potential backbone therapy across multiple tumor types.

We're also pleased that the FDA has granted Hympavzi breakthrough therapy designation for investigation in younger pediatric patients aged 6 to 11 in hemophilia B with or without inhibitors. That's an important innovative medicine today, and we are investigating the full potential of Hympavzi to support more patients living with hemophilia.

Our third strategic priority is investing to maximize post 2028 growth. We are committed to fully supporting a robust and accelerated approach to R&D, the successful commercial launch of new products and both on business development while maintaining our robust dividend. And finally, we are scaling artificial intelligence across R&D, manufacturing, commercial and patient engagement to improve productivity and accelerate innovation. We have been setting the foundation with AI already data, agentic workflows and compute capacity. To meet the growing AI demand over the next 2 years, we are expanding to more than 1,200 GPUs, largely driven by R&D application of AI.

In R&D, we are embedding AI across discovery, development, regulatory and medical to increase productivity and accelerate the pipeline and time lines. AI is optimizing supply planning and manufacturing, contributing to our manufacturing optimization program goals. In commercial, AI is helping to accelerate new product launches delivering insights for dynamic targeting and supporting personalized messaging and real-time marketing content.

So with that and after I described the 4 priorities, which describe the full picture of what we plan to do in 2026, I will turn it over to Chris to discuss for the news of the day, which are the Metsera long-acting announcement of VESPER-3.

Chris?

Thank you, Albert. It is my pleasure to discuss the VESPER-3 study results today and provide more color to our press release this morning. These data are an important advancement in our obesity portfolio because they increased significantly our confidence in the Phase III monthly dosing study that we expect to start later this year.

To start, I'd like to review how the structure of PF'3944 drives its long half-life. Prior GLP-1 receptor agonists that rely on albumin binding to extend half-life require dissociation from the albumin protein for optimal receptor engagement, '3944 binds the GLP-1 receptor while still bound to albumin due to lipidation of the terminal end of the amino acid chain rather than in the middle. This allows for reduced clearance without reduced receptor engagement resulting in a half-life exceeding other agents that require albumin dissociation for binding.

A key differentiator of '3944 is this extended half-life, which supports monthly dosing. Furthermore, given '3944 length of 41 amino acids, the molecule is considered a biologic and would be eligible for regulatory review by the BLA pathway. The right side of the slide shows previously reported data from the Phase IIb VESPER-1 study, evaluating '3944 dosed weekly and without titration. These data show dose-dependent placebo-adjusted weight loss of up to 14.1% at week 28, demonstrating the molecule's potential to deliver efficacy that is competitive with the standard of care and potentially best in class among mono agonists.

In our currently ongoing weekly Phase III study of '3944 VESPER-4, we are also testing a higher dose of 2.4 milligrams weekly. With VESPER-3, we aim to achieve 2 key objectives: first, to demonstrate that we could achieve continued weight loss when switching from weekly to monthly subcutaneous injections and maintain '3944 efficacy while reducing the dosing frequency four-fold. And second, to demonstrate that '3944 could switch to a 4-fold equivalent monthly dose while maintaining a well-tolerated and favorable safety profile.

Today, I will walk you through these data, which demonstrate we've successfully achieved both. The VESPER-3 Phase IIb study was designed to evaluate '3944 with monthly maintenance dosing following a titration period of up to 12 weeks. This study compares 4 different dosing regimens versus placebo with a prespecified interim tolerability analysis at Week 12 and a primary reporting milestone at week 28. Arm 1 and Arm 3 are low and medium dose regimens that we plan to advance to Phase III, and these 2 study arms are the focus of the data we are sharing today.

Starting with our first objective. I'm pleased to share that we observed robust statistically significant weight loss across all doses tested. At week 28, placebo-adjusted weight loss was 10% and 12.3% for our planned low and medium Phase III doses, respectively. These results are shown in the blue bars and represent the trial's efficacy estimate. In the teal bars are our model predictions of the potential efficacy we would expect with monthly maintenance dosing of '3944 in the study of adults with obesity or overweight and without type 2 diabetes, similar to VESPER-3. a model-based meta-analysis approach was used to generate these predictions. This approach uses a mathematical model to capture the weight loss trajectory over time and the dose response relationship.

This model was built, taking into account the observed data from the VESPER-3 trial, the available data from other 3944 clinical studies and data from published trials of other weight loss. For the low and medium dose regimens, we see excellent concordance between our VESPER-3 clinical data in blue and our model predictions in teal, applying the same model to project the potential efficacy of the planned Phase III high-dose regimen of 9.6 milligrams monthly, we predict placebo-adjusted weight loss of nearly 16% at week 28.

Note the high dose is already being studied in the VESPER-4 Phase III study as a 2.4-milligram weekly dose. Collectively, our clinical data model predictions show that '3944 can deliver robust weight loss after switching to monthly administration and suggest that we can potentially achieve increased efficacy with a higher dose. Moreover, VESPER-3 data do not show a weight-loss plateau reached at Week 28, projecting continued weight loss is expected as the study continues through Week 64.

With these results, we are confident that '3944 has the potential to deliver efficacy that is competitive with the standard of care and potentially best-in-class among monoagonists with a differentiated monthly dosing format. Next, I'll turn your attention to the second objective of VESPER-3 demonstrating a well-tolerated and favorable safety profile for '3944 when switching to a 4-fold equivalent monthly dose.

Similar to our first objective, I'm pleased to report that year too '3944 delivered. In VESPER-3 '3944 has displayed a well-tolerated and favorable safety profile that is consistent with what has been observed with weekly GLP-1 receptor agonists, observed gastrointestinal treatment-emergent adverse events were predominantly mild or moderate with no more than 1 instance of severe nausea or vomiting in any dose group and no instances of severe diarrhea.

Treatment discontinuation rates for VESPER-3 weekly and monthly phases both show a compelling profile across the dose regimens planned for inclusion in Phase III. Five participants discontinued due to adverse events in each of the weekly and monthly phases. There were no discontinuations due to adverse events in the placebo group. We're encouraged by these results as they serve as an important proof of concept for the delivery of our four-fold equivalent monthly dose that maintains competitive tolerability, particularly given the study protocol did not limit down titration.

The totality of tolerability data support our plans to evaluate a higher monthly dose of 9.6 milligrams in Phase III, which is the monthly equivalent to the 2.4 milligram weekly dose currently being studied in the ongoing VESPER-4 trial. Today's encouraging results bolster our expansive obesity program. This year, we plan to advance 20-plus obesity trials, including 10 Phase III studies of '3944 that span chronic weight management, obesity associated comorbidities and opportunities to increase patient optionality and access.

We are targeting the first of a series of potential approvals in 2028. Looking to our early-stage programs, we are enthusiastic about Phase II studies with our ultra long-acting amylin analog which we believe has the potential for class-leading efficacy and combinability with '3944 in a monthly dosing format. We previously reported positive early data from the single ascending dose combination study, which showed well-tolerated starting doses and additive weight loss.

We plan to show updated combination data later this year. We continue to advance our potentially person class oral GIPR antagonist that is in Phase II and additional Phase I studies of agents with diverse modalities and mechanisms. These include an injectable ultra-long-acting GIPR agonist a potential quarterly dose injectable GLP-1 receptor agonist and oral candidates.

To summarize, today's results are clear. VESPER-3 achieved its 2 main objectives: reinforcing '3944 potential potent and tolerable monthly profile. The ultra-long acting GLP-1 receptor agonist serves as a foundation to our differentiated investigational obesity portfolio, delivering robust weight loss with no plateau served at Week 28 in VESPER-3, while also maintaining competitive tolerability when switching to a four-fold equivalent monthly dose. We are primed to execute across an expansive Phase III program of '3944, targeting potential approval starting in 2028. And we are pursuing differentiated combination approaches with earlier-stage agents that have the potential to deliver greater optionality to address the diverse unmet needs of patients. With that, I'll turn it back to Albert.

Thank you, Chris. And I just wanted to say that today's results provide a compelling validation of our unique proprietary ultra long-acting peptide platform. For the first time, we have shown that the GLP-1 receptor agonist peptides can be administered monthly while maintaining the potential for competitive efficacy and safety. We are pleased with this important milestone for the platform that reinforces both the differentiation of our technology and the significant long-term value creation opportunity that represents. And with that now, I will turn it over to Dave that he will discuss the excellent results of the quarter.

So Dave?

Great. Thank you, Chris and Albert, and good morning, everyone. Let me begin today by highlighting that our strong financial performance for both the fourth quarter and the full year directly reflects our continued disciplined execution of our key strategic priorities. We resolved certain and significant uncertainties in our business and made strategic investments aimed at driving revenue growth later this decade and beyond. .

Looking ahead, Pfizer is approaching an exciting phase, where recently launched and acquired products and a strong pipeline are anticipated to spur growth towards the end of this decade. With that said, this morning, I'll provide our full year and fourth quarter -- full year and fourth quarter 2025 results, then I'll touch on our cost improvement initiatives as well as our capital allocation priorities. I'll finish with a few comments on our '26 guidance, which we are reaffirming today. For the full year 2025, we recorded revenues of $62.6 billion versus $63.6 billion last year representing a 2% operational decline.

Importantly, our operational revenue growth when excluding contributions from our COVID-19 projects was 6%. Full year 2025 adjusted gross margins expanded to 76%, in line with our expectations. We will continue to drive cost improvements going forward across our manufacturing network. And on the bottom line, we reported full year 2025 diluted EPS of $1.36, versus $1.41 last year and adjusted diluted earnings per share of $3.22 versus $3.11 LY, ahead of expectations.

Pfizer's recently launched and acquired set of products delivered $10.2 billion in revenues for the full year of '25 while growing approximately 14% operationally versus last year. We plan to continue to invest behind these 2 product groups to drive their future performance to enable the company to partially offset our LOEs over the next several years.

Now turning to the fourth quarter of '25, we recorded revenues of $17.6 billion, a decrease of 3% operationally versus the same period of largely driven by an approximate 40% operational year-over-year decline in our COVID products. The decline was primarily due to Comirnaty receiving a narrow recommendation for vaccines in the U.S. and Paxlovid, which experienced reduced demand from lower infection rates. Having said that, our non-COVID product performance was solid, growing 9% operationally versus the same period of last year.

Our results demonstrate the effectiveness of our refined commercial strategy. We saw solid contributions across our product portfolio, primarily driven by Abrysvo, Eliquis, Prevnar and the Vyndaqel family. Adjusted gross margin for the fourth quarter was approximately 71%, primarily reflecting the product mix in the quarter, including lower commodity sales versus fourth quarter of '24 as well as continued strong cost management.

Future improvements in our manufacturing footprint remained a top priority going forward. As a reminder, over the past 2 years, our adjusted gross margins have generally remained in the mid- to upper 70s. Excluding Comirnaty, which has a 50-50 profit split with our partner, BioNTech, we achieved approximately $600 million in savings from Phase 1 of our manufacturing optimization program through 2025 and with additional savings expected in '26 and '27.

Total adjusted operating expenses were $7.4 billion for the fourth quarter of '25, in line with last year. But looking at the components, adjusted SI&A expenses decreased 5% operationally, primarily driven by focused investments and ongoing productivity improvements that drove a decrease in marketing and promotional spend for various products and lower spending in corporate-enabling functions.

Adjusted R&D expense increased 4% operationally, primarily driven by the increase in spending in oncology and obesity product candidates, partially offset by a net decrease in spending due to pipeline focus and optimization, including the expansion of our digital capabilities. Now turning to the bottom line. In the fourth quarter, our reported diluted GAAP performance was a loss per share of $0.29. Our adjusted diluted earnings per share performance was a profit of $0.66, ahead of our expectations due to our overall gross margin and cost management performance.

In support of our goal to enhance R&D productivity and focus on high-impact medicines, our fourth quarter GAAP results reflect strategic decisions in our development plans and updated long-range revenue forecast for certain products and pipeline assets. As a result, we recorded approximately $4.4 billion of noncash intangible asset impairments related to several medicines in development as well as in-line products.

It is important to note that one of the asset indications we deprioritized was disitamab vedotin in bladder cancer is largely the result of the recently strong study readouts, expanded indications and related higher long-term revenue projections for Paxlovid. Paxlovid is an asset we will continue to invest behind and thus diminishing the value of DV in bladder cancer. I will also mention, while impairment decisions are based on current valuations of individual assets, overall, the Seagen portfolio is progressing ahead of our expectations. These decisions highlight our focus on delivering future growth as well as innovation.

We are on track to deliver the majority of the anticipated $7.2 billion in total net cost savings from our productivity programs by the end of 2026. We expect additional savings of $700 million in '26 and $200 million in '27 from Phase 1 of the manufacturing optimization program for a total of $1.5 billion in savings by the end of '27. In addition, we exceeded our savings targets through '25 from our cost realignment program and as previously communicated, the R&D savings achieved in '25 under the cost realignment program is expected to be reinvested in '26 and is reflected in our '26 R&D guidance range.

We remain committed to achieving the expected $5.7 billion of total net savings from our cost realignment program by the end of '26, at which time we will have met our savings commitment under the program. Going forward, we will continue to focus on identifying further productivity opportunities and efficiencies. Now let me quickly touch upon our capital allocation strategy, which is designed to enhance long-term shareholder value.

Our strategy consists of maintaining and over the long term, growing our dividend, reinvesting in our business at the appropriate level of financial return and in the future, the potential to make value-enhancing share repurchases. And in '25, we returned $9.8 billion to shareholders via the quarterly dividend, invested $10.4 billion in internal R&D, invested approximately $8.8 billion in business development transactions, primarily reflecting the Metsera acquisition and the 3SBio licensing deal. And as a reminder, our leverage is expected to end 2025 at near a 2.7x target following the close of the Metsera transaction.

However, given the next few years of LOE headwinds, we expect the leverage to remain at this current level or slightly higher through the LOE period. Additionally, the planned sale of our stake in V will further improve our balance sheet. When including the proceeds, we have approximately $7 billion in BD capacity. Now let me turn quickly to our full year '26 guidance, again, which remains unchanged. We expect total company full year '26 revenues to be in the range of $59.5 billion to $62.5 billion and full year '26 adjusted diluted earnings per share to be in the range of $2.80 to $3 a share, which reflects our expectations of strong contributions across our product portfolio, mid-70s adjusted gross margin, continued focus on strong cost management, all while prioritizing investments in our business to drive growth by the end of this decade.

Our COVID products are expected to trend lower again in '26 with revenues of approximately $5 billion. We continue to expect stable revenue contributions from our non-COVID product portfolio, which incorporates an expectation of approximately $1.5 billion in revenue compression due to products impacted by anticipated generic entry in '26. Revenues at the midpoint, excluding COVID and LOE products are expected to grow approximately 4% operationally year-over-year.

And lastly, I will mention that we will continue to monitor currency fluctuation as the year progresses. In closing, let me continue to emphasize that over the next few years, our focus is on investing in key assets and managing upcoming LOEs, mainly from 2026 to 2028. At the end of the decade, growth is expected to be driven by our advancing R&D pipeline, the business development initiatives we've already executed and the ongoing progress of products we've recently launched or acquired. Our goal is to invest strategically balancing cost savings with funding high-value products designed to ensure long-term and sustainable growth potential for our shareholders. And with that, I'll turn it back to Albert and begin the Q&A.

Thank you, David, and congratulations for an excellent quarter. Now operator, please assemble the queue. .

[Operator Instructions] Our first question will come from Chris Schott with JPMorgan.

Just had maybe a 2-parter on the VESPER-3 data. I guess, first, can you just elaborate any more on the tolerability you saw here? And maybe just specifically, is there anything more you can say about vomit rates or any differences you saw between the mild or moderate dosing arms? And then just maybe bigger picture, if we consider the 2 doses that are moving forward from VESPER-3, it seems like you have a drug that clearly had solid weight loss. It's got monthly dosing. At the same time, that weight loss might be a bit below what you saw the weekly [indiscernible] Zepbound. I just wanted to get your views on what role you see that type of profile playing in the market.

Excellent. And of course, I will start with Chris, which I suspect will be the one who will receive most of the questions today, and I love it. So -- and then maybe we'll ask of course the commercial guys to speak a little bit about it. So Chris, why don't you start?

Yes. Thanks for the question. So obviously, we will share the full tolerability data at our oral presentation at ADA in June. We are really encouraged by the observed distribution of AEs across weekly and monthly. And you could have expected potentially that when patients switch to a 4-fold higher dose, we're going to have a higher number of sudden discontinuations and nausea and vomiting, [ we did not ], nicely distribution between the monthly as well as the weekly.

Just to remember for this study, there was no step down titration was allowed, which is unusual for obesity trials. But that will obviously not happen in the Phase III study, we will allow down-titration. Regarding the different doses, as we pointed out, low and medium was presented today, the higher dose is already being tested in VESPER-4 because previous prediction models indicated that it will be well tolerated and we should test 2.4 milligrams weekly, which is happening now. And in the monthly study we'll test [ 9.6 ] as pointed out.

All right. Why don't we go -- Aamir, how do you see this play in commercial and then Alexandre?

I think when you look at the clinical data, I think what it suggest to us, clearly, is that '3944 from an efficacy perspective has the potential to deliver efficacy that's competitive with the standard of care and potentially best-in-class against [ monotherapy ]. So we think when you take that efficacy and then you combine it with a lower medication burden through a monthly dose, that's a value proposition that's going to resonate with patients, with providers and with payers because persistency and simplicity matter.

And it also gives us the opportunity to switch patients from weekly onto monthly therapy. So we think '3944 is going to be a compelling therapy full stop. And then you add to that the opportunity that exists from the other assets that we have in our portfolio with our commercial capabilities to execute in U.S. and international, and I think it gives us a lot of confidence around the commercial potential.

Yes. Thank you, Aamir. The surprise, I think, so far with this market, it is how well it is performing outside the U.S. So Alexandre, what's your take?

That's right. Just -- what's really interesting in this category is actually the size of the market, ex U.S. is projected to be $150 billion and 40% of that is actually ex-U.S. There are 2 things that are really interesting in this category that are unique and that reinforce the potential of these assets. First, is the out-of-pocket category. Because in most countries, when we introduced innovation, we have to go through reimbursement negotiation and often translate into price reduction in this category.

We see that there are high willingness to pay out of pocket across all mature markets, either be in Europe or in Australia or Canada, and we see price point being [ across $250 to $350 ], which is higher than what we had expected. And when we look at the latest release from our competitors in this category, we see that there is higher willingness to pay from all those geographies, including actually also emerging markets where we also see high prevalence. The second is the time to market because it's going to be mostly an out-of-pocket category, the time after approval at the EMEA will be instant and where we will be able to actually commercialize those products. So that will drive also rapid penetration in the market.

Thank you, Alexander.

Our next question comes from Vamil Divan with Guggenheim Securities.

So just maybe building off this, Chris, you just talked a little bit about this in a prior question around down attrition in Phase III. Can you just elaborate a little bit more on that kind of how you are designing your Phase IIIs and allowing for flexibility of the patient maybe you're dealing with any sort of side effects and maybe that improves overall the profile you see from Phase II? And then my other question is actually is beyond VESPER-3. You mentioned this at ADA. I'm curious what other data we may get from either your internal programs or from the Metsera portfolio at ADA vis-a-vis your internal GIPR. Do you expect to provide that Phase II data there?

Thank you very much for the question. Just a reminder again for the VESPER-3 data we presented today is only 2 step-up doses. You used to 4, 5 step-up doses to get to the desired dose in this study, there's only 2 step-up doses. So the Phase III design for VESPER-6 will test different titrations as well as, as we pointed out, the additional dose of 9.6 milligrams which is currently being tested in VESPER-4 as 2.4 milligrams weekly.

Regarding the next -- the rest of the portfolio, we're obviously excited about the platform in general. It's a very differentiated platform. As you know, we previously presented data for the ultra-long acting amylin '3945 also called MET-233, where the observed additive weight loss when combining '3944 and '3945 was 5% at day 8 and single agent ultra-long amylin previous data showed at Day 36, 8.4% placebo-adjusted weight loss. So we should share later this year, including ADA, updated date on amylin and potential early data for the combination of the amylin plus '3944.

We also, as you know, in our portfolio, excited about the rest of the Phase II programs, which including a first in -- potential first-in-class GIPR antagonist oral that was discovered, conceptualized internally, that's currently in the randomized Phase II experience and also the more broader Phase I program of peptides, including an ultra-long GLP-1 that's potentially monthly quarterly, that's currently in Phase I as well as our additional oral portfolio, including the oral GLP-1 recently acquired from YaoPharma.

Our next question comes from Steve Scala with TD Cowen.

In the VESPER-3 data, did the placebo arm gain weight or lose weight? And the second question is not on obesity, but Pfizer has been quite adamant about no life beyond [ December '28 ] for [ Vyndaqel]. Should we completely rule out any sort of strategy whatsoever such as settlement with generic companies on patents Pfizer holds?

Thank you, Steve. Let me take the Vyndaqel because I have been asked multiple times. Right now, we are assuming that the patent will be lost at the end of 2028. And I don't have any other comments to make on that. These are very sensitive topics. So I'm moving to to Chris now to talk about the placebo arm of what was the weight lost there.

Again, the full data will present at ADA, but in this case, as VESPER-3, actually, the placebo arm was very stable, not really up or down, but you'll see the data at ADA.

Our next question comes from Geoff Meacham with Citibank. .

Congrats on the data today, again, a few on the new data today. So when you look at the PK/PD, are you guys set with monthly being the longest dosing interval to preserve efficacy? Or is it potentially -- is it feasible to extend to every 2-month dosing? And then on your Phase III plans, is it [indiscernible] likely to be the standard type of metabolic studies that we'd expect to do? Or would you pursue any maybe inflammation or neuropsych indications? Or would you pursue GLP-1 active comparator studies? Just trying to think of how you could separate yourself in a broad Phase III program.

Yes. Thank you, Geoff. So Chris, [ monthly ] more and then additional studies.

So thank you for the question. So '3944 is, as we demonstrated the first peptide that can be administered monthly. And potentially, yes, we can go longer, but for '3944, our aim is as a monthly maintenance therapy. As I mentioned, we do have another molecule, a peptide currently in Phase I, which has a prodrug propeptide with a potential for 3 monthly administrations. That's currently in Phase I, and we should, in the next couple of months, get additional PK/PD data from that molecule, which will be a potential opportunity to go to 3 monthly.

The second question, the initial Phase III programs VESPER-4, VESPER-5 and VESPER-6, VESPER-4 is the one in patients without type 2 diabetes that's currently ongoing with weekly testing, including the high dose of 2.4 milligram weekly, VESPER-5 in patients with type 2 diabetes and VESPER-6, the study that will include monthly dosing. Beyond that, we plan to start 7 studies. We haven't showed or revealed what these studies are going to be.

But you're absolutely correct that beyond cardiovascular metabolic, we are looking at other opportunities to differentiate and also to differentiate with our combinations, for instance with Amylin or with the GIPR currently in Phase I.

Our next question comes from Terence flynn with Morgan Stanley.

Maybe 2 also for me on the VESPER-3 data. I know you want to hold a lot of data until ADA, but just was wondering if you can provide any high-level details on the baseline characteristics, so either BMI or gender mix. I know sometimes those can vary across studies. And then on the tolerability side, again, 1 question when you have longer dosing intervals is the duration of GI side effects. And so any qualitative commentary there, if that's longer than 1 or 2 days.

Chris, again, that goes to you.

Okay. Just to start with the demographics. The study was conducted in the U.S. only. And I think, as you know, there are differences, especially in AE and tolerability, discontinuations between U.S.-only patient populations. So that's one. The rest of the detailed demographics will be presented at ADA, but it's as expected from a small U.S.-based Phase II study. The next question was...? .

What was the next question? tolerability?

On tolerability. As we said it before, we are encouraged by the overall tolerability. It is similar to what you expect for GLP-1 class, but Specifically, we can move to monthly with a distribution of AEs across weekend monthly. That didn't give us alarm that's switching to monthly, suddenly, there's a cluster of discontinuations or significant AEs. As I pointed out earlier as well, there's no -- there's only 1 severe nausea, 1 severe vomiting across the whole program, no severe diarrhea. So overall, we're very encouraged by the safety profile. And again, ADA will share the whole AE profile. .

Our next question comes from Akash Tewari with Jefferies.

So the data data in second-line plus NSCLC has been pretty underwhelming so far versus docetaxel. Is your team confident that you can deliver a superior profile with your upcoming Phase III with B6A. Or are you going to need to enrich in B6A high-expressing patients. Can you help frame expectations for this readout? .

Chris?

So you're referring to sigvotatug vedotin, yes?

Yes.

Yes. Correct. Okay. So this is a second-line study, I should point out against docetaxel, the Phase III study, there's also additional Phase III study ongoing, just a reminder, which is first line, which is sigvotatug vedotin plus pembrolizumab versus pembrolizumab in the TPS high PD-L1 high population. In the single agent activity we've seen was the response rate was over 30% with a median overall survival in the Phase II study, which approached 16.3 months.

So overall, we're encouraged by the data with the combination study with [indiscernible] pembrolizumab. We saw overall response at 57% with disease control rate of over 90%. So we are confident in the 2 studies. I agree with you that the second-line study against docetaxel, none of the ADCs have really showed a benefit over docetaxel, but everything we've seen so far. So gives us confidence in the trial. That will be the first study to read out.

And the second study to read out will be the one with pembrolizumab versus pembrolizumab. It's an even-driven study. Events are slower than we expected. So that could mean either ARM are performing better, but we should update you on the study results in the coming months -- first half of this year.

Excellent, Chris. So the next question, please. .

Thank you. We'll go next to Asad Haider with Goldman Sachs. .

Great. And thanks for all the detail on the clinical catalyst. Maybe just 1 on portfolio realignment, Albert, with respect to just this recent divestment of your stake in the HIV joint venture. Just broadly, what innings are we in, in terms of just portfolio pruning or realignment, noting that you've also recently announced a new reorganization incorporating your global hospital and biosimilars business?

I think Chris can also comment on that, but let me given that you address the question to me, I think we have done most of our pruning of our pipeline right now. So the things that we are continuing right now at large are things that we believe they are the ones to invest and we keep investing very, very few exceptions of things that were already there and we had some issues to discontinue or to divest. So I think -- from that aspect, I think we are doing very well. Chris, anything to add there?

Yes, we're focusing this on the 4 therapeutic areas, and we during 2025 significant prioritization and focus the program. And as you know, identified up to $500 million savings in R&D, which is now reinvested in Phase III programs. And this year, as Albert pointed out, we plan to start approximately 20 Phase III programs driving the portfolio.

And maybe -- Dave also can add a little bit color on that. But I just wanted to say that when you speak about creating or creating cost savings in R&D that we reinvest, we don't mean going forward with discontinuation of program, actually, with increase of programs. It's going to be by deploying AI, which already happened in 2025 with excellent results that creates significant productivity gains. This is where we are reducing the cost of R&D. And we all are invested to more programs that, as you see, we are starting to pivotal studies in '26. Dave?

Yes, I just would just add on to that. As we look at our in-line portfolio of products, we always continue to look to see how we can maximize the value. Viv is just a good example of nonstrategic asset for us, monetizing that in such a way that we can redeploy that capital at higher returns in the future. As you pointed out, we did create a sterile injectable and biosimilar of which we're focused on driving productivity across that set of product portfolio. And we will continue to do that as we think about our product portfolio going forward.

Our next question comes from Courtney Breen with Bernstein. .

Just perhaps building on the conversation that was just taking place. As you talk about the 20-plus pivotal studies that are starting this year, we're seeing kind of a midpoint $11 billion guide for R&D in '26. How do we think about '27 as you study start to annualize? And then kind of combining that with the element that you just raised out a bit of the AI investment, the 1,200 GPU deployment that you're making kind of when and where will we begin to see impact from that strategy? And will that impact anything in the operations of R&D of the pivotal trials? Or should we be thinking more about innovation on the research side over the long run?

Courtney, that's a very good question. As you can understand, we don't give guidance for 2027. But I will ask Dave to give some color.

Yes. I guess contextually, if you just think about R&D, as we cycled from '25 into '26, with the business development transactions that we've done, we've actually increased the burden and the load of work that needs to be done within our R&D infrastructure. At the same time, we're investing about $11 billion in R&D. So we are being able to be more productive in the infrastructure across R&D and take on more substrate to be able to focus on creating medicines for the end of the decade and beyond.

So I think what we're trying to do is continue to refresh improve the productivity across our R&D platform to invest those dollars back into R&D to continue to forward advance the programs that we have underway and the programs that we're developing. As you know, 2026 is a big start year for us from a science perspective. We will continue to focus on those investments going forward.

Our next question comes from Umer Raffat with Evercore ISI.

Two quick ones, if I may. First, on the monotherapy. Could you remind us if the 9.6 milligram monthly dose was the reaction to the data today? Or is that already being contemplated? And then secondly, on the emerging tolerability data for your [ GLIP ] amylin combo, how are you feeling on that? And do you think you can fit the GLiP plus amylin in a single pill?

Okay. Thank you, Tomas. On the first question, a reminder that the 2.4 milligrams is already being tested as a weekly regimen as a high dose in VESPER-4, and that decision was made based on the modeling based meta analysis. And as we showed today, our modeling predicts very well between what we actually observed and by the modeling predicted for 3.2 and 4.8. So we have confidence in the modeling also for 9.6 or the 2.4 milligrams

And which basically what you say is that the 9.6, it is the 2.4

Correct.

4x weekly, it is 9.6 monthly. .

And correct, yes. what is the second part?

Combination

So just a reminder that the combination is monthly, it's amylin plus GLP-1 ultra-long monthly subcutaneous. So it's not [ pill ]. We do have an oral portfolio, and we do have some other oral medicines discovered internally, which we've not revealed yet, but currently, our oral medicines, gLP-1 and GIPR, not the amylin as oral. .

And how do you feel about this day?

And we'll show data for the amylin plus GLP-1 monthly data for the ultra long-acting monthly data at ADA. The earlier data we've shown reminder of the combination of '3944 plus '3945 was 5% at day 8. That was early data that was shown and we'll update those data later this year.

Our next question comes from Jason Gerberry with Bank of America. .

I apologize for the background noise. But just based on today's VESPER-3 update, just kind of curious how you're thinking about the value add of the GLP-1 amylin injectable combination relative to the monotherapy? And are you really looking to kind of compete in that ultra high efficacy tier with agents like Lilly's [ GGG ]? Or is the value-add potentially more in GLP-1 nonresponders? Just sort of curious because it seems like what you have with the monotherapy approach to make you competitive with Zepbound and [ Meritage ]? So just sort of curious how you think about the combo and where that fits.

Why don't I ask Chris to give a little bit of science behind this combination and then I will ask Amir and Alexandre to comment on how that can be marketed.

Yes, we will have optionality because we are developing in Phase 3 both the single agent '3944 as well as the combination '3944 plus '3945. Everything we've seen thus far suggests us to us, to your point, that we should get increased efficacy for the combination. And that's why we hope to update data later this year, start the Phase II study this year and then next year start the Phase III study for the combination.

And then Aamir, how do you see this playing as portfolio

Yes, Jason. So I think the quick answer would be, look, I think we're in the very early innings of a large market where there is still significant unmet need, right? There's more convenient dosing that's needed, higher weight loss for certain BMI patients, GI tolerabilities need to improve maintenance strategies, friction in the patient journey. So our belief is that there's not going to be 1 single asset that serves all those patients. People are going to have different starting points hold preferences on their dosing and route of administration comorbidities, their willingness to pay.

And what you need to win in a market like that is, one, you need a great portfolio of products that can serve all those patients. And two, you need really differentiated capabilities. And I think with Chris describing not only our data today, but some of the other things that we have in our portfolio, we have the first piece in place and emerging. And we feel very confident about our commercial capabilities, whether it's our field forces that are the top ranked in the U.S. and already are seeing the majority of GLP-1 prescribers or the digital platforms that we're building like Pfizer For All that have touched over 25 million patients. So when you put that all together, we have a lot of confidence in our ability to win commercially in this market with these assets.

Thank you. And Alexandr3, any additional? .

No.

Okay. Let's go to the next question, please.

Our next question comes from Michael Yee with UBS.

Two questions, 1 for Chris and 1 for Dave. On the oral GLP-1 that you guys recently in-licensed, can you just remind us how much information you knew or what data you already had? I believe there's already a large Phase I going. So that should add some comfort there, but tell us about what you knew already on that molecule. And then for Dave, you reiterated $7 billion of capacity. Can you just talk about the ability to do more in the context of the recent dividend pause or at least dividend growth pause recently given that, that does not happen very often and how you think about your dividend.

Let me start with Dave at this time and then we go to Chris

Yes. So clearly, our focus is maintaining our dividend at the moment and growing our dividend over time. So it's a very important and critical structure and component of our capital allocation program. And again, we do have -- coming into this year, we had $6 billion in BD capacity. It's actually gone up a bit as we've announced the pending liquidation of the [ VIVA ] asset. So that actually is a good example of how we're looking at the set of assets that we have within Pfizer and understanding how we can best monetize them over time. So with that, I'll turn it over to Chris.

Thank you very much. 5002 is the YaoPharma oral small molecule, which is not on done at Lupron Scaffold. It's currently in Phase I, and we've acquired it through an exclusive global collaboration and license agreement with YaoPharma. And we plan to conduct Phase I studies and also combination studies with our GIPR antagonist that's currently in the randomized experience in Phase II. And we're currently transitioning all the work to the U.S. to start Phase I studies in the U.S., including manufacturing in the year.

We'll go next to Alex Hammond with Wolfe Research. .

So one of the key readouts guided for '26 is that Lyme disease vaccine VALOR study but a few on this. When could we expect an update and what are expectations for the launch if positive. What does vaccine contracting look like and what channels will be the key target for you? And I guess, finally, how big could this opportunity really be?

Yes, Lyme diseae?

Yes. Thank you. I'll start. So thank you very much. This could be a first-in-class vaccine for Lyme disease, the Phase III [ VALOR ] trial. It's a multivalent protein subunit vaccine targeting all 6 out of surface proteins of Verallia burgdorferi. The study we expect to read out first half of this year. Just a reminder, approximately 400,000 people in the U.S. and 132,000 people in Europe, affected by Lyme disease. And as you know, significant long-term morbidity and long-term sequelae. So a vaccine specifically in certain regions of the world could be very, very important.

Thank you, Chris. We're very, very waiting to see the date of that to be a huge solution for an unmet medical need. Let's move to the next question, please. .

We'll go next to Mohit Bansal with Wells Fargo.

And one more on the VESPER program here. Would like to understand what kind of target profile you are looking at from the Phase III trial? I'm asking because with the GLP-1, you kind of see mid- to high teens kind of weight loss, there's an optimized GLP-1? And if you try to push it beyond that, you could probably start to run into tolerability issues. What makes you think that this longer acting GLP-1 could provide higher weight loss than that vis-a-vis better tolerability or do you think that monthly is probably the biggest differentiator here?

Chris?

Thank you very much. So it's both. We expect competitive weight loss and the data we show today, including with the predictions, but to expect from the 9.6 milligrams at 16 milligrams weight loss, we are predicted at week 28 is highly competitive, tolerable to be highly competitive and then, of course, monthly dosing, which will be highly differentiated. Just to point out, we are also planning a Phase III study which will evaluate switching. So patients already on weekly therapy doing well to switch those basins to monthly dosing.

Thank you, Chris. And this is not only ours, of course, weekly to monthly, but also any other GLP-1s that are in the market and they want to move after they achieve a weight loss into a maintenance with only 1 injection rather than with 4. Of course, there is also the oral solutions, but that's going for 1 weekly to 1 daily pill. Some will do it, but I think our research shows that most would like, if they are already used needle, and they would like to switch mostly to a more convenient needle, which is once a month. .

We'll go next to Evan Seigerman with BMO Capital Markets. .

I just wanted to touch on your comments around investment in AI. How -- what are the metrics you're putting around that? And more broadly, I just want to ensure that this is going to drive a good return on your adjustment versus just kind of feeding into the hype?

It's a very good question, and let me start, but then I will last specific marketing achievements and R&D achievements through AI. In general, there are things in AI, but the technology is ready now. And those are deploying very, very fast. And certainly, I cannot do everything, but certainly can do more than what it is used right now to do. And that has to do with how successful you are in implementing it, embedding it into your organizational footprint, embedding it into your business processes and also creating AI literacy among the employees that eventually are using this with that clearly affects everything from enabling functions and maybe Dave can speak a little bit about the things that we are doing there.

I mean when I say enabling functions from finance, HR, legal, you name it. And of course, in R&D, where we have seen already significant productivity enhancements in marketing that it is helping us to maximize the ROI right now and in manufacturing were a very big part of the savings that were achieved successful deployment of AI use case that is called the [ Golden Bus ]. Chris, do you want to give some specific examples?

Yes. Thank you very much for the question. So as you pointed out, in R&D, we're embedding AI in each function, meaning in discovery, medical, regulatory, safety, pharmacovigilance, clinical trial execution, and we're recruiting and embedding AI engineers in each of those functions to work with the scientists and the clinicians how to measure success, productivity, productivity, speed and cost, to be bring costs down by embedding AI and obviously, accelerating speed.

What about in commercial?

Yes. Evan, I think metrics are at the heart of everything that we're doing with AI. I'll give you 2 very specific examples. One is our field force productivity. We're using AI to not only help train our field forces, but also help make their time with physicians maximize. So we invest more time with physicians rather than behind screens Second is on the marketing side, we measure ROI.

And you've seen us be very disciplined, as Dave alluded to, in our SI&A spend, particularly as we're trying to grow revenue for a lot of our launch and acquired brands, and AI has absolutely helped us increase our MROI by being much, much more targeted about where we invest.

Alexandre, you did fantastic things also in international with AI.

Yes, that's right. I mean every step of the way when we interact with our customer is subject to an improvement with AI. Let me give you an example, [indiscernible] planning for rep is actually done better when it is done with AI. The quality of the interaction is listened, so that we can rerun those interactions that we can improve the quality of the interaction. We can also do targeting better way so that we have advanced targeting, thanks to AI.

And finally, imagine that operating globally with very different regulatory requirements require every country to redo and reassess every promotional pieces. With AI, we can do that instantly in all those markets. We don't need to rerun all those activities at every country. So that has massive impact on productivity and speed to market.

And Dave, maybe...

Yes. Maybe just 2 points. From an enabling functions perspective, I think about AI in us leveraging our vendors because we have big vendor technology platforms across our enterprise. And as they make investments in their, we're taking advantage of those and embedding those within our process, which is increasing our productivity. And then secondly, think about our business model, we have routine transactions, but we have a large number of products that are across literally hundreds of markets. So AI is allowing us to use those data sets to essentially automate some of those transactions to make it very efficient that today, we deploy resources to be able to do that. So now the technology is enabling us to be a lot more productive.

Yes. So in closing, Evan, that's why we put it as one of the 4 imperatives strategic priorities we plan to do, which is to scale up because we have some big success. Many people are asking us, how is possible that Pfizer was able to take so much cost out of its operations without affecting the top line. And the answer is yes. We didn't just cut cost, what we did is we improved productivity. And the main lever, of course, there was simplification efforts that also took place. But the main lever was the successful deployment of AI, where basically we are reducing the cost without that being seen in the activity. So very excited about the prospects of AI.

Next question, please.

Our next question comes from Dave Risinger with Leerink Partners. .

Yes. And thanks for all the updates. So my question is for Chris. Chris, could you talk a little bit more about MET'233i, which I believe is now numbered '3945 Specifically, the bias of amylin relative to calcitonin, the implications for the efficacy and tolerability profile and the data we should expect at ADA?

Thank you very much for the question. So this is an ultra long-acting amylin, which was previously shown to have a monotherapy efficacy of 8.4% placebo-adjusted weight loss at day 36. It's a [ deal ] molecule, so it's not biased to the one. It's placebo-like tolerability was previously shown with the monotherapy. And that gave confidence for the -- starting the combination of '3944 and '3945. previously, early data shown a day 8, 5% weight loss, but obviously, that's very early. So we will update those data later this year. This is an important combination for us because we believe with this combination, we can have best-in-class efficacy with a monthly dosing, which will be highly differentiated for this combination.

Thank you, Chris. And now it's time for the last question. .

Our final question comes from Louise Chen with Scotiabank. .

I wanted to ask you first, it's been a couple of years since you completed the acquisition of Seagen. And I'm just curious how that integration has gone? And then how is that deal really increase your leadership in oncology? And then just a second quick question on your PD-1 [indiscernible]. It's becoming a more crowded market. So just curious where you expect to stand out with respect to your pipeline. I mean there's some indications that are coming before you, but is there anything special that you would like to call out.

Thank you, Louise. And clearly Seagen has been integrated on research, commercial, manufacturing and multiple other levels. But given that Chris was the leader that drove the integration during the first sensitive year, Chris, maybe you want to make a comment on how the integration of Seagen and continue doing.

Thank you very much for the question. So firstly, we have a vibrant community of scientists and clinicians in Seattle. I believe we're one of the biggest employers for -- in the biotech or biopharma industry in that region. Most of the colleagues actually remained at Pfizer, which is just a testament of our culture and the success of the integration.

A number of programs have started and being accelerated, including, as you've seen, the readout with 303 and 304 for Padcev. We are planning an additional Phase III study for Padcev. It will start later this year. It's an important study for us and for patients because that is to -- study to potentially replace cystectomy, which, as you know, leads to significant morbidity and mortality. We also accelerated a number of other programs into Phase III, including SV with 2 Phase III studies ongoing in additional Phase III study that's going to start PD-L1, another Phase III program ongoing in non-small cell lung cancer and a number of Phase I ADCs that's differentiated, including using the integrin antigen as a marker with new payloads, including TOPO 2 and new [ orastatin ] based payload. So integration, overall of Seagen going very, very well.

Regarding '4404, it is a differentiated molecule. What we've seen in the preclinical data was a 100-fold increase for the affinity for PD-1 in the presence of VGEF and binding to all isoforms or in VGEF. It's a preclinical data highly encouraging overall encouraged by the field now. As you know, we've recently seen from China first line non-small cell lung data that was positive. The data we've seen with a combination of 4404 with chemotherapy are highly encouraging.

And as we accelerate the program, as you've seen in we started Phase III programs already for colorectal cancer. And earlier this year, we'll also start with first-line Phase III with non-small cell lung cancer and then endometrial cancer and bladder cancer, including combinations with our ADC portfolio.

Thank you, Chris. Very exciting. So thank you very much, everyone. Clearly, I'm very proud of what we achieved in 2025 in multiple horizons. The last piece of the puzzle was revealed today with the fourth quarter results, which were stellar. We beat with a significant margin, revenues and earnings in the phase of the lowest-ever COVID season that generated the lowest ever revenues because of the way that this strain was mild.

Now we are already in 2026. And this is a pivotal year because it marks the first year of an LOE cycle, but already started this year. And we've been preparing for that for many years with the acquisitions we have done strategic and licensing agreements, while also it was sharpening our focus on the most impactful internal programs. Our U.S. and international commercial organizations have refined models to strengthen leadership with key product portfolios, streamlining and financial discipline are, of course, ongoing priorities. We will continue strategic investment in future growth and value creation for our shareholders, including by maintaining and over the long term, growing our dividend.

Our 2026 strategic agenda is clear, and I'm confident in the progress we will achieve. Thank you for your interest in Pfizer, and we look forward to continuing to share our progress with you in the year ahead. Thank you.

This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Good morning, everybody. I'm Chris Schott from JPMorgan, and it's my pleasure to be hosting this fireside chat with Albert Bourla, Chairman and CEO of Pfizer. Albert, Happy New Year. Great to be speaking with you again today. I know you want to make some opening remarks, then we'll jump into the discussion from there. So over to you.

Of course. If you can advance the slide, I wanted to say, first of all, that 2025 was for Pfizer, a good year. We had a good financial performance. We have three consecutive earnings that we beat both revenues and profitability. And we were able to improve margins by taking out $5.6 billion of OpEx between '24 and '25. Now I don't know many companies that they can do $5.6 billion of cost in '24 and '25 and have four in '24 and three in '25 consecutive quarters that you are beating expectations. I think that's a testament to the company is good when it comes to execution.

The other thing that was very good in '25 was that we were able to resolve certain uncertainties that were depressing our multiples. The first one was tariffs, MFN, I think that's for the entire industry. I think it is pretty much behind us. Of course, we need to be alert that things can change, but I think that has been settled. The second one that was specific for Pfizer was the COVID and the impact that, that can have in our profitability. What if you have a significant reduction of COVID, is it going to kill your EPS? We did have a significant reduction in COVID. And I will remind you, '24, we had $11 billion approximately COVID revenues, and we gave guidance that will be around $6.5 billion this year. So a significant decline. It was a very small, slow COVID year, year 2025. And despite that, we were able to exceed expectations and raise on EPS, which shows that you have been able by doing other things, growing other parts of the business and taking out cost, make the COVID less relevant for our business, almost now irrelevant.

And the third uncertainty was that after we didn't do well with our oral GLP-1s, everybody was wondering, so what is Pfizer's strategy in obesity? Where are you? And I think the acquisition of Metsera and then following that, our oral GLP-1 from a Chinese company, they have positioned us now into a very competitive position to do the year. But all of that was, of course, in '25. Now if there is anything that I want this room to keep from '25 is this company knows how to execute. Let's go now to '26. And it is custom that every time I'm here with you every year, I present what will be the focus of the year for Pfizer. And these are the four priorities that we are going to do.

Of course, maximize the value of key transactions. When I speak about key transactions, there were three that account for 80% of all the investments that we did. This is Seagen, this is Biohaven with Nurtec and this is Metsera. We are going to make sure that the in line products will grow way much faster and that their pipelines will accelerate their development. Of course, the second is deliver on critical R&D milestones. I will show in a moment that this year is going to be very rich in catalysts for Pfizer, and I will go through each one of them. We need to make sure that we deliver on them.

Of course, we invest to maximize post-'28 growth. We have entered the LOE period, '26, '27 and '28 is for Pfizer, the LOE period. And we want to make sure that as we go out of that period, we have industry-leading growth on the top line. And last but not least, it is to scale AI across our business. AI was a significant contributor in our ability to take out $5.6 billion of cost plus even more in manufacturing if you count. And now I think we are ready to scale it up to levels across the entire organization.

And I would like to finish with a slide that speaks about the anticipated catalysts. On regulatory decisions, I will just point out the Padcev. There are two approvals that we expect. One already was granted months ahead of schedule because of the strength of the data. And the other one, the 304 will be granted hopefully this year. The reason why I mentioned it is because it's more than doubling the addressable population of Padcev. Right now, the current indications are for approximately 19,000 patients. With the new one, we are adding other 22,000. So it's significant.

Now in terms of data readouts, Elrexfio, the second Phase III study that is a serious now population is coming up, hopefully in the first half. LITFULO, it is a new indication for vitiligo. Again, it is atopic dermatitis. If we get it, we will be able to compete in the vitiligo. Lyme disease. Everybody is expecting this vaccine. It is a disease that it's important gets more and more significant and a disease that there is no vaccine so far to prevent it. So we cross our fingers that the results will be good.

The mevrometostat, this is the follow-on basically on XTANDI. This is a study that we will read out. It is in combination with XTANDI, and we try to show better results than XTANDI alone. It's very important because XTANDI next year will be off patent. And we want to be able to promote in this area, new solutions because we have a very capable field force. And there are two products that they can do that. The one it is this one and the other one, it is TALZENNA, talazoparib, that again, it is in combination with XTANDI. The fact that XTANDI goes off patent makes quite easy the access of these products because the cost is less.

I think the most important of all, SV. SV, it is our Seagen entry to the lung cancer basically an ADC. We have studies running right now. The one that we expect readout this year, it is the second line in monotherapy. And we have also for next year, a first-line lung cancer in combination with KEYTRUDA. And last but not least, everybody is expecting what happens with Metsera portfolio and when are we going to show data. There are two significant data readouts of Metsera. The first one is the results of the monthly program. Right now, we expect to be able to release data from the monthly program this year. We -- I remind you what the study is about. It is weekly step up the dose for 4 months, and then you start the patients in a monthly. And when we release the data, we -- all patients, we hope that we will have data for all of them at least 4 months in a monthly, so 8 months trial, and some will be at 6 months. So it's an important. And also, that also will dictate our Phase III study and program.

The other one, it is about the ultra-long-acting amylin and GLP-1. We have already presented -- Metsera presented already data from the amylin monotherapy weekly. The data was stellar. They had 8.4% placebo-adjusted weight loss at 36 days with Amylin. 36 days, 8.4% reduction on placebo adjusted and very good tolerability with amylin because we know that the Achilles heel of the GLP-1s is the tolerability. Now what we are going to see are data in combination with the GLP-1 that I'm very excited about them. So these are on the readouts. But of course, it's a year that we are investing. So we anticipate this year to initiate 20-plus pivotal Phase III studies.

I'll start with the Metsera, the ultra-long-acting GLP-1. We expect to initiate 10 Phase III studies this year. 10 Phase III studies this year. One actually was initiated the last week of December, the 1 of the 10. And I think that also is very impressive. Just 4, 5 weeks after the closing of a very controversial acquisition, we were able to do such a good work in integrating and working with the Metsera team that we were able to launch their Phase III ahead of their initial expectations that was for basically the first quarter of this year. So I'm very excited about that.

Equally, for the other acquisitions that we have done, the VEGF, we are expecting to start four Phase III studies, one in colorectal, one in endometrial, one in lung cancer, and the last one will be in bladder cancer, but in combination with Padcev. So it is the first one that we test this molecule together with an ADC, and we are very excited about it. Nurtec, we expect to start two studies. I will speak about one, but I think it's quite important. It is use of Nurtec for chronic migraine. Chronic migraine, it is defined as at least 15 migraine episodes in the month. And for those people who will start the regimen that there will be daily dosing of Nurtec so that they will prevent those episodes.

LITFULO and Hympavzi, we go to moderate hemophilia and alopecia areata. Padcev, very important study, that one for Padcev that we're initiating. As you know, Padcev had stellar results, double survival rate in multiple settings. But the muscle invasive bladder cancer, usually, most of the patients, they really need to have a cystectomy. That's a horrible operation and that creates horrible quality of life. So for the first time now, we'll try to see if in these patients, we can spare the cystectomy by using Padcev. Imagine if that's positive as all the previous studies of Padcev, how that will change the lives of these patients.

PCV25, we expect to start a Phase III this year. And in SV, we have already two studies that are running. One will have readout this year, the other next year and we start a third one for all comers. Very exciting. So I don't want to hear again, there are no catalysts for Pfizer stock because sometimes you say it, all right? And I hope that we'll have all a good year.

Yes, absolutely. Maybe start the conversation, and you laid this out nicely. Pfizer has been through a period of significant change in the last few years. As you mentioned, the portfolio has evolved beyond COVID. We've had a pipeline that's maturing as you just laid out. We've got a new commercial structure. Your confidence today that you've got the portfolio and the pipeline to manage through this patent cycle and then to kind of exit the patent cycle with a healthy growth rate. Can you just talk about where that stands today versus a year or 2 ago?

I'm highly, highly confident on that. And it is, first of all, because we are preparing for it for many years. As I said, we invested $80 billion cumulative in acquiring growth basically. And three of them, it is the three that we are putting a lot of emphasis. You need to know that in '25, the new business development -- new introductions, business development or new launches probably will end up because we are going to give our final results in a month at the zip code of $10 billion, $10 billion acquisition with a double-digit growth. In '26, we expect to continue having double-digit growth of this portfolio and the years to come. So that, as it's going up, is offsetting basically the LOEs. Now fully, probably not. But for example, this year, it is the first year that we have $1.5 billion of LOEs. Our growth from these products will more than offset the LOEs because if you see the guidance that we gave, $62 billion approximately '25 and $61 the midpoint of '26, that includes $1.5 billion of COVID reduction, right? $11 billion in '24, $6.5 billion in '25, and we took stance to derisk the COVID projections by putting $5 billion this year. It could be even worse COVID or even better COVID period from a health perspective, which means we can do less. But if it is like '25, we can do $1.5 billion more. If it is like the previous years, the upside is very significant. But excluding COVID, LOE or not LOE, doesn't matter. The business is growing in '26. In '27, we have a bigger challenge to face because it is not $1.5 billion, it's $4.5 billion. But I still think that with the growth of this portfolio, we will have set big time. And in '28 probably will be the year that we will have a modest decline. And then we will enter into a leading industry growth.

Yes. Perfect. Maybe just digging into those topics a little bit more. We're fresh off the '26 guidance call. Can you just elaborate a little bit more on how you approached expectation setting just given the uncertainty around COVID balanced against this, obviously, very healthy growth portfolio you're talking about?

COVID is the one that is the most challenging for us to predict. And that's why we took the stance that we are going to derisk it. We reduced projections by $1.5 billion. It is really a derisking exercise. It's not that we calculated anything from the $6.5 billion that we will make to $5 billion. So with that aspect that we think is derisked, although you never know. And hopefully, we could have an upside. But again, you never know. On the remaining of the business, we are much more confident in our ability to predict it. And we stand by what we said and hopefully, we can deliver more.

Maybe a similar question. Looking past '26, we obviously have some of these well-telegraphed LOEs. What do I think about for that top and bottom line growth profile as we look out to '27, '28 as you're still kind of in this transition period?

Yes. All our effort in '26, '27, '28, it is to maintain as much the revenues to a reasonable level, so not to go down more than 3%, 4% in '28 and even less in the other years. But there will be a modest decline probably in '26, '27, '28. We went through all the measures that we have taken to improve our margins to at least come to a floor EPS that will help us go through that period. Following '28, '29, '30, '31 and '32, we calculate our projections are for industry-leading exponential growth in the revenues.

And can you elaborate a little bit more in terms of what you have to assume within the portfolio to get to that reacceleration? And maybe as part of that, what would you highlight in terms of the bigger disconnects of when you look at your forecast versus what the Street is kind of expecting in that return to growth period?

Yes. I take out COVID because already we derisked it. But I think that Nurtec, I don't think that the Street is incorporating new indications that are coming for Nurtec. There is one Phase III study that is already running and will read out, I think, next year. And that's for menstrual migraines. And that's a significant part of the business, and I believe we will be the first. And the second one is the one that I just spoke that we are going to initiate for chronic, so daily treatment so that chronic -- prevention of chronic migraine. So that's -- Nurtec is one. SV, there is a very big disconnect with what we think that could be and what the Street now is forecasting. Probably the Street without seeing Phase III data, they don't put much. So the catalyst is this year, the first one. And the second one is next year. So that's a significant, I think, gap also. And I will mention another one, Elrexfio. And Elrexfio for multiple myeloma, we have much higher expectations, and those are driven by the Phase III studies that are running that are constantly increasing the population that it is addressable. I will finish that the Street hasn't factored at all probably or very little, still the Metsera portfolio and haven't factored it also the VEGF. So it's quite significant.

Yes. Maybe digging into Metsera. Obviously, you made a big push into the space with the deal late last year. Can you just maybe to start the conversation, frame your high-level views of how you see the obesity market kind of broadly speaking, playing out over the next few years? And what's going to take for Pfizer to be competitive in that landscape?

Yes. I think the market will grow very fast. I believe it will be $150 billion by year 2030. Right now is duopoly with one of the players scoring higher wins, more wins than the other. But there is a lot of others that are entering. Compared to when we did the business case of Metsera, there were two things that changed in my -- in our estimations. One, it is we saw some more data, which some of them you will see, and we are very, very confident. The second is that we saw Lilly and Novo sales, and we saw how big is the cash market for this indication, which in our projections, we didn't have that. We had a very small cash market, which means that outside the U.S. very little business and inside the U.S. part of the business. Now we know it's 30%, right? It's huge. It's like Viagra. That's exactly the same characteristics. When we launched Viagra, we were surprised how it was the first medicine that people were willing to pay out of pocket to get the medicine, irrelevant if it was covered or not by the system. So the same is with that. Metsera is giving us highly differentiated portfolio. The portfolio of long-acting, I think but you will see the data could make huge difference. The amylin and GLP-1 long-acting again, ultra-long-acting, monthly, right, not weekly, ultra-long acting. Both of them, I think they can -- our projections is with the base of the data that we have seen, that it could be best-in-class that we will have best-in-class tolerability profile and best-in-class placebo-adjusted weight loss. Very early, but this is where the data are pointing us when we try to model them. And it's not only right that, right? So Metsera has also an oral portfolio, amylin and GLP-1 and GIPR as a peptide. And all of that are in the clinic right now. And also, I'm very excited about these combinations, amylin, GLP-1 and GIPR, what we can do in terms of reducing tolerability, improving weight loss. Of course, we have also our own GIPR, which is an oral molecule. Metsera is a peptide. The oral, small molecule, the reason why we bought GLP-1 oral from Chinese to be able to try and combine it. So market will be big. You need differentiated products. You need significant marketing capabilities because that's a consumer-driven market. It's not to a bigger extent than anything else. It's not the payers that will define it, plays to the strengths of Pfizer. Metsera portfolio is excellent, highly differentiated, but the commercial capabilities of Pfizer, I think, is what can make a difference vis-a-vis the leader in this industry, which is Lilly and is a wonderful company.

Yes. On [ Phase III ], I know that's later this year, just your level of confidence that these assets you acquired, the monthly dosing is going to be attractive profile. I mean, just elaborate a little bit more on what you been...

You never know with when the box opens and -- but we are very confident. And this is why we plan to initiate the Phase III, and we will present the Phase II data on the monthly and probably in a big conference as usual. But I'm very confident. I'm also very -- I have seen some data on the amylin and GLP-1 combination. I can't speak about them right now because we are accumulating more patients and more time, but they are very encouraging. Very encouraging.

Okay. Good to hear. Maybe last question is time lines for these assets.

I hope to launch in '28. And if anything, we'll try to be at the earlier rather than at the later of '28. And there we go -- and we hope that based on our commercial muscle, we will not have a traditional ramp-up as we launch, but we have a much more steep hockey stick ramp-up to the maximum market share that we will achieve.

Yes. And then maybe just last question on this. Amylin, sounds like you're very excited about that combo. Is there anything that Pfizer can do to further accelerate development time lines given...

Yes. And as I said, Pfizer already, we initiated the Phase III this year, Seagen's plans were for next year -- I mean '25, Metsera's plans were for 2026. And I think that's the combination of the Metsera people and Pfizer people that they are working right now immediately like if they were together for the last 10 years. Actually, a lot of them were ex Pfizer people. So that helped.

They have been working together. Maybe just moving beyond obesity. You mentioned SV and that kind of interesting asset coming from Seagen. Can you just speak to the overall opportunity you see for that one? And what gives you confidence in that mechanism based on the data we've seen so far? So because you highlight, it's one that has very significant peak sales potential. I think the Street still is not giving you a ton of credit for it. So maybe just help level set your level of conviction in that profile.

I mean the level of conviction comes from the Phase II data that we have seen and we have presented, and they are very, very good. I'm sure you have seen them, right? So right now, we have two studies running in both in non-small cell lung cancer. And one that we will have readouts now, it is monotherapy in second line. And the one that will come next year is first line in combination with KEYTRUDA. This is a $60 billion lung cancer market, right? It's a huge market. And so far, if we were able with the SV, which has the same payload like Padcev reproduce the synergistic effects together with PD-L1, the synergistic effect of this payload, which is the vedotin in lung cancer, that will be a significant blockbuster. Now the whole thing is blinded. We have done everything we could to make sure that the study will be successful. And we have very good Phase II data. We need to see the Phase III.

And to the extent the second-line data is positive, how direct of a read would you view that as we think about the first-line study reporting out in '27?

I think will increase our confidence in the first line, but the first line will read out anyway. So we'll see.

Soon enough. Staying on oncology, your VEGF PD-1 bispecific. I think we're all trying to get our hands around it, very exciting market, how the individual companies are going to differentiate from one another? So when you think about the asset you selected, how you're developing it, how do you think about differentiating from the others who are kind of going after the same target?

First of all, we believe that our molecule is differentiated because it has two arms with both VEGF and PD-L1, unlike the other antibodies that they have one arm with PD-L1, one with VEGF. So by itself, we think that's why we saw better encouraging noncomparable, of course, results. But we do think that the molecule is differentiated. But beyond the molecule, what it is extremely important, it is the development program that you will do and also what will be the combinations that you will try to bring into the market. I think the development, we start very aggressively because we really believe in this molecule with four Phase III studies now. And one of them is testing the hypothesis with Padcev, right? We have seen that Padcev created tremendous results with KEYTRUDA, double survival rate. It's not a trivial thing, double the survival rate. We believe that PD-L1/VEGF, they work better than PD-1s. So if we can repeat now that, we can have transformational results. So again, the studies are running. The assets are good. Our ability to execute is very good, and we will see.

Yes, yes, absolutely. Maybe last one on the oncology portfolio, breast cancer. You've got a number of assets you've been working on there. What's the latest in terms of what you're most excited about and the time lines of when we can expect those assets?

Clearly, our CDK4, it is the one that excites me the most. It is a huge opportunity for a mega blockbuster, right? We are testing the CDK4 right now in metastatic breast cancer against the standard of care basically in combination with aromatase inhibitors. So we have Ibrance or the Lilly or the Novartis product. And again -- together with aromatase inhibitor against our CDK4. We have seen data on the earlier phases that makes us believe that we will have way better results. The reasons are because CDK4 is very selective to the breast cancer cells and less on the bone marrow cells, which is the CDK6 mostly that creates all the side effects. As a result, this product can be dosed constantly. I remind you that Ibrance is dosed 3 weeks and then there is 1 week of treatment holiday, a break, exactly because you need to deal with the toxicity. That molecule is constant. That by itself will improve the efficacy. But also the fact that it has such a good tolerability and very favorable side effects profile is the big opportunities to position it in earlier phases. That imagine early breast cancer is a huge opportunity, particularly for women that they are doing the surgery. And 30% of them approximately will metastasize, but 70% will not. So -- but the 30% is very tough. If they metastasize is a very big problem. It's life-threatening. And people -- physicians would like to have something that if proven that they can reduce this 30%. But it's very challenging to give something that has neutropenia for 5 years, if you create that side effects will be even more detrimental sometimes for the health of the individual rather than preventing the 30% chances. That one has an ideal profile. So I think it's very good. That's why we take it in first line. And we have the KAT6 that is going to be in second and third line. So we have a very good life cycle to replace Ibrance that will go off patent in '27.

Yes. And just latest on time lines that we can think about for those two assets?

CDK4, I think we expect the readout next year. Yes, next year.

Okay. Perfect. Padcev, I think you mentioned obviously, a big expansion of the market you're going after. How far along, I guess, in the growth cycle are we with this asset from what we've seen? So how do we think about the next few years of...

Next few years, we think that will grow. That will grow. First of all, we have, I'd say, very good penetration right now, but still, there is a lot of room to increase the use of Padcev versus other treatments. It is impressive clinical data that is driving that. It's our job to make sure that even community oncologists, they realize the benefit and start using it. So that's one wave. But then there are the new indications. And I think those also could play, particularly the two indications that one was approved and the other will be approved, as I said, more than doubling the population that can be used. So that will be a significant driver of growth. And then we are going into the cystectomy -- so bladder sparing experiment that if it is positive, again, will be a significant advancement.

A couple of different legs up for those numbers from here. Maybe last one on the in-line portfolio. Tafamidis franchise, I know we've got some increased competition. Just how should we think about that in the U.S. the next few years? Is that still a growth franchise? Or is that more kind of maintaining the business being more of...

I would say growth in international. In the U.S., I would say, stability or modest growth as competition is coming. Still, the market is growing. So we are -- of course, they are taking some of the market share, but we will continue that. And it is only until '28, right? '28 is going off patent. But overall, I think we will have a growth of the tafamidis, mostly in the international and less so in the U.S. this year.

Okay. Maybe just a couple of questions on MFN. So obviously...

By the way, I have the international and U.S. heads of Pfizer sitting here. They are taking notes of our expectations.

MFN, I know policy risk was a big discussion point for the sector last year. And I think the deal you struck in September, I think, really lifted that overhang for the sector. Just where we sit today, can you talk a little bit about what went into that deal and Pfizer's ability kind of to manage through these new kind of agreements?

Yes. I think there will be an impact that is already incorporated in our projections. We gave 2.8 to 3, right, as EPS. That includes that. That includes the reduction in COVID. That includes the LOE, and that includes $0.22 of investments in Metsera and 3SBio, the VEGF that were not last year, right? So all of that are there. And still, we will deliver 2.8 to 3 and even better.

When I think about MFN world where some of your newer launches, there's going to be more globally flat prices in major markets. I'm just trying to get my hands around what does that mean for international sales? Is that neutral? Is it positive? Is it negative? Is it too early to tell as you think about?

I believe we'll be positive. But of course, it's a bold move, right? One -- why I say that? First of all, it is 8 countries outside the U.S. that are affected by MFN. The other 100 countries is business as usual, and we are launching our products and we continue doing the business. In those 8 countries, which are the high-income countries, already one of them, which is U.K., we saw that they already signed a deal with the U.S. government that they will increase significantly the spend in innovative medicines. I will tell you that they are reducing their clawback from something like 22% to 15%. So it's a significant reduction. Then they commit that they will -- right now, they spend 0.28% of GDP in innovative medicine, 0.28%. They committed that they will raise that to 0.6% in a decade, which is double. But even more importantly, they will raise that to 0.32% next year. So you see the first country already are adjusting for the entire portfolio. Now when it comes to new product pricing, which is really what is affected here, they increased the -- usually, they calculate prices based on the quality, what is the value of the quality. They increased significantly 25%, the value of the quality, so which should resonate to 25% higher valuations of the prices. I'm in constant discussions with the leaders of France, Germany, you name it. And they all understand that, first of all, this is a sector that is very strategic and Europe missed the train, and they now need to come back because it's all about China and the U.S. And the second, they understand that with a new system, unless if they pay, they won't see the products launched in their countries. The whole Europe will have it except the 6 countries that are in MFN. I don't think that can be achievable. So I think we will see better price.

Great. And maybe last minute or so here. BD, obviously, you've done a lot in the pipeline. Can you talk about what are the priorities for you at this point as we think about capital deployment for the next year or 2?

Capital deployment, dividend, we are committed to maintain the dividend, right? Right now, we never say no to buybacks, but it's not in our plan to do buybacks. In terms of investments, its R&D investments are going to go higher this year and will continue going higher. And so -- and also, we will invest this year and the years to come quite a bit in the new launches and the business development. So those assets that I said they are already $10 billion, growing double digit will accelerate their growth. So this is how we see business. And then, of course, business development. We have right now with all of that included, a firepower that we can use. We said that it is around $6 billion for this year. And maybe we use it, maybe not, if we find the right opportunity. But there are opportunities right now, and I think we can use it.

Excellent. Well, I think we're out of time. Thank you so much for the comments. Appreciate it.

Thank you very much.

Thank you very much.

Thank you.

A good day, everyone, and welcome to Pfizer's analyst and investor call to review the full year 2026 financial guidance. Today's call is being recorded. At this time I would like to turn the call over to Francesca DeMartino, chief investor relations officer and senior vice president. Please go ahead, ma'am.

Good morning, and welcome to Pfizer's 2026 financial guidance call. I'm Francesca DeMartino, chief investor relations officer. On behalf of the Pfizer team, thank you for joining us. This call is being made available via audio webcast at Pfizer.com. Earlier this morning we released our 2026 financial guidance via a press release that is available at our website, Pfizer.com. I'm doing today by Dr. Albert Bourla, our Chairman and CEO, and Dave Denton, our CEO. Albert and Dave have prepared remarks and then we'll open the call for questions. Before you get started I want to remind you that we'll be making forward-looking statements and discussing certain non-GAAP financial measures. I encourage you to read the disclaimers in our slide presentation, the press release we issued this morning, and the disclosures in our SEC filings which are all available on Pfizer.com. Forward-looking statements on the call are subject to substantial risks and uncertainty, speak only as of the call's original date, and they undertake no obligation to update or revise any of the statements. With that I will turn the call over to Albert.

Thank you, Francesca. Good morning, everyone, and thank you for joining our call today. Happy holidays to all. 2025 has been an important year for Pfizer with disciplined execution, focused performance and notable strategic milestones that have strengthened our company for future growth and impact.

Today, we are reaffirming full-year 2025 adjusted diluted EPS guidance and revising full-year 2025 revenue guidance to approximately $62 billion, which is within the previous revenue guidance range.

In a moment, Dave will provide additional perspective and walk through our 2026 guidance. In addition to delivering our financial performance this year we are very proud because we also resolved significant uncertainties facing our business.

First, with our landmark voluntary agreement with the U.S. government, we now have greater clarity on 2 critical fronts: Pricing in the U.S. and tariffs. We addressed the call for lowering prescription drug costs and aligning prices with those in other developed countries. With our commitment to further invest in manufacturing in the U.S., we also have a 3-year grace period from certain U.S. tariffs. Second, we exceeded adjusted diluted EPS expectations through the third quarter despite lower COVID-19 revenues. With the underlying strength of our business, we've had the agility to take other actions offsetting the impact of lower infection rates on our COVID-19 portfolio, which makes COVID business, not as -- Pfizer's business not as dependent on COVID anymore.

And third, we established a strategy that we believe will position Pfizer as a significant leader in the next generation of therapies for chronic weight management. Following the recent closing of our Metsera acquisition, our new exclusive global collaboration and license agreement with YaoPharma and other Pfizer programs that include our GIPR antagonist candidate. We have a robust and diverse obesity portfolio. It includes highly differentiated incretin and amylin injectables in the clinic and a wealth of next-generation oral and injectable early clinical and preclinical molecules. We plan to move quickly in 2026 to advance about 15 programs with many of them being Phase III studies just for this product.

With Pfizer's proven scientific commercial and manufacturing capabilities, we believe we are in a strong position to help address substantial unmet patient need in obesity and many adjacent cardiometabolic conditions.

Now I will review additional 2025 highlights but also reinforce why we are confident in our ability to drive progress in the year ahead. We successfully executed on each of the key strategic priorities guiding Pfizer in 2025. Refocusing our R&D engine on the most impactful opportunity, this was a key objective. I'm pleased with a very successful year of execution and high-quality results as we both advance high-priority internal programs and completed strategic deals, we believe will be transformative for Pfizer.

We started 2025 organizing our R&D team and pipeline, focused to prioritize opportunities where Pfizer is in the strongest position to address significant patient need in high-growth therapeutic areas. We made good disciplined progress with our late-stage R&D pipeline this year and so far have delivered 7 positive Phase III readouts and 9 key pivotal program starts. Oncology is a source of strength and our continued progress in 2025 was illustrated by a series of potential practice-changing data readouts, approvals and multiple Phase III study starts. Recently, for example, the FDA approved Padcev in combination with pembrolizumab for patients with muscle-invasive bladder cancer who are ineligible for cisplatin-containing chemotherapy. With this approval, which was received months earlier than anticipated, Padcev with pembrolizumab is the first and only ADC and PD-1 inhibitor regimen for this patient population and the potential new standard of care.

This supports our efforts to substantially expand the benefits of Padcev, adding approximately 7,500 addressable U.S. patients to the previous U.S. addressable population of about 19,000 with locally advanced or metastatic urothelial cancer. We are also expecting a near-term readout of the EV-304 study of Padcev plus pembrolizumab in patients with cis-eligible this time muscle invasion bladder cancer. Clinical trial success and regulatory approval in this population would extend the reach of Padcev to approximately 15,000 additional patients in the U.S.

We also recently served our robust plan to develop PF-4404. This is our in-licensed PD-1 VEGF bispecific, with speed, breadth and depth across tumor types, lines of therapy settings and novel combinations, including with ADCs. We believe this has the potential to become a next-generation backbone oncology therapy, and we are investing heavily behind it. Our first wave of studies include 7 planned or recently started trials with 2 Phase III studies that -- and we expect the second meaningful wave of study starts in 2026.

2025 was also marked by our strong U.S. and international commercial execution. In the U.S., we are encouraged by our progress across primary care, specialty care and oncology portfolios that are the key to driving strong performance in business. Our international commercial growth also has come from a strategic focus and execution supporting key products in key markets. As we enter a period of loss of exclusivity for several of our major brands, we remain focused on driving growth of recently launched and acquired products while also protecting our core products portfolio.

Financial discipline and productivity improvement was another area of success this year. We remain on track to deliver about $7.2 billion in total combined net cost savings with the majority of the savings now expected by the end of 2026 or rather early 2027 as originally stated. We are committed to enhancing long-term shareholder value, and we advanced the capital allocation strategy that, through the third quarter 2025, returned approximately $7.3 billion to shareholders via our quarterly dividend. Our '25 performance has demonstrated our focus on supporting patients and creating long-term value for some holders. We have shown agility to deliver even as the dynamic COVID-19 environment continues to shift, and our landmark voluntary agreement with the U.S. government, as I said in the beginning, to lower drug cost for American has provided much needed clarity for '26. '25 has strengthened Pfizer's Foundation. As we develop our strategy for the year ahead, we will prioritize our commitment to delivering on the promise of key recent acquisitions and differentiated programs.

Through our internally discovered products as well as acquisitions of Biohaven Pharmaceuticals, Seagen and Metsera, our licensing agreement with 3SBio and additional key development programs, we believe we are well positioned for '29 and '30 to become growth years for Pfizer. We have made strides in simplifying our business, and we intend to continue improving productivity in support of our margins. Additionally, leveraging AI and other technologies is a key area of focus for 2026 as we work to scale these efforts across our enterprise.

With that, I will turn over to Dave to provide the meat of today's meeting, guidance.

Great. Thank you, Albert, and good morning and happy holidays to everyone. As we near the end of 2025, it's clear that Pfizer continues to deliver on its near-term financial commitments while strategically investing for its future. This year, we entered into a licensing agreement with 3SBio, further strengthening our oncology pipeline, and with our recent Metsera acquisition, we have an opportunity to enter the important and expanding obesity space. We expect these deals will further strengthen Pfizer's revenue growth potential late in the decade and beyond. Additionally, we anticipate our recently launched and acquired set of products to demonstrate solid double-digit growth, which we believe will allow us to partially offset the company's future LOEs. .

Let me begin this morning by providing an update on our 2025 financial guidance, which remains strong. With only a couple of weeks remaining in this year, we now expect total revenues to be approximately $62 billion. As you might expect, given the low rate of COVID infections globally, our COVID revenues have been compressed, we now expect our COVID products to deliver revenues of approximately $6.5 billion this year, a decline of approximately 40% versus LY. Paxlovid is more significantly affected as its utilization is directly related to infection rates of the COVID virus. Comirnaty has shown a slower rate of decline as patients continue to seek protection from COVID via vaccinations despite narrowing of government eligibility recommendations.

We expect the declining COVID trends to continue into next year, which I'll cover in just a moment. Importantly, we are reaffirming our 2025 adjusted diluted earnings per share guidance range of $3 to $3.15, demonstrating our confidence in our ability to deliver on our profit commitments despite a weak COVID environment. Further, I'll note that we are trending towards the top end of this EPS guidance range for the year. As we look ahead to 2026, we have confidence in the strength of our business and our ability to deliver on our commitments, all while creating long-term value for our shareholders. On a total company basis, we anticipate 2016 revenues to be in the range of $59.5 billion to $62.5 billion.

Our COVID products are expected to trend lower again in '26, with revenues of approximately $5 billion. Paxlovid utilization remains volatile, but closely follows infection rates. Paxlovid's revenues fluctuates based on the timing, duration as well as the severity of COVID-19 cases. Next year Paxlovid's forecast assumes that COVID infection rates will again decline and we expect this will be especially true in Q1 given the current trends.

Comirnaty continues to decline globally but is a more predictable revenue stream near term. In the U.S., we expect a modest decline with stable government eligibility recommendations versus '25. Like in the U.S., we expect a modest revenue decline internationally as we defend our market share and began managing the transition of multiyear contracts. Keep in mind that our existing European commission contract runs through 2026. To be clear, next year, we expect Paxlovid to decline more significantly than Comirnaty. We continue to expect stable revenue contributions from our non-COVID products portfolio, which incorporates an expectation of approximately $1.5 billion in revenue compression due to products impacted by generic entry or loss of patent protection in 2026.

Revenues at the midpoint, excluding COVID and LOE products are expected to grow approximately 4% operationally year-over-year. On a total company basis, we anticipate 2026 adjusted diluted earnings per share in the range of $2.80 to $3 a share. While we are continuing to drive productivity and execute on our cost improvement programs, we are prioritizing investments in our business to drive growth by the end of this decade. The company has made several strategic investments over the past several periods, Seagen, 3SBio and Metsera, just to name a few, and it's imperative to invest behind these important assets as well as our pipeline to maximize their long-term potential.

Let me just highlight a few anticipated significant drivers of EPS performance in '26 versus this year. First, recall that the 3SBio and Metsera transactions have an anticipated dilutive impact of approximately $0.22 or compressing EPS by nearly 7%. Approximately $1.5 billion decline in our COVID revenue expectations drive approximately $0.18 in anticipated earnings compression. And next year, we expect a more typical tax rate of approximately 15%, which drives an anticipated $0.12 earning headwind as compared to 2025's rate. And finally, the company's productivity efforts as well as our recently launched and acquired products are expected to enhance profits in '26, partially offsetting these negative headwinds.

Now moving further down the P&L. Total adjusted SI&A and R&D expenses are expected to be in the range of $23 billion to $25 billion and reflect the anticipated achievement of $5.7 billion of savings from our cost realignment program by year-end 2026. Again, 1 year earlier than initially targeted. I will talk more about that in a moment. Specifically, the company expects adjusted SI&A expenses will be in the range of $12.5 billion to $13.5 billion a reduction of approximately 4% at the midpoint versus 25% guidance. Now adjusted R&D expenses are expected to be in the range of $10.5 billion to $11.5 billion reflecting continued focus and prioritization in key therapeutic areas as well as maximizing the development of PF-4404 as well as the Metsera assets.

The effective tax rate on adjusted income is expected to be approximately 15%, largely reflecting the jurisdictional mix of income as well as a more typical tax year. We will continue to be disciplined with our operational expense management as we remained focused on driving operating margin expansion over the coming years.

Now let me just touch on the phasing of the programs over the next 2 years. Phase 1 of the manufacturing optimization program is expected to achieve savings of $600 million by the end of 2025, with additional expected savings of $700 million in '26 and again, $200 million in '27. As a reminder, we initiated our cost realignment program in Q4 '23, with the midpoint of our August '23 adjusted SI&A and adjusted R&D guidance at approximately $29.7 billion, inclusive of Seagen.

Now let's take a closer look comparing the adjusted SI&A and R&D baseline to the midpoint of our FY '25 and '26 guidance. We expect to achieve $5.6 billion in savings through '25. As previously communicated, approximately $500 million of R&D savings achieved in '25 will be reinvested in '26 and is reflected in our '26 R&D guidance range.

Now looking forward to '26, we expect to achieve $600 million in SI&A savings and considering all of these items, we now expect to deliver $5.7 billion of total net savings by the end of '26, a year ahead of our initial plans. At that point, the savings under the cost realignment program will be achieved. Nonetheless, we will continue to focus on identifying further productivity opportunities and efficiencies as we go forward. We will remain focused and disciplined with our capital allocation.

We recently declared our first quarter '26 dividend, which was maintained at $0.43 a share. We believe the current dividend levels ensures an attractive dividend yield for our shareholders while preserving financial flexibility to continue to invest in the business as well as enhance long-term shareholder value. Additionally, as previously noted, our leverage is expected to end '25, slightly above 2.7x target following the close of the Metsera transaction. However, given the next few years of LOE headwinds, we expect leverage to remain consistent with current levels through the LOE period. That said, we have approximately $6 billion in BD capacity as we enter 2026. Our '26 guidance assumes no share repurchases.

And before I wrap up, I'll touch on just a few other items. We expect to continue to generate robust cash flow from operations in '26. The bulk of the restructuring cash payments related to our cost realignment programs are now behind us. And in '26, we will make our final TCJA repatriation tax payment of approximately $2.6 billion. Additionally, our '26 capital expenditures are expected to be slightly over $3 billion for the year. Adjusted gross margin is expected to be in the mid-70s, which takes into consideration our expected -- expectations of product mix, anticipated impact from our LOEs and anticipated savings from our Phase 1 of our manufacturing optimization program.

Lastly, effective with fiscal year '26, Pfizer is reorganizing the global hospital and biosimilars products, a new organizations, which will bring together our global portfolio of generic sterile injectables, anti-infective injectables as well as biosimilars. We believe the new organization will transform the way we prioritize and deliver these medicines to patients as well as provide productivity benefits within the organization. We'll provide a recast of our '25 product revenue tables before we report Q1 '26 earnings.

As we look ahead, the next few years will be defined by continued investments behind our critical set of assets as well as by managing our upcoming LOEs, which are primarily expected to occur in 2026 through 2028. Between now and the end of the decade, we expect approximately $17 billion of revenues impacted by patent and regulatory exclusivity expiration. Once we move to the latter part of the decade, we expect to see meaningful growth by 3 factors: the maturization of our R&D pipeline, the business development initiatives we've executed, and the continued ramp-up of our recently launched and acquired products. Our priority is to invest strategically so that the end of the decade become strong years of growth. This means balancing cost reductions while ensuring we fund the projects and products that will deliver long-term value.

Our approach is clear, disciplined investments in operational efficiencies designed to achieve and sustain growth and drive shareholder value.

And with that, I'll now turn it back over to Albert and open up for Q&A.

And I turn it immediately back to operator. Please assemble the queue. .

[Operator Instructions] Our first question comes from Alex Hammond with Wolfe Research.

I guess can you elaborate a little bit more on your expectation for Vyndaqel growth next year? With the first year of the parts you redesign in the rear view, how are you thinking about continued volume growth of the franchise? And as you expand into more ex-U.S. markets, how much of the net tailwind could that be? I guess the real question is how much do you think that organic growth can offset the recent competitor launches that have taken some new patient starts?

Thank you. This is Dave. We don't really give product level expectations, but just a little bit of color on this. Vyndaqel continues to perform well globally. Specifically, internationally, we continue to see nice progression of the product as we continue to see new patient starts and we continue to maintain our market share. In the U.S., obviously faced with a bit more competition, we continue to invest behind gross to net to make sure that we have proper placement within formularies. We see prescriptions continue to increase, but we continue to have to reduce and improve our gross to net yield to maintain our position. But again, product is a great product. It continues to perform well. It will continue to grow through its LOE period. .

Our next question comes from Terence Flynn with Morgan Stanley.

I guess 2 for me. First, I was just wondering, Dave, if you can give us any color at all about what's embedded for the agreement you signed with the U.S. government regarding MFN for 2026. And then on Metsera, I think we were expecting to see or at least hear from you guys regarding some of the VESPER-3 monthly data. So just wondering if you can confirm if that trial is done, if you can give us any insight in terms of the monthly dosing schedule and then how that might tie into your Phase III plans in '26?

Let me take them and then Dave can speak about what is included in the guidance. And we expect in the first quarter to print and review the results of the monthly dose. So that is coming as part of the plan. I haven't seen those data yet. We are also going to review the data about the combination program. probably also in the Q1, which I had seen, but there are more data coming. So -- and I think they are promising. But we are going to discuss that in the next quarter. So Dave, about the U.S. agreement and how that affects our guidance. .

Certainly, as Albert indicated, the agreement with the U.S. government is a critical milestone for us as we enter 2026, and we think about the next several years, it relieves a significant headwind and allows us to be much more planful and certain about the environment in which we'll operate in. Clearly, with our guidance expectations that we just walked through. There are -- there is price compression and margin compression baked into that, as we have given deeper discounts in our Medicaid business for the U.S. government, which will help patients over time.

I'm not going to break it out specifically, but that is consistent with our expectations with the U.S. government, and we continue to manage to make sure that we can drive affordability measures for our patient and get great access to our drugs and medications.

Our next question comes from Dave Risinger with Leerink Partners.

Yes. Thanks very much, and thank you for the detailed update. So I have 2 questions. First, you've obviously done a great job executing on the efficiencies and bringing them forward. I'm just wondering how we should think about operating costs, i.e., for the SG&A line and for R&D beyond 2026. So is there a specific goal you have, for example, to grow costs modestly in '27 or keep them flat. And then separately, there's a note in one of the slides about $6 billion of BD capacity. Just wondering if you meant that to be for 2026?

Yes. So first, on the efficiency side is I think we have stated pretty clearly that the level of R&D that we currently have within our business is likely appropriate for 2026 and for the next several years. We have a lot of substrate to work through and continue to progress, so we think that's -- in the ZIP Code of where we are today is appropriate. Secondly, on the SI&A side of the house, we continue to look for productivity gains. Clearly, we've made a lot of those already. So probably the pace of those improvements is going to slow, but we're still working our way through that. And then finally, on the BD capacity, clearly, we have $6 billion that will continue in '26 and potentially the '27 until we return to generating more robust cash flows post the LOE period.

Yes. Thank you, Dave. And also Dave, don't forget that there is also the line of cost of goods. But also it's a line that we are having incredible focus right now.

Our next question comes from Evan Seigerman with BMO Capital Markets.

Two for me. Just walk me through some of the levers that you can use to maybe drive upside to next year's numbers? I know you highlighted some on the call, but any others you want to focus on. And then I wanted to touch on some commentary you made around performance later in the decade. So I know you're not going to give guidance on trough earnings. But with your discussion around revenue growth in 29, 2030, let's think about what could contribute to trough earnings and how we should be maybe potentially modeling it as we think about your P&L in the next couple of years?

Yes. So I think on the lever side, Evan, I think we've done a nice job of this of managing productivity and cost management across the enterprise. Clearly, as we think about that in the corporate functions, but importantly, in the field force and being able to make sure that we're allocating our expenses in areas that actually drive increased growth or really result in superior performance, so that allocation of SI&A has increased productivity. So I think that's probably the biggest lever we have in the short term.

And I think as it relates to the next several years, probably the best thing to think about this, Evan, is as we go into next year, we have about $1.5 billion of LOEs. Those LOEs double basically as we go into '27. And they yet again, double again as we go into '28. So think about $1.5 billion, $3 billion plus, $6 billion plus, those will be the headwinds that we'll face and we'll have to drive productivity and improvements and drive our newly launched and acquired products to partially offset that. And that's how to think about it, but those are the headwinds that we'll wrestle with. And once '28 is behind us, the vast majority of those LOEs are done and the growth drivers that we invest in over the next several years will be maintained, and that should allow us to begin to accelerate the top line.

And I want to emphasize what Dave says, that he and me, we are laser-focused to bring growth post NDA in this company. And we have, by the end of the decade, to have strong growth. And this is where both the performance of the new products and new launches that will be in their prime time during the end of the decade, it's extremely important. And back to your question, Evan, that would represent potential upside. We think the guidance that we gave, it is the right guidance. We think that we will be within this range. But clearly, we will strive to see what we can do with the new product.

And I think the R&D also investments in business development investments that we are doing right now also should contribute to that level. Don't forget that our Metsera first introduction, we hope will happen in year '28. So in '29 and '30, we will have some more tangible examples -- tangible results that could drive growth.

Our next question comes from Louise Chen with Scotiabank.

I just had 2 for you. First one, I wanted to ask you how you think about the magnitude of growth once you pull out of that trough EPS period in 2029 and 2030? And then maybe if you could just give a little bit more color on what key products you think are going to drive that. And then secondly, if you could give more color on what the 15 obesity studies that you have planned for 2026 will be?

Dave, do you want to take that...

Yes, obviously, we probably can't get too specific there. I will say that what Albert just articulated is between now and 2028, we are focused on investing behind our launched acquired products as well as the business transactions that we've recently done such that we can maximize their potential once we get to '29 and beyond. So I think between now and then, as we get for clarity on the readout, so we get more clarity about where our focus is on some of those products as we see the growth drivers continue to take hold. We can probably give you a bit more color on that. But clearly, we're working to maximize that as we speak today.

Secondly, on the key products, clearly, it goes back to a little bit with Metsera, 4404 but also all the products that we have just we acquired and recently launched, which today at the end of 2025 will be about $10 billion in revenue. Again growing at double digits going into next year.

That's an area that I'm also very encouraged to see the growth of that business because it's also the results of the investments we did. Also I want to add a little bit on the 15 studies that we spoke on obesity, those -- I can't tell you which ones they are for several reasons and competition. But of course, we will disclose the plan, but I can give you some color. Most of them will be because of [ this ] offer -- Metsera portfolio. That's clear. Also, I can tell you on the 15, most of them will be Phase III. And in addition to the Metsera, of course, you need to think about our own pipeline. .

And the one that it is right now the most advanced is in Phase II. It is an oral GIPR that we are testing on the backbone of GLP-1. Keep in mind that we just did the licensing of an oral GLP-1, which is clearly more advanced than ours in the clinic. So in case the GIPR is proven the theory correct, but it does create synergistic effects on GLP-1, the addition of GIPR. Then we have our own GIPR but will not delay -- our own GLP-1, that will not delay as much the GIPR program because this one that we license is more advanced. So all of that will be part of our clinical program that we will have for obesity, which I repeat at least 15 studies, of which most will be Phase III.

Our next question comes from Geoff Meacham with Citibank.

I just have a couple. The first on metabolic disease, I just want to get your perspective on the pricing volume assumptions looking to the end of the decade, just following the White House agreement and post the Metsera closing. I wasn't sure if those numbers align with kind of of your deal assumptions? And then strategically, it does seem that vaccines are in a tougher spot in this environment. Does Pfizer look at this as short term in terms of your investments? Or is there maybe a natural push in hem/onc and metabolic where infectious disease will diminish and its contribution over time?

Let me maybe take the first question on the metabolic disease, which very -- basically is the obesity portfolio. And the MFN agreements with Lilly. First of all -- and Novo Nordisk. The prices that we saw that were announced were pretty much the prices that we estimated when we did our NPV analysis for Metsera portfolio. So they were quite a bit aligned with what we had. Actually, since we did the analysis and we went into our agreement with -- to acquire Metsera, there were a few things that happened. Most of them are on the positive side rather than on the negative.

One was that we never calculated the Medicare in our expectations. Now there is a Medicare business to be expected given the Lilly and Novo agreements. The second thing is that we didn't appreciate how large the out-of-pocket market will be international. We had a much smaller business, similar prices versus the U.S., so MFN will not be affected, but very much lower uptake because we assume that without the reimbursement, the uptake will not be very big. We are seeing multiples of what we were expecting in the cash market, which clearly also will help was cover and derisk a lot of our projections with Metsera.

Then on the vaccines. I think vaccines are an essential part of any health care system, I believe strongly and like the vast majority of the scientific community, the vast majority of the payers, if not exclusively and of the government health care systems that vaccines, it is the most cost-effective intervention to prevent illness in the world and that will continue, will not go away. I can assure you are not going back to Pasteur, Louis Pasteur times or before his times. There is clearly an anomaly, I would call it right now in this trend of everyone believing that, which is reflected in the beliefs of HHS and all the institutions that they are controlling like the FDA, which makes several comments about vaccines, the CDC that make several comments about vaccine.

I think those comments, they don't have merit, and that will not change the way that we are looking our long-term investment on vaccines. We will continue investing on vaccines because, as I said, this is an anomaly that will correct itself. I hope pretty soon.

Our next question comes from Jason Gerberry with Bank of America.

So my question is just as we think about 2026 and sort of the obesity and PD-1 bispecific investment, should we be thinking about as like more of a partial year investment and then 2027 looks like more of a full encumbrance of the P&L as you get those programs up and running full year, steady state. And as you kind of navigate those P&L dynamics, any programs that are going to get delayed or terminated? Any additional color you can just kind of provide as to how you navigate some of those puts and takes from a P&L perspective?

Jason, it's Dave. I think largely, think about the obesity and the PD-L1 investment in '26 as a full year run rate. Obviously, there are ebbs and flows in any R&D pipeline based on Phase III starts because they're typically more expensive. But by and large, it's fully loaded. I think that's the most critical component of that.

Our next question comes from Mohit Bansal with Wells Fargo.

Happy holidays to all of you as well. So a couple of questions. One, I want to double-click on the thought process that 2029 and '30, you could grow as well. So in our models, it can happen if you can extend tafamidis beyond 2029. Is that the thought process there as well or is that baked in there as well?

And then the second one is on Metsera. Are we going to see data from the monthly dosing as well as the combination dosing next -- in the first quarter as well? Or it is just an internal review at this point?

Let me take the Metsera quickly because I answered it before, and then Dave can take the financial question. Yes, we expect to see in the first half probably earlier than later. But in the first half, the -- both the monthly data and the combo date. Dave, on the financials?

Yes. We expect that we will grow by the end of the decade, not with the extension of Vyndaqel from a LOE perspective, is our expectation that certainly in the U.S. that will go LOE in late '28. We have enough substrate in our pipeline as well as what we've acquired and what we've advanced and launched recently to return to growth by the end of the decade is our expectation.

And don't forget that, as Dave said, this is -- this year is expected to be in the ZIP code of $10 billion revenues, this portfolio growing double digit. So that accelerates and grows significantly as we move towards those years plus all these new acquisitions that will add data in the pipeline.

Our next question comes from Chris Schott with JPMorgan.

Appreciate the questions. My first question was just on capital deployment and where share repo might fit into the mix? I guess, just consider what the stock price is, is that part of the consideration at this point? Or as you work through the LOE cycle, is really the prioritization here for more on the BD side of things?

And then maybe just the second question was just following up on the margin front. On the gross margin front, is it still reasonable to think about upper 70% margins over time? I know you got some initiatives playing through. I'm just trying to get a sense if you're trying to just kind of land with this operating margin range could look like these next few years before you return to growth? I'm just trying to get any color you might have on the GM side would be great. .

Yes. Chris, Dave. On the capital allocation and deployment. Obviously, I would love to do share repurchase. I'm a big share repurchase believer. I think it drives a lot of value. The reality is at this point in time, I think the best and highest use of capital is continued investment in business development. So we do not anticipate doing any share repurchases in the near term. Secondly, as you think about gross margin, we do expect that over time, we can get to the mid- to high 70s.

Obviously, over the next 2 to 3 years with this headwind of these LOEs, that puts tremendous pressure on gross margin. So we'll have to work through that. But we're working hard so that when we come out of this growth period, we come out not only at growth from a top line perspective, but we come out with what I would consider productive growth where we can really drive margins and drive leverage through the P&L. So we're accelerating delivery of earnings post that period. Hope that helps.

Our next question comes from Courtney Breen with Bernstein.

I did just want to jump back to the -- to your comments, Albert, earlier on the White House deal and impact on the business. I just wanted to clarify, do you think that the reason you're not having to call out any material impact to your economics this year -- I am sorry, for 2026, is something specific to Pfizer and the Pfizer deal that was made? Or do you think this is something that we can anticipate for other players in the sector when it comes to their deals given the similar constructs?

And then secondly, you did call out today the new business unit that's being established kind of aggregating some of these kind of less core parts of your organization. Can you talk a little bit about the different trajectories or kind of different long-term potential scenarios that could play out with that business unit? And specifically, is there an opportunity to remove more manufacturing cost that is kind of in the Pfizer base if you were to spin out this particular business unit over time?

Thank you, Courtney. Very good question. Look, on the MFN, I don't know. Of course, the deals of the other companies, so I don't know. What is inside them and how they affect their EPS in 2026. What I want to clarify is that neither Dave nor me said that the impact is not material. What we said it is included in our guidance. We are covering it because we have things that are doing very well. So don't assume that it would be immaterial. I think you should assume there is an impact as we always said and will be covered.

As regards to the hospital business, which is a combination of sterile injectables, biosimilars, this is a business that has very different characteristics than the remaining Pfizer business. It is mainly -- the main customer is hospitals, both internationally and in the U.S. of this portfolio. Those products are typically generic products. So their promotion is not that much based on detailing to physicians because they are very experienced by using them. It is more key account management on the hospitals.

And the 2 things that matter the most with this business, it is the cost of goods and even more importantly, reliable supply. So those are the 2 things that help you to get market share with this business. As a result, we built together an end-to-end business where commercial and manufacturing are all under one leader in this business. That's extremely important because the cost of goods now and the market share are within the same leader that has to maximize and optimize the P&L. That's a very important step.

So what do we expect from that business? First of all, you need to understand that it is sizable in terms of size, but not that big in terms of Pfizer. But in terms of overall SKUs, it's almost half of Pfizer SKUs. So basically, we are moving half of the SKUs, removing the complexity of the business into almost a stand-alone business that we'll be able to maximize in a much better way. And the maximization has to do with both optimization of cost, optimization of supply, cleaning of the portfolio, as a result, gaining market share. And the bottom line, it is improving as much as possible the EPS that is generated by this business.

Yes. Maybe just a little color additional on that is when you think about these set of products, they're not big growing products. These are products that have been around for a long time. They're generics, are stable, they're consistent. What we can do by organizing this fashion is be able to drive productivity through how we deliver and execute against these products and getting them to hospitals and patients ultimately. So think about this as more of a productivity play than it is a growth play at this point.

Our next question comes from Carter Gould with Cantor.

I wanted to double-click on the dividend strategy. We did see an evolution on that front with you sort of maintaining a dividend for the first time in sort of 16 years after steady increases. How should we think about the evolution of that strategy going forward, specifically sort of the push pulls from here as we contemplate COVID EU contracts running off in '27 and the prioritization of business development?

Thank you. Obviously, the dividend is very important and a critical component of our capital allocation strategy. To be very clear, we're very focused on maintaining the dividend. And to be very clear, ultimately, we're very focused on growing the dividend. The reality is at the moment, as we go into this period of LOEs in this investment period to lock in growth by the end of the decade, we think the best and highest use is to give financial flexibility to invest back into the business behind the substrate to be sure that we can return to growth. So that's the priority. That's the focus, that's the allocation strategy at this point in time.

Our next question comes from Kerry Holford with Berenberg.

Just one, please, on the tax rate guidance now back up to 15%. Just interested to hear you talk about how that might evolve. Clearly, it's evolved more positively than expected through the course of this year. Can you envisage any flex on that into the year ahead?

Thank you, Kerry. Obviously, we're planning for next year to be, I'll say, a more typical tax year. If you look at now the global tax infrastructure, 15% is a fairly typical overlay and expectation for that rate. I do -- obviously, this year has been a little lower, largely because of some very specific onetime discrete items that will not be repeated next year. So I think 15% is a reasonable expectation for the next several years, assuming no major overhaul in tax policy from a government perspective.

Our next question comes from Vamil Divan with Guggenheim Partners.

I think most of mine have been asked, but a couple of follow-ups on topics that have been asked about before. One, just on the management optimization program in Phase 1 of the cost optimization program, the $1.5 billion that you've laid out. I'm curious, I think when you first announced that Phase I, you did say there'd likely be a Phase II and maybe more beyond. I'm just curious when we might get more visibility on the manufacturing side and again, further optimization there.

And then Albert, I was curious on your comments regarding the vaccines that you made earlier, and it sounds like maybe there will be a reversal over time and kind of your views are in line with the majority of the scientific community. I'm just curious from your side in your role at Pfizer and your role at pharma, is there anything what you're doing or what you think you can do maybe differently to try and address, I guess, not just the vaccines, but also some of the other maybe broader dysfunctions in the FDA, which I think a lot of investors are just wondering about this may be a broader than Pfizer question. But given your leadership position, I'm just curious if you could comment on kind of what can be done to give investors a little more comfort on how some of these factors are playing out in GC right now.

Thank you, Samir. Let me answer that one, and then Dave can go to the financial question. Look, in pharma, the entire pharma is very worried about it, irrelevant if they are on vaccines or not because what is worrisome, it is that the science is replaced with political beliefs or with sometimes obsession, that it can be easily moved to other areas of the business. So everyone is, let's say, worried about what is happening. But I would say this is nothing our worry compared to the worry that we see in the world.

The American associations of pediatricians or obstetricians, of cardiologists, you name it, of neurologists, they are extremely, extremely upset and they keep issuing statements that they are contradicting recommendations that are happening from CDC. Let's not forget that CDC used to be the most reliable and credible organization in the world that everybody was looking up at. And right now, we have, for the first time, the entire world. And by the way, that includes WHO, the World Health Organization, includes health authorities of other countries that they are not doing what they are recommending here.

So I think we need to let the whole thing play. As I said, it is an anomaly that will correct itself. Well, I think it's mostly driven politically. And when political situation allows, that I think will be resolved. It has nothing to do with science. Now Dave, let's go back to what you were saying.

Yes. So on the margin improvement program that we have in place, first, Phase 1, we're very happy. It's going to deliver $1.5 billion savings over the next few years. So we're off to the races from that standpoint. Secondly, what's important is that to Albert's point earlier, the agreement with the U.S. government now gives us a stable environment in which we can plan for the next several years. So this will allow us to begin to plan for and execute additional phases of our program in the future and think about the hospital and biosimilar product grouping that we announced today is the next evolution of us organized in a way to drive efficiencies across our business, across our manufacturing platform specifically. So you'll hear more about this as we move forward, but that's kind of where we stand at the moment.

Our next question comes from Steve Scala with TD Cowen Securities.

This is Chris on for Steve Scala. Pfizer has been saying growth could return in 2028, but today you're saying 2029 to '30. Why the pushout? And second, what are the most important clinical readouts that Pfizer expects in 2026?

Maybe I'll just -- I'll hit the first one, and Albert, maybe you can take the second one.

No, you can take the second one.

Okay. So as we think about the first one, we've been very clear that we have these LOEs '26, '27 and '28. And '28 being the largest, and we would not return to growth until we hit the end of the decade. And as we think about readouts coming up, and we'll have more to say about this in the future, but Padcev has a very important readout soon, Elrexfio additional indications from multiple melanoma. Our SV readout is coming out next year, which will be critical and important to us as we think about that. Our VESPER-3 data, Metsera is another readout. We have lyme disease also reading out at some point in time. So those are just off the top of my head, some critical ones. And there's -- as we go into JPMorgan as we go into the first half of this year, we'll be more explicit and give you a scorecard so you can track our performance against these readouts.

Yes. Very important year for readouts next year. Okay. The last question, please. .

Our last question comes from Asad Haider with Goldman Sachs.

Most of mine have been answered as well. But maybe just going back to the obesity market and Albert your comments on how growth in the cash pay segment is giving you incremental confidence in your internal projections. So if you could just double-click on that comment a little bit more in the context of just consumerization trends impacting how you're thinking about U.S. and OUS launch dynamics. Are there any analogs we should be looking at? And then maybe any updated framing on how you expect the oral versus injectable mix to evolve over time?

Yes. Let me start with the obesity market and the part of the cash market. It is the first time that we have seen since the Viagra introduction, an international market, but also a U.S. market that it is developing such a very, very big part of cash pay. It's a very different type of animal this category and the passion of the consumers to receive the medicine, it is what is driving that. That clearly plays strongly to companies that have very strong international presence, which is what we are.

Don't forget that I don't think anyone else has more direct -- let's say, more direct presence in so many countries with so much relations with health care authorities, physicians and with direct field forces than us. I think really in the industry, we are very, very, very large across the world. So from that aspect, I think plays to our strength, but -- and in general, plays to the strength of this market for all companies.

The second thing about the oral. We always believe that oral could be a very significant component. You remember that we had the first probably oral molecules of GLP-1s way back in the day. We believed in that. Unfortunately, those molecules have failed. So we stayed with a very strong clinical organization, very strong manufacturing organization, very strong commercial, but not portfolio. And that was a very big uncertainty for Pfizer, what is your obesity strategy. By doing the Metsera now we have a very clear obesity strategy. Metsera has also oral products, and they have both amylin and the GLP-1s. They are peptides. But unlike other peptides, they don't have to be taken with full -- with empty stomach. So which means that you can take it in the morning irrelevant if you take breakfast, right? So which is a very big advantage, I think.

But of course, the biggest will be the efficacy, which we are very optimistic about it. And then we have our own oral. And the most important of that, it is a GIPR antagonist, but we have many other I just want to clarify in our pipeline. But a GIPR antagonist that we are awaiting Phase II now. And I think it is the most advanced GIPR oral in the world right now among all our pharmaceutical companies. So if the results are positive and we really see on the Phase II that creates synergistic effects on top of GLP-1s, we do have now also a GLP-1 oral that it is a small dose that can be easily combined because the small dose is a very important component of combining. And that, I think, will give us a strong play also into the oral market. So we believe oral could become a significant market, treat the masses, and we are going to have a very strong play in that.

So thank you very much for all. I think that concludes our call. As we look to the year ahead, I'm really confident and excited about our future. Business is performing well. We are very disciplined in the way that we allocate our capital in internal R&D, we are having a lot of efficiencies from SI&A, we have a lot of efficiencies from manufacturing cost of goods. And by the way, we have a lot of efficiencies from R&D, which we are reinvesting in R&D, which we believe is the absolutely right thing to do. So I'm really thinking that '26 will be a pivotal year for Pfizer, and we are going to take a small break, our thousands of colleagues so that they can return very strong into this new year. Happy holidays to all.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Good morning, everyone. I hope you're all doing well. Nice to see a packed room. Day 3 of our London Healthcare Conference. And again, I was mentioning today, it's good to see optimism and smiling faces year-over-year increase. My name is Akash Tewari. I'm a pharma and biotech analyst here at Jefferies. I have the pleasure of hosting the Pfizer management team. Dave, why don't I hand it off to you for some entry remarks, and we'll get started.

Great. Thank you. First, thank you for hosting us today. I really appreciate everybody's interest in the company. I think, as you know, we're -- 2024 and 2025 has been a very interesting and exciting year for us. I think as we started out in this journey for the year, we continue to focus on executing at a high level, both commercially and also financially. We continue to deliver on our financial promises. And importantly, as we think about the next several years, we have a very keen focus on ensuring that we return to growth in the '29 and '30 time frame for our business.

Over the next several years, we have many LOEs coming about. So we have done a few things as we begin to manage our way through this LOE period. First and foremost, we've improved our cost structure. We've identified about $7.7 billion of cost improvements across our business that are being taken out over the next several years. So we're rightsizing the business for again, as we enter the LOE period, at the same time, making sure that we're investing for growth in the back half of the decade. Secondly, we restructured and reorganized our R&D emphasis. We've promoted Chris Boshoff to lead our R&D infrastructure and organization within Pfizer. He has created a world-class team around him, focused in oncology, vaccines, internal medicine and I&I. We'll talk about some of the programs that we have behind those.

Thirdly, we have just implemented and executed 2 really important business development transactions, one with 3SBio to further supplement our oncology practice in our oncology business. And then very recently, the Metsera transaction which will allow us to enter the obesity place space in a very meaningful way.

So again, I think we're very excited about where we are. We continue to invest at the appropriate levels to ensure that our business returns to growth, and we continue to focus on improving productivity. So with that, happy to go into some details.

Yes, absolutely. You know what, you mentioned the BD deals. Why don't we start with that? And I'll go from this perspective. Whenever your team has talked about and we'll start with Metsera, Pfizer and obesity. Historically, it was -- when we think about the global OBC market, you're never going to be able to reach so many patients. Using the injectable approach, it was really an oral small molecule angle that I think your team was particularly interested in.

But over time, I think your team did start to talk about other forms of differentiation. And I think one of the things that stood out about Metsera was even though they were a SMID-cap, they did look at obesity with kind of a global approach, and they were looking at it from a health economic perspective. What did you see in that asset that really let your team say, even if we might get in a bit of a bidding war with our friends on this side of the Atlantic, it was really worth it for Pfizer?

Yes. Albert called it the crisis phase of our location, if you will. I think a couple of things. As we looked at first, taking a step back and thinking about obesity and how Pfizer can play with this. We have really 3 strengths that allows us to play in this space in a very competitive way. One, we have a very strong commercial engine within primary care globally, probably the largest and the biggest and most robust program in the world. Secondly, we have a footprint of manufacturing both in the U.S. and outside the U.S. that would allow us to very quickly ramp up and to be able to accommodate molecules and medicines in this space. And thirdly, we have a long history in research in cardiometabolic diseases.

So we have a platform in the sense to be very successful in obesity. The one thing that we didn't have as a successful product in late stages. Metsera, when we looked at this and we looked at the landscape pretty broadly globally, we felt like it had a want a platform of products, so it's not just one product. It has the opportunity to be very differentiated from a potentially monthly dosage perspective with a very good profile from a tolerability perspective and very limited side effects. So I think both with the GLP-1 as well as the Amylin platform. I think the combination of those 2 with the existing pipeline that we have with the GIPR antagonist that we have in our early phases both stand-alone but also in combination, we feel like this could be a meaningful platform for us to compete over the next decade.

Understood. And just to be clear, you mentioned it's monthly. When you thought about the value add for Metsera and you thought dosing, was being a monthly kind of combination approach really critical when you were evaluating that portfolio?

Yes, it is. The platform itself can work on a weekly basis, financially, we believe. But I think taking it to the monthly dosage will allow us to be very differentiated in the marketplace, which allow us to, we think, even be further successful versus a weekly platform.

Understood. And it's interesting. I've -- whenever companies do ask me, should we enter into the obesity space, I've always said, absolutely, I mean, tirzepatide, the world's biggest drug in 2 years. I think that's something. But it's funny when you think about entering into obesity, I think especially a year ago, 2 years ago, it's always -- I need to spend $20 billion in CapEx. I need to catch up with Lilly and Novo. And I think we're seeing that, that's not necessarily the framework we should be thinking about. When you think about CapEx necessary to really compete in obesity, what do you feel like is the adequate amount of investment for Pfizer?

Ironically, we don't have a big CapEx need to support this platform. We have an infrastructure of manufacturing as well as research that we can kind of plug these assets into the existing infrastructure that we have. Keep in mind, we will have to reconfigure a bit of our production lines, but the relatively minor incremental investments that we need to make over the next several years to support these medicines. So we feel like -- as we think about the return platform just financially, getting a medicine in the space, we do not have to make those incremental investments to ensure that these medicines get to market.

Understood. Maybe actually, on the TrumpRx deal and the announcement, I mean, obviously, Pfizer is putting products there already. But I can't help but think you're going to have an obesity portfolio entering into the market in the next couple of years. How -- first of all, what do you think about that TrumpRx deal in terms of suddenly, Medicare now has access to obesity treatments? And really, is that an avenue that Pfizer would be interested in entering with the Metsera portfolio?

Likely, I think it's a little early to tell that definitively at this point in time. I will say that the recent announcements with both Novo and Lilly when we thought about the pricing constructs that was announced, largely in the same material levels that we thought about pricing at this point in time. We -- clearly, as we thought about this market over the next decade, we clearly understood it was going to be a very competitive market. There's going to be more entrants coming in the market. There's going to be price pressure. So we expected that. I think the one thing that we didn't count on was actually a coverage by Medicare. So it's probably an upside as we think about looking into the future. And so we'll see how that plays out over time. But I think that's constructive to the environment in the U.S.

Understood. And maybe just finally, again, I can't help but think the oral small molecule part for Pfizer in terms of entering obesity and the global potential is still something your team is interested in exploring. But you also are in terms of your piggybank for M&A this year, you set out $15 billion in terms of what you were comfortable with spending. A, is Pfizer still interested in adding an oral small molecule as a part of their obesity approach? And also, given you do have some capital constraints now, should we think about maybe China as an avenue where you could potentially explore adding that product into your portfolio?

Yes. The answer is yes to both of those. But keep in mind that actually Metsera has an early preclinical, some oral medications as well as we do as well within our pipeline, but early stages. At the same time, we will look globally to maybe supplement this asset over time to ensure that we're competitive in all segments, so for sure.

Understood. Now maybe stepping back and the deal that Albert was really in the forefront in terms of securing a deal with the Trump administration and "removing the regulatory overhang". I think on the Q3 call, your team had mentioned, this deal will be dilutive to a certain extent '26 EPS. Can you kind of put some guardrails in terms of where the pushes and pulls? And I know, obviously, you can't give guidance, but how impactful from a ballpark perspective this would be?

Yes. I probably can't get into too much detail here, but maybe frame it up a little bit in the sense that we clearly are giving MFN pricing, so discounts within the Medicaid segment of our business, which is about 5% of the U.S. volume, about 2.5%, 3% of our global volume. So we will take price compressions in that piece to make sure that medicines are more affordable to our most vulnerable citizens in the U.S. So that will be a headwind to us.

I think to your point, this does allow this construct with the U.S. government allows for a constructive path forward such that we can better plan our business. We can understand the infrastructure we can utilize in the U.S. and what we can utilize outside the U.S., understand how pricing going forward both U.S. and ex U.S., hopefully can come closer to parity over time, and it gives a framework for allowing that to happen systematically over some time so that all countries can begin to absorb and plan for those adjustments in pricing.

So we think it's a good start. We think we're well positioned to now make the strategic decisions necessary in our business to continue to improve our productivity going forward.

Understood. And I can't help but think with the guardrails you just kind of sent, that seems like modestly incremental but not a major framework shift in terms of how you were thinking about next year's guidance.

Yes, I think that's correct. And it also -- clearly, we have made commitments to make additional investments within the U.S. from a manufacturing perspective, and we will continue to do that. The good news is we have as we think about Metsera and 3SBio and even our Seagen portfolio, we need to make investments in manufacturing and in research within the U.S. to support these products and these portfolios going forward. So we will leverage that commitment to continue to invest to ensure those products come to market.

Understood. Now Dave, you had mentioned Pfizer becomes a growth company as we kind of exit the decade. But I think another part of that, which maybe doesn't get as appreciated. I had the pleasure of hosting the Bristol team earlier in the conference. Bristol obviously talks about trough earnings and then kind of a return to growth. I've never sensed that Pfizer -- it's not a trough earnings type of story for Pfizer. It almost seems like it's more -- your team has shown an ability to have earnings north of $3. And it seems like state stability when we think about earnings power towards the end of the decade with the potential to growth. How would you characterize that?

Yes. I think what's important for us, obviously, as we go into next year and the next 2 years after that, that's the bulk of our LOEs. We have between now and the end of the decade, about $17 billion of product losing patent protection. The bulk of that is '26, '27 and '28. Once we get behind '28, we began to -- the LOEs largely behind us, we can begin to see both maturity in our R&D pipeline plus business development work that we've just done, plus the acceleration and continued ramp-up of our newly launched products. We can see real growth at that point in time. Now listen, that's not modeled into the expectations from an investor perspective because it's a little further out. And we have the need to put some additional data on the board to demonstrate that we have products to fill in that gap over time.

I think the point between now and 2029 is we need to make sure that we're investing appropriately such that '29 and '30 are growth years. And I think we're much more focused on ensuring that investment is properly allocated, focused in the right areas and are very consistent with making sure that we deliver on those growth aspirations over time. So we've not set a minimum EPS target. We have not set kind of a trough as you discussed, but I think it's more about we're making our business much more efficient by taking out costs, but also ensuring that we're not starving those products and those projects and those areas that really allow us to grow over time.

Understood. Now I think we're all work in progress. I can say that for myself. When you look at Pfizer and what you just laid out as a company that returns to meaningful growth, exiting the decade, how much of a work in progress are you that with your current portfolio? Are there assets that you still need to acquire externally to really achieve that?

No. I think that we have the substrate within our either newly acquired or launched products as well as the substrate that we have in our pipeline today to do that. Most of the products that we're looking at are opportunities we're looking at are typically late '29, '30 or '31. So I don't think there's anything from a business development perspective that's going to, at this point, meaningfully change the growth trajectory between now and 2030 for the most part.

Understood.

Even Metsera, which we think is going to be a great, if successful, a great acquisition. It comes about in '28 and '29 and '30. So it's really almost behind -- it really peaks after 2030.

Now I also cover BioNTech, and obviously, both you and that company got an influx of cash from what happened during the pandemic, which again, was well deserved. But even BioNTech thought about when we're developing a PD-1 VEGF and we're thinking about the costs associated with running these novel, novel combinations, they were looking at Bristol as a partner to really space out that cost. You have the 3SBio asset. And you can tell how excited your team is. But I feel like, to a certain extent, who's going to win this race? Is it really a battle of BD and running the right trials and also finding the right partners? When you think about the costs associated to really make that product reach its potential, how much of that spend do you think will be done by Pfizer versus thinking about external partners to really spread out the OpEx spend?

Obviously, we'll look to see if a partner, not so much financially, but more operationally can bring some insights to the development plan. I would say, having said that, my expectation is the vast majority, if not all of that spend will be borne by Pfizer at this point in time. We have, I think, 7 programs that we've identified that we're going to launch within 3SBio to ensure that medicines appropriately, I guess, designed over time to fit the right patient population and profile, and we'll invest aggressively behind it.

Back to my point earlier while not talking about a trough earnings, we're talking about making sure that we put the right R&D dollars against an asset like 3SBio such that in '30 or '31, '32, it becomes a very meaningful product and the race is on. So I think we are focused very much on investing in from a timing perspective to be -- we'd like to be first to market. We're working to that, and we're aggressively investing to ensure that we can achieve that.

Understood. Now maybe stepping back and we go again with that $15 billion external capital commitment, you're kind of towards the tail end of that right now. Let's put it this way, and I think we hear this from a lot of our companies. If we find the right asset, we will do what's necessary to externally acquire it. And then number two is, again, your team has also been very disciplined in terms of your BD approach.

So given some of your more limited capital constraints now, what areas is your team most focused on building out for the rest of the year or into '26? And then number two, let's put it this way, how much of a hard line is that $15 billion number that your team communicated at the start of the year?

Yes. It's a pretty hard number. We're -- keep in mind that we're probably now with Metsera down to about $5 billion in capacity that we have over the next couple of years. Maybe from an area perspective, let me kind of go through my 4 therapeutic areas and talk about where we are at this point in time. First, oncology. Our pipeline with the Seagen acquisition in 3SBio is very rich at this point in time. So we're opportunistically looking to how to fill additional substrate into oncology. We don't need it. But I think if we can opportunistically put something in there to enhance our market potential and reach to patients, we will do so, but not a big need.

Vaccines is a space that's largely internally developed. We will always look to the external environment from BD, but realistically, there's not a big opportunity BD. So check the box, we're probably okay there. Internal Medicine, we just made a big bet in Metsera. So we've kind of checked the box. To your point, we may supplement that asset with smaller molecules over time, but pretty much, we've laid our bet for the next several years in internal medicine. Now we have I&I. I&I, we have 2 trispecifics in the pipeline that we think very highly of. But if you really look at the substrate within I&I, it's not as robust as we'd like. So I think that's an area strategically, we'd like to understand if we can -- is there additional molecules or projects that we can bring into that platform over time.

Interesting. And when you think about I&I, there's kind of, I think, 2 angles that we're seeing in terms of differentiation going forward. You have your trispecifics. You're already in that -- you finish your contribution of components angle, you can get products relatively quickly into the clinic. There's also the oral side, right? And you've seen Lilly, really, I think, look at I&I targets with an eye towards getting oral molecules. When you think about differentiation in I&I going forward and you think, a, combinations of novel targets with -- that are potentially biologics versus an oral approach, what kind of fits best into Pfizer's internal capabilities?

We actually have probably capabilities to do both a bit from -- within our infrastructure. Obviously, we're -- we have steep knowledge in the oral small molecule space is probably our sweet spot. But if you think about what we've done over the last decade, we've actually moved more into biologics and actually by the end of the decade, the vast majority of our revenues will likely be in biologics versus small molecules. So we have capacity in both. So I'm not -- I wouldn't say that's a limiting factor for us. We looked at what is the best medicine to reach the most patients in a highly unmet need situation.

Understood. Now this is, I think, a question that just kind of occurred to me now. Tafamidis has been such a remarkable product, and I think it's really changed the amyloidosis space. And I just can't -- we'll hear this from investors too, you're just modeling tafamidis revenues going off the patent towards the end of the decade. And it kind of feels wrong, right? Like you've built out a sales force there in specialty cardiovascular. You've really started to make inroads into the community care setting.

How do you think about -- when you think about external BD not letting that go to waste, right? What are you seeing in the specialty cardiovascular realm, which is still interesting to your team? And could we think about other developments in ATTR for Pfizer?

We're always looking at that. I think we're unfortunately in a tough situation with the pending LOE coming, particularly in the U.S., I think, in 2028. But we're constantly looking at what could we do clinically, what can we do from a BD perspective or what can we do legally to extend the patent on that molecule. At this point in time, I don't have anything to announce. I don't have a pathway for that, but just rest assured that it's certainly a big priority within the 4 walls of Pfizer to understand if there's something we can do to unlock that both in the U.S. and as well as internationally.

Okay. Understood. Now it's interesting. Your team laid out different OpEx cuts in kind of waves. And I think when the initial wave came out maybe 2 years ago, I feel like there was -- and your team kind of also hinted at this, there could be more to come. There was more operating leverage flexibility that your team had depending on how the portfolio approach, how the portfolio played out and then also what you're comfortable with doing.

You're now as we go in towards the end of the decade, thinking about $7 billion in either cuts that have already occurred or are planned to occur going forward, should we still have that sense that there's maybe a bit left in the tank for Pfizer in terms of operational efficiencies?

Yes, there is. I think keep in mind that by the end of this year, we'll generate $4.5 billion of savings of the $7.7 billion target. That largely doesn't include a lot of the cost savings that we've already "achieved" or implemented within our manufacturing facilities because think about when we improve productivity and manufacturing facility, that shows up in improved cost of goods sold. That shows up in better gross margin when we sell the product. And typically, we sit on several months of products. So as we turn product into 2026, you will see improved gross margins due to those cost savings. So while we've -- maybe we've not realized all those savings. Many of those savings have already been achieved from an infrastructure perspective.

Now as we cycle into 2026, we have new opportunities to go improve the productivity across either enabling functions as well as our manufacturing facilities and our commercial operations. So there's more opportunities there. We continue to leverage technology and process improvement to do that and really streamline our focus.

Maybe just last thing, Dave. I think this is one of the more underappreciated parts of this year for Pfizer. I know 2 years ago, you're always getting questions. I think you probably still might get some of, well, Pfizer cut the dividend, et cetera, et cetera. Your team had a very significant working capital improvement on free cash flow in 2025. I think of like $3 billion to $4 billion, which I don't think a lot of people appreciated. Can you talk about how you're able to achieve that for this year? And then going forward, how much more efficiencies you can get on working capital as we think towards the end of the decade?

Yes. This has largely been with, I guess, coordination with our manufacturing group as we think about managing inventories across our platform. Just given the fact that we have center SKUs and compete in 170 countries, it's hard to get inventory correct. So we carry a large volume of inventory, making sure that we streamline our supply chains, a good focus on that. And then maybe the last comment I'll make about cash flow because I know we have to go is one thing that's not appreciated as we've gone through these cost reduction efforts, we have incurred a lot of cash cost, i.e., severance or selling of assets at below book value, sometimes.

So we've incurred cash outflows as we implemented these cost savings efforts. That will go away. We're getting close to the end of that. That is billions of dollars of cash flow that is outgoing that will dissipate over time that will enhance our cash flow.

$3 billion to $5 billion. I mean...

Yes, probably.

Understood. That's very helpful. Thank you so much. I really, really appreciate it.

Thank you so much for your interest.