Pfizer Inc (PFE) — Q3 2024 Earnings Call Transcript

Good morning, and welcome to Pfizer's earnings call. I'm Francesca DeMartino, Chief Investor Relations Officer. On behalf of the Pfizer team, thank you for joining us. This call is being made available via audio webcast at pfizer.com. Earlier this morning, we released our results for the third quarter of 2024 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 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, including Dr. Andrew Baum, who recently joined Pfizer as EVP and Chief Strategy and Innovation Officer. 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 discussed in 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. I appreciate you being here today. Our team continues to perform effectively, and we are excited to report another strong quarter. We remain committed to our mission of delivering breakthroughs that transform patients' lives. I am proud to share that we have reached over 270 million patients with our medicines and vaccines during the first nine months of 2024. Our focus on execution excellence is starting to yield positive results, including market share growth in the U.S. and internationally, as well as significant increases in revenue and earnings per share. Consequently, we are adjusting our guidance for full year 2024 total revenues and adjusted diluted earnings per share upwards. In January, we outlined five key priorities to steer Pfizer throughout this year of execution. Today, we will discuss how we have progressed in the third quarter aligned with those strategic priorities. I will highlight our achievements related to the first three priorities. Dave will cover our ongoing efforts to reduce costs, enhance margins, and strategically allocate our capital. We will then review our financial results for the quarter, explaining why we believe we are well positioned to meet our financial commitments and create long-term value for our shareholders, followed by a Q&A session. So let’s delve into our performance against our priorities for this quarter. Simply put, Oncology is thriving and delivered another robust performance, achieving 31% year-over-year growth due to strong demand across our product range, including those from Seagen and legacy Pfizer products. We aspire to achieve world-class leadership in Oncology. In the U.S., we have already become the third largest biopharma company in oncology by revenue for the first half of 2024, and we are proud of the progress we are making toward our objectives. Demand for XTANDI, the leading treatment for four types of advanced prostate cancer, increased by 28% year-over-year. TALZENNA grew by 77% in the quarter compared to the same period last year. We are optimistic about the prospects for advancing the treatment landscape for prostate cancer based on the promising overall survival data we shared earlier this month from the Phase III TALAPRO study. TALZENNA, in combination with XTANDI, showcased statistically significant survival benefits for patients with metastatic castration-resistant prostate cancer, marking it as the first and only such combination to achieve this. Pioneering scientific breakthroughs in cancer remains a key focus area in Oncology. The TALAPRO-2 results demonstrate our commitment to enhancing survival rates for men with prostate cancer, the second most prevalent cancer in men and a leading cause of cancer-related deaths worldwide. We saw ongoing momentum during the quarter with the continuous launch of PADCEV in combination with pembrolizumab for patients with advanced metastatic bladder cancer, regardless of their eligibility for cisplatin-based chemotherapy. This combination has quickly established itself as the most prescribed first-line treatment in the U.S. for locally advanced metastatic urothelial cancer. In thoracic cancer, we achieved 31% operational growth this quarter with LORBRENA, targeting adults with ALK-positive metastatic non-small cell lung cancer. Following the release of five years of CROWN data at the ASCO Annual Meeting, we have seen an increase in first-line new patient starts globally, particularly in key markets like the U.S., China, Germany, and France. Our BRAFTOVI and MEKTOVI combination also experienced strong year-over-year growth of 32% in the third quarter, primarily fueled by expansion in the metastatic non-small cell lung cancer indications. We continue to be impressed by the performance of ELREXFIO, which saw roughly 80% sequential revenue growth from the second quarter of 2024. In the U.S., we have more than doubled our new patient initiations since January. In Japan, we have caught up with competitors and launched as the first to market with a BCMA bispecific, addressing an unmet medical need for patients with triple-class exposed multiple myeloma. We believe ELREXFIO could be a game-changing treatment option for multiple myeloma, and we are progressing development with four ongoing registrational studies in earlier lines of therapy that, if positive, could allow us to serve a much larger patient population. Now I will share some select highlights of our ongoing strategic pipeline advancements. We are focusing on opportunities where we possess scientific expertise and deep capabilities to meet significant unmet patient needs. Earlier, I highlighted the strength of our Oncology medicines. However, we are most excited about our pipeline. Lung cancer is the leading cause of cancer-related death globally. At the recent ESMO Congress, we presented long-term follow-up results from the FOREST trial, which evaluated BRAFTOVI and MEKTOVI in patients with BRAF V600E mutant metastatic non-small cell lung cancer, showcasing compelling efficacy. We are also rapidly advancing next-generation ADC candidates that could significantly impact over 300,000 patients with non-small cell lung cancer in the U.S. One candidate is currently in Phase III, and we plan to initiate additional trials shortly. Another is a PD-L1 AV ADC. We are optimistic about the updated Phase I data shared at ESMO for this ADC, with registration-enabling trials scheduled for 2025. Our pipeline is expanding with another novel ADC being studied in two ongoing registration trials in endometrial cancer. MEBROMETOSTAN, our novel EZH2 inhibitor, represents another advancement as a potential new treatment for men with metastatic castration-resistant prostate cancer, and we are currently enrolling patients for Phase III studies. Furthermore, we are working on developing two candidates designed to potentially replace current backbones for HER2-positive breast cancer. Atirmocib, a potential first-in-class CDK4 inhibitor, is currently enrolling for a Phase III trial, with a first-line Phase III study expected to start by early 2025. We anticipate the first Phase III data for vepdegestrant, an estrogen receptor candidate that we are co-developing, in the coming months. Our fourth-generation PCB candidate is currently in Phase II for both adults and children, targeting 25 serotypes, featuring improved immunogenicity for serotype 3, which is a significant contributor to disease. We aim to maintain our leadership by expanding our pipeline with a fifth-generation candidate currently in preclinical development, covering over 30 serotypes. Recently, we advanced a potential new vaccine against Seba, an urgent public health threat lacking approved vaccines. Utilizing lessons from our previous STEP program, we have developed a new formulation for a second-generation candidate. Following encouraging Phase I data, we have moved forward with a Phase II study. Additionally, we are addressing the significant unmet need for approximately 90 million Americans and 200 million Europeans residing in areas with high incidence of Lyme disease. VLA15 is a vaccine candidate we are co-developing that targets the six most prevalent serotypes in North America and Europe. A Phase III trial is underway, and pending positive data and regulatory approval, VLA15 could become the only vaccine available to prevent the acute severe and long-term health effects of Lyme disease globally. TAXICOVID serves as the standard of care with COMIRNATY as oral treatment for those at high risk of progressing to severe disease. However, we see an opportunity to extend our therapeutic impact and market position with our next-generation oral antiviral candidate, EBUSATRELVI. In a Phase II study, we demonstrated robust antiviral activity across all doses without the need for boosters. We have addressed drug-drug interactions and the metallic taste associated with TAXICOVID. A Phase III study is expected to begin in the coming months. We are advancing our Phase III program for non-segmental vitiligo with ritlecitinib, a candidate developed in-house at Pfizer with a differentiated JAK mechanism, potentially expanding the indications for our existing product approved for severe alopecia areata. Vitiligo, similar to alopecia areata, is an autoimmune disease with a high unmet need, affecting nearly 3 million patients in the U.S. alone. We are also excited about our two first-in-class trispecific antibodies, with early data indicating excellent 3-in-1 potency. We believe this program might enhance efficacy in atopic dermatitis, with an ongoing Phase II study evaluating both safety and efficacy. A Phase II readout of ponsegromab, another product developed in-house, showed encouraging results for patients suffering from cancer cachexia, a life-threatening wasting condition with no FDA-approved treatments. The Phase II study met its primary goals regarding weight change from baseline in comparison to placebo across all tested doses. The highest dose demonstrated improvements in appetite, cachexia symptoms, physical activity, and muscle mass from baseline. Based on these promising results, we plan to move forward to a registration-enabling study next year. Our ongoing Phase II study in patients with heart failure-related cachexia is progressing as scheduled. We are on track with dose optimization studies for danuglipron, our oral GLP-1 receptor agonist candidate, and anticipate discussing more on this in early 2025. In our broader obesity portfolio, we continue to make progress with early-stage candidates, including an oral small molecule GIPR antagonist that is advancing to Phase II in 2024, as well as a once-daily oral GLP-1 receptor agonist currently in Phase I. The highlights I presented today across critical therapeutic areas demonstrate the meaningful advancements we have made with our pipeline. Earlier this year, we disclosed that Dr. Mikael Dolsten, Pfizer's Chief Scientific Officer, would be leaving the company after 15 years leading our research initiatives. We are in the process of selecting a successor and expect to provide an update soon. Now, I will shift focus to our commercial performance. Maximizing the performance of our new products is another one of our strategic priorities. I am happy to report that the decisive actions we took at the start of the year to enhance our commercial organization have yielded satisfactory results. With NURTEC, we experienced a 28% growth in total prescriptions and maintained our leadership in the oral migraine segment. Notably, 85% of primary care clinicians prescribing CGRP treatments began with NURTEC, reflecting our progress in primary care and our collaboration with payers to eliminate barriers for timely patient access to treatment.

Thank you, Albert, and good morning, everyone. I will build on Albert's comments by reinforcing that we are very pleased with the financial results for the third quarter of 2024. These results demonstrate that our focus and our execution against our five strategic priorities are driving positive patient outcomes and continued financial and operational strength. In addition to our strong top line performance, our cost reduction programs are creating a more efficient organization, setting the stage for increased capital returns and supporting our commitment to both maintaining and growing our dividend, all while enhancing shareholder value. This morning, I will briefly review our Q3 P&L performance, highlight our capital allocation priorities, and touch upon our full year 2024 financial guidance. Additionally, as we approach the end of the year, I will also share several modeling considerations as we begin to plan for 2025. Turning first to the third quarter performance versus the same period last year. Let me walk you through the P&L. Total company revenues were $17.7 billion, representing an impressive 32% operational growth. Our COVID-19 products were significant contributors, with PAXLOVID generating $2.7 billion in revenue. This included $442 million related to delivering 1 million treatment courses to the U.S. Government Strategic National Stockpile. COMIRNATY, our COVID-19 vaccine, contributed $1.4 billion in revenue. Our COVID-19 products were not the only drivers during the quarter. Our non-COVID products also exhibited robust performance with revenues of $13.6 billion, reflecting 14% operational year-over-year growth. This performance shows that our refined commercial approach is working. We continue to focus on key products and geographies, refining how we allocate our commercial field resources globally and further optimizing our marketing resources into key priority areas. We saw a strong contribution from our recently acquired Seagen products, including PASSIVE, which continues its momentum following the results of the EV302 study last year. Other key growth drivers included VYNDAQEL, ELIQUIS, XTANDI, and NURTEC, partially offset by declines in Xeljanz and Ibrance. Adjusted gross margin for the third quarter is approximately 70%, primarily the result of a net unfavorable mix related to our COVID-19 products, primarily due to the COMIRNATY profit split with BioNTech and applicable royalty expenses, as well as a slight dampening due to the associated costs incurred with the withdrawal of Oxbryta. All of this was partially offset by our ongoing focus on cost management across our manufacturing network. We continue to expect gross margins to be in the mid-70s for the full year. And as previously communicated, long-term improvements in gross margins will remain a key focus for the company over the next several years. We expect to achieve savings from Phase I of our manufacturing optimization program beginning in 2025, delivering approximately $1.5 billion in savings from the first phase by the end of 2027. In parallel, we continue to evaluate our strategy for both Phase II and Phase III, which will focus on network structure and product portfolio, respectively. We expect to have more information to share on those components of the program once they become available. Total adjusted operating expenses decreased 2% operationally to $5.8 billion, which includes spending acquired via our Seagen transaction. Looking at the components, adjusted SI&A expenses increased 1% operationally, driven primarily by marketing and promotional expenses for recently launched and acquired products, partly offset by a reduction in U.S. health care reform fees. Adjusted R&D expenses decreased 4% operationally, driven primarily by lower spending on certain vaccine programs as well as our cost realignment program, partially offset by increased spending related to the Seagen acquisition. We continue to be disciplined in our operational expense management and remain on track to deliver at least $4 billion in net cost savings from our cost realignment program by year-end. Q3 reported diluted earnings per share was $0.78 in the quarter, and our adjusted earnings per share was $1.06, benefiting from our top line performance and efficient operating structure, as well as a favorable tax rate driven primarily by jurisdictional mix. As mentioned last quarter, unique onetime items included in our GAAP results and excluded from our adjusted results this quarter include a $420 million charge related to the expected sale of one of our facilities, resulting from the discontinuation of our DMD program earlier this year. 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 growing our dividend over time, reinvesting in our business at an appropriate level of financial return, and making value-enhancing share repurchases after deleveraging our balance sheet. In the first nine months of '24, we returned $7.1 billion to shareholders via our quarterly dividend, invested $7.8 billion in internal R&D, and as we expected, completed business development activity was minimal. Our commitment to deleveraging our capital structure to a gross leverage target of 3.25 times remains a key priority. In support of that goal year-to-date, we have deleveraged by approximately $4.4 billion, paying down approximately $2.3 billion in maturing debt and approximately $2.1 billion in commercial paper. In October, we monetized another tranche of our Helion shares, which for reporting purposes is a Q4 event. We received approximately $3.5 billion in net cap proceeds, and our ownership in Helion was reduced from approximately 23% to approximately 15%. Year-to-date, we have received approximately $6.9 billion of net cash proceeds from the sale of our shares. We intend to monetize our remaining Helion investment in a prudent fashion considering our cash flow requirements and future market conditions. Overall, in Q3, we generated robust operating cash flows, which combined with the Helion net sale proceeds of approximately $3.5 billion, resulted in significant cash flow generation as we enter the fourth quarter. Our objective remains to delever and return to a more balanced allocation of capital between reinvestment and direct return to shareholders over time. Now let me spend just a few minutes on our outlook for the full year. Based on our focused execution and strong year-to-date results, we are raising our full year '24 revenue guidance by $1.5 billion and our adjusted diluted earnings per share by $0.30. We now expect revenues in the range of $61 billion to $64 billion, and operational revenue growth, excluding COVID-19 products, is unchanged at 9% to 11%, taking into consideration the reduction of sales associated with Oxbryta. COVID-19 product revenues are now expected to be $10.5 billion, $5 billion for COMIRNATY and $5.5 billion for PAXLOVID. Our guidance for adjusted SI&A, adjusted R&D and our effective tax rate on adjusted income remains unchanged. Last, we expect adjusted diluted earnings per share of $2.75 to $2.95, primarily reflecting the top-line increase and absorbing the Oxbryta impact. As a reminder, our EPS guidance includes an anticipated $0.40 of earnings dilution from the Seagen acquisition, largely due to financing costs. Now as we begin to look towards next year, I want to touch on a few modeling considerations. As we've previously discussed, there are several nonrecurring items included in our 2024 results. First, during 2024, PAXLOVID revenue included a U.S. government revenue credit true-up and the fulfillment of our obligation to the U.S. National Strategic Stockpile. Second, given our ownership of Helion is now below 20%, we will no longer record equity income from that investment in our adjusted earnings beginning in 2025. Finally, our 2024 tax rate on adjusted income was favorably impacted by timing with respect to the impact of Pillar 2 and to a lesser extent, audit settlements. All in, these items are expected to have a favorable impact on full year 2024 adjusted diluted earnings per share of approximately $0.30. In closing, I'm extremely pleased with our third quarter 2024 results and our overall performance this year. Our team remains dedicated to strong operational execution, and we believe our cost-saving programs will drive enhanced operating leverage over time that will enable us to consistently deliver on our financial commitments to our shareholders. We are committed to driving long-term value creation through scientific leadership, portfolio strength, and productivity across all aspects of our business. And with that, I'll now turn it back over to Albert.

Thanks, Dave. It's time for the Q&A. Before we take our first question, I want to briefly touch on something that is likely on many minds. We strive to be attentive to our shareholders and are always open to their perspectives. We had a meeting with Starboard Value two weeks ago, which included our Lead Director and our Head of Investor Relations. The meeting was constructive and they presented the same information they made public last week. Given the timing close to our quarterly earnings day, we were mostly listening. While we agree with some of their points, we have significantly different views on many others. For instance, they were not satisfied with our total shareholder return. We are not satisfied either, but we believe we are on the best path forward to enhance shareholder return. On the other hand, they questioned our capital deployment for business development. We believe our deals will yield substantial shareholder returns, with some like Seagen or BioNTech being transformational for Pfizer. The crucial factor is how we enhance performance. In January, we introduced a five-point plan aimed at creating shareholder value that has been guiding our decision-making throughout the year. We remain focused on executing this plan and fulfilling our commitments, including driving long-term shareholder value. We will engage productively with our shareholders, including Starboard, and will consider all constructive ideas presented. Now, operator, please prepare the queue to discuss our third quarter performance and pipeline.

I wanted to ask questions about the pipeline, particularly with regard to obesity, where we appreciate the additional insights into what you have in the clinic. Albert, you previously said that you believe that Pfizer could be the number two company on the market with an oral. That would imply that danuglipron is the lead asset there; however, you do have two additional assets that we find intriguing at a GP-1 oral that is in Phase I that is once a day but would clearly be behind. And then now an oral GIP antagonist, which I think is a source of debate. Can you frame what your strategy is, how important it is to be second to market versus perhaps having a differentiated approach with these two assets?

Look, I will ask Mikael to comment because there is a lot of activity going on right now. But my general comment is that, as I have said, if Daniel moves fast based on what we know right now, we should be the second oral into the market, provided that the first one will be successful and the other ones will not come before us. So far, this is what the situation looks like. The market is very, very large. And there is a significant need for oral solutions. We know that. So there is no doubt that if successful, we will have our decent market share of oral. But the important thing is that the obesity market is developing, and we are exploring several other opportunities right now. The two that we have mentioned in the clinic, Mikael can speak a little bit more about both the danuglipron and the other two.

Thank you, Albert. As mentioned earlier, we are actively progressing with our danuglipron plan, which features a once-a-day regimen with a modified release system. We believe that a daily modified release could offer unique benefits, and introducing this as a second oral option will strengthen our position in the market. Similarly, we've observed that injectables can be divided into two different products. I don't anticipate significant differences among the various oral options within the GLP-1 class. That's why we are also eager to introduce a GIP antagonist that could improve tolerability and enhance efficacy. We are currently starting Phase II studies based on our advancements. These are our two most advanced initiatives, and we continually seek to expand options as we progress. There are numerous applications for GLP-1s, which is why we are also developing a second once-a-day option.

I have a question on your recent data from the fensegrumab program in cachexia. You reported positive Phase II data. Broadly speaking, this program has been previously highlighted as well. For the registrational trial, would a trial that replicates your Phase II in a larger group of patients be sufficient? Or would you need to show outcomes like survival? Also, aside from details of the registrational trial, can you help us understand how big of an opportunity you see for this drug?

Let's start with Mikael discussing the science, and then maybe Andrew can talk about the potential market size.

In general, for cancer agents, and this is more in the supportive care space, we're addressing segments of unmet patient needs, which relates to regaining the performance status with better body weight, have higher physical activity, and be able to go through more treatment cycles, which should often translate to better long-term survival. As you know, that is always dependent on how patients cross over to different trials. I do think initial registration will come from similar endpoints as in our Phase II studies, but we clearly aim to translate better patient performance to other outcomes that are more hard endpoints going through more treatment cycles and treatments that, call it, with better cancer outcomes over time. This is something that will be shown in multiple cancer types. So we do think similar to other products that have been heavily used in support of cancer care, this could be a very large opportunity. In addition to that, we are running heart failure studies and looking at a third opportunity, also a large chronic disease. With that, Andrew, some comments on the potential of this molecule?

Yes, correct. Building on Mikael’s comments, look, cachexia is a massive unmet medical need. It’s prevalent in 50% to 80% of oncology patients, particularly within pancreatic and non-small cell lung cancer. It’s probably about 20% to 30% in heart failure and COPD. The size of the market really depends on whether it’s viewed as a supportive care therapy, but also, obviously, as Mikael mentioned, whether you have outcome benefits. The size of the market, or particularly the size of this drug, is going to be very much informed by the data that we deliver in the pending Phase II and Phase III trials.

I feel like it's still very early in your engagement with some of your shareholders and the new shareholders. So perhaps it might be too premature to ask much further on that. So instead, maybe I'll focus on pipeline briefly. I know you mentioned, Mikael, that the oral GIP antagonist adds better tolerability and more efficacy. It sounded like you were implying it's more incremental to what an oral GLP could do as a stand-alone. Could you just lay that into context? For example, in the four-week Phase I study you ran, did it hit 4% to 5% weight loss? And secondly, the more than 30-valent pneumococcal vaccine that you guys disclosed this morning, does it have more than one carrier protein?

Yes. The ability of GIPR to act in concert with GLP-1 has been well documented in a few different peptide settings. We aim to be the first to document this with an oral approach, which could offer a nice differentiation for patients that need more rapid achievement of their treatment objectives. That's what we want to reveal right now. Regarding our new platform for PCV generation 4 and 5, we include a number of technical improvements. We don't want to disclose those today, but we were open to mentioning that our PCV fourth generation, which covers 25 serotypes, has an example of improved serotype 3 based on new technology that moves it far beyond what we believe any other technology has accomplished. Why is that important? Well, serotype 3 covers somewhere between 15% to 30% of diseases in different countries, and improving it can have a bigger impact than adding a number of infrequent serotypes. As we go to the more than 30 valence, it will combine such improvement with many more serotypes.

I apologize for being on mute. This is Trung Huynh from UBS. I have two questions. Thank you for your insights regarding the activist investor. You mentioned that you disagree with their views on capital deployment and pointed to the significant shareholder returns of Seagen and BioNTech. Can you explain the difference between your perspective and what the market is thinking regarding BD? Additionally, how do you plan to rebuild confidence in the company so that your expectations align with those of the market? On the topic of your commitment to reducing debt, I appreciate your remarks on this. Is there a willingness to expedite the deleveraging process, perhaps by selling the hospital business or offloading the Helion stake sooner? You have products approaching loss of exclusivity, which might provide some additional flexibility for your balance sheet. I'd like to hear your thoughts on this.

Why don't we start with this one, and then I'll take a little bit the activist question.

Yes. First, on the deleveraging point, yes, our objective is to deleverage as rapidly as possible. The company has been laser-focused on doing that, given the fact that we've taken out about $4.4 billion in debt year-to-date, and we'll continue to do that. Without speaking directly about any potential BD opportunities here, we are always looking to evaluate the infrastructure that we have and the assets that we currently maintain and understand if there's availability to monetize some of those assets over time to further support our deleveraging activity. So I would say all options are on the table, and we'll continue to evaluate what makes the most sense for us strategically long-term.

As regards our projections compared to the Street projections in business development, let’s start by saying that by far, the two biggest deals, Seagen and BioNTech in terms of revenues, right? In both cases, I think the Street has moved on higher than what we predicted when we made the deal. On the other hand, we’re very stable. If you add onto that Biohaven with NURTEC, which we are on track to exceed for the second quarter, Street expectations, it is covering 80% of the investments that we’ve made, and probably way more in terms of revenues. The most important thing is that those two, Seagen and BioNTech, have brought transformational assets to Pfizer. It’s not just the revenue growth, but we are seeing right now, and we’ll continue seeing all the way towards the end of the decade. But it is also due to mega-blockbuster prospects if technical success is achieved. We are moving into Phase III because we have seen very positive earlier data. So I would say that we truly think that this was well-invested capital that will demonstrate significant value for shareholders. But I also want to make a final comment regarding any discussions with activists. No matter if we agree or disagree on what has happened, the most important thing is what we are doing going forward. Starboard has not presented any specific actions, but they suggested something needs to change. I want to indicate that we are already implementing a lot of changes since the beginning of the year. Over the past ten months, we have implemented changes, including changing our commercial model to separate the U.S. and international business and appointing new leaders who have now delivered three consecutive quarters of revenue growth. We integrated Seagen and created an end-to-end oncology research organization to ensure a successful integration of the company and have retained the vast majority of legacy Seagen colleagues, delivering multiple successful readouts. We announced a plan to reduce OpEx by $4 billion, which we are executing successfully without negatively affecting the top line. We implemented a plan to reduce manufacturing costs by $1.5 billion, which is delivering satisfactory results. We have brought in Andrew Baum, who is knowledgeable in research, to help prioritize our R&D pipeline and future business development. We are advancing the process of selecting a new scientific officer. We have enhanced our Board with two new directors who have deep expertise in corporate governance and shareholder value creation. All these changes reflect our intentional five-point plan that we rolled out in January. We plan to engage with all shareholders, including Starboard, and consider any good ideas that create long-term shareholder value. I don’t think that the statement something needs to change is particularly pragmatic, as it seems to be coming fifteen months late.

So I just had two here. The first one, I wanted to ask is how we should think about the big pushes and pulls for sales and EPS in 2025? And when you might give guidance? Could it be as early as this year? And then the second one, just on Seagen, just wondering how the integration is coming along and if you have any updates on some of the metrics, like sales in 2030 for the Seagen deal?

Regarding 2025, it's really topical because we're in the middle, as you can imagine, building our 2025 financial plan across all of our business lines. To your point, there will be many pushes and pulls as we consider growth for next year for both our core business and our COVID business. It’s our expectation that we will provide guidance for 2025, most likely by the end of this year. So stay tuned, more to come. We will lay out all the pushes and pulls when we give guidance for 2025, providing you a clear understanding of our business and the opportunities to enhance shareholder value longer term.

Thank you for the question. We are very pleased with the integration so far. We have retained most colleagues from legacy Seagen, and now have over 1,500 colleagues working at our facilities in Basel, near Seattle. In Q3, global revenue from legacy Seagen reached $854 million, with PADCEV contributing over $400 million. Year-to-date, Seagen delivered $2.3 billion for us, representing a 38% year-over-year increase on a pro forma basis. We are executing well on our portfolio and pipeline. We have begun Phase III studies with dasitamab vedotin for urothelial cancer, which affects up to 40% of bladder cancer. For Sigotatacvedotin, the B6A, we initiated the first Phase III study in non-squamous non-small cell lung cancer, where we observed significant data. We also plan to start a combination of sicotatactedotin and pembrolizumab in the first-line setting for non-small cell lung cancer, having aligned with the FDA on trial design and dosing. Additionally, we are progressing towards starting a Phase III program with the PD-L1 V in combination with pembrolizumab early next year. Overall, we have seen great commercial performance and continue to effectively execute on our pipeline.

Thanks so much for the question. Just had a couple of quick ones. Mikael, another one on obesity. I know you've added assets outside of danuglipron, and I appreciate it's early. What does success look like on efficacy, just given the current standards? And strategically, how does Pfizer view orals versus longer-acting injectables when considering the investments Pfizer is making in this category? And then real quick, Albert, on the IRA. It seems here to stay, but when you think about the potential for a new administration, what would Pfizer like to see, obviously beyond closing the gap between orals and biologics on exclusivity?

For orals, I think you have a number of advantages. One is, of course, the combined effects with all other drugs that are involved in metabolic disease to achieve lasting outcomes. What you're looking for, I would say, is a 10% to 20% weight loss; the lower range for the first GLP, the upper range where you can see oral combinations edge towards. That's very much similar to what you can see with the peptide, so I can provide a broad range with a lower and an aspirational range—lower for more single agents and those agents that we can aspire to go above 15%.

Thank you, Mikael. Now on IRA. Clearly, IRA overall is negative for innovation and does not promote a spirit that encourages investments, but there are also some good things about it. I wouldn’t like to see the out-of-pocket next year being $167 per month for all your medicines for seniors. That, we want to make sure is maintained. However, the forced price setting and negotiation penalties are things that need to change. It’s not only about IRA; I would mention that 340B right now is one of the biggest issues. It is unethical and is evolving in a way that creates a significant transfer of funds from where it needs to be to some businesses to bolster their profit lines. Therefore, 340B reform is something that I, and the entire pharma industry, have prioritized.

Great. Appreciate the questions. Two for me. First, regarding the RSV opportunity. What do you see as the most likely outcome for revaccination frequency and the potential impact on the longer-term market opportunity? The second question is more of a clarification. For your CDK4 inhibitor, you guided to starting the first-line Phase III study early next year. If you can share any detail there on the design, will it be a head-to-head against IBRANCE, or will it be a combination with VFD or a monotherapy type design?

Alexandre, could you speak about the RSV market and how it evolves based on the ACIP recommendations, including revaccination and population factors?

Yes, absolutely. Even though it's not material yet, we're making very good progress. On the adult front, we've received BTC recommendations since the beginning of the year in large markets like the U.K., Germany, France, Canada, Australia, and various mid-sized markets with positive recommendations. We are also moving into funding, and we recently won exclusive tenders in the U.K. and Canada. Regarding reimbursement, we secured regional reimbursement in Germany and launched in Germany in mid-October. We are negotiating reimbursements in several large and mid-sized markets. On the pediatric side, we are making good progress as well, with recent positive recommendations in numerous countries, including the U.K., France, and Australia. Additionally, we received approval from the Pan-American Health Organization that covers 40 markets in the Americas, providing ABRYSVO with endorsement within those regions. We see great potential, although it will take time to navigate all these stages, we believe it will yield positive results.

ABRYSVO's performance in Q3 is substantial, particularly as we approached this vaccination season with adequate stock in fridges, both in retail and health systems. Administration levels began steadily rising in the quarter, even as we anticipate continued volume into Q4. Our significant improvement in market share and sales reflects the effectiveness of our strategies.

Thank you, everyone, for your attention. It was another good quarter for Pfizer. We are executing on the five points plan presented at the beginning of the year, revealing the underlying operational health of our business, the stabilization of the COVID business, and strong growth from the remaining parts of our business. There is significant performance from new products and consistent delivery on our commitments to shareholders. We look forward to continuing this successful path.