- First-Quarter 2020 Revenues of $12.0 Billion, Reflecting 7%
Operational Decline; Excluding the Impact from Consumer
Healthcare(1), Revenues Declined 1% Operationally
- 12% Operational Growth from Biopharma, Primarily Driven by
Eliquis, Vyndaqel/Vyndamax, Ibrance and Inlyta as well as 15%
Operational Growth in Emerging Markets
- 37% Operational Decline from Upjohn, Primarily Due to U.S. Loss
of Exclusivity of Lyrica in 2019 and Declines from Lipitor and
Norvasc in China due to the Volume-Based Procurement (VBP)
Program
- First-Quarter 2020 Reported Diluted EPS(2) of $0.61, Adjusted
Diluted EPS(3) of $0.80
- Reaffirmed 2020 Financial Guidance for Revenues and Adjusted
Diluted EPS(3), Absorbing Unfavorable Changes in Foreign Exchange
Rates and Reflecting Certain Anticipated Impacts from the COVID-19
Pandemic
- Company Details COVID-19 Business Impact and Response to
Pandemic, Including Researching Potential Therapeutics and
Vaccines
Pfizer Inc. (NYSE: PFE) reported financial results for
first-quarter 2020, reaffirmed its 2020 financial guidance for
revenues and Adjusted diluted EPS(3) and updated certain other
components of its 2020 financial guidance primarily to reflect
actual and anticipated impacts from the novel coronavirus disease
of 2019 (COVID-19).
Results for the first quarter of 2020 and 2019(4) are summarized
below.
OVERALL RESULTS
($ in millions, except per share
amounts)
First-Quarter
2020
2019
Change
Revenues
$
12,028
$
13,118
(8
%)
Reported Net Income(2)
3,401
3,884
(12
%)
Reported Diluted EPS(2)
0.61
0.68
(10
%)
Adjusted Income(3)
4,514
4,891
(8
%)
Adjusted Diluted EPS(3)
0.80
0.85
(5
%)
REVENUES
($ in millions)
First-Quarter
% Change
2020
2019
Total
Oper.
Biopharma
$
10,007
$
9,045
11
%
12
%
Upjohn
2,022
3,214
(37
%)
(37
%)
Consumer Healthcare(1)
—
858
(100
%)
(100
%)
Total Company
$
12,028
$
13,118
(8
%)
(7
%)
Beginning in 2020, Upjohn began managing Pfizer’s Meridian
subsidiary, the manufacturer of EpiPen and other auto-injector
products, and a pre-existing strategic collaboration between Pfizer
and Mylan N.V. (Mylan) for generic drugs in Japan (Mylan-Japan). To
facilitate comparison across periods, revenues and expenses
associated with Meridian and Mylan-Japan are reported in Pfizer’s
Upjohn business in all periods presented.
Acquisitions and the contribution of Pfizer’s Consumer
Healthcare business to the GSK Consumer Healthcare joint venture
(JV) that were completed during 2019 impacted financial results in
the periods presented(1). Some amounts in this press release may
not add due to rounding. All percentages have been calculated using
unrounded amounts. References to operational variances pertain to
period-over-period growth rates that exclude the impact of foreign
exchange(5).
IMPACT OF COVID-19 ON BUSINESS ACTIVITIES AND FINANCIAL
RESULTS
As a result of the COVID-19 pandemic, Pfizer has taken proactive
steps intended to protect the health and safety of colleagues, to
maintain supply of Pfizer medicines and vaccines to patients, to
continue to advance Pfizer’s pipeline and to help develop potential
treatments for COVID-19 and a potential vaccine to halt the spread
of the novel coronavirus.
Information on the important steps Pfizer has taken in the
battle against the COVID-19 pandemic can be found in the Corporate
Developments section of this press release.
Colleague Health and Safety
At this time, Pfizer colleagues in most locations who are able
to perform their job functions outside of a Pfizer facility are
working remotely. Certain Pfizer colleagues, primarily those in the
Pfizer Global Supply, Worldwide Research and Development, and
Global Product Development organizations, have roles whose physical
presence at Pfizer facilities is required to perform their job
function. These colleagues continue to report to work but are
subject to strict protocols intended to reduce the risk of
transmission, including social distancing, maintaining contact
logs, increased cleaning and use of personal protective equipment
as necessary.
Manufacturing
Pfizer’s manufacturing and supply chain professionals have been
working continuously in an effort to ensure continued patient
access to Pfizer medicines and vaccines. Across its plant network,
Pfizer has implemented its preparedness plan to control site
operations. To date, Pfizer has not seen a significant disruption
in its supply chain, and all of its manufacturing sites around the
world have continued to operate at or near normal levels. So far,
Pfizer has been able to mitigate distribution issues that have
arisen, including by using newly available commercial air capacity
to transport inventory. Pfizer continues to monitor for actions by
governments that could result in disruptions to supply
movements.
In addition, Pfizer is taking a number of steps simultaneously
to scale up manufacturing operations at risk to accelerate its
ability to supply a potential novel treatment or vaccine for
COVID-19. Pfizer is also committed to offering any excess
manufacturing capacity and to potentially shifting production in
order to support others’ efforts to manufacture any life-saving
breakthroughs that may be developed to combat COVID-19.
Clinical Trials
In late March 2020, Pfizer paused the recruitment portion of
certain ongoing global interventional clinical studies and delayed
most new study starts. Pfizer took this action in the interests of
public health, so that clinical site partners and Pfizer could
concentrate on care for patients in ongoing clinical trials and to
avoid adding to the demands on the healthcare system during the
peak of the COVID-19 crisis.
In late April 2020, Pfizer began to restart recruitment across
the development portfolio, including new study starts, at all
clinical trial sites that are currently operational, and where
Pfizer and investigators are able to monitor safety and where
health authorities have allowed recruitment to resume. Pfizer will
work with investigator sites to ensure their readiness before any
new study participants are enrolled. Completion of certain studies
currently in the recruitment stage or studies that have yet to
begin could be delayed.
For all ongoing clinical trials, Pfizer is working closely with
clinical trial sites to understand their needs and is performing
remote monitoring to oversee study conduct. In addition, processes
to enable tele-health and home healthcare are being utilized where
appropriate to continue the data collection process and support
patient safety.
Sales and Marketing
Pfizer has experienced an impact on its sales and marketing
activities due to widespread restrictions on in-person meetings
with healthcare professionals and the refocused attention of the
medical community on fighting COVID-19. Access to prescribers for
sales force colleagues during first-quarter 2020 was mixed, with
those in China unable to meet with healthcare professionals for
most of the quarter, while those in the U.S. were unable to meet
in-person with doctors starting in the second half of March.
As a result of the lower number of in-person meetings with
prescribers and restrictions on patient movements due to
government-mandated work-from-home or shelter-in-place policies,
the rate of new prescriptions for certain products and of
vaccination rates for most vaccines has slowed, which is currently
expected to primarily impact second-quarter 2020 financial results.
These declines are expected to be partially offset by existing
patients re-filling prescriptions that extend the per-prescription
treatment duration to avoid going to pharmacies as frequently,
which had a modest favorable impact in first-quarter 2020 and is
expected to continue in second-quarter 2020. In addition, certain
Pfizer medicines saw increased demand, which Pfizer believes may be
due to physicians apparently prescribing them to treat or prevent
COVID-19 infections or related conditions, including Prevnar
13/Prevenar 13 in adults and certain anti-infective products, as
well as certain sterile injectable products utilized in the
intubation and ongoing treatment of mechanically-ventilated
COVID-19 patients. Please note that none of these products are
approved for the treatment of COVID-19 and, therefore, Pfizer does
not know the benefit/risk profile for their use in this
disease.
Financial Condition and Access to Capital Markets
Due to Pfizer’s significant operating cash flows, as well as its
financial assets, access to capital markets and revolving credit
agreements, Pfizer believes it has, and will maintain, the ability
to meet liquidity needs for the foreseeable future.
Pfizer will continue to pursue efforts to maintain the
continuity of its operations while monitoring for new developments
related to the COVID-19 pandemic, which are unpredictable. Future
COVID-19 developments could result in additional favorable or
unfavorable impacts on Pfizer’s business, operations or financial
condition.
2020 FINANCIAL GUIDANCE(6)
Pfizer’s 2020 financial guidance for Total Company(7) was
updated primarily to reflect actual and anticipated
COVID-19-related impacts.
Today’s guidance update reflects management’s current
expectations for operational performance, foreign exchange rates as
well as various COVID-19-related uncertainties, primarily those
related to the severity, duration and global macroeconomic impact
of the pandemic. Key guidance assumptions related to COVID-19
include:
- Patient visits with physicians, vaccinations and elective
surgical procedures will rebound starting in second-half 2020 and
align more closely with historical levels;
- New-to-brand prescription trends for certain key products and
vaccination rates will resume on a similar trajectory to what was
seen in 2019, beginning in second-half 2020;
- Access to prescribers for sales force colleagues is restored in
second-half 2020;
- Clinical trial enrollment, including new study starts, will
fully resume in second-half 2020;
- Pfizer’s manufacturing and supply chain activities are not
materially disrupted; and
- Pfizer’s investments in potential treatments and a potential
vaccine for COVID-19 continue throughout 2020.
Based on these assumptions, Pfizer reaffirmed or updated the
following 2020 financial guidance components for Total Company(7),
which reflects a full year of revenue and expense contributions
from Biopharma and Upjohn:
- Guidance range for revenues was reaffirmed at $48.5 to $50.5
billion, absorbing a $0.6 billion unfavorable impact from changes
in foreign exchange rates in relation to the U.S. dollar since
mid-January 2020, primarily the weakening of the Brazilian real,
the euro, the Mexican peso and the Chinese yuan.
- Guidance range for Adjusted cost of sales(3) as a percentage of
revenues was lowered by 400 basis points to a range of 19.5% to
20.5%, primarily to reflect the favorable impact of product mix and
other efficiencies.
- Guidance range for Adjusted SI&A expenses(3) was lowered by
$500 million to a range of $11.5 to $12.5 billion, primarily to
reflect incremental cost-savings opportunities, primarily
reductions in indirect SI&A spend associated with corporate
enabling functions, as well as actual and anticipated
COVID-19-related spending reductions.
- Guidance range for Adjusted R&D expenses(3) was increased
by $500 million to a range of $8.6 to $9.0 billion, solely to
reflect incremental investments Pfizer anticipates making in 2020
to combat the COVID-19 pandemic, including development of potential
anti-viral treatments and a potential vaccine, as well as the
evaluation of existing Pfizer medicines, which are the subject of
novel research projects for investigation in COVID-19
patients.
- Guidance range for Adjusted diluted EPS(3) was reaffirmed at
$2.82 to $2.92, absorbing a $0.04 unfavorable impact from changes
in foreign exchange rates since mid-January 2020.
Revenues
$48.5 to $50.5 billion
Adjusted Cost of Sales(3) as a Percentage
of Revenues
19.5% to 20.5%
(previously 19.9% to 20.9%)
Adjusted SI&A Expenses(3)
$11.5 to $12.5 billion
(previously $12.0 to $13.0
billion)
Adjusted R&D Expenses(3)
$8.6 to $9.0 billion
(previously $8.1 to $8.5
billion)
Adjusted Other (Income)/Deductions(3)
Approximately $800 million of
income
Effective Tax Rate on Adjusted
Income(3)
Approximately 15.0%
Adjusted Diluted EPS(3)
$2.82 to $2.92
Financial guidance for Adjusted diluted EPS(3) continues to
assume no share repurchases in 2020.
2020 Financial Guidance for New Pfizer(8)
Pfizer’s updated 2020 financial guidance for New Pfizer(8) is
presented below. New Pfizer(8) revenue guidance absorbs a $500
million unfavorable impact from changes in foreign exchange rates
since mid-January 2020.
New Pfizer(8) financial guidance reflects a full-year 2020 pro
forma view of the company assuming the pending Upjohn combination
with Mylan was completed at the beginning of 2020.
Revenues
$40.7 to $42.3 billion
Adjusted IBT Margin(9)
Approximately 37.0%
Adjusted Diluted EPS(3)
$2.25 to $2.35
Operating Cash Flow
$10.0 to $11.0 billion
(previously $11.0 to $12.0
billion)
Financial guidance for New Pfizer(8) operating cash flow now
includes a $1.25 billion voluntary contribution to the U.S.
qualified pension plans, planned for the second half of 2020.
2020 Financial Guidance for Upjohn(10)
Pfizer’s reaffirmed 2020 financial guidance for Upjohn(10) is
presented below. Upjohn revenue guidance absorbs a $100 million
unfavorable impact from changes in foreign exchange rates since
mid-January 2020.
Upjohn(10) financial guidance reflects a full-year 2020
contribution from the Upjohn business as it is presently being
managed.
Revenues
$8.0 to $8.5 billion
Adjusted EBITDA(11)
$3.8 to $4.2 billion
CAPITAL ALLOCATION
- During the first three months of 2020, Pfizer paid $2.1 billion
of dividends, or $0.38 per share of common stock.
- No share repurchases have been completed to date in 2020. As of
April 28, 2020, Pfizer’s remaining share repurchase authorization
was $5.3 billion. No share repurchases are currently planned in
2020.
- The first-quarter 2020 diluted weighted-average shares used to
calculate earnings per common share was 5,613 million shares, a
reduction of 137 million shares compared to first-quarter
2019.
EXECUTIVE COMMENTARY
Dr. Albert Bourla, Pfizer’s Chairman and Chief Executive
Officer, stated, “We are fully committed to confronting the public
health challenge posed by the COVID-19 pandemic by collaborating
with industry partners and academic institutions to develop
potential approaches to prevent and treat COVID-19. Our researchers
and scientists also have been exploring potential new uses of
existing medicines in Pfizer’s portfolio to help infected patients.
We aim to leave no stone unturned as we explore every option to
help provide society with a treatment or vaccine. I want to thank
all of our R&D colleagues who are working tirelessly to find
potential vaccines and treatments that could bring an end to this
pandemic. I would also like to acknowledge the remarkable job that
our manufacturing team has done throughout this crisis to ensure
our medicines continue to reach patients in need.
“Our strong performance in the first quarter highlights the
resiliency of our business even during the most challenging times.
The Biopharma business grew 12% operationally, driven by strong
performances from many key brands. Upjohn faced two expected
headwinds this quarter -- generic competition for Lyrica in the
U.S. and the nationwide expansion of the VBP program in China --
while continuing to progress toward a successful close of our
transaction with Mylan, now expected in the second half of 2020,”
Dr. Bourla concluded.
Frank D’Amelio, Chief Financial Officer and Executive Vice
President, Business Operations and Global Supply, stated, “Today we
reaffirmed our 2020 financial guidance for revenues and adjusted
EPS(3) and updated certain other guidance components primarily to
reflect actual and anticipated impacts from the COVID-19 pandemic.
Importantly, our guidance for Total Company(7) revenues absorbs a
$0.6 billion unfavorable impact from changes in foreign exchange
rates since mid-January 2020. Likewise, our guidance for Adjusted
diluted EPS(3) absorbs a $0.04 impact from unfavorable foreign
exchange. The decrease in our guidance for Adjusted SI&A
expenses(3) reflects incremental cost-savings opportunities, as
well as actual and anticipated COVID-19-related spending
reductions. These actual and projected SI&A expense(3)
reductions were offset by an increase in our guidance for Adjusted
R&D expenses(3), which now includes anticipated incremental
investments to develop potential therapies and a potential vaccine
to combat COVID-19. While our near-term outlook has greater
macroeconomic uncertainty than usual due to COVID-19, we are
confident that the long-term outlook for our businesses remains
solid.
“Despite the impact of COVID-19, 2020 is still expected to be a
transformational year for Pfizer. Following the pending close of
the Upjohn-Mylan transaction, New Pfizer will be positioned to
deliver revenue and Adjusted diluted EPS(3) growth that is expected
to be among the industry leaders. New Pfizer will be a smaller,
science-based company with a singular focus on innovation while
also continuing to allocate significant capital directly to
shareholders, primarily through dividends,” Mr. D’Amelio
concluded.
QUARTERLY FINANCIAL HIGHLIGHTS (First-Quarter 2020 vs.
First-Quarter 2019)
First-quarter 2020 revenues totaled $12.0 billion, a decrease of
$1.1 billion, or 8%, compared to the prior-year quarter, reflecting
an operational decline of $1.0 billion, or 7%, as well as the
unfavorable impact of foreign exchange of $134 million, or 1%.
Excluding the impact of Consumer Healthcare(1), revenues declined
1% operationally compared to the prior-year quarter.
Impact of COVID-19 on First-Quarter 2020 Revenues
First-quarter 2020 revenues included an estimated net favorable
impact of approximately $150 million, or 1%, due to COVID-19,
primarily reflecting increased demand for certain products in
Pfizer’s Hospital portfolio and an increase in wholesaler buying
patterns for Eliquis, partially offset by a decline in patient
visits to doctors’ offices and elective surgical procedures during
first-quarter 2020.
Biopharma Revenue Highlights
First-quarter 2020 Biopharma revenues totaled $10.0 billion, up
12% operationally, primarily driven by:
- Eliquis globally, up 29% operationally, primarily driven by
continued increased adoption in non-valvular atrial fibrillation as
well as oral anti-coagulant market share gains. U.S. growth was
also favorably impacted by COVID-19-related wholesaler buying
patterns, partially offset by a lower net price;
- the Hospital business globally, up 11% operationally, driven by
the U.S. and emerging markets, primarily due to continued uptake of
anti-infective products in China and continued growth from Panzyga
following its November 2018 U.S. launch, as well as increased
demand in the U.S. for certain anti-infectives and other sterile
injectable products utilized in the intubation and ongoing
treatment of mechanically-ventilated COVID-19 patients;
- Vyndaqel/Vyndamax global revenues were $231 million, driven by:
- the U.S. launches of Vyndaqel in May 2019 and Vyndamax in
September 2019 for the treatment of transthyretin amyloid
cardiomyopathy (ATTR-CM); and
- 156% operational growth in international markets, primarily
driven by the March 2019 launch of the ATTR-CM indication in
Japan;
- Ibrance in the U.S. and emerging markets, collectively up 17%
operationally, primarily driven by:
- 15% growth in the U.S., primarily driven by increased
cyclin-dependent kinase (CDK) class penetration and Ibrance’s
continued CDK market share leadership in its approved metastatic
breast cancer indications; and
- 37% operational growth in emerging markets, reflecting
continued strong volume growth in most markets;
- Prevenar 13 internationally, up 11% operationally, primarily
reflecting continued pediatric uptake in China as well as the
overall favorable impact of timing associated with government
purchases for the pediatric indication in certain emerging
markets;
- Inlyta in the U.S., up 255%, primarily reflecting increased
uptake resulting from the second-quarter 2019 U.S. Food and Drug
Administration (FDA) approvals for combinations of certain immune
checkpoint inhibitors plus Inlyta for the first-line treatment of
patients with advanced renal cell carcinoma;
- Retacrit in the U.S., up 363%, primarily reflecting continued
uptake for the only biosimilar short-acting
erythropoiesis-stimulating agent in the market;
- Xeljanz in international markets, up 38% operationally,
primarily reflecting continued uptake in the rheumatoid arthritis
indication and, to a lesser extent, from the recent launch of the
ulcerative colitis indication in certain developed markets;
and
- Xtandi in the U.S., up 25%, primarily driven by continued
strong demand in the metastatic and non-metastatic
castration-resistant prostate cancer indications and, to a lesser
extent, uptake from the metastatic castration-sensitive prostate
cancer indication, which was approved in the U.S. in December
2019;
partially offset primarily by lower revenues for:
- Enbrel internationally, down 21% operationally, primarily
reflecting continued biosimilar competition in most developed
Europe markets as well as in Brazil and Japan;
- Prevnar 13 in the U.S., down 10%, primarily reflecting the
unfavorable impact of timing associated with government purchases
for the pediatric indication compared with the prior-year
quarter;
- Ibrance in developed Europe, down 11% operationally, primarily
reflecting continued strong demand, more than offset by pricing
pressures in certain markets; and
- Xeljanz in the U.S., down 4%, reflecting continued strong
demand across all approved indications, more than offset by a lower
net price due to higher rebating from commercial contracts signed
in 2019 as well as a temporary lowering of wholesaler inventories
in first-quarter 2020. Wholesaler inventory levels for Xeljanz were
restored to normal levels in early April 2020, during Pfizer’s
second quarter, as underlying volume demand has remained
consistently strong.
Upjohn Revenue Highlights
First-quarter 2020 Upjohn revenues totaled $2.0 billion, down
37% operationally, primarily driven by the expected significant
volume declines for Lyrica in the U.S. due to multi-source generic
competition that began in July 2019. Upjohn revenues in China
declined 41% operationally, driven by expected declines from
Lipitor and Norvasc, primarily resulting from the VBP program,
which was initially implemented in March 2019, and expanded
nationwide beginning in December 2019.
GAAP Reported(2) Income Statement
Highlights
SELECTED TOTAL COMPANY REPORTED COSTS
AND EXPENSES(2)
($ in millions)
First-Quarter
% Change
2020
2019
Total
Oper.
Cost of Sales(2)
$
2,378
$
2,433
(2
%)
(3
%)
Percent of Revenues
19.8
%
18.5
%
N/A
N/A
SI&A Expenses(2)
2,873
3,339
(14
%)
(13
%)
R&D Expenses(2)
1,724
1,703
1
%
1
%
Total
$
6,975
$
7,474
(7
%)
(7
%)
Other (Income)/Deductions––net(2)
221
92
140
%
140
%
Effective Tax Rate on Reported
Income(2)
12.2
%
10.0
%
First-quarter 2020 Cost of Sales(2), SI&A Expenses(2) and
R&D Expenses(2) were favorably impacted primarily by the July
31, 2019 completion of the Consumer Healthcare JV transaction with
GSK(1) and, to a lesser extent, lower indirect SI&A expenses
associated with corporate enabling functions.
Pfizer’s response to the COVID-19 pandemic increased certain
operating expenses in first-quarter 2020, including expenses
incurred to protect colleagues that continue to work in Pfizer’s
manufacturing facilities and R&D sites, incremental transport
expenses to ensure supply chain continuity and other expenses
incurred to comply with other restrictions related to COVID-19.
Pfizer recorded higher other deductions––net(2) in first-quarter
2020 compared with the prior-year quarter, primarily driven by:
- net losses on equity securities in first-quarter 2020 compared
with net gains on equity securities in first-quarter 2019;
- an unfavorable change in the fair value of contingent
consideration; and
- higher interest expense,
partially offset primarily by:
- lower asset impairment charges;
- the non-recurrence of net losses on the early retirement of
certain outstanding debt securities recorded in first-quarter 2019;
and
- lower business and legal entity alignment costs.
Adjusted(3) Income Statement
Highlights
SELECTED TOTAL COMPANY ADJUSTED COSTS
AND EXPENSES(3)
($ in millions)
First-Quarter
% Change
2020
2019
Total
Oper.
Adjusted Cost of Sales(3)
$
2,350
$
2,415
(3
%)
(4
%)
Percent of Revenues
19.5
%
18.4
%
N/A
N/A
Adjusted SI&A Expenses(3)
2,745
3,311
(17
%)
(16
%)
Adjusted R&D Expenses(3)
1,727
1,693
2
%
2
%
Total
$
6,821
$
7,419
(8
%)
(8
%)
Adjusted Other
(Income)/Deductions––net(3)
(186
)
(135
)
37
%
38
%
Effective Tax Rate on Adjusted
Income(3)
15.0
%
15.2
%
First-quarter 2020 diluted weighted-average shares outstanding
used to calculate Reported(2) and Adjusted(3) diluted EPS declined
by 137 million shares compared to the prior-year quarter primarily
due to Pfizer’s share repurchase program, reflecting the impact of
share repurchases during 2019, partially offset by shares issued
for employee compensation programs.
A full reconciliation of Reported(2) to Adjusted(3) financial
measures and associated footnotes can be found starting on page 27
of the press release located at the hyperlink below.
RECENT NOTABLE DEVELOPMENTS (Since January 28, 2020)
Product Developments
- Bavencio (avelumab)
- In April 2020, EMD Serono, the biopharmaceutical business of
Merck KGaA, Darmstadt, Germany in the U.S. and Canada, and Pfizer
announced the submission of a supplemental Biologics License
Application (sBLA) to the FDA for Bavencio for first-line
maintenance treatment of patients with locally advanced or
metastatic urothelial carcinoma. The FDA granted Breakthrough
Therapy Designation to Bavencio for this indication, and the sBLA
is being reviewed by the FDA under its Real-Time Oncology Review
pilot program.
- In March 2020, EMD Serono and Pfizer announced that the Phase 3
JAVELIN Head and Neck 100 study evaluating avelumab in addition to
chemoradiotherapy (CRT) versus standard-of-care CRT in patients
with untreated, locally advanced squamous cell carcinoma of the
head and neck was terminated based on the recommendation of the
independent Data Monitoring Committee as the study was unlikely to
show a statistically significant improvement in the primary
endpoint of progression-free survival based on a pre-planned
interim analysis. A detailed analysis of the Phase 3 JAVELIN Head
and Neck 100 study is being conducted and study findings will be
shared with the scientific community.
- Braftovi (encorafenib) -- In April 2020, Pfizer
announced that the FDA approved Braftovi in combination with
Erbitux®(12) (cetuximab) for the treatment of adult patients
with metastatic colorectal cancer with a BRAF V600E mutation, as
detected by an FDA-approved test, after prior therapy.
- Eucrisa/Staquis (crisaborole ointment, 2%)
- In March 2020, the European Commission (EC) approved Staquis
for treatment of mild to moderate atopic dermatitis (AD) in adults
and pediatric patients from 2 years of age with 40% or less body
surface area affected.
- In March 2020, Pfizer announced that the FDA approved its
supplemental New Drug Application for Eucrisa, extending the lower
age limit from 24 months down to 3 months in children with
mild-to-moderate AD. Eucrisa was previously approved in the U.S.
for use in adults and children 2 years of age and older. This
supplemental approval makes Eucrisa the first and only
steroid-free, topical prescription medication for mild-to-moderate
AD patients as young as 3 months of age.
- Ruxience (rituximab) -- In April 2020, Pfizer announced
that the EC approved Ruxience, a biosimilar to MabThera®(13), for
the treatment of non-Hodgkin’s lymphoma, chronic lymphocytic
leukemia, rheumatoid arthritis, granulomatosis with polyangiitis
and microscopic polyangiitis, and pemphigus vulgaris.
- Steglatro (ertugliflozin) -- In April 2020, Merck &
Co., Inc. (Merck), known as MSD outside the U.S. and Canada, and
Pfizer reported top-line results for the Phase 3 VERTIS CV
cardiovascular (CV) outcomes trial for Steglatro, an oral
sodium-glucose cotransporter 2 inhibitor, which achieved its
primary endpoint of non-inferiority for major adverse CV events
(MACE) compared to placebo in patients with type 2 diabetes
mellitus and established atherosclerotic CV disease. MACE was
defined as time to the first event of CV death, nonfatal myocardial
infarction or nonfatal stroke. The key secondary endpoints of
superiority for Steglatro versus placebo for time to composite of
CV death or hospitalization for heart failure, CV death alone and
the composite of renal death, dialysis/transplant or doubling of
serum creatinine from baseline were not met. While not a
pre-specified hypothesis for statistical testing, a reduction in
hospitalization for heart failure was observed with Steglatro. The
safety profile of Steglatro was consistent with that reported in
previous studies. Detailed results of VERTIS CV are scheduled to be
presented on June 16, 2020 at the virtual American Diabetes
Association’s 80th Scientific Sessions.
- Vyndaqel (tafamidis) -- In February 2020, Pfizer
announced that the EC approved Vyndaqel, a once-daily 61 mg oral
capsule, for the treatment of wild-type or hereditary transthyretin
amyloidosis in adult patients with ATTR-CM. Vyndaqel is the first
and only treatment approved in the European Union (EU) for patients
with ATTR-CM. In 2011, the tafamidis meglumine 20 mg capsule
formulation of Vyndaqel was approved in the EU for transthyretin
amyloidosis in adult patients with stage 1 symptomatic
polyneuropathy to delay peripheral neurologic impairment.
- Xtandi (enzalutamide) -- In February 2020, Astellas
Pharma Inc. and Pfizer announced results of the final overall
survival (OS) analysis from the Phase 3 PROSPER trial, which
evaluated Xtandi plus androgen deprivation therapy (ADT) versus
placebo plus ADT in men with non-metastatic castration-resistant
prostate cancer (nmCRPC). The results demonstrated a statistically
significant improvement in OS in patients with nmCRPC who were
treated with Xtandi plus ADT. OS was a key secondary endpoint of
the trial. In a preliminary analysis, adverse events were generally
consistent with those previously reported from PROSPER. Detailed
efficacy and safety results from the final PROSPER OS analysis will
be shared at a later date.
Pipeline Developments
A comprehensive update of Pfizer’s development pipeline was
published today and is now available at
www.pfizer.com/science/drug-product-pipeline. It includes an
overview of Pfizer’s research and a list of compounds in
development with targeted indication and phase of development, as
well as mechanism of action for some candidates in Phase 1 and all
candidates from Phase 2 through registration.
- Abrocitinib (PF-04965842) -- In March 2020, Pfizer
announced positive top-line results from the Phase 3 JADE COMPARE
study. The study met its co-primary efficacy endpoints and
evaluated the safety and efficacy of abrocitinib, an
investigational oral once-daily Janus kinase (JAK) 1 inhibitor, in
adults with moderate-to-severe AD who were also on background
topical therapy. The study also included an active control arm,
dupilumab, a biologic treatment administered by subcutaneous
injection, compared with placebo. These data, along with other
results from other pivotal trials, MONO-1 and MONO-2, are expected
to support filings with regulatory agencies, starting with the FDA,
planned for later this year.
- PF-06482077 (20-Valent Pneumococcal Conjugate Vaccine)
-- In March 2020, Pfizer announced top-line results from one of its
Phase 3 studies (NCT03760146), which evaluated the safety and
immunogenicity of PF-06482077 in adults 18 years of age or older
not previously vaccinated against pneumococcal disease. The primary
immunogenicity objectives of non-inferiority for the 20 serotypes
included in PF-06482077 in adults 60 years of age and older at one
month after vaccination were met for all serotypes in common with
licensed Prevnar 13 (13-valent pneumococcal conjugate vaccine
[Diphtheria CRM197 Protein]) and six of the seven additional
serotypes when compared to a licensed pneumococcal polysaccharide
vaccine (PPSV23); one of the new seven serotypes missed
noninferiority criteria by a small margin. Secondary immunogenicity
objectives for adults 18-59 years old compared to those 60-64 years
old met non-inferiority for all 20 serotypes. The safety objectives
were met in adults 18 years of age or older, demonstrating that the
safety and tolerability of PF-06482077 were comparable to licensed
pneumococcal vaccines. Based on prior discussions with regulators,
these data are expected to meet licensure criteria. Pfizer will
seek to present and publish outcomes from this clinical trial at a
future date once safety and immunogenicity data have been fully
analyzed. Pfizer expects to file the adult indication for
PF-06482077 with the FDA in the early part of the fourth quarter of
2020.
- PF-06928316 (Respiratory Syncytial Virus (RSV) Vaccine)
-- In April 2020, positive top-line results were achieved for a
Phase 2b proof-of-concept study, which evaluated the safety,
tolerability and immunogenicity of PF-06928316 in vaccinated
pregnant women ages 18 through 49 and their infants. Detailed
results from this study will be shared at a future medical
conference. The Phase 3 program for PF-06928316 is projected to
begin in the coming months.
- Tanezumab (PF-04383119) -- In March 2020, Pfizer and Eli
Lilly and Company (Lilly) announced that the FDA accepted for
review a Biologics License Application for tanezumab 2.5 mg
administered subcutaneously, which is being evaluated for patients
with chronic pain due to moderate-to-severe osteoarthritis (OA) who
have experienced inadequate pain relief with other analgesics. The
Prescription Drug User Fee Act goal date for a decision by the FDA
is in December 2020. In its filing acceptance letter, the FDA
stated that it was planning to hold an Advisory Committee meeting
to discuss this application. In addition, the European Medicines
Agency validated for review a Marketing Authorisation Application
for tanezumab 2.5 mg administered subcutaneously for adult patients
with moderate-to-severe chronic pain associated with OA for whom
treatment with nonsteroidal anti-inflammatory drugs and/or an
opioid is ineffective, not tolerated or inappropriate.
Corporate Developments
- Since March 2020, Pfizer has made a series of announcements
related to the COVID-19 pandemic:
- In April 2020, Pfizer announced important advances in the
battle against the COVID-19 pandemic, including:
- Antiviral Compound Screening: Pfizer confirmed a lead
compound and analogues to be potent inhibitors of the SARS-CoV-2
3C-like protease, based on the results of initial screening assays.
In addition, preliminary data suggest the lead protease inhibitor
shows antiviral activity against SARS-CoV-2. Consequently, Pfizer
will continue to perform pre-clinical confirmatory studies,
including further antiviral profiling and assessment of the
suitability of the lead molecule for IV administration clinically.
In parallel, the company is also investing in materials that aim to
accelerate the start of a potential clinical study of the lead
molecule to third-quarter 2020, three or more months in advance of
earlier estimates, subject to positive completion of the
pre-clinical confirmatory studies.
- Applying Pfizer’s Long History in Vaccine R&D Expertise
to Collaborate with BioNTech: Pfizer and BioNTech entered into
a global collaboration agreement to co-develop a potential
first-in-class, mRNA-based coronavirus vaccine program, BNT162,
aimed at preventing COVID-19 infection. In March 2020, the
companies announced a letter of intent to collaborate and began
working together at that time. The two companies plan to jointly
conduct clinical trials for the COVID-19 vaccine candidates
initially in Europe and the U.S., across multiple research sites.
In late April 2020, Pfizer and BioNTech announced that the German
regulatory authority, the Paul-Ehrlich-Institut, approved the Phase
1/2 clinical trial and the first patient was dosed with a BNT162
vaccine candidate shortly thereafter. Pfizer and BioNTech also plan
to conduct trials for BNT162 in the U.S. upon regulatory approval,
which is expected shortly. The companies estimate that there is
potential to supply millions of vaccine doses by the end of 2020,
subject to technical success of the development program and
approval by regulatory authorities, and the potential to rapidly
scale up the capacity to produce hundreds of millions of doses in
2021. Under the terms of the agreement, Pfizer will pay BioNTech
$72 million in cash and make an equity investment of $113 million.
BioNTech is eligible to receive future milestone payments of up to
$563 million for a potential total consideration of $748 million.
Pfizer and BioNTech will share development costs equally. Pfizer
will initially be responsible for all of the development costs
until commercialization of the vaccine. Thereafter, BioNTech would
repay Pfizer its 50% share of these development costs over time.
BioNTech and Pfizer will also work jointly to commercialize the
vaccine worldwide (excluding China, which is subject to a separate
collaboration between BioNTech and Fosun Pharma) if development is
successful and regulatory approval is obtained.
- Analysis of Azithromycin as an Agent with Antiviral
Activity: In an effort to share information that could benefit
COVID-19 mitigation efforts, Pfizer researchers published a review
in Clinical Pharmacology and Therapeutics which assesses published
in vitro and clinical data regarding azithromycin as an agent with
antiviral properties. This open access review may serve to
facilitate the use of azithromycin in future research on COVID-19.
Azithromycin is not approved for the treatment of viral
infections.
- Studying Pfizer’s Existing Medicines for Critical Patient
Populations in Need:
- Pfizer and the Liverpool School of Tropical Medicine’s
Respiratory Infection Clinical Research Group initiated two new
studies to provide insights on the interaction between S.
pneumoniae and SARS-CoV-2. The studies (SAFER study (SARS-CoV-2
Acquisition in Frontline Health Care Workers – Evaluation to Inform
Response) and the FASTER study (Facilitating A SARS CoV-2 Test for
Rapid triage)) will help demonstrate whether patients infected with
COVID-19 have a higher risk of also developing pneumococcal
pneumonia and if having both infections leads to more severe
disease and poorer outcomes. The SAFER study will enroll 100
healthcare workers at the Royal Liverpool Hospital and examine
rates of SARS-CoV-2 acquisition and dynamics of pneumococcal
colonization. The FASTER study will recruit 400 patients from the
infectious disease ward at the Royal Liverpool Hospital suspected
of having COVID-19. Enrollment has already begun, and data are
expected over the next few months.
- Pfizer is in discussions with other institutions about studies
involving its immuno-kinase portfolio. This research is based on
the hypothesis that modulation of the immune response could
mitigate systemic and alveolar inflammation in patients with
COVID-19-related pneumonia by inhibiting essential cytokine
signaling involved in immune-mediated inflammatory response that
could lead to damage of the lungs, resulting in acute respiratory
distress syndrome in patients with COVID-19-related pneumonia.
Pfizer will continue to share information from its portfolio and
emerging candidates that could benefit the many companies and
organizations who are working quickly to provide solutions to
combat this unprecedented healthcare crisis.
- In April 2020, Pfizer and The Pfizer Foundation announced the
commitment of $40 million in medical and charitable cash grants to
help combat the health effects of the COVID-19 pandemic in the U.S.
and around the world. The donation addresses the urgent needs of
partners who are working to slow the spread of the virus within
communities and strengthen vulnerable healthcare systems against
future public health threats. Pfizer is also responding to patient
and healthcare provider needs during this unprecedented time by
evolving its U.S. Patient Assistance Program and donating
additional critical medicines and vaccines in the U.S. and around
the world. The Pfizer Foundation is a charitable organization
established by Pfizer Inc. It is a separate legal entity from
Pfizer Inc. with distinct legal restrictions.
- In April 2020, Pfizer, Merck and Lilly announced medical
service volunteer programs to enable employees who are licensed
medical professionals to aid in the fight against COVID-19. Pfizer
created a new Global COVID-19 Medical Service Program that empowers
medical colleagues to provide diagnostic, treatment and public
health support in the battle against COVID-19. Licensed medical
professionals who feel duty-bound to provide their services during
this crisis will now have a way to engage in the fight against
COVID-19. Colleagues will continue to receive their pay, benefits
and be able to return to their position upon completion of
service.
- In March 2020, Pfizer announced that, given the unique
circumstances of the COVID-19 pandemic and Pfizer’s responsibility
to prioritize the health and safety of colleagues and invited
guests, the company will reschedule its Investor Day that had been
planned for March 31, 2020 to a later date. At this point, there is
no timetable for rescheduling the event. Pfizer will work within
the context of appropriate guidance from health authorities to
determine a future date.
- In March 2020, Pfizer issued a five-point plan calling on the
biopharmaceutical industry to join the company in committing to
unprecedented collaboration to combat COVID-19. Pfizer is making
five promises that will help scientists more rapidly bring forward
therapies and vaccines to protect humankind from this escalating
pandemic and prepare the industry to better respond to future
global health crises.
- Sharing tools and insights: With very little known about
this virus, many are working to develop cell-based assays, viral
screening, serological assays and translational models to test
potential therapies and vaccines. Pfizer is committed to making the
vital tools it develops available on an open source platform to the
broader scientific community and to sharing the data and learnings
gained with other companies in real time to rapidly advance
therapies and vaccines to patients.
- Marshalling Pfizer's people: Human capital is Pfizer's
most valuable resource. Pfizer has created a SWAT team of our
leading virologists, biologists, chemists, clinicians,
epidemiologists, vaccine experts, pharmaceutical scientists and
other key experts to focus solely on addressing this pandemic. This
team is applying their passion, commitment and expertise to a
single focus of accelerating the discovery and development process
that will deliver therapies and vaccines to patients as soon as
possible.
- Applying Pfizer's drug development expertise: Many
smaller biotech companies are screening compounds or existing
therapies for activity against the virus causing COVID-19, but some
lack the experience in late stage development and navigating the
complex regulatory systems. Pfizer is committed to sharing its
clinical development and regulatory expertise to support the most
promising candidates these companies bring forward.
- Offering Pfizer's manufacturing capabilities: Once a
therapy or vaccine is approved it will need to be rapidly scaled
and deployed around the world to put an end to this pandemic. As
one of the largest manufacturers of vaccines and therapeutics,
Pfizer is committed to using any excess manufacturing capacity and
to potentially shifting production to support others in rapidly
getting these life-saving breakthroughs into the hands of patients
as quickly as possible.
- Improving future rapid response: Finally, to address
future global health threats, Pfizer is reaching out to federal
agencies including the National Institutes of Health, the National
Institute of Allergy and Infectious Diseases, and the Centers for
Disease Control and Prevention to build a cross-industry rapid
response team of scientists, clinicians and technicians able to
move into action immediately when future epidemics surface.
- Since February 2020, Pfizer announced the election of three new
members to its Board of Directors, including:
- In April 2020, Dr. Susan Desmond-Hellmann was elected to
Pfizer’s Board of Directors, effective immediately, and was
appointed to the Governance & Sustainability Committee and the
Science and Technology Committee of the Board.
- In March 2020, Dr. Susan Hockfield was elected to Pfizer’s
Board of Directors, effective immediately, and was appointed to the
Regulatory and Compliance Committee and the Science and Technology
Committee of the Board.
- In February 2020, James Quincey was elected to Pfizer’s Board
of Directors, effective immediately, and was appointed to the
Compensation Committee and the Science and Technology Committee of
the Board.
In addition, at its April 2020 Annual Meeting
of Shareholders, all 14 current Pfizer directors were
re-elected.
- Since February 2020, Pfizer and Mylan have made a series of
announcements regarding the pending combination of Mylan with
Upjohn, a division of Pfizer, into a new global pharmaceutical
company, Viatris, including:
- In April 2020, the EC approved the combination of Mylan and
Upjohn, conditioned upon the completion of the sale of certain of
Mylan’s products in Europe.
- In March 2020, Pfizer and Mylan announced that due to the
unprecedented circumstances surrounding the COVID-19 pandemic,
including associated delays in the regulatory review process, the
proposed transaction is now anticipated to close in the second half
of 2020. There are no additional changes to the previously
announced terms or plans regarding the transaction. Pfizer and
Mylan remain highly confident in the benefits of the pending
transaction to their respective shareholders and other
stakeholders. Mylan, Pfizer and Upjohn are working closely on
integration planning and are making significant progress toward Day
1 readiness while continuing to progress toward a successful
transaction close. Mylan’s extraordinary general meeting of
shareholders to approve certain matters in connection with the
transaction was rescheduled from April 27, 2020, to June 30, 2020,
and will be hosted in conjunction with Mylan’s annual general
meeting of shareholders.
- In February 2020, Pfizer and Mylan announced that Sanjeev
Narula, current chief financial officer (CFO) of Upjohn was named
incoming CFO of Viatris. As the Viatris CFO, Mr. Narula will report
to Michael Goettler, who was previously announced as incoming CEO
of Viatris. The Mylan and Upjohn teams will continue to work
together over the coming months to fill additional leadership
positions and further its comprehensive integration planning
efforts. Mylan and Upjohn will continue to operate as independent
organizations under their existing organization structures until
the transaction closes.
- In February 2020, Pfizer and Mylan announced the remaining
appointees to the inaugural 13-member Board of Directors for
Viatris. In addition to the previously announced Pfizer-designated
appointments of Ian Read and Jim Kilts, Pfizer has appointed
current Pfizer board member W. Don Cornwell, who will resign from
the Pfizer board to serve as a director of Viatris upon the close
of the transaction. Additionally, Mylan has appointed eight of its
own directors to serve on the Viatris Board of Directors, including
JoEllen Lyons Dillon, Neil Dimick, Melina Higgins, Harry A. Korman,
Rajiv Malik, Richard A. Mark, Mark W. Parrish and Pauline van der
Meer Mohr. As previously announced, the Board of Directors of
Viatris will also include Viatris Executive Chairman Robert J.
Coury and Viatris CEO Michael Goettler.
Please find Pfizer’s press release and associated financial
tables, including reconciliations of certain GAAP reported to
non-GAAP adjusted information, at the following hyperlink:
https://investors.pfizer.com/files/doc_financials/Quarterly/2020/q1/Q1-2020-PFE-Earnings-Release.pdf
(Note: If clicking on the above link does not open up a new web
page, you may need to cut and paste the above URL into your
browser's address bar.)
For additional details, see the associated financial
schedules and product revenue tables attached to the press release
located at the hyperlink referred to above and the attached
disclosure notice.
(1) The following acquisitions and divestitures impacted
financial results for the periods presented:
- On July 31, 2019, Pfizer and GlaxoSmithKline plc (GSK)
completed a transaction that combined the two companies’ respective
consumer healthcare businesses into a joint venture (JV), operating
under the GSK Consumer Healthcare name. In exchange for
contributing its Consumer Healthcare business to the JV, Pfizer
received a 32% equity stake in the JV and GSK owns the remaining
68% of the JV. Upon the closing of the transaction, Pfizer
deconsolidated its Consumer Healthcare business and began recording
its share of earnings from the Consumer Healthcare JV on a
quarterly basis on a one-quarter lag in Other
(income)/deductions––net commencing from August 1, 2019. Therefore,
Pfizer recorded its share of the JV’s earnings generated in
fourth-quarter 2019 in its first-quarter 2020 operating
results.
- On July 30, 2019, Pfizer announced the successful completion of
its acquisition of Array BioPharma Inc. (Array). Array’s portfolio
included two approved products, Braftovi (encorafenib) and Mektovi
(binimetinib).
- On July 1, 2019, Pfizer announced the successful completion of
its acquisition of the privately held clinical-stage biotechnology
company, Therachon Holding AG.
(2) Revenues is defined as revenues in accordance with U.S.
generally accepted accounting principles (GAAP). Reported net
income is defined as net income attributable to Pfizer Inc. in
accordance with U.S. GAAP. Reported diluted earnings per share
(EPS) is defined as diluted EPS attributable to Pfizer Inc. common
shareholders in accordance with U.S. GAAP.
(3) Adjusted income and its components and Adjusted diluted EPS
are defined as reported U.S. GAAP net income(2) and its components
and reported diluted EPS(2) excluding purchase accounting
adjustments, acquisition-related costs, discontinued operations and
certain significant items (some of which may recur, such as gains
on the completion of joint venture transactions, restructuring
charges, legal charges or gains and losses from equity securities,
but which management does not believe are reflective of ongoing
core operations). Adjusted cost of sales, Adjusted selling,
informational and administrative (SI&A) expenses, Adjusted
research and development (R&D) expenses and Adjusted other
(income)/deductions are income statement line items prepared on the
same basis as, and therefore components of, the overall Adjusted
income measure. As described in the Financial Review––Non-GAAP
Financial Measure (Adjusted Income) section of Pfizer’s 2019
Financial Report, which was filed as Exhibit 13 to Pfizer’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2019,
management uses Adjusted income, among other factors, to set
performance goals and to measure the performance of the overall
company. Because Adjusted income is an important internal
measurement for Pfizer, management believes that investors’
understanding of our performance is enhanced by disclosing this
performance measure. Pfizer reports Adjusted income, certain
components of Adjusted income, and Adjusted diluted EPS in order to
portray the results of the company’s major operations––the
discovery, development, manufacture, marketing and sale of
prescription medicines and vaccines––prior to considering certain
income statement elements. See the accompanying reconciliations of
certain GAAP Reported to Non-GAAP Adjusted information for the
first quarter of 2020 and 2019. The Adjusted income and its
components and Adjusted diluted EPS measures are not, and should
not be viewed as, substitutes for U.S. GAAP net income and its
components and diluted EPS.
(4) Pfizer’s fiscal year-end for international subsidiaries is
November 30 while Pfizer’s fiscal year-end for U.S. subsidiaries is
December 31. Therefore, Pfizer’s first quarter for U.S.
subsidiaries reflects the three months ending on March 29, 2020 and
March 31, 2019 while Pfizer’s first quarter for subsidiaries
operating outside the U.S. reflects the three months ending on
February 23, 2020 and February 24, 2019.
(5) References to operational variances in this press release
pertain to period-over-period growth rates that exclude the impact
of foreign exchange. The operational variances are determined by
multiplying or dividing, as appropriate, the current period U.S.
dollar results by the current period average foreign exchange rates
and then multiplying or dividing, as appropriate, those amounts by
the prior-year period average foreign exchange rates. Although
exchange rate changes are part of Pfizer’s business, they are not
within Pfizer’s control. Exchange rate changes, however, can mask
positive or negative trends in the business; therefore, Pfizer
believes presenting operational variances provides useful
information in evaluating the results of its business.
(6) Pfizer does not provide guidance for GAAP Reported financial
measures (other than revenues) or a reconciliation of
forward-looking non-GAAP financial measures to the most directly
comparable GAAP Reported financial measures on a forward-looking
basis because it is unable to predict with reasonable certainty the
ultimate outcome of pending litigation, unusual gains and losses,
acquisition-related expenses, gains and losses from equity
securities and potential future asset impairments without
unreasonable effort. These items are uncertain, depend on various
factors, and could have a material impact on GAAP Reported results
for the guidance period.
In addition to the assumptions outlined in the 2020 Financial
Guidance section of this press release, the 2020 financial guidance
for Total Company(7) reflects the following:
- Does not assume the completion of any business development
transactions not completed as of March 29, 2020, including any
one-time upfront payments associated with such transactions.
- Includes Pfizer’s pro rata share of the Consumer Healthcare
JV(1) anticipated earnings, which is recorded in Adjusted other
(income)/deductions(3) on a one-quarter lag. Therefore, 2020
financial guidance for Adjusted other (income)/deductions(3) and
Adjusted diluted EPS(3) reflects Pfizer’s share of the JV’s
earnings that were generated in fourth-quarter 2019 (recorded by
Pfizer in first-quarter 2020) as well as Pfizer’s share of the JV’s
projected earnings during the first three quarters of 2020.
- Reflects an anticipated negative revenue impact of $2.4 billion
due to recent and expected generic and biosimilar competition for
certain products that have recently lost or are anticipated to soon
lose patent protection.
- Exchange rates assumed are a blend of actual exchange rates in
effect through first-quarter 2020 and mid-April 2020 rates for the
remainder of the year. Financial guidance reflects the anticipated
unfavorable impact of approximately $0.9 billion on revenues and
approximately $0.06 on Adjusted diluted EPS(3) as a result of
changes in foreign exchange rates relative to the U.S. dollar
compared to foreign exchange rates from 2019.
- Guidance for Adjusted diluted EPS(3) assumes diluted
weighted-average shares outstanding of approximately 5.6 billion
shares, which assumes no share repurchases in 2020.
(7) Financial guidance for Total Company reflects a full-year
2020 contribution from Biopharma and Upjohn, the current construct
of the company, and excludes any impact from the pending Upjohn
combination with Mylan.
(8) Financial guidance for New Pfizer reflects a full-year 2020
pro forma view of the company assuming the pending Upjohn
combination with Mylan was completed at the beginning of 2020.
Therefore, New Pfizer reflects contributions from the Biopharma
business as it is presently being managed, which excludes
contributions from Pfizer’s Meridian subsidiary and the
Pfizer-Mylan strategic collaboration in Japan (Mylan-Japan).
Pfizer’s Meridian subsidiary and Mylan-Japan were managed by
Pfizer’s Biopharma business in 2019 but were moved to Upjohn in
2020. Financial guidance for New Pfizer also includes the full-year
effect of the following items that assume the completion of the
Upjohn combination with Mylan:
- $12 billion of net proceeds from Upjohn to be retained by
Pfizer, which Pfizer will use to repay its own existing
indebtedness; and
- other transaction-related items, such as income from transition
services agreements between Pfizer and Viatris.
In addition, 2020 financial guidance for New Pfizer Adjusted IBT
Margin(9) and Adjusted diluted EPS(3) reflects Pfizer’s share of
the earnings generated by the Consumer Healthcare JV(1) in
fourth-quarter 2019 (recorded by Pfizer in first-quarter 2020) as
well as Pfizer’s share of the JV’s projected earnings during the
first three quarters of 2020.
(9) Adjusted income(3) before tax margin (Adjusted IBT margin)
is defined as revenue less the sum of Adjusted cost of sales(3),
Adjusted SI&A expenses(3), Adjusted R&D expenses(3),
Adjusted amortization of intangible assets(3) and Adjusted other
(income)/deductions(3) as a percentage of revenue. Adjusted IBT
Margin is presented because management believes this performance
measure supplements investors’ and other readers’ understanding and
assessment of the financial performance of New Pfizer(8). Adjusted
IBT margin is not, and should not be viewed as, a substitute for
U.S. GAAP income before tax margin.
(10) Financial guidance for Upjohn reflects a full-year 2020
contribution from the Upjohn business as it is presently being
managed, which includes contributions from Pfizer’s Meridian
subsidiary and the Pfizer-Mylan strategic collaboration in Japan
(Mylan-Japan). Pfizer’s Meridian subsidiary and Mylan-Japan were
managed by Pfizer’s Biopharma business in 2019 but were moved to
Upjohn in 2020.
(11) Adjusted Earnings Before Interest, Tax, Depreciation and
Amortization (EBITDA) is defined as reported U.S. GAAP net
income(2), and its components, adjusted for interest expense,
provision for taxes on income and depreciation and amortization,
further adjusted to exclude purchase accounting adjustments,
acquisition-related costs, discontinued operations and certain
significant items (some of which may recur, such as gains on the
completion of joint venture transactions, restructuring charges,
legal charges or gains and losses from equity securities, but which
management does not believe are reflective of ongoing core
operations). Adjusted EBITDA is presented because management
believes this performance measure supplements investors’ and other
readers’ understanding and assessment of the financial performance
of Upjohn. Adjusted EBITDA as defined is not a measurement of
financial performance under GAAP, and should not be considered as
an alternative to net income(2) or cash flow from operations
determined in accordance with GAAP.
(12) Erbitux® is a registered trademark of ImClone LLC.
(13) MabThera® is a registered trademark of Roche, Inc.
DISCLOSURE NOTICE: Except where otherwise noted, the information
contained in this earnings release and the related attachments is
as of April 28, 2020. We assume no obligation to update any
forward-looking statements contained in this earnings release and
the related attachments as a result of new information or future
events or developments.
This earnings release and the related attachments contain
forward-looking statements about our anticipated future operating
and financial performance, business plans and prospects,
expectations for our product pipeline, in-line products and product
candidates, including anticipated regulatory submissions, data
read-outs, study starts, approvals, revenue contribution, growth,
performance, timing of exclusivity and potential benefits,
strategic reviews, capital allocation objectives, benefits
anticipated from the reorganization of our commercial operations in
2019, plans for and prospects of our acquisitions and other
business development activities, including our proposed transaction
with Mylan N.V. (Mylan) to combine Upjohn and Mylan to create a new
global pharmaceutical company, our acquisition of Array BioPharma
Inc. and our transaction with GSK which combined our respective
consumer healthcare businesses into a new consumer healthcare joint
venture, our ability to successfully capitalize on growth
opportunities or prospects, manufacturing and product supply, our
efforts to respond to COVID-19, our expectations regarding the
impact of COVID-19 on our business, operations and financial
results and plans relating to share repurchases and dividends,
among other things, that involve substantial risks and
uncertainties. You can identify these statements by the fact that
they use future dates or use words such as “will,” “may,” “could,”
“likely,” “ongoing,” “anticipate,” “estimate,” “expect,” “project,”
“intend,” “plan,” “believe,” “assume,” “target,” “forecast,”
“guidance,” “goal,” “objective,” “aim,” “seek” and other words and
terms of similar meaning. Among the factors that could cause actual
results to differ materially from past results and future plans and
projected future results are the following:
- the outcome of R&D activities, including, without
limitation, the ability to meet anticipated pre-clinical or
clinical endpoints, commencement and/or completion dates for our
pre-clinical or clinical trials, regulatory submission dates,
regulatory approval dates and/or launch dates, as well as the
possibility of unfavorable pre-clinical and clinical trial results,
including the possibility of unfavorable new clinical data and
further analyses of existing clinical data;
- the risk we may not be able to successfully address all of the
comments received from regulatory authorities such as the FDA or
the EMA, or obtain approval from regulators, which will depend on
myriad factors, including such regulator making a determination as
to whether a product’s benefits outweigh its known risks and a
determination of the product’s efficacy; regulatory decisions
impacting labeling, manufacturing processes, safety and/or other
matters; and recommendations by technical or advisory committees,
such as ACIP, that may impact the use of our vaccines;
- the speed with which regulatory authorizations, pricing
approvals and product launches may be achieved;
- claims and concerns that may arise regarding the safety or
efficacy of in-line products and product candidates, including
claims and concerns that may arise from the outcome of
post-approval clinical trials, which could result in the loss of
marketing approval, changes in product labeling, and/or new or
increased concerns about the side effects or efficacy of, a product
that could affect its availability or commercial potential, such as
the update to the U.S. and EU prescribing information for
Xeljanz;
- the success of external business-development activities,
including the ability to identify and execute on potential business
development opportunities, the ability to satisfy the conditions to
closing of announced transactions in the anticipated time frame or
at all, the ability to realize the anticipated benefits of any such
transactions, and the potential need to obtain additional equity or
debt financing to pursue these opportunities, which could result in
increased leverage and impact our credit ratings;
- competitive developments, including the impact on our
competitive position of new product entrants, in-line branded
products, generic products, private label products, biosimilars and
product candidates that treat diseases and conditions similar to
those treated by our in-line drugs and drug candidates;
- the implementation by the FDA and regulatory authorities in
certain countries of an abbreviated legal pathway to approve
biosimilar products, which could subject our biologic products to
competition from biosimilar products, with attendant competitive
pressures, after the expiration of any applicable exclusivity
period and patent rights;
- risks related to our ability to develop and commercialize
biosimilars, including risks associated with “at risk” launches,
defined as the marketing of a product by Pfizer before the final
resolution of litigation (including any appeals) brought by a third
party alleging that such marketing would infringe one or more
patents owned or controlled by the third party, and access
challenges for our biosimilar products where our product may not
receive appropriate formulary access or remains in a disadvantaged
position relative to the innovator product;
- the ability to meet competition from generic, branded and
biosimilar products after the loss or expiration of patent
protection for our products or competitor products;
- the ability to successfully market both new and existing
products domestically and internationally;
- difficulties or delays in manufacturing, sales or marketing,
including delays caused by natural events, such as hurricanes;
supply disruptions, shortages or stock-outs at our facilities; and
legal or regulatory actions, such as warning letters, suspension of
manufacturing, seizure of product, injunctions, debarment, recall
of a product, delays or denials of product approvals, import bans
or denial of import certifications;
- the impact of public health outbreaks, epidemics or pandemics
(such as the COVID-19 pandemic) on our operations, including due to
travel limitations and stay-at-home or work-from-home orders,
manufacturing disruptions or delays, supply chain interruptions,
disruptions to pipeline development and clinical trials, decreased
product demand, including due to reduced numbers of in-person
meetings with prescribers, patient visits with physicians and
elective surgeries as well as increased unemployment resulting in
lower new prescriptions, challenges presented by reallocating human
capital, R&D, manufacturing and other resources to assist in
responding to such outbreaks without disruption to our operations,
costs associated with the COVID-19 pandemic, including protocols
intended to reduce the risk of transmission, increased supply chain
costs and additional R&D costs incurred in our effort to
develop a potential vaccine or treatment for COVID-19, and other
challenges presented by disruptions to our normal operations in
response to the pandemic, as well as uncertainties regarding the
duration and severity of the pandemic and its impacts and
government or regulatory actions to contain the virus or control
the supply of medicines, each of which may also amplify the impact
of the other factors listed in this section;
- uncertainties related to our efforts to develop a potential
treatment or vaccine for COVID-19, including that our development
programs may not be successful or commercially viable or receive
approval from regulatory authorities, any disruption in the
relationships between us and our collaboration partners or
third-party suppliers, other companies may produce superior or
competitive products, the demand for such products may no longer
exist, lack of availability of raw materials to manufacture such
products, we may not be able to recoup costs associated with our
R&D and manufacturing efforts or create or scale up
manufacturing capacity on a timely basis or have access to
logistics or supply channels commensurate with global demand for
any approved vaccine or product candidate and any pricing and
access challenges for such products;
- trade buying patterns;
- the impact of existing and future legislation and regulatory
provisions on product exclusivity;
- trends toward managed care and healthcare cost containment, and
our ability to obtain or maintain timely or adequate pricing or
favorable formulary placement for our products;
- the impact of any significant spending reductions or cost
controls affecting Medicare, Medicaid or other publicly funded or
subsidized health programs or changes in the tax treatment of
employer-sponsored health insurance that may be implemented;
- the impact of any U.S. healthcare reform or legislation,
including any replacement, repeal, modification or invalidation of
some or all of the provisions of the U.S. Patient Protection and
Affordable Care Act, as amended by the Health Care and Education
Reconciliation Act;
- U.S. federal or state legislation or regulatory action and/or
policy efforts affecting, among other things, pharmaceutical
product pricing, intellectual property, reimbursement or access,
including under Medicaid, Medicare and other publicly funded or
subsidized health programs; patient out-of-pocket costs for
medicines, manufacturer prices and/or price increases that could
result in new mandatory rebates and discounts or other pricing
restrictions; general budget control actions; the importation of
prescription drugs from outside the U.S. at prices that are
regulated by governments of various foreign countries; revisions to
reimbursement of biopharmaceuticals under government programs;
restrictions on U.S. direct-to-consumer advertising; limitations on
interactions with healthcare professionals; or the use of
comparative effectiveness methodologies that could be implemented
in a manner that focuses primarily on the cost differences and
minimizes the therapeutic differences among pharmaceutical products
and restricts access to innovative medicines; as well as pricing
pressures for our products as a result of highly competitive
insurance markets;
- legislation or regulatory action in markets outside the U.S.,
including China, affecting pharmaceutical product pricing,
intellectual property, reimbursement or access, including, in
particular, continued government-mandated reductions in prices and
access restrictions for certain biopharmaceutical products to
control costs in those markets;
- the exposure of our operations outside the U.S. to possible
capital and exchange controls, economic conditions, expropriation
and other restrictive government actions, changes in intellectual
property legal protections and remedies, as well as political
unrest, unstable governments and legal systems and
inter-governmental disputes;
- contingencies related to actual or alleged environmental
contamination;
- any significant breakdown, infiltration or interruption of our
information technology systems and infrastructure;
- legal defense costs, insurance expenses and settlement
costs;
- the risk of an adverse decision or settlement and the adequacy
of reserves related to legal proceedings, including patent
litigation, such as claims that our patents are invalid and/or do
not cover the product of the generic drug manufacturer or where one
or more third parties seeks damages and/or injunctive relief to
compensate for alleged infringement of its patents by our
commercial or other activities, product liability and other
product-related litigation, including personal injury, consumer,
off-label promotion, securities, antitrust and breach of contract
claims, commercial, environmental, government investigations,
employment and other legal proceedings, including various means for
resolving asbestos litigation, as well as tax issues;
- the risk that our currently pending or future patent
applications may not result in issued patents, or be granted on a
timely basis, or any patent-term extensions that we seek may not be
granted on a timely basis, if at all;
- our ability to protect our patents and other intellectual
property, both domestically and internationally, including in
response to any pressure, or legal or regulatory action by, various
stakeholders or governments that potentially results in us not
seeking intellectual property protection for or agreeing not to
enforce intellectual property related to potential vaccines and
treatments for COVID-19;
- interest rate and foreign currency exchange rate fluctuations,
including the impact of possible currency devaluations in countries
experiencing high inflation rates;
- governmental laws and regulations affecting domestic and
foreign operations, including, without limitation, tax obligations
and changes affecting the tax treatment by the U.S. of income
earned outside the U.S. that may result from pending and possible
future proposals, including further clarifications and/or
interpretations of or changes to the TCJA enacted in 2017;
- any significant issues involving our largest wholesale
distributors, which account for a substantial portion of our
revenues;
- the possible impact of the increased presence of counterfeit
medicines in the pharmaceutical supply chain on our revenues and on
patient confidence in the integrity of our medicines;
- uncertainties based on the formal change in relationship
between the U.K. government and the EU, which could have
implications on our research, commercial and general business
operations in the U.K. and the EU, including the approval and
supply of our products;
- any significant issues that may arise related to the
outsourcing of certain operational and staff functions to third
parties, including with regard to quality, timeliness and
compliance with applicable legal or regulatory requirements and
industry standards;
- any significant issues that may arise related to our joint
ventures and other third-party business arrangements;
- further clarifications and/or changes in interpretations of
existing laws and regulations, or changes in laws and regulations,
in the U.S. and other countries, including changes in U.S.
generally accepted accounting principles;
- uncertainties related to general economic, political, business,
industry, regulatory and market conditions including, without
limitation, uncertainties related to the impact on us, our
customers, suppliers and lenders and counterparties to our
foreign-exchange and interest-rate agreements of challenging global
economic conditions and recent and possible future changes in
global financial markets; the related risk that our allowance for
doubtful accounts may not be adequate; and the risks related to
volatility of our income due to changes in the market value of
equity investments;
- any changes in business, political and economic conditions due
to actual or threatened terrorist activity or civil unrest in the
U.S. and other parts of the world, and related U.S. military action
overseas;
- growth in costs and expenses;
- changes in our product, segment and geographic mix;
- the impact of purchase accounting adjustments,
acquisition-related costs, discontinued operations and certain
significant items;
- the impact of product recalls, withdrawals and other unusual
items;
- the risk of an impairment charge related to our intangible
assets, goodwill or equity-method investments;
- the impact of, and risks and uncertainties related to,
acquisitions and divestitures, such as the acquisition of Array,
our transaction with GSK which combined our respective consumer
healthcare businesses into a new consumer healthcare joint venture
and our agreement to combine Upjohn with Mylan to create a new
global pharmaceutical company, Viatris, including, among other
things, risks related to the satisfaction of the conditions to
closing to any pending transaction (including the failure to obtain
any necessary shareholder and regulatory approvals) in the
anticipated timeframe or at all and the possibility that such
transaction does not close; the ability to realize the anticipated
benefits of those transactions, including the possibility that the
expected cost savings and/or accretion from certain of those
transactions will not be realized or will not be realized within
the expected time frame; the risk that the businesses will not be
integrated successfully; negative effects of the announcement or
the consummation of the transaction on the market price of Pfizer’s
common stock, Pfizer’s credit ratings and/or Pfizer’s operating
results; disruption from the transactions making it more difficult
to maintain business and operational relationships; risks related
to our ability to grow revenues for certain acquired products;
significant transaction costs; unknown liabilities; the risk of
litigation and/or regulatory actions related to the transaction,
other business effects, including the effects of industry, market,
economic, political or regulatory conditions, future exchange and
interest rates, changes in tax and other laws, regulations, rates
and policies, future business combinations or disposals;
competitive developments; and as it relates to the Consumer
Healthcare JV with GSK, the possibility that a future separation of
the joint venture as an independent company via a demerger of GSK’s
equity interest to GSK’s shareholders and a listing of the joint
venture on the U.K. equity market may not occur; and
- the impact of, and risks and uncertainties related to,
restructurings and internal reorganizations, including the
reorganization of our commercial operations in 2019, as well as any
other corporate strategic initiatives, and cost-reduction and
productivity initiatives, each of which requires upfront costs but
may fail to yield anticipated benefits and may result in unexpected
costs or organizational disruption.
We cannot guarantee that any forward-looking statement will be
realized. Achievement of anticipated results is subject to
substantial risks, uncertainties and inaccurate assumptions. Should
known or unknown risks or uncertainties materialize or should
underlying assumptions prove inaccurate, actual results could vary
materially from past results and those anticipated, estimated or
projected. Investors should bear this in mind as they consider
forward-looking statements, and are cautioned not to put undue
reliance on forward-looking statements. A further list and
description of risks, uncertainties and other matters can be found
in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 and in our subsequent reports on Form 10-Q, in
each case including in the sections thereof captioned
“Forward-Looking Information and Factors That May Affect Future
Results” and “Item 1A. Risk Factors”, and in our subsequent reports
on Form 8-K.
The operating segment information provided in this earnings
release and the related attachments does not purport to represent
the revenues, costs and income from continuing operations before
provision for taxes on income that each of our operating segments
would have recorded had each segment operated as a standalone
company during the periods presented.
This earnings release may include discussion of certain clinical
studies relating to various in-line products and/or product
candidates. These studies typically are part of a larger body of
clinical data relating to such products or product candidates, and
the discussion herein should be considered in the context of the
larger body of data. In addition, clinical trial data are subject
to differing interpretations, and, even when we view data as
sufficient to support the safety and/or effectiveness of a product
candidate or a new indication for an in-line product, regulatory
authorities may not share our views and may require additional data
or may deny approval altogether.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended. In connection with the proposed combination of Upjohn Inc.
(“Newco”), a wholly owned subsidiary of Pfizer Inc. (“Pfizer”) and
Mylan N.V. (“Mylan”), which will immediately follow the proposed
separation of the Upjohn business (the “Upjohn Business”) from
Pfizer (the “proposed transaction”), Newco and Mylan have filed
certain materials with the SEC, including, among other materials,
the Form S-4, Form 10 and Prospectus filed by Newco and the Proxy
Statement filed by Mylan. The Form S-4 was declared effective on
February 13, 2020 and the Proxy Statement and the Prospectus were
first mailed to shareholders of Mylan on or about February 14, 2020
to seek approval of the proposed transaction. The Form 10 has not
yet become effective. After the Form 10 is effective, a definitive
information statement will be made available to the Pfizer
stockholders relating to the proposed transaction. Newco and Mylan
intend to file additional relevant materials with the SEC in
connection with the proposed transaction. INVESTORS AND SECURITY
HOLDERS ARE URGED TO READ DOCUMENTS FILED WITH THE SEC CAREFULLY
AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT MYLAN, NEWCO AND THE PROPOSED TRANSACTION. The
documents relating to the proposed transaction (when they are
available) can be obtained free of charge from the SEC’s website at
www.sec.gov. These documents (when they are available) can also be
obtained free of charge from Mylan, upon written request to Mylan
or by contacting Mylan at (724) 514-1813 or
investor.relations@mylan.com or from Pfizer on Pfizer’s internet
website at
https://investors.Pfizer.com/financials/sec-filings/default.aspx or
by contacting Pfizer’s Investor Relations Department at (212)
733-2323, as applicable.
PARTICIPANTS IN THE SOLICITATION
This communication is not a solicitation of a proxy from any
investor or security holder. However, Pfizer, Mylan, Newco and
certain of their respective directors and executive officers may be
deemed to be participants in the solicitation of proxies in
connection with the proposed transaction under the rules of the
SEC. Information about the directors and executive officers of
Pfizer may be found in its Annual Report on Form 10-K filed with
the SEC on February 27, 2020, and its definitive proxy statement
relating to its 2020 Annual Meeting filed with the SEC on March 13,
2020, as supplemented by its supplement to proxy statement filed
with the SEC on April 7, 2020. Information about the directors and
executive officers of Mylan may be found in its Annual Report on
Form 10-K filed with the SEC on February 28, 2020, and its
definitive proxy statement relating to its 2019 Annual Meeting
filed with the SEC on May 24, 2019. Additional information
regarding the interests of these participants can also be found in
the Form S-4, the Proxy Statement and the Prospectus. These
documents can be obtained free of charge from the sources indicated
above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200428005274/en/
Media Amy Rose, 212.733.7410
Investors Chuck Triano,
212.733.3901
Ryan Crowe, 212.733.8160
Bryan Dunn, 212.733.8917
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