- Second-Quarter 2020 Revenues of $11.8 Billion, Reflecting 9%
Operational Decline; Excluding the Impact from Consumer
Healthcare(1), Revenues Declined 3% Operationally
- 6% Operational Growth from Biopharma, Primarily Driven by
Vyndaqel/Vyndamax, Eliquis, Ibrance, Inlyta and Xtandi
- 31% Operational Decline from Upjohn, Primarily Due to U.S. Loss
of Exclusivity of Lyrica in 2019, Partially Offset by 17%
Operational Growth in China, Primarily Due to Lipitor and
Norvasc
- Second-Quarter 2020 Reported Diluted EPS(2) of $0.61, Adjusted
Diluted EPS(3) of $0.78
- Raised Midpoint of 2020 Financial Guidance for Revenues by $0.1
Billion to $48.6 to $50.6 Billion and Adjusted Diluted EPS(3) by
$0.03 to $2.85 to $2.95; Reaffirmed All Other 2020 Financial
Guidance Components
- Initiated Four Different Registration-Enabling Vaccine
Candidate Programs Since May 2020, Including for Pneumococcal
20-Valent in Infants, Meningococcal Pentavalent, Respiratory
Syncytial Virus and for COVID-19, Which Started Dosing Patients in
the U.S. Yesterday
Pfizer Inc. (NYSE: PFE) reported financial results for
second-quarter 2020, increased its 2020 financial guidance for
revenues and Adjusted diluted EPS(3) and reaffirmed all other
components of its 2020 financial guidance, which continues to
reflect actual and anticipated business impacts from the novel
coronavirus disease of 2019 (COVID-19) pandemic.
Results for the second quarter and the first six months of 2020
and 2019(4) are summarized below.
OVERALL RESULTS
($ in millions, except per share
amounts)
Second-Quarter
Six Months
2020
2019
Change
2020
2019
Change
Revenues
$
11,801
$
13,264
(11
%)
$
23,829
$
26,382
(10
%)
Reported Net Income(2)
3,426
5,046
(32
%)
6,828
8,929
(24
%)
Reported Diluted EPS(2)
0.61
0.89
(31
%)
1.22
1.56
(22
%)
Adjusted Income(3)
4,403
4,520
(3
%)
8,917
9,410
(5
%)
Adjusted Diluted EPS(3)
0.78
0.80
(2
%)
1.59
1.65
(4
%)
REVENUES
($ in millions)
Second-Quarter
Six Months
% Change
% Change
2020
2019
Total
Oper.
2020
2019
Total
Oper.
Biopharma
$
9,795
$
9,432
4
%
6
%
$
19,802
$
18,477
7
%
9
%
Upjohn
2,006
2,970
(32
%)
(31
%)
4,027
6,184
(35
%)
(34
%)
Consumer Healthcare(1)
—
862
(100
%)
(100
%)
—
1,721
(100
%)
(100
%)
Total Company
$
11,801
$
13,264
(11
%)
(9
%)
$
23,829
$
26,382
(10
%)
(8
%)
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 other business development activities completed
in 2019 and in the first half of 2020 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 continues to take
proactive steps intended to protect the health and safety of
colleagues, to maintain supply of Pfizer medicines and vaccines to
patients and to continue to advance Pfizer’s pipeline.
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
continue to work remotely. Certain Pfizer colleagues, primarily
those in the Pfizer Global Supply and Worldwide Research and
Development organizations, have roles whose physical presence at
Pfizer facilities is required to perform their job functions. These
colleagues continue to report to work and 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
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. In addition,
Pfizer has taken steps to scale up manufacturing operations at risk
to accelerate its ability to supply a potential novel treatment or
vaccine for COVID-19.
Clinical Trials
After a brief pause to the recruitment portion of certain
ongoing clinical studies and a delay to most new study starts, in
late-April 2020, Pfizer restarted recruitment across the
development portfolio, including new study starts. Pfizer continues
to work closely with clinical trial sites to understand their needs
and is performing remote monitoring where appropriate 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 second-quarter 2020 was mixed, with
those in most international markets able to meet with healthcare
professionals for most of the quarter, while those in the U.S. were
unable to meet in-person with doctors for nearly all of the
quarter. At this time, no U.S. sales force colleagues are meeting
in-person with healthcare professionals due to COVID-19-related
safety concerns. Pfizer is actively reviewing and assessing
epidemiological data and colleagues remain ready to resume
in-person engagements with healthcare professionals on a
location-by-location basis as soon as it is safe to do so.
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 slowed in certain markets,
including the U.S., which negatively impacted second-quarter 2020
financial results. These declines were partially offset by certain
Pfizer medicines and vaccines that saw increased demand in certain
markets compared to the prior-year quarter, including Prevenar 13
for streptococcus pneumoniae in adults in international markets as
well as certain sterile injectable products utilized in the
intubation and ongoing treatment of mechanically-ventilated
COVID-19 patients.
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 increased its 2020 financial guidance for Total
Company(7) and New Pfizer(8) revenues and Adjusted diluted EPS(3)
and reaffirmed all other financial guidance components.
Financial guidance 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 regarding these uncertainties
broadly reflect an ongoing, gradual global recovery from the
first-half 2020 macroeconomic and healthcare impacts of the
COVID-19 pandemic. Specific COVID-19-related assumptions
include:
- Patient visits with physicians, vaccination rates and the
number of elective surgical procedures will gradually increase from
second-quarter 2020 levels, beginning in third-quarter 2020;
- New-to-brand prescription trends for certain key products will
gradually improve from second-quarter 2020 levels, beginning in
third-quarter 2020;
- Gradual improvement in access to U.S. healthcare professionals
for sales force colleagues;
- Clinical trial enrollment, including new study starts,
continues throughout the remainder of 2020;
- Pfizer’s manufacturing and supply chain activities continue to
not be materially disrupted; and
- Pfizer’s investments in potential treatments and a potential
vaccine for COVID-19 continue throughout 2020. However, updated
financial guidance does not include any revenues from a potential
COVID-19 vaccine.
Based on results to date and these assumptions for the remainder
of the year, Pfizer increased its 2020 financial guidance for Total
Company(7) and New Pfizer(8) revenues and Adjusted diluted EPS(3)
and reaffirmed all other financial guidance components. Total
Company(7) financial guidance reflects a full year of revenue and
expense contributions from Biopharma and Upjohn and is presented
below.
Revenues
$48.6 to $50.6 billion
(previously $48.5 to $50.5
billion)
Adjusted Cost of Sales(3) as a Percentage
of Revenues
19.5% to 20.5%
Adjusted SI&A Expenses(3)
$11.5 to $12.5 billion
Adjusted R&D Expenses(3)
$8.6 to $9.0 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)
$2.85 to $2.95
(previously $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) financial guidance reflects the
Biopharma business as it is presently being managed and assumes the
pending Upjohn combination with Mylan was completed at the
beginning of 2020.
Revenues
$40.8 to $42.4 billion
(previously $40.7 to $42.3
billion)
Adjusted IBT Margin(9)
Approximately 37.0%
Adjusted Diluted EPS(3)
$2.28 to $2.38
(previously $2.25 to $2.35)
Operating Cash Flow
$10.0 to $11.0 billion
2020 Financial Guidance for Upjohn(10)
Pfizer’s reaffirmed 2020 financial guidance for Upjohn(10) is
presented below. 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 six months of 2020, Pfizer paid $4.2 billion
of dividends, composed of dividends of $0.38 per share of common
stock in each of the first and second quarters of 2020.
- No share repurchases have been completed to date in 2020. As of
July 28, 2020, Pfizer’s remaining share repurchase authorization
was $5.3 billion. No share repurchases are currently planned in
2020.
- The second-quarter 2020 diluted weighted-average shares used to
calculate earnings per common share was 5,619 million shares, a
reduction of 53 million shares compared to second-quarter 2019.
EXECUTIVE COMMENTARY
Dr. Albert Bourla, Pfizer’s Chairman and Chief Executive
Officer, stated, “We remain 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 have made important progress toward
developing an effective vaccine though significant additional work
remains. I want to thank all of our R&D colleagues who continue
to work tirelessly to find a potential vaccine 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 half of the year highlights
the resiliency of our business even during the most challenging
times. The Biopharma business grew 9% operationally in the first
six months of the year, driven by strong performances from many key
brands. Upjohn faced the expected headwind of generic competition
for Lyrica in the U.S. that was partially offset by strong
performance in China in second-quarter 2020. We continue to
progress toward a successful close of our transaction with Mylan,
now expected in the fourth quarter of 2020,” Dr. Bourla
concluded.
Frank D’Amelio, Chief Financial Officer and Executive Vice
President, Business Operations and Global Supply, stated, “We
raised the midpoint of our 2020 financial guidance range for
revenues and Adjusted diluted EPS(3) for Total Company(7) and for
New Pfizer(8) while reaffirming the ranges for all other financial
guidance components. 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. Overall, I was pleased with our financial performance in
second-quarter 2020, which demonstrated the durability of our
business despite the challenges that the COVID-19 pandemic has
presented.
“Despite the ongoing impact of COVID-19, 2020 is still expected
to be a transformational year for Pfizer. Following the pending
close of the Upjohn-Mylan transaction, now expected in
fourth-quarter 2020, 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 (Second-Quarter 2020 vs.
Second-Quarter 2019)
Second-quarter 2020 revenues totaled $11.8 billion, a decrease
of $1.5 billion, or 11%, compared to the prior-year quarter,
reflecting an operational decline of $1.2 billion, or 9%, as well
as the unfavorable impact of foreign exchange of $277 million, or
2%. Excluding the impact of Consumer Healthcare(1), revenues
declined 3% operationally compared to the prior-year quarter.
Impact of COVID-19 on Second-Quarter 2020 Revenues
Second-quarter 2020 revenues included an estimated net
unfavorable impact of approximately $500 million, or 4%, due to
COVID-19, primarily reflecting unfavorable disruptions to wellness
visits for pediatric and adult patients in the U.S. and lower
demand for certain products in China, partially offset by increased
U.S. demand for certain sterile injectable products as well as
increased adult demand for Prevenar 13 in certain international
markets.
Biopharma Revenue Highlights
Second-quarter 2020 Biopharma revenues totaled $9.8 billion, up
6% operationally, primarily driven by:
- Vyndaqel/Vyndamax global revenues of $277 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
- 140% operational growth in international markets, primarily
driven by the March 2019 launch of the ATTR-CM indication in Japan
and the February 2020 approval of the ATTR-CM indication in the
European Union;
- Eliquis globally, up 19% operationally, primarily driven by
continued increased adoption in non-valvular atrial fibrillation as
well as oral anti-coagulant market share gains. Second-quarter 2020
U.S. growth was unfavorably impacted by a lower net price and
COVID-19-related wholesaler buying patterns;
- Ibrance in the U.S., up 11%, primarily driven by increased
cyclin-dependent kinase (CDK) class penetration and Ibrance’s
continued CDK market share leadership in metastatic breast
cancer;
- Prevenar 13 internationally, up 18% operationally, primarily
reflecting significantly increased adult uptake in Germany and
certain other markets resulting from greater vaccine awareness for
respiratory illnesses, including specifically pneumococcal disease,
due to the COVID-19 pandemic, as well as continued strong pediatric
uptake in China;
- the Hospital business in the U.S., up 13%, primarily driven by
increased demand for certain sterile injectable products utilized
in the intubation and ongoing treatment of mechanically-ventilated
COVID-19 patients as well as continued growth from Panzyga
following its November 2018 U.S. launch;
- Inlyta in the U.S., up 120%, primarily reflecting increased
demand 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; and
- Xtandi in the U.S., up 32%, primarily driven by continued
strong demand in the metastatic and non-metastatic
castration-resistant prostate cancer indications as well as the
metastatic castration-sensitive prostate cancer indication, which
was approved in the U.S. in December 2019,
partially offset primarily by lower revenues for:
- Prevnar 13 in the U.S., down 22%, primarily reflecting the
expected unfavorable impact of disruptions to wellness visits for
pediatric and adult patients due to COVID-19-related mobility
restrictions or limitations, partially offset by the favorable
impact of timing associated with government purchases for the
pediatric indication, compared to the prior-year quarter;
- the Hospital business in emerging markets, down 14%
operationally, primarily driven by lower demand for certain
anti-infective products in China due to lower infection rates
driven by fewer elective surgical procedures, shorter in-patient
hospital stays and improved infection control compared to the
prior-year quarter;
- Enbrel internationally, down 16% operationally, primarily
reflecting continued biosimilar competition in most developed
Europe markets as well as in Japan and Brazil;
- Chantix in the U.S., down 21%, primarily reflecting expected
lower demand resulting from reduced doctor visits, including
wellness visits when Chantix is typically prescribed, due to
COVID-19-related mobility restrictions or limitations; and
- Ibrance in developed Europe, down 10% operationally, primarily
reflecting continued strong demand, more than offset by pricing
pressures in certain markets.
Upjohn Revenue Highlights
Second-quarter 2020 Upjohn revenues totaled $2.0 billion, down
31% operationally, primarily driven by the expected significant
volume declines for Lyrica in the U.S. due to multi-source generic
competition that began in July 2019. Excluding the impact of Lyrica
in the U.S., Upjohn revenues declined 6% operationally.
Second-quarter 2020 Upjohn revenues in China grew 17%
operationally, primarily driven by Lipitor and Norvasc. First-half
2020 Upjohn revenues in China declined 21% operationally.
GAAP Reported(2) Income Statement Highlights
SELECTED TOTAL COMPANY REPORTED COSTS
AND EXPENSES(2)
($ in millions)
Second-Quarter
Six Months
% Change
% Change
2020
2019
Total
Oper.
2020
2019
Total
Oper.
Cost of Sales(2)
$
2,281
$
2,576
(11
%)
(6
%)
$
4,658
$
5,009
(7
%)
(5
%)
Percent of Revenues
19.3
%
19.4
%
N/A
N/A
19.5
%
19.0
%
N/A
N/A
SI&A Expenses(2)
3,030
3,511
(14
%)
(12
%)
5,903
6,850
(14
%)
(13
%)
R&D Expenses(2)
2,132
1,842
16
%
16
%
3,856
3,544
9
%
9
%
Total
$
7,443
$
7,929
(6
%)
(3
%)
$
14,417
$
15,403
(6
%)
(5
%)
Other (Income)/Deductions––net(2)
($862
)
$126
*
*
($641
)
$218
*
*
Effective Tax Rate on Reported
Income(2)
13.1
%
(22.1
%)
12.7
%
(5.7
%)
* Indicates calculation not meaningful.
Second-quarter 2020 Cost of Sales(2), SI&A Expenses(2) and
R&D Expenses(2) were favorably impacted primarily by the July
31, 2019 completion of the Consumer Healthcare JV transaction with
GSK(1). Additionally, the decline in SI&A Expenses(2) was
primarily driven by decreased sales and marketing activities due to
the COVID-19 pandemic compared with the prior-year quarter and, to
a lesser extent, lower spending associated with corporate enabling
functions. Second-quarter 2020 R&D Expenses(2) increased
primarily due to upfront payments associated with two R&D
agreements executed during the quarter.
Pfizer recorded higher other income––net(2) in second-quarter
2020 compared with other deductions––net(2) in the prior-year
quarter, primarily driven by:
- higher net gains on equity securities;
- lower business and legal entity alignment costs; and
- income from the Consumer Healthcare joint venture(1).
Pfizer’s effective tax rate on Reported income(2) for
second-quarter 2020 compared to the prior-year quarter was
negatively impacted primarily by the non-recurrence of a tax
benefit recorded in second-quarter 2019 related to the settlement
of a U.S. Internal Revenue Service audit for multiple tax
years.
Adjusted(3) Income Statement Highlights
SELECTED TOTAL COMPANY ADJUSTED COSTS
AND EXPENSES(3)
($ in millions)
Second-Quarter
Six Months
% Change
% Change
2020
2019
Total
Oper.
2020
2019
Total
Oper.
Adjusted Cost of Sales(3)
$
2,236
$
2,556
(13
%)
(7
%)
$
4,586
$
4,971
(8
%)
(5
%)
Percent of Revenues
18.9
%
19.3
%
N/A
N/A
19.2
%
18.8
%
N/A
N/A
Adjusted SI&A Expenses(3)
2,808
3,464
(19
%)
(17
%)
5,553
6,775
(18
%)
(17
%)
Adjusted R&D Expenses(3)
1,895
1,825
4
%
4
%
3,622
3,518
3
%
3
%
Total
$
6,939
$
7,845
(12
%)
(9
%)
$
13,761
$
15,264
(10
%)
(8
%)
Adjusted Other
(Income)/Deductions––net(3)
($361
)
($100
)
*
*
($547
)
($235
)
*
*
Effective Tax Rate on Adjusted
Income(3)
14.4
%
16.9
%
14.7
%
16.0
%
* Indicates calculation is greater than 100%.
Second-quarter 2020 diluted weighted-average shares outstanding
used to calculate Reported(2) and Adjusted(3) diluted EPS declined
by 53 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 26
of the press release located at the hyperlink below.
RECENT NOTABLE DEVELOPMENTS (Since April 28, 2020)
Product Developments
- Bavencio (avelumab)
- In June 2020, EMD Serono, the biopharmaceutical business of
Merck KGaA, Darmstadt, Germany in the U.S. and Canada, and Pfizer
announced that the FDA approved the supplemental biologics license
application for Bavencio for the maintenance treatment of patients
with locally advanced or metastatic urothelial carcinoma (UC) that
has not progressed with first-line platinum-containing
chemotherapy.
- In June 2020, EMD Serono and Pfizer announced that the European
Medicines Agency (EMA) has validated for review the Type II
variation application for Bavencio for first-line maintenance
treatment of patients with locally advanced or metastatic UC. With
this validation, the application is complete, and the EMA will now
begin the review procedure. In addition, in May 2020, a
supplemental new drug application was accepted by Japan's Ministry
of Health, Labour and Welfare for Bavencio as a first-line
maintenance therapy for locally advanced or metastatic UC.
- Daurismo (glasdegib) -- In June 2020, Pfizer announced
that the European Commission approved Daurismo, a Hedgehog pathway
inhibitor, in combination with low-dose cytarabine, a type of
chemotherapy, for the treatment of newly diagnosed (de novo or
secondary) acute myeloid leukemia in adult patients who are not
candidates for standard chemotherapy.
- Ibrance (palbociclib) -- In May 2020, Pfizer announced
that following a preplanned efficacy and futility analysis, the
independent Data Monitoring Committee of the collaborative Phase 3
early breast cancer PALbociclib CoLlaborative Adjuvant Study
(PALLAS) determined that the trial is unlikely to show a
statistically significant improvement in the primary endpoint of
invasive disease-free survival. No unexpected new safety signals
were observed in patients receiving Ibrance. Ibrance is also being
studied in patients with high-risk early breast cancer and results
from the collaborative PENELOPE-B trial are expected later this
year.
- Lyrica (pregabalin) -- In July 2020, the Japan Patent
Office recognized the validity of certain amended claims of the
patent covering Lyrica. Upjohn believes these claims cover the
Lyrica approved indications in Japan, and plans to take the
appropriate legal and regulatory steps to preserve the ability to
exclusively provide the product to patients and physicians in the
country through patent expiry. If these steps are successful,
Upjohn anticipates maintaining marketing exclusivity for Lyrica in
Japan through the patent’s expiration date in July 2022, with
generic forms of pregabalin becoming available no earlier than
December 2022.
- Nyvepria (pegfilgrastim-apgf) -- In June 2020, Pfizer
announced FDA approval for Nyvepria, a biosimilar to Neulasta®(12).
Nyvepria is indicated to decrease the incidence of infection, as
manifested by febrile neutropenia, in patients with non-myeloid
malignancies receiving myelosuppressive anti-cancer drugs
associated with a clinically significant incidence of febrile
neutropenia. Pfizer expects to launch Nyvepria in the U.S. later
this year.
- Steglatro (ertugliflozin) -- In June 2020, Merck &
Co., Inc., known as MSD outside the U.S. and Canada, and Pfizer
announced the presentation of results from the Phase 3 VERTIS CV
cardiovascular (CV) outcomes trial that evaluated Steglatro, an
oral sodium-glucose cotransporter 2 inhibitor, versus placebo,
added to background standard of care treatment, in more than 8,200
patients with type 2 diabetes and atherosclerotic CV disease across
531 centers in 34 countries. The study met the primary endpoint of
non-inferiority on major adverse CV events, which is composed of a
composite of CV death, nonfatal myocardial infarction or nonfatal
stroke, compared to placebo. The safety profile of Steglatro was
consistent with that reported in previous studies. The results of
the VERTIS CV trial were presented at the American Diabetes
Association’s virtual 80th Scientific Sessions.
- Xtandi (enzalutamide) -- In May 2020, Astellas Pharma
Inc. and Pfizer announced final results from the OS analysis of 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. In the trial,
Xtandi plus ADT reduced the risk of death by 27% compared to
placebo plus ADT. The median OS was 67.0 months for men who
received Xtandi plus ADT compared to 56.3 months with placebo plus
ADT. OS was a key secondary endpoint of the trial. These data were
simultaneously published online in the New England Journal of
Medicine and presented during the virtual scientific program of the
2020 American Society of Clinical Oncology Annual Meeting.
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 June 2020, Pfizer
announced positive top-line results from the Phase 3 JADE TEEN
study of abrocitinib, an investigational oral once-daily Janus
kinase 1 inhibitor, in patients 12 to under-18 years of age with
moderate to severe atopic dermatitis who were also on background
topical therapy. Results showed that the percentage of patients
achieving each co-primary efficacy endpoint at Week 12 was
statistically significantly higher with both doses of abrocitinib
than with placebo. The safety profile seen with abrocitinib was
consistent with previous studies. Full results from JADE TEEN will
be submitted for presentation at a future scientific meeting and
publication in a medical journal.
- BNT162 COVID-19 Vaccine Development Program
- Clinical Updates:
- In July 2020, Pfizer and BioNTech SE (BioNTech) announced
the start of a global (except for China) Phase 2/3 safety and
efficacy clinical study to evaluate a single nucleoside-modified
messenger RNA (modRNA) candidate from their BNT162 mRNA-based
vaccine program, against SARS-CoV-2. After extensive review of
preclinical and clinical data from Phase 1/2 clinical trials, and
in consultation with the FDA’s Center for Biologics Evaluation and
Research and other global regulators, Pfizer and BioNTech have
chosen to advance their BNT162b2 vaccine candidate into the Phase
2/3 study, at a 30 µg dose level in a 2 dose regimen. BNT162b2
encodes an optimized SARS-CoV-2 full length spike glycoprotein,
which is the target of virus neutralizing antibodies. Preliminary
clinical Phase 1/2 data from nearly 120 patients demonstrated a
favorable overall tolerability profile for BNT162b2, as compared to
BNT162b1, with generally mild to moderate and transient (1-2 days)
systemic events, such as fever, fatigue and chills and no serious
adverse events. The 30 µg dose regimen elicited neutralizing
geometric mean titers (GMTs) generally similar to the GMTs that
were elicited by the BNT162b1 vaccine candidate. BNT162b2
vaccinated human participants also displayed a favorable breadth of
epitopes recognized in T cell responses specific to the SARS-CoV-2
antigen, as compared to the BNT162b1 vaccine candidate. The Phase
2/3 study is an event driven trial that is planned to enroll up to
30,000 participants between 18 and 85 years of age. The companies
plan to enroll a diverse population, including participants in
areas where there is significant expected SAR-CoV-2 transmission.
The Phase 2/3 trial is designed as a 1:1 vaccine candidate to
placebo, randomized, observer-blinded study to obtain safety,
immune response, and efficacy data needed for regulatory review.
The trial’s primary endpoints will be prevention of COVID-19 in
those who have not been infected by SARS-CoV-2 prior to
immunization, and prevention of COVID-19 regardless of whether
participants have previously been infected by SARS-CoV-2. Secondary
endpoints include prevention of severe COVID-19 in those groups.
The study also will explore prevention of infection by SARS-CoV-2,
the virus that causes COVID-19. The primary efficacy analysis will
be an event-driven analysis based on the number of participants
with symptomatic COVID-19 disease. The trial design allows for
interim analyses and unblinded reviews by an independent external
Data Monitoring Committee. If the Phase 2/3 trial is successful,
Pfizer and BioNTech expect to be ready to seek Emergency Use
Authorization or some form of regulatory approval as early as
October 2020. If authorization or approval is obtained, the
companies currently aim to supply globally up to 100 million doses
by the end of 2020 and approximately 1.3 billion doses by the end
of 2021.
- Commercial Updates:
- In July 2020, Pfizer and BioNTech announced an agreement with
the U.S. Department of Health and Human Services and the Department
of Defense, under which the U.S. government will pay the companies
$1.95 billion upon the receipt of the first 100 million doses of
BNT162, subject to regulatory approval or emergency use
authorization from the FDA and successful manufacture and delivery
of the vaccine by Pfizer. The U.S. government can acquire up to 500
million additional doses.
- In July 2020, Pfizer and BioNTech announced an agreement with
the United Kingdom for 30 million doses of BNT162, to be delivered
in 2020 and 2021, subject to clinical success and regulatory
approval or authorization.
- Regulatory Updates:
- In July 2020, Pfizer and BioNTech announced that the two most
advanced investigational vaccine candidates in the BNT162
mRNA-based vaccine program (BNT162b1 and BNT162b2) received Fast
Track designation from the FDA.
- Giroctocogene fitelparvovec (SB-525, PF-07055480) -- In
June 2020, Pfizer and Sangamo Therapeutics, Inc. (Sangamo)
announced updated follow-up data from the Phase 1/2 Alta study of
giroctocogene fitelparvovec, an investigational gene therapy for
patients with severe hemophilia A. All five patients with severe
hemophilia A who received the 3e13 vg/kg dose showed sustained
factor VIII (FVIII) activity levels, with a median of 64.2% via
chromogenic assay (patient-level geometric means after week 9
post-infusion). No patients experienced bleeding events or required
FVIII infusions. The FVIII activity levels reflect measurements up
to 61 weeks, the extent of follow-up for the longest-treated
patient in the cohort. Giroctocogene fitelparvovec was generally
well tolerated. As previously reported, one patient in the 3e13
vg/kg dose cohort had a treatment-related serious adverse event of
hypotension (grade 3) and fever (grade 2), with symptoms of
headache and tachycardia, which occurred six hours post-infusion
with giroctocogene fitelparvovec, and which fully resolved within
24 hours. No other treatment-related serious adverse events were
reported. Among the five patients in the 3e13 vg/kg dose cohort,
four received corticosteroids for liver enzyme (alanine
aminotransferase, ALT) elevations. Three patients had subsequent
ALT elevations that responded to corticosteroids. All episodes of
ALT elevations fully resolved with oral corticosteroids. These data
were presented as a late-breaking oral abstract at the World
Federation of Hemophilia 2020 World Congress. Pfizer and Sangamo
plan to present further follow-up data from the Alta study when all
five patients in the 3e13 vg/kg dose cohort have been followed for
at least one year.
- PF-06482077 (20-Valent Pneumococcal Polysaccharide Conjugate
Vaccine candidate)
- In June 2020, Pfizer announced the initiation of two Phase 3
clinical trials (NCT04382326 and NCT04379713) evaluating a
four-dose series in infants starting at 2 months of age. Both
studies will expand the data on the safety and tolerability of the
investigational vaccine in infants and include a control group of
Prevnar 13 (Pneumococcal 13-valent Conjugate Vaccine [Diphtheria
CRM197 Protein]). Study NCT04382326 has the goal of determining
immunologic noninferiority between PF-06482077 and Prevnar 13, a
critical requirement for vaccine licensure.
- In May 2020, Pfizer announced positive top-line results from a
second Phase 3 study (NCT03828617), which described the safety and
evaluated the consistency of immune responses elicited across three
different lots of PF-06482077 in adults 18 through 49 years of age
not previously vaccinated against pneumococcal disease. Responses
elicited by PF-06482077 for all 20 serotypes were equivalent across
all three lots, meeting the primary immunogenicity objective of the
study. The safety profile for PF-06482077 was similar to the
Prevnar 13 control group. This clinical lot consistency study is
expected to satisfy licensure requirements for manufacturing
consistency by the FDA, and other countries’ regulatory agencies.
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.
- PF-06882961 (Oral glucagon-like peptide-1 receptor agonist
(GLP-1RA)) -- In June 2020, Pfizer presented results from a
Phase 1 study evaluating the safety, tolerability, pharmacokinetics
and pharmacodynamics of multiple doses of PF-06882961, an
investigational, orally-administered, small molecule GLP-1RA, at
the American Diabetes Association’s virtual 80th Scientific
Sessions. The study found that PF-06882961 was associated with
robust glycemic efficacy and encouraging reductions in HbA1c
compared to placebo at 28 days of treatment in clinical trial
participants with type 2 diabetes. In addition, early signals of
weight loss were observed in participants receiving PF-06882961 70
mg twice-daily (BID) and 120 mg BID at day 28. In the study,
PF-06882961 demonstrated a safety and tolerability profile
consistent with the GLP-1RA class. Pfizer has recently initiated a
Phase 2 study of PF-06882961 in type 2 diabetes and aims to
initiate a Phase 2 study in obesity in second-half 2020.
- PF-06886992 (Pentavalent (ABCWY) Meningococcal Vaccine
candidate) -- In June 2020, Pfizer announced the initiation of
one Phase 3 clinical trial (NCT04440163) in adolescents and young
adults to assess the safety, tolerability, and immunogenicity of
PF-06886992 compared to licensed meningococcal vaccines, with the
goal of determining immunologic noninferiority.
- PF-06928316 (Respiratory Syncytial Virus (RSV) Vaccine
candidate) -- In June 2020, Pfizer announced the initiation of
one Phase 3 clinical trial (NCT04424316) in pregnant women to
evaluate the safety and efficacy of PF-06928316 in infants born to
immunized pregnant women as compared to placebo.
- PF-06939926 (Duchenne muscular dystrophy (DMD) gene
therapy) -- In May 2020, Pfizer announced updated Phase 1b
clinical data on PF-06939926, an investigational gene therapy being
developed to treat DMD. The preliminary data from 9 ambulatory boys
with DMD, aged 6 to 12 (mean age: 8 years) indicate that the
intravenous administration of PF-06939926 was well-tolerated during
the infusion period, with encouraging efficacy and manageable
safety events, even when considering those adverse events that were
more severe in nature. The treatment provided durable and
statistically significant improvements across multiple
efficacy-related endpoints measured at 12 months post-infusion,
including sustained levels of mini-dystrophin expression and
improvements on the North Star Ambulatory Assessment rating scale,
which is a validated measure of muscle function. Three serious
adverse events were reported, two of which reflected likely
complement activation. While these two serious adverse events were
severe in nature, all three events fully resolved within 2 weeks,
providing encouragement that close monitoring and early
intervention can help mitigate the effects of complement
activation. This new dataset, which includes updated 12-month
results on safety, dystrophin expression, and exploratory
functional endpoints for 3 additional boys, was presented for the
first time during a virtual oral session at the American Society of
Gene & Cell Therapy Annual Meeting. Based on the encouraging
preliminary efficacy data and manageable safety events from this
Phase 1b study, Pfizer is planning to begin dosing patients in a
Phase 3 study using a commercial-scale manufacturing process in the
second half of 2020, pending regulatory approval.
- Tanezumab (PF-04383119) -- Pfizer and Eli Lilly and
Company initially disclosed in March 2020 that in its acceptance
letter for the biologics license application (BLA) for tanezumab,
the FDA stated that it was planning to hold an Advisory Committee
meeting to discuss the application. In subsequent discussions, the
FDA indicated that an Advisory Committee meeting is not
anticipated, though a decision to hold an Advisory Committee
meeting remains at the discretion of the FDA. The FDA’s review of
the BLA is ongoing and the Prescription User Fee Act date for a
decision from the FDA is in December 2020.
Corporate Developments
- In June 2020, Mylan announced that its shareholders
overwhelmingly voted to approve the proposed transaction combining
Mylan and Upjohn, a division of Pfizer, at Mylan’s extraordinary
general meeting of shareholders. Approximately 99.6% of votes cast
were voted in favor of the combination. The transaction is subject
to customary closing conditions, including receipt of the remaining
required regulatory approvals. Pfizer and Mylan expect the
transaction to be completed in fourth-quarter 2020.
- In June 2020, Upjohn Inc., a wholly-owned subsidiary of Pfizer
and Upjohn Finance B.V., a wholly-owned subsidiary of Upjohn, as
well as Pfizer and Mylan announced the successful private offering
of $7.45 billion aggregate principal amount of Upjohn’s senior,
U.S. dollar-denominated notes and of €3.60 billion aggregate
principal amount of Upjohn Finance B.V.’s senior, euro-denominated
notes. The notes were offered in connection with the previously
announced proposed Reverse Morris Trust transaction that will
ultimately combine Upjohn and Mylan to form a new company, Viatris.
Immediately prior to the Upjohn separation, and as partial
consideration for Pfizer’s contribution of Upjohn to Viatris,
Pfizer will receive a payment of $12 billion, which will be fully
funded by the net proceeds from these offerings together with the
net proceeds from other previously announced financing
transactions.
- In May 2020, Pfizer announced that it would be holding its
rescheduled Investor Day on Monday, September 14, 2020 at 9:00 a.m.
EDT. Pfizer had postponed its Investor Day, originally scheduled
for March 31, 2020, due to health and safety concerns around the
COVID-19 pandemic. Since this announcement, Pfizer has determined
that holding an in-person event in September 2020 is not
practicable given continued COVID-19 health and safety concerns so
the event will instead be held virtually over two days: Monday,
September 14, 2020 and Tuesday, September 15, 2020. Additional
details for the event will be provided via press release at a
future date.
- In April 2020, Pfizer and Valneva SE (Valneva) announced an
agreement to co-develop and commercialize Valneva’s Lyme disease
vaccine candidate VLA15, which is currently in Phase 2 clinical
studies. VLA15 is the only active Lyme disease vaccine program in
clinical development today, and covers six serotypes that are
prevalent in North America and Europe. Valneva and Pfizer will work
closely together throughout the development of VLA15. Under terms
of the agreement, Valneva is eligible to receive a total of $308
million of cash payments consisting of a $130 million upfront
payment, $35 million in development milestones and $143 million in
early commercialization milestones. Valneva will fund 30% of all
development costs through completion of the development program,
and in return Pfizer will pay Valneva tiered royalties. Pfizer will
lead late-stage development and have sole control over
commercialization. In June 2020, Valneva announced that the
antitrust-related condition precedent was met and, consequently,
the agreement became effective.
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:
http://investors.pfizer.com/files/doc_financials/2020/q2/Q2-2020-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 other business development
activity impacted financial results for the periods presented:
- On June 8, 2020, Valneva SE (Valneva) announced that the
antitrust-related condition precedent was met and, consequently,
the agreement between Valneva and Pfizer that was previously
announced in April 2020 became effective. Under terms of the
agreement, the companies will co-develop and commercialize
Valneva’s Lyme disease vaccine candidate VLA15, which is currently
in Phase 2 clinical studies. In connection with the agreement,
Pfizer paid Valneva an upfront cash payment of $130 million in
second-quarter 2020.
- On April 9, 2020, Pfizer signed a global agreement with
BioNTech to co-develop a potential first-in-class, mRNA-based
coronavirus vaccine program, BNT162, aimed at preventing COVID-19
infection. In connection with the agreement, Pfizer paid BioNTech
an upfront cash payment of $72 million in second-quarter 2020.
Pfizer also made an equity investment of $113 million in BioNTech
common stock.
- 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
first-quarter 2020 in its second-quarter 2020 operating results.
Likewise, Pfizer recorded its share of the JV’s earnings generated
in fourth-quarter 2019 and first-quarter 2020 in its operating
results for the first six months of 2020.
- 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
second quarter and first six months 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 second quarter and first six
months for U.S. subsidiaries reflects the three and six months
ending on June 28, 2020 and June 30, 2019 while Pfizer’s second
quarter and first six months for subsidiaries operating outside the
U.S. reflects the three and six months ending on May 24, 2020 and
May 26, 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:
- Includes 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.
- Does not assume the completion of any business development
transactions not completed as of June 28, 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.
- 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 second-quarter 2020 and mid-July 2020 rates for the
remainder of the year. Financial guidance reflects the anticipated
unfavorable impact of approximately $0.6 billion on revenues and
approximately $0.05 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) 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.
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) and first-quarter 2020
(recorded by Pfizer in second-quarter 2020), as well as Pfizer’s
share of the JV’s projected earnings during second-quarter 2020 and
third-quarter 2020 (to be recorded by Pfizer in third-quarter 2020
and fourth-quarter 2020, respectively).
Financial guidance for New Pfizer operating cash flow includes a
$1.25 billion voluntary contribution to the U.S. qualified pension
plans, planned for the second half 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) Neulasta® (pegfilgrastim) is a registered trademark of
Amgen, Inc.
DISCLOSURE NOTICE: Except where otherwise noted, the information
contained in this earnings release and the related attachments is
as of July 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 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, including our
investigational vaccine candidate against SARS-CoV-2, 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 business, operations,
financial condition and results, including due to travel
limitations and government-mandated work-from-home or
shelter-in-place orders, manufacturing disruptions or delays,
supply chain interruptions, including challenges related to
reliance on third-party suppliers, disruptions to pipeline
development and clinical trials, including difficulties or delays
in enrollment of certain clinical trials, decreased product demand,
including due to reduced numbers of in-person meetings with
prescribers, patient visits with physicians, vaccinations and
elective surgeries resulting in fewer new prescriptions or refills
of existing prescriptions and reduced demand for products used in
procedures, further reduced product demand as a result of increased
unemployment, challenges presented by reallocating human capital,
R&D, manufacturing and other resources to assist in responding
to the pandemic 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, challenges as it
relates to our business development initiatives, including
potential delays or disruptions related to regulatory approvals,
including related to the anticipated combination of Upjohn with
Mylan, interruptions or delays in the operations of certain
regulatory authorities, which may delay the approvals of new
products we are developing, potential label expansions for existing
products and the launch of newly-approved products, potential
increased cyber incidents such as phishing, social engineering and
malware attacks, 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 uncertainties related
to the risk that our development programs may not be successful,
commercially viable or receive approval or emergency use
authorization from regulatory authorities, risks associated with
preliminary data, including the possibility of unfavorable new
preclinical or clinical trial data and further analyses of existing
preclinical or clinical trial data that may be inconsistent with
the data used for selection of the BNT162b2 vaccine candidate and
dose level for the Phase 2/3 study, the risk that clinical trial
data are subject to differing interpretations and assessments,
including during the peer review/publication process, in the
scientific community generally, and by regulatory authorities,
whether and when data from the BNT162 mRNA vaccine program will be
published in scientific journal publications and, if so, when and
with what modifications, disruptions in the relationships between
us and our collaboration partners or third-party suppliers, the
risk that other companies may produce superior or competitive
products, the risk that demand for any products may no longer
exist, risks related to the availability of raw materials to
manufacture any such products, the risk that we may not be able to
recoup costs associated with our R&D and manufacturing efforts
and risks associated with any changes in the way we approach or
provide additional research funding for potential drug development
related to COVID-19, the risk that we may not be able to create or
scale up manufacturing capacity on a timely basis or have access to
logistics or supply channels commensurate with global demand for
any potential approved vaccine or product candidate, which would
negatively impact our ability to supply the estimated numbers of
doses of our vaccine candidate within the projected time periods
indicated, and pricing and access challenges for such products,
including in the U.S.;
- 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 our medicines, including
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 Tax Cuts and Jobs Act 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 proposed
transaction was approved by Mylan’s shareholders on June 30, 2020.
The Form 10 was declared effective on June 30, 2020. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200728005358/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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