Pfizer Inc. (PFE) Earnings Call Transcript & Summary

Good morning, everybody, and thanks for joining us. I'm Chris Schott at JPMorgan, and I'm pleased to be hosting a fireside chat with Pfizer's Chairman and CEO, Albert Bourla, this morning. Albert, thanks for joining us.

Thanks.

Yes. And maybe just to open up, there's a lot to dig into in the story between COVID and your pipeline progression, et cetera. But I think maybe you should make some opening remarks in terms of Pfizer's positioning and priorities as we think about 2021.

Thank you very much, Chris. Thank you for the opportunity to talk to you. And let me also just quickly remind everyone that, of course, I will be making forward-looking statements and that actual results may be different. We always do that, but it is always very prudent to remind people and investors as they are looking our state. Look, I mean, it was a fascinating year for us. It was a very difficult year for the world, obviously. And it was a year that, I would say, helped me grow as a CEO in an accelerated mode. And I'm very happy in the situation that we are right now. I think after COVID, we will find ourselves in the right part of history. And right now, we are looking forward to the future. And our future, of course, involve that we will be able to deliver on the COVID promises. But the fundamental, it is that we will be able to fulfill our purpose, which is breakthroughs that change patients' lives. So the way I see our priorities and our promise to the world is that the world will see many more breakthroughs that would be defined as first and best in class that would change patients' lives like COVID just did. We will do that by deploying our capital in a way that it is enhancing its mission. We will utilize our operations that have proven that they can operate by utilizing the scale, at the same time, having agility in bringing the world innovation. And the result of all of that will be for patients to see significant advancement for their lives. For investors would be to see top line revenue growth in this company that would be at least 6% for our base business and at least double digit for our bottom line, all of that excluding the COVID impact, but clearly, it will be significant.

Absolutely. Certainly, Pfizer's development of a COVID vaccine, that was one of the clear bright spots of a very difficult 2020 for the world. I know that's something I know you and the organization must be incredibly proud of. Can you just maybe update us in terms of where we are in terms of ramping manufacturing? And I know this week, your partner announced an increase in capacity targets for the year. And just talk a little bit of what's enabled you to be able to kind of produce even more product than we initially anticipated with the vaccine.

Yes. We are now expecting that we will produce in 2021 around 2 billion dose. And as you know, we say what we mean and we mean what we say. So when we say something, we feel confident that we will be able to do that. It was very, very challenging to be able to come to that point. And I have to say that I have admiration for our manufacturing team as much as I have for our research team because it's almost equally difficult to scale up manufacturing at that level so fast as it was to develop the vaccine. And both teams can rise to the occasion. One was that we were able, first of all, to have now registrations across the world almost of 6 dose per vial. That, of course, provides an additional 20% capacity, which is very welcome. And right now, as I say this almost all regulatory authorities, they have reviewed the data that we submitted because it's not in rumors that they have done it. And they have all approved this. Europe, FDA, Switzerland, WHO, Israel, you name it. But also, the significant higher improvement versus a very aggressive target was based on doing things very differently and very out-of-the-box in manufacturing. And we do things very differently and out of the box in the way that we treat partners in raw materials so that we can have manufacturing of specialized raw materials at the scale that is needed. We are doing in the way that we flow our operations in manufacturing so that we can improve dramatically our capacity. We did in the way that we enable third parties to be part of this manufacturing process, which is very, very complicated. We do that by designing new equipment that is much more efficient and working with manufacturers of equipment to deliver this in record speed and timing. So it's so many initiatives that we have put in place. And right now, as I said, we feel comfortable that these initiatives will deliver 2 billion doses in 2021.

Wow. That's great. In terms of your upcoming '21 guidance, how do we think about vaccine contribution and the type of margins we can think about with the vaccine revenues?

Look, clearly, it's complicated. And clearly, there are a lot of dynamics that are happening right now. So when we provide guidance, which is expected in the last quarter earnings, somewhere, I think, at the end of January, a few weeks, we will try to separate the 2. So still, I think we will treat of it as a separate from base business, although there are more and more indication that we should start seeing as part of the core business, given everything we have so far. But still, we will treat it separately. So we will provide details about COVID vaccine and the rest of the business, and we will separate margins and we'll separate contributions, I mean, and profits. But the people will have to wait until we do that. Right now, I do think that all inclusive, 2021, we see EPS around from $3 to $3.1 per share. Of course, as I said, this is a dynamic situation. This is only for the new Pfizer because I have seen our partners that they forgot to remove from expectations. The Upjohn contribution, it is completely out, but includes COVID. And that could change, of course, but right now -- because of the dynamics. But right now, I just want to give you a preview of how we feel things are with.

Sure. And that $3 to $3.10 number, that's reflecting this kind of expanded 2 billion doses or so of the COVID vaccine, is that -- it's probably -- there's a lot of moving parts, obviously, in the number, but...

I don't think that the expansion is what -- a lot of moving parts, let me put it this way. So either way, until we give more specifics, in few weeks. So a little bit of patience. Already, I did something that's very, very [indiscernible]...

Yes. Very helpful color.

Of our EPS in an exclusive to you, Chris.

There we go. We appreciate that. And I guess, just a couple more on COVID. Obviously, a lot in the core business to talk about from there. But when we think about the longer-term dynamics with the COVID vaccine, I think we're seeing very different pricing strategies from participants in the market. Can you just talk about Pfizer's approach and how you think about price evolving over time? And it seems like this COVID virus, unfortunately, is going to be around for a while, and we'll be dealing with this in some fashion for an extended period of time.

Yes. Clearly, there were very different approaches in all facets, in the ways developed, in the technology that were used, in the way that was funded and the way that was priced, which is appropriate. Particularly when it comes to price, this is what antitrust authorities are expecting, but everyone is doing it their own. But there is a common element, I think, you know, that everybody has priced their vaccine well below the value it brings to society, well below, right? That includes us because this is a specific situation, which is a pandemic. As I said, we need to see how things will evolve. But one possible scenario, it is that after the pandemic phase is done, we will have a repeated business out there because there are COVID around that we want to keep control or because there are new strains or because of many different reasons. If that happens and we have a continuation of this business after the pandemic, I think that we could likely see more normal volumes rather than this that the entire world is vaccinated at once, but more prices that reflect the cutting-edge technology. So should be similar prices like other vaccines with similar, let's say, technology. But for the time being, for the whole pandemic, of course, we are going to use everybody's pricing, very low.

Okay. And then just -- it seems like COVID clearly validated mRNA as a viable technology platform within the vaccine kind of market. Where else do you see applicability of that? And can we think about Pfizer expanding its efforts on our mRNA kind of development over time beyond just COVID?

I think it's a must. I don't think how after all this know-how that we have developed together with our partner, BioNTech in the RNA technology, that we will not utilize it to be able to provide medical solutions for other devastating diseases. Already, we are working years now, 3 years almost, in a flu vaccine. We think that mRNA can completely disrupt the flu market because you can have -- can do things in weeks instead of months. So as the flu market is changing every year with a new variant, this technology is ideal to be able to adjust to the latest news of the current strength and be much more effective as a result. Also, has proven how effective it is, by the way, this technology. So we will do that. And of course, we are thinking other areas of viral diseases that we can develop vaccines on it.

Okay. So stay tuned, it sounds like, in terms of another avenue for the company's pipeline.

I think within the year, we accumulated scientific knowledge and technology and know-how of years. [indiscernible] we have developed infrastructure that normally would take years to be able to develop, we develop in months. Everything, as I said, happened in [ miracle ] times. So it's time to use it for the better of humanity.

Yes, absolutely. On the core portfolio, there's been a lot of activity over the past years in terms of pipeline readouts, et cetera. The company, as I think you mentioned before, issued long-term sales targets of at least 6% revenue CAGR through 2025, and that excludes the vaccine sales. And there's about that growth that seems like it's a bit above what we think for the rest of the industry. Just would be interested in your confidence in that guidance today, given what you've learned on the pipeline over the last year or 2 since you provided the guidance. Just how confident are you in hitting that target?

I'm very confident. And let -- remind all that we said up to 6%. So the 6% is not the ceiling, it's the floor. And clearly, there will be leverage on the bottom line. So that's why I said, we'll be at least double digit on the bottom line. I'm very confident and more confident than I was very confident a year ago. I'm even more confident now that we will be able to deliver that. Our all emphasis is how to sustain that for the -- not the foreseeable future, but for the last part of the decade, and we are working -- I'm feeling more and more comfortable on that as well.

Okay. When we think about the metrics that you provide, obviously, you've got this significant COVID sales coming in, in 2021. Should we think about that target evolving to maybe incorporate the vaccine sales or a different set of metrics that we could see from the company over time? Or you kind of stay at this core number? Yes.

I think for January, we will clearly separate the 2. So because there is a lot of uncertainty and people -- one is very predictable or, let's say, is more predictable than the other. But as I said, there are so many indications that, that can become. So I don't think that will be forever, at a certain point, that the whole means.

Okay. Okay. And then the company recently completed separation of the Upjohn business. Can you just talk about what that separation enables? And then also as part of that, how do you think about your capital deployment priorities with now the more focused organization that you have?

No, the separation of Upjohn enabled the generation of the company, but it is much more focused, singularly focus, I would say, on science. And this creates very -- it requires very different mentality, very different risk-taking, very different culture. And I think that we are -- I couldn't think of a better start of this new journey for Pfizer than with the demonstration of what our scientific machine can do. To be frank, it's -- I couldn't dream it, something like that. That's not the only one. I think after we have done our Research Day with investors, it became very obvious to me by all analysts, and even more importantly, by speaking to all investors, that there were a lot of aha moments. And people now have much better appreciation of the depth and breadth of our pipeline. So now a singularly focused company will have a capital allocation, but all those -- the principles already we have declared before the separation. One, dividend is an important part of our investment thesis. We increased our dividend just recently, and now we will wait for the big announcements of their first dividend. And we will adjust ours so that our shareholders will stay hold. This means it will be a small reduction. And then from there, we will continue our principles of having an increased dividend. But the dividend will grow at the beginning not as fast as our profits, so that -- which means that we will come to much more reasonable payout because it will be higher right now. Now on the remaining of the capital, we are -- we never say never to anything. But of course, we invest in business and in our manufacturing and research side, but also we will invest to acquire. And in business development, again, we never say never, but nothing has changed. We are focusing on Phase II, Phase III-ready assets that could become medicines around '23, '24, '25, '26, '27, all this area. So that we will complement our already impressive, I think, pipeline that is coming. And the goal is one: top line growth, sustainable, high top line growth, sustainable for the future.

Yes. On that business development priorities, are there specific verticals that you're more focused on versus others? Or is it really just looking for interesting assets that fit that criteria of that, let's say, 2023 through 2026, 2027 launch time lines?

No. Clearly, we're looking for interesting assets and we never say never, but there are some priorities. There are some bias. The priorities are they need to be in the therapeutic areas that we believe we master right now. We have 6 areas, including [indiscernible] but we are very good. We will select by making sure we're stable in this area, and we will develop it by making fewer mistakes so the chances that we will generate value in our hands is not much higher. So that's one bias. As I said, Phase II, Phase III, it is what we are looking because we want to enhance the growth predominantly [ post everything ]. I would say that we have -- Pfizer is now focusing mainly in the first and best-in-class. So you should expect most of them to be cutting-edge technological, let's say, project that could -- that they have enough indications that they have good chances to become first and best. So all of that are -- of course, not everything will be like that, right? So there will be some [indiscernible], particularly when you have a good fit commercially that we can corporate something that we can generate significant value. But this is a strategy right now and we feel that actually so far has been proven.

Yes. Is there [indiscernible].

It's [ many ]. So I think we will continue.

Great. Is there any size limitations as we think about the company post-Upjohn? So it sounds like from what you're talking about, this is probably not going to be big diversified companies being acquired. But when we think about these kind of tuck-in Phase II, Phase III-ready assets, is there an upper bound of size that we should be keeping in mind? Or is that not really what you're looking at? Okay.

I don't have an upper bound. And frankly, we have the ability to -- basically, to do everything that exists out there if we wanted to. It's just that we are not going to do anything that exists out there, unless we are very confident that produce significant value for Pfizer.

Yes, yes. Excellent.

And [indiscernible] for Pfizer.

For Pfizer, yes. Is that challenging in this environment? Because I guess when I look at it, it seems like there's a lot of really interesting science out there. The valuations seem challenging at times. So how do you think about that?

I think the valuations are very challenging at the time, and they are very expensive. But I think also us, if we believe in something, we are ready to pay the full price, so that we can get it. I don't think that will stop us. But we are very careful with how we manage the capital.

Okay. Great. Digging into some specific products. First on IBRANCE. This is obviously one of your largest and most successful products. How much more growth do you see in the metastatic breast cancer market for the CDKs? I guess just maybe give us a snapshot of where penetration is today and where you see penetration going over time?

Look, in terms of, let's say, within the CDK plus, we have the dominant markets right now. We are at the 86% to 87% stable in total scripts for IBRANCE and then 13 to 14 for everybody else in total scripts. Also in new scripts, at least 8 of 10 new scripts are coming from IBRANCE for metastatic and the remaining come from everybody else. So I think in terms of maintaining ourself within the CDK class, I feel quite comfortable not only based on the belief of our product, best and first-in-class and all of that, but also now backed up with the reaction of the market. Now in terms of growth, capacity. I think the CDK penetration is quite low right now compared to what it could be. There's still a significant amount of chemo, a significant amount of monotherapies that are happening out there. And the last couple of years, our main emphasis has been switched into that, to be able to make sure that the physicians and patients understand the opportunity, have better care for their patients by moving to CDK IBRANCE than to pay with the chemo or with one of them. And that works very well. So I think -- I'm expecting that this will continue the growth.

Great. And can you just come back to the point on the share within the class? Because I know that's probably one of my top, I'd say, non-COVID questions on Pfizer is just as we think about one of your competitors launching an adjuvant and the implications to your share in metastatic, can you just explain a little bit in terms of your confidence in holding that share and other drugs in the market? It's well regarded by physicians, but -- and there's still some skepticism out there. So can you talk a little bit about just what gives you that confidence you can hold share?

Sure. I -- first of all, I thought a lot about it. And clearly, it was a scenario that I was trying to understand in my mind. I feel very, very comfortable now. I feel, as I said, very comfortable not only because we keep doing market reserves, and we are examining what the preference of physicians would be now that they have data from, let's say, competition on the adjuvant. And -- but also I see it in terms of how scripts are moving. So I think that in the metastatic breast cancer, we will maintain stable our market share. And I think, collectively, altogether, we will grow the CDK market.

Okay. Can you also juggle like you've got several other CDK programs in development you highlighted at the analyst meeting? Which of those do you see most impactful, and when do we start thinking about more data from those assets?

Yes. There are plenty of stuff that are happening right now in oncology and both actually, our sites in La Jolla that we are having mainly the biological targets, research of oncology, but also our new site in Boulder, Colorado are very, very active right now. So a lot of stuff are coming out from the collaboration of these 2 major sites. But coming to the CDK, I think the CDK2/4/6 is, for me, the most exciting, and I expect that we'll have more of that this year. So...

Okay. Great. So thinking about your franchise for IBRANCE, I know we've got a patent expiration later part of the decade. But is your anticipation that we'll have some assets that can effectively replace that or kind of build upon that by the time we get to the LOE?

This is clearly what we are working for. And I hope for the benefit also of the patients that we'll find some that will be better than IBRANCE by that time. For time being, IBRANCE is the best option that patients have according to my opinion.

Yes. Great. Moving over to, I guess, the JAK pipeline. You highlighted abrocitinib as one of your largest launch opportunities at the analyst meeting. Can you talk about the market dynamics as we think about atopic derm and how you see the JAKs gaining share in the space? As it does seem, obviously, a huge market opportunity. I just want to understand a little bit better how we think about the category evolving.

Yes. I think abrocitinib has some characteristics that make it unique for the life of these patients. First of all, it's fast and profound release in itch, fast and profound release in the itch. Then they are reducing significantly the risk of flares, which is very important for them. And also, they are help to skin -- even more important than everything, I think, to help to clean the skin beyond the current standards, but it typically is, which is around 75%, right? We are pretty much better than that. There is a sizable part of our patient population that they had 90% cleared. And there is a part of the population that almost -- they got almost 100% complete, let's say, disappears. These are very important characteristics for a pool of patients. But eventually altogether, globally, it's 60 -- in the developed world, globally, it is 60 million patients. This is a very, very big number. And in the number of patients, they are underserved right now with the current solution. So I believe that when new solutions that are offering like the JAK1 that we are bringing now, the market will expand. So clearly, even if there is competition, which I know many people are asking about it, and the relevant, if we are better or worse or the same, which I believe we have advantages over competition, clearly. But I think the markets will grow because there is the significant mean. And that would not be the one. I mean you asked also about other JAKs. Our franchise is moving very dynamically right now. And I expect that we have JAK3 in -- because this is JAK1 that we spoke, right, in atopic dermatitis, in alopecia and the like. And we will have, this year, Phase III data for alopecia and we have this year proof of concept for vitiligo. So it's significant. And also, we are coming with a topical for atopic dermatitis that can complement, which will be a tick to JAK1. In general, we have almost 10 indications with 5 different molecular entities for testing right now.

Yes. A lot going on there. Just going back to abrocitinib. It seems like the existing market leader. I think it's been really focusing on safety as a point of differentiation. What do you think the JAKs need to do to overcome maybe the safety perceptions on the category? Certainly, your data doesn't suggest there's a lot of risk there. But it seems like dermatologists might need a little bit of education. So how do you think about approaching that challenge and getting physicians comfortable with the profile?

First of all, there is already JAKs, and we have a lot of experience with Xeljanz that we did have to address, concerns and market -- to address the concerns and now there is a very high comfort level by utilizing that. We will develop the data because in this country, you need to bring data, and this is the beautiful thing about science in this country. So we will -- and we will educate. We have excellent relations with dermatologists. We have developed experience with dermatologists by launching other products, so we are visiting them. And we will explain to them the data and then they should make their decisions. But I feel that the benefits that they bring clearly will outweigh any potential risks in the mind of all because the data are strong.

Yes. And certainly, your point about the market being underserved is a great one since it seems like all of these immunology categories, we add new mechanisms, you've seen really tremendous growth. And it feels like atopic derm is one of kind of the last remaining ones where we still have such low penetration. I guess especially, I do get from a competitive standpoint, though, as we think about the other JAK, RINVOQ in this setting, and I think AbbVie has taken a different approach of having 1 drug with many indications, does that -- how do you think about that competitive dynamic where it seems from a payer standpoint, having that bundled indication might help a bit versus you taking an approach of just trying to find the best asset for each indication? So how do you see that playing out from an access perspective as the market evolves? So is this the open category? Or do you think that there will be efforts to restrict, like, formula is just one of the JAKs that are available?

No. I think that they're always in the category. For example, we are facing it with Xeljanz how to penetrate because there was this type of behaviors in exclusive rebate that were excluding [indiscernible], right? But what happened? So that's something that we have addressed and we continue to address and that actually we have also to take legal actions. But for new entries, I think zero rebate is different. So if you are a new one and like us and a competitor that is coming, the fact that you have broader label or a narrow label means anything in getting access.

Okay. So you're not seeing that as a hurdle at all for...

And results to get access. The time is switching very dynamically into a value -- show me the value. So now you are good, you have a value. We are reasonable to negotiate the price that reflects this value, you will get access.

Okay. Okay. Helpful. I know there's a lot of other stuff going on in the pipeline. We'd love just to hear what conveys in your broader pipeline you're most excited about as you think back to what you shared in September and as we think about data in the next few years. What are the assets you highlight to us that we should be watching most closely?

I think number one, it is and what means I'm going to speak about them, there are many. I kept saying there is no saliva anymore in my mouth saying that our -- at least 6% projections are derisked because they are based on significant number of assets that some will go well, some will not. But on average, provides that you have a decent research machine, will provide quite predictable results. I think we have right now best-in-class research machine based on data again, Phase II success, Phase III success, Phase I success, time to market, all of that, new breakthrough designations. With all of that in mind, we are demonstrating that this is a very, very serious research machine. So going back, vaccines, one of the most fascinating areas. We are expecting to get our first and best-in-class 20-valent for adults. We have, I think, a PDUFA date or, let's say, an action date around June of this year. So we come to the market hopefully on time for the full vaccinations. So that's one. But -- and we are working with the pediatric as well, 20-valent, that is progressing very nicely. And COVID isn't delayed because that would be -- we are moving, okay? But also, we are having to see that we are expecting this year to have conclusive results that if it's successful, first and best, to us, we are waiting -- we are working on a pentavalent meningococcal vaccine. This will be first again and hopefully, best in class. We are working in an RSV vaccine, but we have to see because it's -- but first and best is what I'm hoping to do in this technology at least. We are working on a Lyme disease, a vaccine. So it's so rich, the portfolio of vaccines that do not exist competition right now. We'll be the first that I'm very, very excited with that. And of course, we are working on COVID, next generations and on mRNA technology on the flu vaccine and on other viral disease. But we will speak about that a little bit late. So that's on the vaccine side. We spoke a little bit about the oncology, but I wanted also to emphasize the recent acquisition -- or not acquisition, partnership, that we did that will allow us to have a very fascinating entry into the complement in the prostate cancer, where we have, let's say, significant resources deployed right now. That is nice, very, very nice, so very excited about it. Rare diseases. As I said multiple times, we are working [indiscernible], let's say, rare diseases that they have very high, I think, probabilities of success, hemophilia, hemophilia B and the Duchenne muscle dystrophy. I think Duchenne muscle dystrophy has great potential to be first and best-in-class, not only best. We are already in Phase III, and we already have excellent results in managing the first side effects that we had seen. So all boys now are progressing very, very nicely in terms of that. We are very optimistic about that. We have [indiscernible]. But rare disease in terms of those 3 are very big-ticket items, all of them. We spoke about immuno inflammation with 1 launch coming now, but with 5 different molecules in 10 different indications, strategy that I hope will produce, again, best in class. We have in internal medicines, the data that we presented both about NASH. So it's very, very, very rich pipeline that I thought good progresses very, very well right now.

Yes, absolutely. Can you just maybe update us a little bit? You mentioned rare disease and Duchenne. Just some of the updates from your competitor, how does that -- does that change at all how you're thinking about your program or thinking about the opportunity set there, I guess?

No, no, no. And I don't want to comment on anything on Sarepta, which is a competitor. They're a great company. And [indiscernible], and I hope they would be successful. What I can comment is only on our program, and our program is progressing very nicely.

Yes. Great. One last one on the pipeline. The 20-valent launch, is that -- I think when you move from the 7-valent to 13, there was an opportunity to increase price a bit. Do you see a similar opportunity as we move to 20-valent given the additional value you're delivering with the vaccine that you can see a higher price, I guess, for that product versus the current Prevnar? Is that a reasonable assumption?

Let me speak about the pricing strategy given the register right now. But clearly, this vaccine will provide significant more benefit. And clearly, as a result, I think, we'll have significant volumes that will be utilized. Keep in mind that when we launched the adult 13 and we had spectacular results, there were a lot of theories that the adults maybe are protected for the 13 from the pediatric. Now the addition of 7, they are not, right? Because they don't exist in pediatric. So I think the potential for higher volumes is there. And so we would just end catch-up opportunity. So when time comes, we'll discuss about it.

Okay. Great. Maybe just in the last couple of minutes here, I want to talk a bit about health care reform and how you're thinking about drug pricing. It does seem like patient out-of-pocket is an area of significant focus and concern for kind of the broader kind of world. What do you see Pfizer, and more broadly, the pharma industry doing to help address rising cost of patient out-of-pocket and kind of this growing gap that we're seeing between maybe list and net prices in the industry?

I think it has become a unanimous, almost, concern for all of us. I think it is -- if you ask any of my peers and good friends, they will tell you that one of the highest concerns, it is. But in the U.S., patients are getting their medicines like if they don't have insurance, although they do have it. Very expensive, right? So -- and that's the result of a system that was driven by the rebates, and we're stimulating wrong behaviors. We have arrived in a situation, but we need to reform. That needs to change. And we are advocating a lot about that. And we believe that the #1 priority for any health care reform, it is to reduce the out-of-pocket cost for patients. That's the #1, and everybody should contribute to that. We should contribute, insurance companies should contribute, the states should contribute, everybody should contribute to that. But this is a must because that's not sustainable situation, and that creates a lot of animosity. This is the fundamental base of why things are so tense right now in the health care section. That's the fundamental and can be easily fixed. So I think we will work with the new administration, all of us and with the new Congress, to pro-innovation, pro-patient solutions. We need to have a vibrant, innovative biopharmaceutical industry. And I don't think I need to explain why after what happened with COVID.

Absolutely.

Because the cost that we paid without having it is going to be not multiple, it will be on the exponential higher. But also we need all these breakthroughs. It don't make anyone any good if they don't reach the patient. So we need kind of pro-patient policies, things like that.

Excellent. We're just about out of time. Really appreciate all the comments today, and we'll be watching the vaccine rollout and the broader pipeline as we go through '21. But Albert, again, thanks for joining us today. Very helpful.

Thank you very, very much.

All right. Good afternoon, everyone, and welcome to JPMorgan's 39th Annual Healthcare Conference. Sorry for the short delay getting started. My name is Cory Kasimov. I'm a senior biotech analyst here. And I'm joined by my colleague, Lisa Gill, our health care technology and distribution analyst; and Chris Schott, our U.S. pharmaceuticals analyst. And it's our pleasure to host this keynote on all things related to COVID-19 vaccines. We're very excited to have a really distinguished group of panelists today, including Dr. Moncef Slaoui, the Chief Adviser to Operation Warp Speed; Angela Hwang, Group President of Pfizer Biopharmaceuticals; Stéphane Bancel, the CEO of Moderna; Karen Lynch, the current President of Aetna and incoming CEO of CVS Health; and Brian Tyler, the CEO of McKesson. So thanks to you all for taking the time to join us today. And even more so, I think I should speak for everyone when I say upfront, thank you for all your efforts in fighting this pandemic. So our hope with this keynote is to cover all things, all aspects of COVID-19 vaccines, from development, production to distribution, logistics and to longer-term outlook for the pandemic. And so with that, Dr. Slaoui, perhaps you can take us a couple of minutes to set the stage for our discussion by providing some overarching perspective on where we are in addressing the pandemic and how you're thinking about the priorities at this point in time.

Thank you, Cory, and thanks for having -- putting together this panel. I look forward to a good conversation. Really, in a few minutes, I'd say to an extraordinary pandemic that hit us starting, say, in January of 2020, there has been an extraordinary response from the health care ecosystem globally and the biotech pharmaceutical ecosystem more specifically in that period of no more than 11 months that elapsed between identifying the sequence of the virus and having 2 vaccines approved and in use in the U.S. population. I think it's truly an exceptional achievement, thanks to the great efforts in the companies whether large biotechs or large pharma, great efforts, thanks to various U.S. government entities within the Human Health Services or the Department of Defense. And also, I think, thanks to a very, very aggressive strategy put forward to incentivize and support financially but also operationally the discovery, the development, the manufacturing and now the distribution of the vaccines. In May of 2020, there were, if my memory doesn't fail me, more than 120 different vaccine programs described in the world and there may still be close to 100 of them at different levels of activity. Within the U.S. Operation Warp Speed we're set up to try and accelerate the development of a number of vaccines. Without getting into the detail, 6 vaccines were selected. Fast forward today, 5 of these vaccines are in Phase III trials or have completed the Phase III trials. 2 are approved messenger RNA. And we have representative from Pfizer and Moderna, I think, that both spearheaded these programs to allow us to have vaccines approved and in use. 2 more have completed recruitment in their Phase III and are really accruing cases, 1 by Johnson & Johnson and should be coming to fruition very, very shortly by the end of this month or early next month, and 1 by AstraZeneca already approved elsewhere and completing Phase III trial here in the U.S., and potentially, getting an emergency use authorization in March. And then still a protein vaccine by Novovax is in Phase III trial. More than 8,000 subjects recruited and a Sanofi collaboration with GSK with a vaccine that's in Phase IIb trials. Great progress in terms of developing the vaccine clinically. Also great progress in terms of manufacturing the vaccines in parallel and at high risk, either within the companies as has been the case for Moderna and Pfizer or in manufacturing capabilities and facilities that have been accessed as part of the U.S. government contracting with contract manufacturers either for production of the vaccine. Drug substance are also critically for the finished activities are a major bottlenecks in same activities used for all vaccines. To date, as I said, 2 vaccines are approved, 40 million doses have been distributed already. Only 9 million people have been immunized. There is a need to accelerate the immunization. The distribution of the vaccine has been, I think, a remarkable also collaboration and partnership, which we -- McKesson, CVS, Walgreens, FedEx and UPS, and here, General Perna, my colleague in the operation and the DoD in general, I think what the companies have paid a critical role in delivering exactly on time as was described yesterday in over 14,000 different locations, the exact quantities of the vaccines on the date that were suggested. Where things need to improve is in the capacity of the health care system in general without getting into the politics of whether it should be at the states or the federal level [indiscernible] it is. And we need to improve the speed with which we are able to deliver these vaccines into the arms of people. That's our #1 key area going forward. I would say other areas that require absolute continuous focus are to continue to streamline and optimize the supply chain with the messenger RNA vaccine, but also with the other vaccine. I think it's vital that we have more variety of platform technologies underpinning vaccines for use in the population in general. It is, I think, very important in the context of a pandemic to be able to have a 1-dose vaccine. And it's a development that could take place, frankly, with the current messenger RNA vaccine given the performance observed over a short period of time with 1 dose. But that would be a new kind of challenge and development, but also vaccines that are being developed as one of those vaccines such as J&J vaccine. And finally, another area where we are very focused is identification of clinical correlates of protection. That's a really critical enabler for the future of older vaccines given that the availability of vaccines now, particularly in the U.S., is making it effectively impossible to recruit high-risk subjects into placebo-controlled clinical trial. It will be the pragmatic way to demonstrate the efficacy of yet more vaccines. We hope that the last vaccine that started Phase III, the Novavax vaccine, will not be derailed by the fact that subjects in the trial will leave the trial to get access to a known vaccine versus an unknown vaccine or a placebo, and therefore, through that, make the vaccine steady outcome highly improbable. So identification of immuno correlation protection, which will be available to all players may enable the development of a second-generation of vaccines that can support vaccinations here in the U.S. as well as on a worldwide basis. So all in all, I think this has been an opportunity for the industry as a whole to demonstrate to the world in general and to the U.S. population in particular its critical role in effectively saving the country and the world from a pandemic that has just brought our lives to a stop, stilled so many, affected so many, disrupted so many. And I think it's very important to highlight the level of collaboration of partnership, a focus of commitment, of selflessness that has characterized the work of the industry and the U.S. government in tackling this pandemic. I'll stop there. I just tried to refresh everybody's memory and mind on what has been done and the critical areas of focus going forward. And looking forward to the discussion with that.

Great. Thanks, Dr. Slaoui. Some great opening remarks. I thought I'd just kind of cut to the chase upfront here with a question for everybody. When do you expect the population at large to be vaccinated? And what do you see as the single kind of main gating factor to getting there? So maybe just -- we'll start with Angela, then go to Stéphane, then Karen and Brian with just that initial question.

Thanks, Chris. And thank you again for bringing us all together to have a very important conversation about a very important topic. I think that Moncef's introduction on sort of the state of where we are with the pandemic sheds a lot of light in terms of how we should think about where we are with the pandemic and how long it would take for us to vaccinate everyone. You've heard him talk about the complexities of this vaccination campaign globally. But we have billions of people that we have to be able to vaccinate because of the pandemic. And the ability for us to vaccinate at the speed that we need in order to gate -- to gain the herd immunity and to stop transmission is obviously of highest priority. So as I think about everyone coming together, and I think that this panel is a great example of this industry, private-public partnership that we all need because it truly needs all of us to be able to make the impact in the world. It's going to take time. There's a lot of people to vaccinate. Vaccinations are complex. And I think by virtue of that, I hope that in 2021, we will put a lot of this behind us. But I think that we should anticipate that there's going to be a lot of work to be done. And this focus on getting the rates of vaccinations up to be able to support the points of vaccination to increase the numbers of them, so that we can really increase the volume of people that can get through them, are going to be all important steps that will help us to achieve that.

Stéphane?

So Chris, thank you, and thank you for having us to on the panel. It's good to see everybody on this panel. First, I would have to really thank Moncef and congratulate him. I think, really, the U.S. has done an amazing job to build the portfolio of vaccines. I have a chance to talk to different regions in the world. And a lot of countries are scrambling because I think they didn't do it as well as what the U.S. did. So it goes to what the U.S. government has done and to the collaboration between all the agencies of the U.S. government, channel for OWS and industry. I mean, if you ask about the question about the U.S., Chris, but I think if it's a worldwide question or U.S. question, it's a very different answer. I think we've got a question about the U.S. and it is a question about people above 18 years of age. If you do the math at 70% vaccination rate, which would be wonderful, given some of the calls we are seeing daily, that's 150 million people. That's 200 million doses in arms of the boost. Of course, less if you assume a single dose. If you look at what, I think, Pfizer and Moderna have said, we will supply to the U.S. government by end of Q2. I cannot speak for Pfizer. Angela can. I can tell you for Moderna. We have said it. We will have, before the end of Q2, 200 million doses of the Moderna vaccine to the U.S. government. We are, so far, on track to the plan we have given them. And we confirm that almost daily with their team. So if you look at that number, I think if both companies can deliver a total of 400 million dose by the end of Q2, that will cover anybody above -- I mean, 70% of population above 18 years of age. So I think the U.S. will most probably be one of the first country of size to get its population protected. I think smaller countries like Israel, Switzerland and so on are going to go pretty fast given how much vaccine they have ordered and the size of population. I think Europe is going to be much later. We would not be surprised if it takes Europe potentially up to the end of the year to get a good immunization across the country and then where we can take them for other countries in the world. I will pass it over to you, Chris.

Karen, your thoughts on the topic.

Yes. So first of all, thank you for bringing this group together. I think it does demonstrate how we can collectively come together as an industry to address pandemic. And I think first of all, congratulations to Pfizer and Moderna for everything that they've been doing. I do think it is what Dr. Slaoui said. It's getting it into the arms of the individuals. And obviously, it all starts with the supply, and we know that people are working incredibly hard to get that supply. And then it's really, right now, it's the allocation decisions that are being made by the states to go after certain types of individuals, so that we get our frontline workers and we get the most vulnerable population. And then obviously, it's the education of people. There are certain people in the U.S. that are hesitant around the vaccine. And I think we all have a responsibility to educate around the efficacy and the importance of the vaccine. And then from a CVS health perspective, we have a large reach. We have 100 million people through our Caremark and our Aetna members that we have the opportunity to educate. We have 10,000 stores across the U.S. where 85% of the U.S. population lives within those 10,000 stores, so that the distribution and the access, we can play an integral part in working in the communities to get people vaccinated.

Brian, pull it.

Well, Chris, it's tough to go last after this esteemed panel. I do want to start though with my sincere appreciation for what the teams at Pfizer and Moderna have done, for their great partnership and also the great partnership with OWS and the U.S. government. I do think this really has been a partnership. And I certainly would echo the previous comments, right? It's going to take product. It's going to take patients, new kinds of patients. It's going to take physical people patients to get shots in arms and willing people to get shots in arms. And I think it's going to take a little bit patience in the early phases. I mean, this is a very new program. It's very complex. There's obviously a lot of passion and energy and some learning that is going to go on around this. And I think we'll continue to get better and better as we go through that. And I do echo Karen's comments that I think all of us, particularly as health care leaders and leaders of large organizations, have to do our part to convince people that it's not just safe to take this, but there's also an element of responsibility to yourself and your community that, inherently, this is a battle we're facing that we're in together. And it's not so much an individual as it is a community that will beat this back.

All right. So I have a question probably for Stéphane and Angela. One of the most discussed topics right now in this ever-changing environment is the emergence of mutations. So I'm curious how you're thinking about variance in the SARS-CoV-2 virus. And do you worry new strains could render the vaccines we have today less effective or even ineffective? Maybe Stéphane first?

Sure. So thanks, Cory. So first, the virus has been mutating since January. It's not something that happened in the last few weeks as reported by the media. The industry, again, with academia has been collaborating extremely well to document mutations for them, [ exchange ] sera and virus strength to help us assess things. I think it's important that people appreciate the difference between a monoclonal antibody and the vaccine, a vaccine when you vaccinate and remake [indiscernible] protein in your body. We're not going to make one antibody, but a super antibody is binding many epitopes for the virus. And so we are following very closely as we have the last 12 months. We, as we said, do not believe that the current strains in the U.K., South Africa, I know there's a new one being discussed from Brazil, cause a problem to the current version of the vaccine. As you know, one of the beauty of mRNA technology is how quickly you can go. I remind everybody, we went from sequence. We're shipping GMP product last year in 42 days. I believe we should be able to do even faster at this time, we will [indiscernible]. I think the question is not for the short term. I believe for those mutations, it's going to be fine. I think the question is going to be more midterm, which is you have a U.K. strain now, but you might have a new strain from U.K. strain and then another strain from [indiscernible] of it. So the question is, as you see the virus mutating over time is are we going to have in 6 months, in 9 months, in 2 years such a drift from, I would say, the original SARS-CoV-2 sequence that came out of 1 -- a year ago? Are you going to need to have a new vaccine and potentially combinations of vaccine? But is it a world that's going to evolve basically like what's happening with flu or what you see for example with a product like Prevnar where you keep adding -- Brian, I mean, the beauty of mRNA is you can combine several molecule in a vial. We currently have been going to Phase III of vaccine against CMV, cytomegalovirus with that 6 mRNA in Israel. We are demonstrative that we can get that done technically and as the regulator are comfortable just taking products from the get-go with combination. So I'm not worried for the short term, but we are watching that very closely. Because I think that we might evolve into a world where we need new strains of vaccines down the world, but not in the short term.

Angela, anything to add there?

Yes. No, likewise, Pfizer is closely monitoring and studying these new strains, these new variants and the mutations from these variants. Just last week, we published data that demonstrated that in vitro, the sera of those who are vaccinated with the Pfizer BioNTech vaccine was able to neutralize the immunity against the particular strain of the SARS-CoV-2 variant. So we know that in this specific instance, it's working. Likewise and continued, we are looking at other mutations as well, and that's being studied. And actually, very shortly, we'll be publishing on that. So all to say that I think all of this coming together, we're bullish about what our vaccine is going to be able to do and its ability to respond to the various mutations and the variance. That being said, what we have to realize is that the virus could change. And that we may need a new vaccine altogether. So it is important that we continue to monitor that as well. And to stay on top of whether it's really a mutation and a small change or whether it actually moves to a place where we need a new vaccine. But again, as we've said, that's where the beauty of the mRNA technology comes in. With the sequence, we're going to be able to be able to make a new vaccine in very short order in as little as 6 weeks. And so that, together with working with regulatory agencies, to really understand what are the studies and maybe what are the data that they would need in order to create a regulatory pathway, authorization or approval. Pretty much what we've been doing for the last several months, we'll continue to do, but obviously, do it in a way that helps us to get ahead of it. But I think that we should anticipate that there's going to be changes, and we need to be ready for these changes, and we are.

Okay. Okay, great. And Dr. Slaoui, we obviously have representation here. The first 2 vaccines both based on this messenger RNA technology. Both have demonstrated pretty remarkable efficacy. I wanted to ask you, though, about your level of confidence in the non-mRNA approaches that are out there. And what do you think maybe the bar for efficacy is given what we've seen so far? So for example, what kind of role might the vaccine with efficacy on the order of 70% to 80%, not 95%, have in this market and the global fight against the virus?

So it's a very important question, and frankly, a very delicate and difficult one. Because I'm going to say having a 50%, just to change from 75%, and the regulators have put a bar at 50%, having a 50% vaccine is so much better than having no vaccine. It would allow with appropriate immunization throughout the population to save millions of life over the years. But of course, once the 95% benchmark has been set, the individual benefit dimension take somehow instinctively the frontline in people's minds versus the population benefit. So the answer -- the scientific answer to your question is the 70% or 80% vaccine can be highly effective in inducing herd immunity, particularly if the vaccine, for instance, has a very high efficacy against severe disease and decreases the -- I'm pretty sure studies are -- will define this, but I think it's a very reasonable thing to expect, that even a 70% or an 80% vaccine, effective vaccine, is actually going to substantially decrease virus with most people immunized, will induce herd immunity if 80% or 90% of the population is immunized. But you don't have the level of certainty that you have when you take -- when you have a 95% effective vaccine. Now my projection, as to the efficacy of the vaccine, I would say, is very high. I do remember in June and having said that I expect the vaccine to be 85% to 90% efficacious, and it was a shock, I remember. So it was very satisfying to see that efficacy was very high. And the number was not coming out of the blue. I actually believe that this virus -- fortunately, this virus is actually a somewhat slow virus from a pathogenesis standpoint. And if you are able to either have a low virus load inoculated or have immune responses able to control your virus load spread quickly, so that by the time the bulk of your destructive immune response against the virus is at its peak, not most of your lungs are infected, but only 5% of your lungs are infected, you are going to clear this virus out and most likely be asymptomatic or have very, very small cough, right, or, if your nerve in the -- olfactory nerve, that you may lose a little bit of smell. As is the case, in effect, in probably 85% to 95% of people that are naturally exposed to the virus, some have still no immunity. So the reason I went through that is just to say my expectation, frankly, is that most of that seems if they are immunogenic in -- particularly, in the elderly, will be effective at a high efficacy rate in the 70s or the 80%. I think some challenges observed with other vaccine may have other explanations than the intrinsic efficacy of the vaccine itself. My -- and this is one of the reasons why we felt that it was appropriate to select one of the vaccines and test it as a 1-dose vaccine. And as you know, the Johnson & Johnson vaccine is being tested both as a 1-dose and as a 2-dose vaccine in large Phase III trials. And the expectation is to have, I hope, 80%, 85% or maybe more efficacy. The -- what people need to realize is that in real life, a very large percentage of people immunized with the first dose will not get their second dose for various reasons. Maybe in a pandemic, at the height of the pandemic, this will not be so, but maybe in the month of May or April or June as the percentage of population becomes larger and larger, a substantial number of immunized people may not get their second dose. Having a 1-dose vaccine is, therefore, very important. And I believe that the Moderna vaccine and the Pfizer vaccine, if tested as 1-dose vaccine, are likely to also demonstrate very high efficacy. So my expectation is high efficacy. My expectation is that anything north of starting with an 8, I hope, will go through. I think a 70% or 65% vaccine that can be made into billions of doses very quickly can be transformative on a global basis. But I do think it will raise really in the North, South, Western world, developing world questions. But if you look at it, firstly, from a public health global health standpoint, any vaccine above 50%, 60% will make a huge difference if available very quickly.

Great. Maybe as we transition to discussion a little bit to logistics here. There seems to be something we're hearing from the media, almost on a daily basis, about the challenges of delivering some of these vaccines. So maybe just another quick comment from everybody about how much of a concern you see these logistic dynamics? Is there a short-term issue? Is this a longer-term issue? Maybe Brian, we'll open up with you for initial comments here, and then go to Karen, Angela and Stéphane.

Sure. Well, it's -- I think, top of everybody's mind for very obvious reasons, and not unexpected, getting a lot of scrutiny and commentary, I guess. I will say, we've had the chance. This is my Day 3 of the JPMorgan conference. I haven't had a lot of chances to talk about this over the course of the last few days. And one of the things that I've noticed is a little bit of confusion in the language between distribution and administration, and Dr. Slaoui actually referenced this. The distribution has actually gone quite well. And I think it's now that last inch, so to speak, of getting it from the provider site into people's arms. So just to maybe clarify the way the process works for everybody's benefit and to frame the conversation and the comments that will follow, the jurisdictions based on their local decisions on how they want to address this will filter up request, so to speak, to Operation Warp Speed and the CDC, who will then make allocation decisions based on a variety of factors, turn those allocation decisions into orders that are pushed down to McKesson. That's really when our role starts. We receive that order. We walk into the dedicated facilities that we built that are securely storing this vaccine. We do the pick, pack and ship, believe it or not, in a freezer to maintain the temperature controls around this virus, and we work with our partners, UPS and FedEx, to get those products out to the provider sites, usually within 24 hours. And I believe our accuracy rate right now is 99 -- in excess of 99.99%. So I'd say the distribution component has been remarkably well, and that's really kudos to the great coordination from all the companies on this call, Moderna, Pfizer, certainly Operation Warp Speed team. So we're proud of what we've been able to do. We just talked a little bit about the need to build the practice and refine the process to compress further the time to get that at the provider site, to get the administration, to catch up to the distribution.

Yes. And I'll pick it up from there. We've had a lot of experience with the long-term care facilities. We've obviously been working very closely with Operation Warp Speed and the launch and the CDC. How that process worked was that the nursing homes would select the pharmacy carrier that they wanted to administer the vaccines, over 40,000 selected CVS Health. Then what happens is the states need to determine the allocation to those facilities. So once the states turn on or activate those nursing homes, then we're able to go in with our pharmacy techs, our pharmacists and nurses, and put the shots in the arms of those in the individual nursing homes. So there's -- that's the way the process has been working. We're very hopeful that the federal program will open up soon. And then that will open up more of a direct distribution into pharmacies across the country. And then I think that will open up the ability for access of individuals to go to their community-based pharmacy so that we can have more people getting vaccinated. We -- I shared with Lisa yesterday, we have the capacity to do 20 million to 25 million of vaccinations a month throughout all of our retail locations. And what that means is we can do 1 million a day. And just to put that in context, we're just coming up to 1 million vaccines this week on all of our long-term care facilities, so we can open up the aperture to get more shots in the arms as soon as the federal program is fully in play.

Stéphane?

I mean just to add a quick word. I mean, we are not in charge of distribution of vaccination. So I will just speak from far away, saying that, first, the job that Brian and his team at McKesson have been doing has been fantastic in the coordination. And then I think you have some teething problem, I will characterize them as such. I don't think it's a good idea to bet against America. I think it was just because of very tight supply and mostly I can't talk about it. Because of very tight supply, the allocation was a big struggle. And in some places, I think people spend too much time thinking about allocation and staying in line versus shooting vaccine in arms. I think there's more and more supply available and as we use the enterprise like CVS and other pharmacy chains and stadiums and a lot of things just to get vaccination, then I think the numbers are going to go up pretty quickly over.

Angela?

Just to add more color to what was already discussed, just from a Pfizer perspective, to give you some numbers. To date, globally, we have distributed, so shipped out 30 million doses to about 10,000 different points of vaccinations, right? So this is through using logistics partners like UPS, FedEx, DHL, so on and so forth for us to take it from outside in Kalamazoo, Wisconsin or in Belgium to get it to the various sites. And I have to say that like everyone has been saying, consistent with what you've heard, it's gone remarkably well. All the doses have gotten to where they needed to get to exactly on time with almost negligible variances. And we had almost no product returns. We've had everything arrive on time at the right temperatures. The couple of boxes that -- where we had excursions, and literally, it was a couple, we've monitored, and we have tested those to realize that the product was still intact. So honestly, this has gone almost as perfect as it could possibly go. As you know, however, we've invested a lot in making sure that this works for us, right? We have our shippers that are temperature-monitored. We are tracking all of these boxes wherever they're going. And we've also provided a tremendous amount of training and support at the points of vaccination because we believe that our job ends when the vaccine is administered, not just where we drop off. So I think this entire infrastructure from beginning to end is what has helped us to really achieve the outcome that we had hoped for at the points of vaccination.

Great. I just really wanted to dig in a little bit, Brian, to what you talked about around this whole process and really maybe just better understand where the product is being delivered to the safeguards around that product. I think one of the things we hear about is concern around a potential counterfeit product. And then dealing with public health. So when you're delivering that, how does it determine that it's going to a hospital or to a CVS? And when we start to think about those logistics, how coordinated is that effort? Is that something that you're coordinating and if they just tell you here's the drop spot? Or is that something that McKesson has a more involved process when we think about dealing with public health?

Okay. There was a lot of questions. Let me kind of peel them back one at a time. You think you started with the safety and security. And I think one of the attractive features of the logistics design that was selected is there's very few points of handoffs. So -- and we're not handling the Pfizer vaccine. They're handling their own distribution. But with Moderna, we're picking it up right at Stéphane's factory on -- our controlled transportation vehicles bring it into our secured facility. The next place it arrives is at the provider site. So there are very little -- very few points of encouraging or opportunities for that chain of control, so to speak, to break down. When you asked about the -- where it end up going? I mean, remember, in the early phase, this is the 1a phase, the target for the program was really our frontline health care workers and the really elderly and sick, right? So Stéphane made a great comment about its teething pains and the administration in the sites, right -- well, we rolled out really literally in the middle of the holidays and the target audience was those who are most busy taking care of the sick patients. So maybe the teething pain should have been expected, and I do think we're continuing to see that get better and better. The way our program is designed and the reason another attractive feature to the model that OWS selected in our opinion is there is very little lost inventory filling up the supply chain. It literally goes from us to the provider site in 24 hours. And in early stages where supply is limited, that's really a critical feature. But McKesson has really no role in deciding who gets it. I mean, that's the role of Operation Warp Speed. So I think the local jurisdictions develop their local plan for -- I can tell you, I believe the state of Texas has 7,000 providers that, at some point, will be involved in this, but that's their decision. The allocations is the decision of the CDC. We view our job, and we built our facility and our infrastructure to simply take those orders and make sure we could get it out to hundreds of thousands of sites of care within 24 hours.

If I may add something there, just to complete what was said, which I completely agree. But it's important for people to understand that to realize -- to put into context the various discussions that happened in media. There are 70,000 locations that have been validated, and they had to meet certain criteria that were offered by the 63 or 64 jurisdiction in the country as potential recipients for the vaccine. Every single dose of vaccine that is shipped because there has been a pull, not a push. In other words, a state says I would like to have 257 doses of vaccine in address 255 blah, blah, blah ZIP code this, which is one of the 70,000 areas. And that's shifting to there. The assumption behind that is that whoever sat down, and we went and visited all the health departments of the various states and jurisdictions, the assumption is, when you decide I want to have X hundreds of doses in this particular location, is because you, at the same time, have organized to immunize those number of doses in the area. And this is, frankly, it is in that transition from deciding to ask for a number of doses in a given place and administering them that we need to optimize. Clearly, the holiday season wasn't a great thing. Clearly, the surge that's happening overwhelming the health care workers in the health care facilities and hospitals is a problem. And therefore, the decision to accelerate going to broader population, and as was said, open the aperture further is the right thing to do to decrease the pressure, continue working into the health care workers and hospitals, but also distribute elsewhere and immunize elsewhere.

Dr. Slaoui, I think most of us understand the different rankings by the CDC as far as when people should be vaccinated just at least the first 1A, 1B, et cetera. But can you reiterate that number one for people? And then I'd like to bring Karen into the discussion because one of the concerns that I think a lot of health care investors have is concerns about the underserved populations. And I think, Karen, you talked a little earlier about how you educate people around taking the vaccine, but less educated people have a tendency to not be vaccinated in the same way as educated people. And so how do you meet those underserved populations? So Dr. Slaoui, if you can start with just the understanding of who is getting vaccinated and then, Karen, if you can add to that, that would be great.

So very important questions, again. And very early on, we realized that it was going to be super important to have a well-thought through ethically defined approach to giving access to vaccine into the population, because, obviously, you're not going to have enough vaccines quickly to immunize and [ treat ] 30 million people, let alone the global world. And we actually involved the U.S. Academy of Medicine to have a discussion, that was at that time a conceptual discussion, to suggest how to go about it. And that there was the first reports that came, I believe, in the month of August or something like that, describing the health care workers, the elderly and frail, first-line workers as the first 3 areas in 1A, 1B, 1C, and then looking after the overall population, the first dose with comorbidities at higher age and then at lower age, et cetera. And then that was further refined once we had the vaccines by the CDC and its ACIP committee. I think the issue about the minority population and underserved population is a critical one. And as Stéphane can attest to, the starting point of paying attention to that problem, which to that challenge, which is a real problem that we must address overall, was at the level of the clinical trials. And enormous efforts have been put and continue to be put to make sure that there is appropriate representation of the minority population and underserved populations in the clinical trials and in that process to have engagement at the level of the community leaders from those underserved population to engage with the population, participate into the trial and have appropriate representation. All the companies have worked very hard to achieve those objectives and to have at least double-digit representation in percentage of African-American, of the Hispanic population and in generality underserved population. I think that was a critical starting point, but we cannot stop there. I mean, at this moment, the key is to continue the engagement into the communities at the very local level. I mean, one of the learnings we got from the clinical trials is that, frankly, it is irrelevant for somebody out in national level to stand up and say something. I mean it's interesting, but it's interesting for 3 or 4 people to do it. What really is meaningful is for a church leader or a sports leader or just a community leader to whatever process to be engaged and understand what the vaccine is, why vaccination is important, to get the vaccine themselves and engage with their neighbors and other members in their community to be vaccinated. There was a challenge in this -- the work that took place to have the vaccine. There was a real challenge to engage the population before we knew we had the vaccine, because it's really a double-edged sword to talk about what a vaccine can do when we don't know. And then once you know, you're going to have to change your methods, right? So for quite a period of time, it was very difficult to have a concrete conversation that is relevant to people that can understand it, feel it and sense it. I think once we had data on efficacy and safety and once discussions happened in the open at the FDA to through VRBPAC process, I think that opened the way for more engagement. We are talking to companies that are really experienced in simplifying, visualizing, translating into everyday's words complex medical or scientific messages in order to help, again, with the engagement process is critically important.

Yes. Lisa, I'll just echo Dr. Slaoui's comments. The -- I think it's an important responsibility and obligation of all of us to make sure that we are in the local communities, serving the underserved population. And it is all about working with community leaders about education. We've had a lot of experience during testing. When we were doing testing in the local communities, we've learned a lot about how to use the community leaders, how to work with the community leaders. And as Dr. Slaoui mentioned, it's about those local community touchpoints that people are familiar with. And as you think about -- even in our retail pharmacies, where the pharmacist is one of the most trusted clinicians in the local community, that is another avenue for people to think about how to get -- to use them to educate and coordinate the vaccines. But it is an important responsibility. I think as Dr. Slaoui said, for us to have that herd immunity, we need to make sure that everyone gets vaccinated. And it is a responsibility for all of us to make sure that we're local and in the communities and working with those community leaders to educate and ensure that vaccination process occurs.

Okay. So we don't have much time left. And we want to make sure that we get to another question we get all the time, and that's how long COVID-19 is going to persist as a significant public health concern? And I know it's kind of the unanswerable question, but we're going to ask it anyway, and kind of keep you -- we've been doing it. We're going go around [indiscernible] or at least what I see on my Zoom screen, maybe start with Stéphane, Karen, Brian, Angela, and then wrap it up with Dr. Slaoui. So Stéphane, on the duration here?

You should have started with the doctor before asking the business guy. So I mean, our thesis as a company is that SARS-CoV-2 is not going away. We are going to live with this virus, we think, forever, like flu and RSV and other vaccines. The key, I think, is going to be to stay really close to the mutation, as we talked before, and to be able to very quickly find a regulatory pathway to evolve our product so that we can keep protecting people. What I think is unknowable today is what's going to happen in terms of duration of vaccination. We just don't have enough data. As you know, the Phase III started in end of July. What -- we have a good sense now looking at neutralizing antibody, as well as what Moncef say, getting a surrogate is very important for all industry. But with the sense of the antibodies of at least our vaccine, I can speak that it'll go down slowly. So I think the nightmare scenario that was in the media in the spring like the vaccine might not even work 3 months, I think that scenario is on the table. But then a question of frequency of injection and what different strength you need of a vaccine to be able to protect people, I think it's on a different question moving forward.

Yes. Correct. I wish I had the answer to that, but I would agree that we'll have the virus for a long time. And it's important for us to remain vigilant. We're in the heat of it right now. And as a society, we need to remain vigilant about keeping social distancing and doing the things that we've been -- wearing masks and doing the things that we've been doing. But the most important part here, and that's what we've been talking about, is making sure that we get people vaccinated and that we continue to drive the education and work on getting people vaccinated all across the country, and quite frankly, the world. And that's my hope, that we can at least slow the pace that we're feeling right now. And I think the vaccine is our light at the end of the tunnel.

Brian?

I don't have any more informed opinion than my first 2 colleagues, other than to say I'm incredibly encouraged by what the industry has accomplished in a relatively short period of time to at least begin to arm us with the tools that we need to fight this back. Stéphane's comments about the science and its ability to adapt and I know our colleagues at Pfizer are tracking it closely are equally important. I mean the question for me becomes not -- will we ever live in a world where we're not battling some variant of this, what have you, but how do we get through this sort of crisis stage. And that is going to be as production comes online, and hopefully more vaccines get approved, as availability increases and then our ability to make sure that our teams and the people in our communities and around us are getting vaccinated and practicing the important social responsibility measures Karen just talked about, wash your hand, stay distanced, wear a mask, so -- because until that herd immunity comes, that's also very, very important. So I don't want us to get overconfident in the science and let go of these social behaviors, because I think we should be focused on those as well.

Okay. And Angela?

Likewise, I believe that this is something that is going to be with us for a long time. We know that it's a global pandemic. It spreads everywhere. We know that it's changing and whether it's changing a little or a lot, that is something that we're anticipating. So we may be in a place where we may need a new vaccine. And then we have to get so many people vaccinated. So I think that with all of this really generating the data that will help us to understand the course of disease is also important. And that's why, I think from -- at least from our perspective, the data that we have now in terms of where we are with our Phase III, but also the extension, right, following our patients for another 2 years and understanding that, is going to be important. The transmissibility, understanding the durability of response but also making sure that we are staying on top of the tracking so that if we do need to make a new vaccine, we can, like all of these things are going to add to the body of evidence that will give us the confidence to be able to manage this disease as it progresses. I think what's clear is that it won't be the crisis that we are in today forever. But what I think is also clear is that very rigorous surveillance and response is going to be absolutely important. And so I think from a business perspective, and from where we sit here at Pfizer, we see this as a durable business. And something that is -- and it's a business and a piece of research that we're going to have to continue to do for a long time.

Okay. And a final word from Dr. Slaoui.

Well, first, I completely agree that in the short term, social distancing, wearing mask, washing our hands, being aware and socially aware are critically important. I do want to remind us, however, that SARS-CoV-2 is only one of the very many viruses that are deadly viruses, which we have been living forever, that we need to also remember that without vaccines, to the many viruses -- pathogenic viruses that exist in the population, we would be living all our lives in a confined environment much more than we have experienced over the last 11 months. And therefore, this gives me optimism that as the vaccine gets more and more used, and, here, I'm talking about a global basis, not on a singular country basis, the circulation of this virus, the intensity of transmission will, by definition, decrease. And we will, little by little, get ourselves in a situation like we have with RSV, for instance, which is a virus for which we do not have a vaccine yet. Yet we live with this virus, and we have lived with this virus, and we continue to live with this virus. And people may not know, but the very frail elderly people for instance have significant morbidity and mortality associated to RSV infections. And a number of companies are working on an RSV virus, but did not slow the population. What's the difference? The difference is as we are born, we meet the RSV virus step by step. And as with SARS, when you're a baby, unless you're really a pretty -- very, very, very young baby, you are usually not ill with these viruses. You learn to live with them, you're primed. And once you're primed, usually, your protection from these viruses will last your life, long life, until you become frail or comorbidities interfere with your immune system, then it becomes susceptible. I do think that we will get to that stage with this virus. Thanks to the vaccination, we will get there quickly, which it will not be through birth cohorts, but we'll do it in a few 2 or 3 years. But what we absolutely must remember and -- how all the time, indeed, to avail this strain, this virus, new strains or other viruses, there is a very long list in the WHO of potential pandemic agents because they will come again. There will be more pandemics, impossible to predict when. We need to be even faster and better equipped for the next one than we have been for this one. So I'm optimistic we'll get this virus under control. It will not disappear, completely agree, but it will stop changing our life and turning it upside down. But we cannot forget. We forgot with Ebola, we forgot with Zika, which were orange lights. We got a huge red light here. We cannot forget. We should be ready.

Well, I want to -- on behalf of the JPMorgan Health Care team, I want to thank all of our panelists today. It was incredibly insightful. This is probably the most important topic going into 2021. And I'm really hopeful that we'll have the opportunity to see each other face-to-face in 2022, thanks to the great vaccines that are out in the marketplace. So with that, thanks again.

Thank you for having us.

Thank you.

Thank you.

Thank you.