Pfizer Inc. (PFE) Earnings Call Transcript & Summary

So good morning for those of you in the U.S. and good afternoon for those of you joining here in Europe. So my name is Mattias Häggblom. I'm Sector Head of Healthcare Research here at Handelsbanken, and welcome to the final but perhaps most important session at our second annual Life Science and Innovation Day. It's a great honor to welcome Mikael Dolsten, Chief Scientific Officer, President, Worldwide Research Development and Medical at Pfizer, as our keynote speaker to this year's Innovation Day. And what better fits by ending an event focused on innovation to bring a company who played a crucial role and continues to do so in the fight against COVID-19, both with the vaccine but also an antiviral. Before I start my discussion with Mikael, I'm going to hand over to Chris Stevo, Head of IR at Pfizer, who's going to help us with some of the disclaimers around forward-looking statements. Chris, over to you.

Thank you, Mattias. You know what these U.S. companies are like. So I'd like to point out that our discussion today may include forward-looking statements. Forward-looking information is subject to substantial risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Additional information regarding forward-looking statements is available in our SEC Forms 10-K and 10-Q under Risk Factors and forward-looking Information and factors that may affect future results. Please note that forward-looking statements on today's webcast speak only as of the webcast original date, and we undertake no obligation to update or revise any of these statements. Back to you, Mattias. Thanks.

Thanks, Chris, for that. And Mikael, I'm honored to have you here. Thanks for spending the time with us. Let's jump straight into today's discussion, which will, of course, focus on innovation. It's tricky not to start our discussion with the pandemic, given the role Pfizer has played and continues to play. So I'm curious to hear if there was a particular point in time when you might have understood how serious this was going to be. And if so, when and perhaps also in addition, what was the thought process about reaching out to the BioNTech team, whom I know Pfizer already had a partnership with and start the process of adding a COVID-19 vaccine candidate to the agreement.

Yes. Thank you very much for starting up with this crucial question and for inviting me to share some of the stories how we succeeded to become a company really giving promise during times of darkness in the pandemic. We have a long history in vaccines and in anti-infectives. So we tend to monitor all the time, changes in the infectious disease panorama. And clearly, late 2019, early 2020 when the reports came from China, we were on our toes trying to understand if this was going to be another epidemic or whether it would have the feature of a pandemic. It spread to Europe with a lot of cases in Italy, and there was some really good connection between many New York hospitals and Italian physicians that I was able to listen into increasingly gave us a sense that this was indeed a quite difficult to manage disease and spreading unexpectedly fast. And then, of course, later in that first quarter, we started to find cases in the United States, which made it a 3-continent disease. Like many scientists, when I discussed with our key experts, they have a healthy skepticism and told me how hard they worked in previous pandemics, whether SARS-CoV-1 or anthrax. And before they were just starting to make progress, the pandemic -- the epidemic had kind of gradually vanished. So we were at this crucial inflection point, not waiting too long, and at the same time, being willing to take a deep dive into this world of uncertainty. And I think there was a little bit of a historical moment. I was asked by Pfizer to be the representative first day of March at a White House meeting with the administration of the current president in those days and a few other companies that were invited because of their skills and capabilities working with vaccines and antivirals. And that gravity, you'd sense as a large group of world-leading expert came together hosted by the United States President, I think, made me see the pieces in the puzzles much clearly reflect a pandemic than an epidemic. On my way back to New York, I called Albert Bourla, our CEO, we had previously made a statement that Pfizer was a company that will use all its resources to deal with this disease. And I told him, I think we can play a unique opportunity here using a novel mRNA technology that seems fit for purpose and also developing an antiviral. Albert felt compelled by, I think, the enthusiasm and the confidence in my voice and he said, let's make sure that we have already this fall, which was only 8 months, something available because we know that in winter time, respiratory infections tend to become much worse and you could have co-appearance of COVID-19 with flu or other viruses. That sounded like an almost impossible task, but it really made this race start with adding tremendous resources initially on the vaccine, but in the background, also on the field. And right now, as you know, it turned out to be a tremendous success after lots of ups and down to have a vaccine used in billions of people with a really terrific safety profile and appeal that, particularly in the United States, has been used extensively and save many lives and keep hospitals free of over-flood of patients. Now unfortunately, dealing with a pandemic of this scale does not allow us to say game over. It just changes the conversation from being overwhelmed of the pandemic to having tools and approaches to deal with it, keep society open, but we need to constantly innovate in order to stay ahead of this virus.

And one thing that still puzzles me is that mRNA vaccines have been in the making for decades, not only for tricky cancer vaccines, but also other infectious disease, including CMV. And how come all stars were aligned when COVID-19 hit, and we had 2 proven mRNA vaccines out so rapidly.

Yes. That's a very insightful question. And you may look upon it from what stars were aligned within Pfizer and, of course, similarly for Moderna and what stars were aligned outside. Starting with our company, we made already at 2018 a move into this technology. I had the opportunity to meet Ugur Sahin in New York. I was actually quite impressed with him at that time being an entrepreneur with an early rising company, but still being a very good scientist, that gave me the sense of working with a team that could bring mRNA to a next level. We were the infectious disease company with long experience in vaccines, and we charted a path forward on flu. We had by then 2 years experience working together how to make a, let's call it, a new vaccine technology with, like always, small-scale experience to gradually think about how do you take it to a different scale. And that gave us the confidence to go into COVID-19 SARS-CoV-2, blending the small company that spent almost 2 decades working on mRNA and us, having got to know them, getting in joint processes and have the experience to go from the lab to clinical studies to production for maybe hundreds of millions or billions of patients. At the same time, outside Pfizer, the rapid progress in understanding the genetic sequence of SARS-CoV-2, all the work done to identify that, it seems to be 1 single protein, the spike that was responsible for the viral entry into host cells, made it a preeminent target for an mRNA technology. That's different from other viruses like CMV that seems to have a much more complex entry process into cells. And finally, I felt that it was a top end point when the medical community across the globe came together so well. In the U.S., I was -- actually, I received a call maybe mid-March from the Head of NIH, Francis Collins, we have worked many years together, whether we should start a consortium of academic and industry leaders to share ideas and improve best practice. We did that together, and we also had ample contacts with many European countries. So I felt the world acted like one team. So you had that special opportunity, the stars aligned internally and externally. And the regulatory authorities stepped up. We're thinking outside the box. It doesn't need to take months between the dialogue. It may take days, and that type of urgency made all of us become a very different team that, in a way, saved humanity from tremendous suffering and loss. I think it was estimated at maybe 10 million lives were saved and so many more hospitalizations because of the availability of vaccines. And more importantly, the despair in society, the unemployment, the need to return to a more normal sustained social environment, all of that became possible again.

So maybe let's leave the pandemic and the mRNA vaccine for now. Let's shift gear a bit and talk about the process around innovation. So one thing I often think about is the fact that small companies, they often lack resources and large companies have such. And small companies can be agile and quick, whereas large companies rarely are. So how do you combine the best of those 2 worlds from your point of view, Mikael?

Yes. We have had an R&D strategy for quite some time that a team needs to be the best team you can assemble. And whether you need to work inside the company or find a biotech partner, you really need to think about boundary-less ways of creating teams, go alone or make a deal or even acquire a capability depending on what's best for that particular product development, for that particular medical advance. And I think that matters that you value very highly that innovation at its peak comes from very cross-disciplinary experience. And I think PAXLOVID pill was an all inside Pfizer innovation. The vaccine was a true partnership. So it just exemplify, you can go very fast, whether you're a large company alone or whether you are a partnership. And if you look at Pfizer, we have over the last 4, 5 years, really amped up our pace in how we work with the biotech community. Clearly, Albert Bourla, our CEO, has been willing to put significant capital behind that strategy. And from entering into new area in oncology, when we acquired Array Biopharmaceuticals, which gave us a foothold into colorectal cancer, a difficult-to-treat disease that we would like to transform, into inflammatory diseases where we not long ago made an acquisition of Arena Pharmaceuticals to add a new type of oral drugs for gastrointestinal inflammation, inflammatory bowel disease. Most recently, you have seen us in area like internal medicine. We acquired Biohaven for a deal beyond $11 billion to get access to a new migraine drug. All of these acquisitions are dependent on that you find a work to get -- a way to work together, share and evolve knowledge with a smaller and a larger entity. It doesn't need to be acquisitions. In gene therapy, we have worked many years in partnerships with companies like Spark, Sangamo. And in oncology, we have worked now for quite some time in breast cancer, one of our areas of strengths, with a completely new oral type of small molecules called PROTACs with Arvinas, a company of a few hundred people in Connecticut. So you can see that it's all about understanding what are the important success factors for each entities. It's about creating a unique culture between the 2 entities and really realize that things can go much better faster if you learn from each other and value each other. And that really was what happened with BioNTech. We find a way to be complementary. And I think we were able to break all kind of records how fast you can move, how much innovation can happen. And I hope it gave you a sense, it's not a one size fits all. It's about adjusting the best way to work together, being willing to be flexible. But I will punctuate, as my last comment on this, a company that's large and mainly offer capital is a far less great partner than a company that provides capital to release speed and scale but also put in a lot of talents and capabilities. And that's really how we have been thinking, that we want to be seen as someone that can unleash the opportunity in the hands of innovators, whether they are inside our company or outside.