Pfizer Inc (PFE) Q2 2026 Earnings Call Transcript

Good day, everyone, and welcome to Pfizer's Second Quarter 2026 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Francesca DiMartino, Chief Investor Relations Officer and Senior Vice President. Please go ahead, ma'am.

Good morning, and welcome to Pfizer's Earnings Call. I'm Francesca DiMartino, Chief Investor Relations Officer. On behalf of the Pfizer team, thank you for joining us. This call is being made available via audio webcast at Pfizer.com. Earlier this morning, we released our results for the second quarter of 2026 via a press release that is available on our website at Pfizer.com. I'm joined today by Dr. Albert Bourla, our chairman and CEO, Dave Denton, our CFO, Cecile Gaigant, our incoming interim CFO, and Chris Boshoff, our chief scientific officer. After their prepared remarks, we will open the call for questions. Members of our leadership team will be available for the Q&A session. Before we get started, I want to remind you that we will be making forward-looking statements and discussing certain non-GAAP financial measures. I encourage you to read the disclaimers in our slide presentation, the press release we issued this morning, and the disclosures in our SEC filings, which are all available on the IR website on Pfizer.com. Forward-looking statements on the call are subject to substantial risks and uncertainties, speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements. With that, I will turn the call over to Albert.

Thank you, Francesca. Good morning, everyone, and thank you for joining our call. We had another strong quarter of execution, driving continuous strategic progress. Our revenues and adjusted, diluted EPS in the second quarter, once more exceeded expectations. This shows that our commercial teams are performing with excellence and precision, and that we continue to operate with financial discipline. We also are building towards the future, advancing our R&D pipeline that provides multiple opportunities for success across our four therapeutic areas. Previously, we announced that Dave Denton would be leaving Pfizer soon for another opportunity. Since then, Dave has partnered closely with Cecile Guagang to prepare for this transition. Cecile is fully ready to serve as our interim CFO, including answering your financial questions during today's Q&A session. I want to thank Dave for his leadership, his dedication to Pfizer, and all he has contributed to our company's success. With Cecile's leadership, I'm confident we are in very good hands. She has had a central role for years in shaping and driving Pfizer's financial and strategic direction. She is an expert in our industry and her field and knows our company well. She has worked closely with Dave and our leadership team in completing key transactions, developing our approach to capital allocation and driving efficiency and productivity improvements across our company. No, I'm confident in the years ahead because we have been purposeful in establishing a foundation marked by strong execution across our business, alignment among our leadership team, and the clear strategy to guide our colleagues in working toward meaningful future growth and impact. Let me go through our progress with our 2026 strategic priorities, starting with maximizing the value of key transactions. In the quarter, revenue for our acquired products grew 25% operational when excluding the impact of certain one-time items in the same quarter a year ago. We view our CIGEN, METERA, and BioHeaven transactions as transformative opportunities for Pfizer. We are focused on execution and pleased with the progress we continue to make with each of them. With the addition of CIGEN, we gained an innovative platform, deep-centered expertise, and the promising ADC pipeline, central to our goal of growing our oncology leaders. We also acquired a commercial portfolio that is delivering ahead of expectations. In the quarter, we drove strong revenue growth with a 21% year-over-year increase across the legacy citizen portfolio in the U.S. after excluding the one-time stocking benefit that we had in the second quarter of last year. With Medsera, we believe we are on a path towards unlocking a differentiated profile for patients with obesity and related conditions in a market expected to reach $150 billion. dollars. Data we shared recently at the American Diabetes Association scientific sessions reinforce why we are excited about berobenadide, which is an investigation ultra-long-acting GLP-1 receptor agonist with the potential to be the first monthly GLP-1 peptide approved for the treatment of obesity and related comorbidities. We are targeting a first approval in 2028, and this year alone, we expect to advance an extensive Phase III program that includes 10 studies for chronic weight management and obesity-related conditions. Finally, the acquisition of BioHeaven positioned our company as a leader in providing treatment options for migraine, a disease affecting an estimated 1.2 billion people worldwide. NURTEC delivered strong year-over-year growth again this quarter and continued to lead the oral CGRP class in total prescriptions. Looking ahead, we are working towards expansion opportunities that would further strengthen our impact for this patient. We had the phase three trial underway for menstrual migraine, an area of high unmet patient need, and another trial evaluating redosing for acute treatment of migraine. We also expect a pivotal trial start this year investigating NURTEX use as a treatment for chronic migraine. Our pipeline progress through the first half of the year reflects our discipline in prioritizing programs where strong science, clinical execution, and strategic investments can make the greatest impact for patients. Our R&D team already has been productive with our ambitious agenda, achieving critical milestones that included three regulatory approvals, six key data readouts, and eight pivotal study starts so far. Oncology is a clear area of strength. In the past two years, we have initiated a dozen late-stage studies across our core tumor areas. We have unveiled data from 21 late-stage readouts and achieved six regulatory approvals. We also have clear line of sight to our aim of delivering a risk-adjusted high single-digit revenue CAGR from year-end 2028 through year-end 2033. This is supported by our bottoms-up analysis that included assessing our base of growing in-line products and 20 key potential new medicines and vaccines within our pipeline. We continue to prioritize investment in R&D, both on internal programs and selective business development with the potential to strengthen our position in key areas. Financial discipline and cost management is allowing us to continue investing in growth. We now expect an additional $1 billion in savings from our ongoing cost realignment program. Powered in part by rapid advancements of technology, net cost savings from these programs are now expected to total $6.7 billion through 2029. We are also moving to work with the next phase of our manufacturing optimization program. And with additional savings, we now expect total NESTCOIN savings of approximately $3 billion from this program through 2029. With our strong performance through the first half of the year and our ongoing productivity enhancement discipline, we remain confident in our business. Today, we are raising the midpoint of our revenue guidance for full year 2026 and the reaffirming guidance for adjusted diluted earnings per share. And we remain committed to maintaining and over time growing our dividend. We view AI as the structural transformation opportunity for driving substantial acceleration of our R&D pipeline, greater speed and productivity across our business, and an improved competitive position profiles. We are already seeing benefits from AI in reducing costs and expanding yields in manufacturing. It's helping to make our commercial field force more effective and sharpening our commercial marketing approaches. Even greater opportunities are ahead as we apply AI to accelerate innovation in drug discovery and development. Our ambition is to build an AI-native R&D organization where every insight from target discovery through medical evidence continuously informs the next decision. In summary, I'm confident in how our business is positioned. We executed well and operated with continued financial discipline through the first half of 2026. With our performance in the second quarter, This is the ninth time we exceeded consensus expectations for revenues in the last 10 quarters. And we have beaten expectations for adjusted diluted EPS in all 10 of the 10 past quarters. And with that, what a better slide to turn it over to Dave and Cecile.

Great. Thank you, Albert. And good morning, everyone. Leaving Pfizer was a difficult decision, but it's the right one for me personally. I'm deeply proud of what we've accomplished together, the team that we have built, and the vision for the future of Pfizer. The results of this quarter show how well our company is executing and why we are confident in the strategy for returning to growth post-2028. We anticipated that a substantial portion of today's call will focus on our outlook for the remainder of this year, as well as our strategy for creating long-term value for both patients and shareholders. So with that in mind, we determined it would be best for you to hear directly from Cecile. I've worked closely with Cecile, seeing firsthand how she leads effectively with her deep financial knowledge, her expertise, and the respect that she has earned from the entire organization. I leave knowing that Cecile will guide Pfizer's financial and growth strategy with both rigor, discipline, and continuity. And with that, I'm pleased to turn it over to Cecile.

Thank you, Albert and Dave, and good morning. Before I discuss second quarter results, I want to underscore Albert's comment. I believe Pfizer is well-positioned to return to growth from 2029 onward and create meaningful value for shareholders. We will continue to execute a disciplined approach to capital allocation, making targeted investment today to drive revenue growth later in the decade and beyond. We intend to do this while maintaining and, over the long term, growing the dividend. Our business is performing well. Commercial execution is driving strong results, including 18% operational revenue growth in our launch and acquired products this quarter. We continue to strengthen and advance our pipeline. With the continued growth of our launched and acquired product, we're laying the groundwork for high single-digit revenue growth towards the end of the decade. Our second quarter adjusted earnings performance reflects discipline execution across our strategic priorities and continued progress towards building the foundation for durable long-term value creation. I will review our results from the quarter, productivity enhancement initiatives, capital allocation priorities, and full-year guidance. We are raising the midpoint of our revenue guidance range, despite lower than expected COVID revenues. We are also reaffirming adjusted diluted EPS guidance, which absorbs an approximately 10 cents impact related to the InnoVent Biologic Transaction that closed in the third quarter of 2026. We delivered revenue growth in the course through disciplined execution across key brands in the U.S. and select international markets. Second quarter, 2026 revenue were $15 billion ahead of our expectation and representing a year-over-year operational increase of 1%. Excluding COVID products, the underlying business delivered 5% operational revenue growth. Progress, leveraging data and scanning AI across the company, supported our field force in driving access and increasing uptake for new launches. Our commercial performance has also helped mitigate the impact of currently low COVID infection levels. On the bottom line, second quarter adjusted diluted EPS was $0.77, also exceeding our expectation. This outperformance reflects continued cost discipline and productivity across the organization, while we still advance several phase three study starts across our pipeline. Our results this quarter demonstrate the effectiveness of our commercial strategy. We saw solid contribution across the portfolio, primarily driven by Eliquis, Patseff, Vindacal Family, and Laubrena, each reflecting focused execution in key ceremonial areas. We also expect post-2028 cash flow to benefit from the previously announced Vindamax patent settlement. Across international and U.S. markets, our commercial team are focused on identifying patients, enabling access, and supporting duration of therapy based on clinical data. This has opted to maintain leadership position across oncology and vaccines and unlock new opportunities. We continue to drive value in key inline products ahead of approaching LOEs, while our launched and acquired product delivered $3.2 billion in revenues and grew 18% operationally in the quarter. Of note, this growth rate was tampered by one-time items recorded in the second quarter of 2025, mostly impacting the legacy C-Gen inline portfolio. Excluding this impact, the growth rate was 27%. We continue to invest behind in-line brands and launch an acquired product to support their growth trajectory and help offset incoming LOE headwinds over the next several years. Financial discipline and strong cost management across the manufacturing footprint remain top priorities. Adjusted gross margin for the second quarter was 76%, primarily reflecting product mix and ongoing cost control measures. We continue to expect $700 million in savings from Phase 1 of our manufacturing optimization program this year, with $175 million realized in Q2. Total adjusted operating expenses were $6.1 billion for the second quarter of 2026, an increase of 4% operationally versus second quarter last year. Looking at the components, adjusted SINA expenses decreased 3% operationally, primarily reflecting lower spending in corporate enabling functions. Adjusted R&D expenses increased 12% operationally, primarily driven by an increase in spending in certain oncology and obesity product candidates. Second quarter 2026 adjusted operating margin was strong at 35%, reflecting effective cost management, strong non-COVID revenue performance, and higher R&D investment in the quarter. Turning to the bottom line, Q2 reported loss per share was negative 4 cents, and our adjusted diluted EPS was positive 77 cents, which benefited from our strong non-COVID revenues and efficient operating structure. Our second quarter gap results reflect the impact to the recent Phase III readout for SV in second-line-plus non-small-cell lung cancer and, to a lesser extent, the removal of revenue projection for expiryta following recent discussion with the FDA. The updated forecast resulted in $4.3 billion in non-cash intangible asset impairments recorded in the court. For SV, we continue to forecast significant risk-adjusted revenue in other non-small cell lung cancer indications, subject to technical and regulatory success. So far, CGEN revenue performance has exceeded our initial expectation, and we aim to continue delivering above initial expectation in the long term. We remain disciplined in operating expense management and focused on long-term margin improvement. We have made meaningful progress on our productivity enhancement initiative and remain on track to deliver most of the anticipated $7.2 billion in total net cost savings by the end of 2026. Building on that momentum, today we announced the expansion of our ongoing cost improvement programs, which are expected to generate approximately $2.5 billion in additional net cost savings from 2027 through 2029. We now expect $1 billion of additional net cost savings from a productivity enhancement from technology and simplification efforts designed to further reduce SINA cost. Separately, the next phase of our multi-year manufacturing optimization program is designed to reduce cost of goods sold and deliver approximately $1.5 billion in additional net cost savings. And we expect to begin realizing a portion of this saving in 2027. This next phase focuses on network structure changes, product portfolio enhancements, and additional operational efficiency. We now expect total net cost savings from this program of approximately $3 billion through 2029. In summary, we now expect approximately $9.7 billion in total net savings from this program through 2029. These initiatives are expected to enhance operating efficiency, support continued operating margin expansion and strengthen our ability to invest in innovation and future growth opportunities. Let me now turn to capital allocation. Our strategy is designed to enhance long-term shareholder value while preserving flexibility. It includes reinvesting in the business at appropriate returns, maintaining an overtime growing or dividend, and preserving optionality for future value-enhancing actions, including share repurchases. In the first half of 2026, we invested $5.5 billion in internal and external R&D, and return $4.9 billion to shareholders via a quarterly dividend. The Innovant Biologics deal closed in July, resulting in an initial $650 million of fund payment to be recorded as acquired in-process R&D expense in the third quarter. Following this transaction, our BD capacity is approximately $6 billion, second quarter 2026 operating cash flow was $3.45 billion and leverage ended the quarter at 2.7 times. Given the LOE impact over the next few years, we expect leverage to remain around current level or modestly higher through this transition period. Earlier in the quarter, we made our final TCGA repatriation tax payment of approximately $2.6 billion and closed on our exit of leave, providing approximately $1.65 billion in net cash proceeds. Based on our performance to date and continued execution, we are raising our full-year 2026 guidance by $500 million at the midpoint to a range of 60.5 to 62.5, from $59.5 to $60.5 billion. Our updated revenue guidance reflects strong non-COVID product performance and revised revenue expectation of approximately $4 billion, down from $5 billion for COVID-19 revenues. We are reaffirming all other components of guidance, including adjusted diluted EPS guidance of $2.80 to $3. This EPS range now absorbs an unfavorable impact of approximately $0.10 related to the $650 million acquired in-process R&D charge from the InnoVent Biologic transaction. This outlook reflects year-to-date performance, confidence in our business, progress with ongoing cost improvement initiative, our expectation of adjusted gross margin in the mid-70s range and continued investment to support growth by the end of the decade. Low COVID-19 incidence could continue to limit vaccination. Our plan also assumes that the majority of community sales will occur toward year end, consistent with the vaccination season. And as always, we will continue to monitor currency fluctuation as the year progresses. Now I will wrap up with a few key points. Over the next several years, we will continue to position Pfizer for high single-digit revenue growth towards the end of the decade. We will invest in our business with focus and discipline, supporting continued progress with our R&D pipeline and driving commercial impact with our launched and acquired product. We remain committed to disciplined capital allocation with a continued focus on maintaining and over the long term growing our dividend, while preserving balance sheet strengths and flexibility. We will continue to operate with rigor and strategic focus, executing with discipline today while building a strong foundation for the future. I look forward to working with Albert and the entire executive leadership team as we help patients around the world and position Pfizer for long-term growth and shareholder value creation. With that, let me turn over to Chris.

Thanks, Cécile. I will now provide additional color on the past quarter. Starting with the recent phase three readout for Litfulo in non-segmental vitiligo, a condition affecting more than a million adults in the U.S. alone. In the Tranquila program, both the 50 and 100 milligram doses of Litfulo delivered significant clinically meaningful improvements over placebo on co-primary endpoints for the facial and total body vitiligo area scoring index, or VASI. Specifically, the program measured the percentage of patients that achieved a certain percent improvement from baseline, 75% for facial VASI, and 50% for total VASI at week 52. On the right, data for Litfulo, an internally discovered molecule with unique mechanism of action targeting TEC, family kinases, and JAK3, alongside results from recent pivotal trials of oral JAK1 selective inhibitors. These data show placebo-adjusted percentages of participants achieving facial Vase 75. At a 100 milligram dose, Lifulo induced a placebo-adjusted response rate of 19.5% at week 52, While cross-trial comparisons cannot support definitive conclusions, we're encouraged when viewing these facial-based results alongside external comparator data. Management of vitiligo requires continued and durable treatment, which is why we are particularly encouraged by emerging data from our extension study demonstrating a sustained treatment effect with continued dosing at 100 milligrams out to two years. Moving to oncology, I'll start with PADCEF, the transformative bladder cancer medicine from our CGN transaction. Last month, the FDA expanded the approved indication of PADCEF plus pembrolizumab to muscle-invasive bladder cancer regardless of cisplatin eligibility. The expansion was based on phase 3 results showing a 35% reduction in the risk of death versus standard of care, Together with prior data showing unprecedented survival benefits in the cisplatin-ineligible muscle-invasive and locally advanced or metastatic settings, these results established PADCEF as a potential practice-changing medicine for more than 42,000 patients in the U.S. alone. This quarter, we also initiated a Phase III trial in the bladder-sparing muscle-invasive bladder cancer setting, aiming to extend PADSAFE transformative benefits even further and to offer an option for patients seeking to avoid cystectomy. Combined with our leading capabilities in small molecules and protein engineering, we are now advancing the next wave of potential ADC breakthroughs in the clinic, leveraging innovative linkers, payloads, and targets. Two, I will highlight GPS, which includes an Oristatin S payload designed for improved tolerability, and 3028 from Inevent, a bispecific dual payload ADC integrating multiple clinically validated approaches. With these and other programs, we aim to cement Pfizer as a leading developer of ADCs, maximizing the value from recent transactions. In June, we announced the primary overall survival endpoint was not met in the intention to treat population, non-small cell, non-squamous, non-small cell lung cancer. though a disappointing outcome, we were encouraged that the subgroup of patients who received only one prior line of therapy showed a median survival benefit of 2.5 months, 13.6 with SV versus 11.1 months with dozitaxel. This suggests a survival benefit that is meaningful for patients. For context, standard-of-care ramassuramab plus dozitaxel was approved based on a survival benefit of 1.4 months in its pivotal second-line trial, though no definitive conclusions can be drawn across studies. Together with updated Phase 1 data we are sharing today, these results reinforce that SV has the potential to deliver meaningful activity in earlier lines of lung cancer. On the right are updated phase 1 data of SV plus pembrolizumab in first-line non-small cell lung cancer with high PD-L1 expression, the same regimen and indication as our ongoing phase 3 trial. These data show robust activity with an unconfirmed objective response rate of about 82%, including a complete response. This compares favorably to historical anti-PD-1 monotherapy. These data align with the ability of a doton ADCs to induce immunogenic cell death and thereby potentially synergize with anti-PD-1 agents such as pembrolizumab. We've seen meaningful activity when combining the doton with immune checkpoint blockers in our PADCEF, TIFDAC, and Etcetris programs, and we aim to extend this finding in SV's ongoing phase 3 trial. Moving to 4404, our PD-1 VGF bispecific antibody that has the potential to be a next-generation backbone therapy. Of note, the ongoing phase one dose escalation study of 4404 in combination with SV is showing early and encouraging response rates. Since in licensing from 3SBI about a year ago, we started nine trials, including two phase three studies. We have expanded the program's global reach with approximately 230 patients dosed outside of China to date and encouraged that the safety profile has remained consistent. Our goal is to develop 4404 as a potential best-in-class foundational therapy across multiple tumor types. Our ambitions with 4404 are supported by its differentiated profile recently presented at AACR, including in vitro data showing soluble VEGF-A affinity that is 30 to 60 fold higher than the PD-1 VEGF bispecific ivenizumab and the VEGF monoclonal antivivacizumab. of phase 2 data remain encouraging. At the selected pivotal dose in first-line PD-L1 positive non-small cell lung cancer, 4404 monotherapy generated a confirmed response rate of about 68% and median progressive free survival of about 12.4 months. As you can see on the right, these data compare favorably with Ivanesimab's phase 3 results in this population, though cross-trial comparisons preclude definitive conclusions. Moving next to mephrometastat, our potential first-in-class internally discovered EZH2 inhibitor. EZH2 is the core catalytic subunit of the polycombe repressive complex 2 PRC2. Mephrometastat is currently in phase 3 development and the next potential breakthrough in our prostate franchise, including Extandi and Talzena. Mifrometastat targets the underlying epigenetic mechanisms that drive resistance to under-receptive pathway inhibitors such as Xtandi. We are encouraged by the randomized phase one data and post-abiraterone hormone-resistant prostate cancer, showing radiographic progressive-free survival more than doubling with Mifrometastat plus Xtandi versus Xtandi alone. This translated to a 49% reduction in risk of disease progression or death. We are taking a comprehensive approach with mephrometastat's development, with three pivotal studies underway, including MEFRA1, evaluating mephrometastat plus Xtandi versus either Xtandi or Zocetaxel in post-abiraterone metastatic hormone-resistant prostate cancer. Each of these studies is event-driven, with the first readout expected for MEFRA1 in the fourth quarter based on the current event rate. In MEFRO-1, our goal is to delay resistance to Xtandi, which has historically delivered radiographic progression-free survival of about five to eight months in similar settings. Obesity is a core focus area for R&D organization. In June, we presented Phase 2b data supporting barabenotide's potential as a first-in-class monthly GLP-1 receptor agonist peptide and foundational metabolic medicine. Shown here, our Phase 2b ADA data on monthly barabenotide at 4.8 milligrams, which is our median Phase 3 dose. At this dose, we achieved placebo-corrected weight loss of up to 12.3% in our VESPA 3 trial. Though cross-trial comparisons cannot support definitive conclusions, it is encouraging that barabenotide achieved week 28 efficacy that was similar to disepatite's medium dose of 10 milligrams in the Surmount 1 study and potentially better than semaglutide's median approved dose of 2.4 milligrams in step one. We also presented the first results at our high phase 3 dose, 2.4 milligram weekly or 9.6 milligrams monthly from phase 2B Vespa 1 extension participants who escalated from placebo to 2.4 milligram weekly barabenotide. Participants achieved approximately 16% mean weight loss over 32 weeks of treatment. Importantly, there were no treatment discontinuations due to treatment-emergent adverse events in any of the arms evaluating maintenance doses moving to phase 3. On the right is a model-based meta-analysis of data from over 32,000 participants to project 72-week weight loss for berobenotide's high monthly phase 3 dose relative to the highest approved doses of tizepatide and semaglutide. As with our clinical data from VESPA-3 monthly study, the analysis suggests berabenotide can deliver weight loss comparable to disepatide and potentially better than semaglutide. We see high concordance between the high-dose VESPA-1 extension study and the model's predictions, further increasing our confidence that berabenotide can potentially deliver robust efficacy and favorable GI tolerability with the convenience of a monthly therapy. Since closing the Medsera transaction about eight months ago, we've advanced barabenotide towards the first of a series of potential approvals beginning in 2028. Today, we have three ongoing Phase III trials. The now fully enrolled VESPA IV and V studies of weekly barabenotide and the VESPA VI study evaluating monthly dosing. We plan to advance 10 phase 3 studies in 2026, including one evaluating participants switching from approved weekly therapies to monthly barabenotide. Our BCT portfolio includes injectables with the potential for monthly or longer dosing, once daily orals and novel combinations. The most advanced combination is barabenotide plus the ultra-long-acting amylin, amylof 3945, which we are developing as potential first in category monthly medicine. We expect to report data from Phase 1, 2A studies of 3945 monotherapy and the barobinotide combination this year. As is typical for small, early-stage studies, these were designed to inform starting doses and potential escalation regimens for further evaluation in Phase 2B. Our Phase 2B SOLAS-1 study has already enrolled more than half of approximately 900 planned participants. We expect data from SOLACE1 in 2027, providing us with the first robust efficacy data from our amylin monotherapy and combination programs. Looking ahead, our efforts in R&D will continue to be defined by focused execution. Here we provide visibility into the steady cadence of milestones expected over the next 12 months, including five regulatory decisions, eight key readouts, and 19 pivotal study starts. With that, I'll hand it over to Albert.

Thank you, Chris. Very nice updates. And let's move to Q&A. I'm sure there are a lot of questions. Operator, please assemble the queue.

Thank you. If you'd like to ask a question, press star 1 on your keypad. To leave the queue at any time, press star 2. Once again, that is star 1 to ask a question. Our first question today will come from Evan Sigerman with BMO Capital Markets. Your line is now open.

Thank you so much for taking my question. Before I ask my question, I want to express my gratitude and congratulations to Dave. You'll be missed. Cecile, we're looking forward to working with you. So ahead of the MEVPRO-1 data, Chris, I'd love it if you could help us define how you view success. Does this study need to reproduce the Phase I magnitude of benefit? would demonstrating a clinically meaningful delay in AR pathway resistance be enough to validate the mechanism and potentially support broad adoption in a clinical setting? Thank you so much.

Thank you very much for the question. We are continuing to be excited about the potential of metformetastat to become a breakthrough therapy in prostate cancer. I want to also address the Q4 readout and how we are thinking about it. Phase one data, as you've seen, showed a hazard ratio of 0.5, doubling radiographic progressive-free survival. And our data are now validated by some competitors with EZH2 or PRC2 inhibitor data in prostate cancer, although these are obviously earlier studies. MEFRA1, 2, and 3 are event-driven studies, meaning control and experimental arm is where events could happen. However, the statistical analysis plan is based on a clinically meaningful benefit of approximately 30 percent over standard of care, because that will be clinically meaningful. And it's hazard ratio based. And as I pointed out, we expect the standard of care to control the control arm to be five to perform at five to eight months in this setting. So altogether, we are confident in the performance of the experimental arm in MIFRO-1, and we're looking forward to share update of a potential next breakthrough for prostate cancer later this year. Thank you.

We can't wait to see the final results. Let's move to the next question, please.

Our next question comes from Chris Schott with JP Morgan. Your line is now open.

Thanks so much for the questions. Just two for me. First, I wanted to dig into the $1.5 billion increase in the non-COVID guidance. Can you just comment on how much of this is coming from Eloquist versus the rest of the business? And I guess specifically, what's in the guidance now for Eloquist growth? I think your partner is talking about 20% to 25% growth this year. Second question, which is on PADSEV, I guess with the further label expansion, just talk a little bit about how we should think about growth for that asset from here going forward. Thanks so much.

All right. Why don't we start with Cecilia on the guidance?

Thank you, Chris, for your question. So, as I described, our performance on the non-COVID portfolio is definitely very strong, both in the U.S. and international, and that's not one single driver. It's definitely strong execution in both U.S. and international businesses. The strengths of our business led to the incremental $1.5 billion above the original guidance is a reflection of one exceeding our expectation in q1 and q2 on non-covid portfolio but it also reflects the confidence in the momentum across our overall business it comes more uh it comes more key products eliquist being one of them with the drivers that our partner bms has described but it's also coming from our launch and acquired product as i mentioned earlier 27 27% growth if you exclude the one-time impacts that we had in 2025, and then some of the drivers that you have seen where we have very strong performance, especially on NERTECH and PADCIP. I'll just comment on the COVID business, just to say that obviously the performance that we have to date reflects the low infection level mostly impacting but we remain with our revenues for community in the later part of the year consistent with the vaccination season. And as a reminder also our community business for international is mostly secured through to the government contract, including the ECP. So overall, very strong performance across the board on our non-COVID, which translates into the raise in revenue and also translates into EPS, which is then offset by the Tencent linked to the AIP R&D.

Thank you. Amir, would like to take the second question?

Chris, I think what's exciting on PATCEF is if you think about the data Chris shared, our indicated uses for PADSF and PEMBRO now span the entire continuum, all the way from curative intent MIBC through to metastatic disease, all independent of cisplatin and eligibility. And we've executed really well against that in the growing patient population that we have. Q2 was really strong. We grew over 20%. A very big part of that is a terrific commercial execution from our PATSEP team. We've driven LAM UC new patient share to now above 60%, and we're also really pleased with the uptake that we have in the MIBC setting. So far, most of that prescribing is in the new adjuvant setting, and obviously we expect those patients to reach adjuvant treatment over time. To question about what to expect, we obviously think PATSEP is going to be a major growth engine for us going forward. We've had very accelerated growth to date. The pace of that growth, of course, is going to moderate from here as we reach the majority of eligible patients and prescribers in LAMUC, but we'll continue to drive that opportunity. And then the upside for us will come through MIDC and continue over time.

And I want also to emphasize that there is a very important study that we have initiated that But if positive, it will be very exciting, which is in bladder sparing opportunities so that those patients will not have to go through this horrible operation. That will be really a big deal if we will achieve it. So next question, please.

Our next question comes from Uma Raffet with Evercore ISI. Your line is now open.

Hi, guys. Thanks for taking my question. I just wanted to focus on the EZH2 for a quick second, and maybe a two-part question for Chris and for Amir, if I may. Chris, I appreciate the readout is not till 4Q, but I just wanted to confirm that the trial was fully enrolled as of May, not as of last December, and that you have not hit those 302 PFS events yet. And Amir, in a scenario this trial hits, how large a commercial opportunity is this? Should we be thinking Xtandi-like? Thank you. Thank you.

Thank you very much. I'll start. Thank you for the question. This trial is definitely fully enrolled, and we have not reached the events for the study, just to confirm. So events not reached as outlined in the statistical analysis plan.

And Amir? Yeah, Amir, thanks for the question. I think we're obviously very excited about this. If we are successful, I think the opportunity can scale across the entire disease continuum from post-abiraterone to earlier line settings. So I think that's exciting for us. The other thing I will point out is that Mevro will be a 100% global opportunity for Pfizer. So we have the opportunity not only in the U.S., but to capture share and value in markets outside the U.S. as well, which is distinct from our situation with Xtandi. So yes, we're very excited about this.

Thank you very much. Next question, please.

Our next question will come from Jeff Meacham with Citibank. Your line is now open.

Hey, everyone. Thanks so much for the question. I guess one for Chris on barabinatide. What are you guys ultimately looking for in the combo studies? Is it quarterly dosing? Is it indications outside of diabetes? Is it rid of trutide-like efficacy? Just wanted to get some perspective on that. And then, how are you looking at the tolerability bar from a competitive standpoint? Thank you.

Thank you for the question. So, as we pointed out, the amylin is unique. It's ultra-long. It's a potential monthly therapy. So, the ongoing phase 1 and 2A study was really to determine the optimal dose that's tolerable to start the study, the safety and the clinical pharmacology, the PK. And that then informed the 2B study, which is now ongoing SOLIS-1, which is controlled with placebo for efficacy. So expect the SOLIS-1 study to read out in 2027. monthly differentiated. We obviously want to see efficacy that's more than with berobenatite alone. And what we've seen so far with the combination early on is obviously well tolerated. So we hope to report that later this year and early next year.

Thank you. Thank you very much. Next question, please.

Our next question comes from Lakash Tiwari with Jefferies. Your line is now open.

Hey, thanks so much. Can you talk about the efficacy advantages Etermo showed versus TDK4-6s in 4-light 1? Are we seeing signs of an early onset PFS separation that we might not see with the other molecules? And what's your current plan for first-line adjuvant with this molecule, and what's really gating you from starting that first-line adjuvant trial? And if I could sneak in another one, there's been a proposal from the CMS to cut reimbursement for 340B hospital payments from ASP plus 6 ASP minus 33%. How would that affect your oncology portfolio? And what's your chances of this proposal ultimately getting enacted? Thank you.

All right. Therese and Damir.

Thank you. I'll start with a termocycle. Just a reminder that the CDK4, again, internally discovered and conceptualized, very well tolerated with very few patients discontinuing treatment, which partly may address your question because of the tolerability profile. We'll share the full data later this year at a conference, but as you've seen before, we've said the hazard ratio is 0.6, which is a 40% reduction in the risk of disease progression or death, and it's clinically meaningful and statistic for that randomized phase two experience. For a termocyclic, we're focusing on two indications, first-line ER positive breast cancer and, to your point, the adjuvant setting. A reminder for second-line ER-positive breast cancer, we are focusing on CAT6, another potential breakthrough internally discovered conceptualized medicine. For the early adjuvant setting, a significant opportunity. We believe a termocyclic could be highly differentiated here because of the tolerability. And we should release later this year the clinical trial design for the adjuvant study that should start by the end of 2026.

Yes. Also, for your question on 340B, clearly, we have articulated multiple times that there is a need to change the situation because the current situation of the program has nothing to do with the intentions of the program when it was established. And we are very active in trying to explain that to regulators and legislators. There is a mobility right now on that topic, and you have seen several announcements here and there, including some pilot programs that they are planning to implement. But I don't think it's, for me, appropriate at this stage to comment because we don't really know what will be the shape and form of all of that. Thank you, Akash. Next question.

Our next question comes from Terrence Flynn with Morgan Stanley. Your line is now open.

Great. Thanks so much for taking the question. Albert, recognize your recent remarks on maintaining the dividend and growing it in the future as an aspiration, but just wondering what would have to transpire in order for you and the board to consider a cut to the dividend. When we look at your BD capacity, you mentioned $6 billion in the prepared remarks. Seems like that's somewhat constraining as you think about the opportunity set out there.

Thank you very much. no thank you we feel extremely confident that we will even the most stretched scenarios that we are running we will be able to maintain our dividend so i want once and for all to make that clear to all that the dividend will be maintained and eventually through the after the LOE period will be start again growing it so that's i think a fundamental statement that i need to bring forth. Thank you. Next question, please.

We'll go next to Trung Huan with RBC. Your line is now open.

Hi, guys. Thanks for taking my questions. Just a couple on immunology, please. So, the vitiligo program, you've disclosed some of the Tranquilo 2 data there in the slides. I didn't see the Tranquilo 1 findings. Perhaps you can summarize the data there. Is there consistency between those two pivotal trials and then it looks like you've listed four new potential uh starts for till record make the tri-specific two in ad one versus placebo one versus dupi there's an asthma one and the copd one perhaps can you talk about your strategic thinking there how quick can you start these the trial designs expected timelines and perhaps can Can you remind us where you hope to differentiate?

Bruce? Thank you very much. So, first question on TRINQUILA, one, and the TRINQUILA study, and two, we obviously want to present later this year at a conference the full data set, so we don't want to release all the data now. We focus on the TRINQUILA data where 100 milligrams was the official co-primary endpoint and only shared that data today, but we've seen, as we stated in the press release, for both 50 and 100 milligrams for both primary and co-primary endpoints, clinically meaningful and statistical data, which we hope to share at a conference later this year. To go on regarding Telrequimac, again, this is an internally discovered conceptualized molecule. It's a tri-specific, so it's IL-4, IL-13, and TSLP. A reminder that one of the main competitors is IL-4 and IL-13, and there's also an IL-13 only medicine recently that you would have seen. So Torecamab also includes TSLP, which is shown to enhance activity in allergic conditions, including in asthma and COPD. For IL-13 specifically, we believe we've got a best in class tri-specific, especially if you look at the affinity for IL-13, the block use of IL-13. Data previously released, which is the EZ75 in atopic dermatitis for both the median and high dose, will be showed 52% and 50% EZ75 placebo-adjusted results. For us, that's, I mean, that's differentiated data. It's highly encouraging. And as pointed out, we hope to start four phase three studies, one against placebo, one against DUPI, and also programs in asthma and COPD.

Yeah, that's a very, very exciting asset for us. Next question, please.

We'll go next to Steve Scala with TD Cowan. Your line is now open.

Thank you. I have two questions. First, on Tilrecomeg, can you confirm that the trial versus Dupixent will be a true head-to-head trial powered for superiority on first line or in-first-line bio-naive patients. And secondly, given small changes in the risks section language of the release, it looks like Pfizer signed the Pfizer voluntary agreement with the U.S. government to lower drug costs, and that occurred sometime in the second quarter of this year. Just curious, were there any major changes in the final version versus earlier versions, and why did it take so long?

Let me take that one. That is the continuation of the memorandum of understanding that we had signed in the White House. You remember this memorable day that we resolved the MFM and tariffs all together for the industry, I think. No, the agreements are very consistent with what you have seen for other companies and for us. And we are very pleased with the agreements. Now, let me move to Chris about the studies with Dupixen and how you think about the protocol. Whatever you can tell us.

Yes, thank you for the question. Indeed, this will be one of the first phase three trials that will be hit against Dupixen and powered for superiority against Dupixen.

All right. Thank you. And the last question, please.

And our final question comes from Asad Hader with Goldman Sachs. Your line is now open.

Great. Thanks for taking the question. For Albert or Cecile, just back to COVID, just given that the trend has continued to be lower than expected and understanding that the lowered $4 billion for 2026 is somewhat secured by contracts and your expectations for vaccination rates, just curious as to what you're expecting in terms of the long-term trajectory of the franchise, since that will have an impact on the high single-digit growth algorithm post-2028 that you've highlighted. And then just a quick follow-up, Albert and BD, just, you know, would be curious to hear any updated thoughts on how you're thinking about utilizing that lever in terms of size in the context of your remaining capacity, as well as where you'd like to build out further.

On the COVID, of course, we can ask also the commercial leaders and the finance to comment on that. But let me give it a very high level. But we have this year a very low COVID season. For all respiratory seasonal diseases, this is something that we see constantly. So it could be a year that the flu is more acute and more spread than years that it is not. It could be years with RSV is more acute and years that it is not. Why we don't see big variation in the sales of the products when this happens is because they are mainly vaccines. And vaccines tend to be more independent from the infection rates. It is based on the risk of infection and people that they are committed or they are in vaccination or they are feeling that they are at risk will continue doing those vaccinations, irrelevant if the season is high or low. Clearly, when it is a high season, moves more people to vaccination, but the variation is very small. When it comes to PaxClovid, this is now completely correlated with infection rates. If someone is not infected, he's not going to need PaxClovid. And this is what we see right now. So what I want to say is that the COVID revenue should split it into the vaccines and the PaxClovid. and the vaccines will see more stability relevant of the fluctuations of the infection rates with the PaxClovid, you will see high correlation if it is a high season or low season. So that's now. Can we predict what will be next year? It could be a very high season or it could be equally low this season. So that's something that you can't really predict very well. What I want to emphasize, though, it is that this year, where we have the lowest possible infections that we could imagine as we were setting our goals, still we were able to offset every shortfall of COVID with the super performance of the remaining of the business. And I think that was the important thing. There was also another question. on the business development also let me give a high level also Terence before he had asked you know you have only 7 billion dollars look guys Pfizer has placed the business development bets already right and we are executing on that if you see how much we have invested in business development it is outpacing everyone else right now since 2022 let's say after we came back from the hike to the normality after the COVID years. We are having 80% of these investments that we did that exceeds $80 billion already being placed in three of the transactions, and all three are performing very well. So still, though, we are executing because in season and we are developing further the pipeline to realize much higher value. In NURTECH, we are developing new claims so that we can further finalize the value. And in METERA, we are moving with the speed of light. As Chris said, two studies that we already initiated, they are fully enrolled, and the other one, it is about to be fully enrolled. So we are moving with the speed of light. So there is a lot that already we have done with the six, seven billion dollars of remaining. We will be very strategic, of course. And you should expect something on the bolt on with the size of these opportunities. The areas that we are looking at are areas that we can make a difference. And clearly, oncology, it's one of them. Immune inflammation is another one. Primary care with obesity, it's another one. And vaccines clearly is another one, although in vaccines you can't find much outside for business development. So I think that we have invested a lot and we will continue doing small pieces. Those investments, we are confident, will drive high single-digit growth after the LA period, which is in 2008. So that's my answer to that. And with that, I think it's time to close the call. And again, I want to emphasize I'm very pleased with what we were able to achieve. To start with, we really can prove that we know how to execute. Operationally, we are probably based on all these three years of results. One of the supreme companies in our ability to execute, reduce our cost base, and still perform and overperform on our top line. I think with R&D, you will see the significant progress that we have. And if you've noticed in the chart that Chris put together in the next 12 months, we have significant catalysts that are coming. And we are remaining optimistic that they will be successful. I want to thank my Pfizer colleagues for their dedication. and I want to wish you all a great day thank you thank you this brings us to the end of today's meeting we appreciate your time and participation you may now