Pfizer Reports Second-Quarter 2022 Results

• Second-Quarter 2022 Revenues of $27.7 Billion, Reflecting 53% Operational Growth, Driven Primarily by Strong Contributions from Paxlovid and Comirnaty⁽¹⁾
• Second-Quarter 2022 Reported Diluted EPS⁽²⁾ of $1.73, Reflecting 77% Growth Over Second-Quarter 2021
• Second-Quarter 2022 Adjusted Diluted EPS⁽³⁾ of $2.04, Reflecting 92% Growth Over Second-Quarter 2021; Excluding Foreign Exchange Impacts, Adjusted Diluted EPS⁽³⁾ Grew 100%
• Raises Full-Year 2022 Financial Guidance⁽⁴⁾ for Revenues and Adjusted Diluted EPS⁽³⁾ by $2 Billion and $0.24, Respectively, on an Operational Basis (Which Excludes the Impact of Foreign Exchange)
  • Including Foreign Exchange Impacts, Pfizer Reaffirms Revenue Guidance of $98.0 to $102.0 Billion and Raises Lower End of Adjusted Diluted EPS⁽³⁾ Guidance by $0.05 to a Range of $6.30 to $6.45
  • Reaffirms 2022 Revenue Guidance for Comirnaty⁽¹⁾ and Paxlovid of ~$32 Billion and ~$22 Billion, Respectively, Despite Unfavorable Impacts from Foreign Exchange
• Pipeline Programs That Have Achieved Milestones Since Previous Earnings Release Include Bivalent mRNA COVID-19 Vaccine, Enhanced mRNA COVID-19 Vaccine, Paxlovid, modRNA Influenza Vaccine, Once-Daily Oral GLP-1 Receptor Agonist and Anti-Interferon-β

NEW YORK--(BUSINESS WIRE)-- Pfizer Inc. (NYSE: PFE) reported strong financial results for second-quarter 2022 and updated certain components of 2022 financial guidance⁽⁴⁾. Pfizer reaffirmed its previous 2022 revenue guidance, despite unfavorable impacts from foreign exchange, while reaffirming its revenue guidance for Comirnaty⁽¹⁾, the Pfizer-BioNTech SE (BioNTech) COVID-19 vaccine, and for Paxlovid, its oral COVID-19 treatment.

The second-quarter 2022 earnings presentation and accompanying prepared remarks from management as well as the quarterly update to Pfizer’s R&D pipeline can be found at www.pfizer.com.

EXECUTIVE COMMENTARY

Dr. Albert Bourla, Chairman and Chief Executive Officer, stated: “In multiple meaningful ways, we made significant progress this quarter on our strategies to bring value to our patients and shareholders, while also making commitments to prioritize the broader needs of the world, including those of the environment and our most vulnerable populations. For example, we set an ambitious goal for ourselves to achieve the Net-Zero Standard for greenhouse gas emissions by 2040, ten years ahead of the timeline described in the standard. We also launched an initiative to help bring all of our current and future patented medicines and vaccines to the 1.2 billion people living in 45 lower-income countries around the world at not-for-profit prices, a first in the industry.”

Dr. Bourla continued: “Even while launching these initiatives to support a healthier, more equitable world, we remain equally committed to strong financial execution on behalf of our shareholders. In the second quarter, we recorded the largest amount of quarterly sales in our history. We also presented potentially best-in-class data for etrasimod and announced the proposed strategic acquisition of Biohaven, both of which are closely tied to our purpose: Breakthroughs that change patients’ lives.”

David Denton, Chief Financial Officer and Executive Vice President, stated: “I am very pleased with the performance of our business this quarter, with strong operational revenue and earnings growth driven by multiple therapeutic areas across the company, and our COVID-19 franchises continuing to serve patients in need while also propelling us to an all-time high in quarterly sales. We continue to prioritize high-value uses for our capital, with an emphasis on reinvesting in our business by funding both internally and externally developed science and innovation while also continuing to grow our dividend and buy back shares, when appropriate, to help offset dilution. I am confident that Pfizer is well-positioned to continue to deliver exceptional value for our patients and shareholders going forward.”

Results for the second quarter and the first six months of 2022 and 2021⁽⁵⁾ are summarized below.

OVERALL RESULTS

REVENUES

Beginning in the first quarter of 2022, Adjusted⁽³⁾ financial measures include expenses for all acquired in-process research and development (IPR&D) costs incurred in connection with upfront and milestone payments on collaboration and in-license agreements, including premiums on equity securities, as well as asset acquisitions of acquired IPR&D and are reported as a separate income statement line item. Previously, these costs were recorded within the R&D expenses line item and certain of these costs were excluded from Adjusted⁽³⁾ results. The change to include all acquired IPR&D expenses within Adjusted⁽³⁾ results had no impact on Adjusted⁽³⁾ diluted EPS in second-quarter 2022 and negatively impacted Adjusted⁽³⁾ diluted EPS by $0.03 in second-quarter 2021.

Also in the first quarter of 2022, Pfizer implemented a change in policy to exclude all amortization of intangibles from Adjusted⁽³⁾ income, which favorably impacted Adjusted⁽³⁾ diluted EPS by $0.02 in second-quarter 2022 and by $0.03 in second-quarter 2021.

Prior period amounts have been revised to conform to the current period presentation for both amortization of intangibles and acquired IPR&D.

Business development activities⁽⁶⁾ completed in 2021 and 2022⁽⁵⁾ impacted financial results in the periods presented. Some amounts in this press release may not add due to rounding. All percentages have been calculated using unrounded amounts. References to operational variances pertain to period-over-period changes that exclude the impact of foreign exchange rates⁽⁷⁾.

2022 FINANCIAL GUIDANCE⁽⁴⁾

Pfizer raised its 2022 financial guidance, on an operational basis⁽⁷⁾, for revenues and Adjusted diluted EPS⁽³⁾ by approximately $2 billion and $0.24, respectively. After including the expected incremental unfavorable impacts of changes in foreign exchange rates since last quarter’s earnings report, the guidance range for revenues remains unchanged and the bottom end of the guidance range for Adjusted diluted EPS⁽³⁾ was increased by $0.05.

The midpoint of the guidance range for revenues reflects a 29% operational increase compared to 2021 revenues of $81.3 billion. This guidance includes the following assumptions related to Pfizer’s COVID-19-related products:

• Comirnaty⁽¹⁾ revenues of approximately $32 billion, which reflects favorable operational updates compared to prior guidance, offset by unfavorable incremental impacts from foreign exchange. This guidance includes doses expected to be delivered in fiscal 2022⁽⁵⁾, primarily under contracts signed as of mid-July 2022.
• Paxlovid revenues of approximately $22 billion, which reflects favorable operational updates compared to prior guidance, offset by unfavorable incremental impacts from foreign exchange. This guidance includes treatment courses expected to be delivered in fiscal 2022⁽⁵⁾, primarily relating to supply contracts signed or committed as of mid-July 2022.

The midpoint of the guidance range for Adjusted diluted EPS⁽³⁾ reflects a 65% operational increase over the 2021 Adjusted diluted EPS⁽³⁾ of $4.06, which has been revised from its original presentation to exclude all amortization of intangibles and to include the impact of all acquired IPR&D expenses.

Financial guidance for Adjusted diluted EPS⁽³⁾ is calculated using approximately 5.75 billion weighted average shares outstanding, and assumes no additional share repurchases in 2022. The expected increase in weighted average shares outstanding compared to 2021 of approximately 50 million shares has an unfavorable impact on 2022 Adjusted diluted EPS⁽³⁾ of $0.03 at the midpoint of the guidance range.

Other components of Pfizer’s 2022 financial guidance, all of which are presented with the expected impacts from changes in foreign exchange rates included, are presented below.

Guidance for Adjusted⁽³⁾ SI&A expenses was decreased by $300 million compared to the previous guidance range, primarily reflecting lower expected selling expenses for certain products and geographies, as well as a decline in deferred compensation savings plan expenses, which are tied to market performance.

The midpoint of the guidance range for Adjusted⁽³⁾ R&D expenses was increased by $250 million compared to the previous guidance, primarily as a result of planned incremental investments in mRNA vaccine programs outside of COVID-19 as well as various other projects.

Guidance for the effective tax rate on Adjusted⁽³⁾ income was lowered by 0.5 percentage points compared to the previous guidance, reflecting favorability in the jurisdictional mix of earnings, settlements of global tax examinations and the expiration of local statutes of limitations, among other drivers.

CAPITAL ALLOCATION

During the first six months of 2022, Pfizer deployed its capital in a variety of ways, which primarily include the following two broad categories:

• Reinvesting capital into initiatives intended to enhance the future growth prospects of the company, including:
  • $5.1 billion invested in internal research and development projects, and
  • More than $7 billion invested in completed business development transactions, including approximately $6.3 billion for the acquisition of Arena Pharmaceuticals, Inc.
• Returning capital directly to shareholders through a combination of:
  • $4.5 billion of cash dividends, or $0.80 per share of common stock, and
  • $2.0 billion, which was used to repurchase 39.1 million shares on the open market in March 2022, at an average cost of $51.10 per share.

In addition to the capital investments listed above, in the first six months of 2022, Pfizer announced the acquisitions of ReViral Ltd. (ReViral), which closed in the international third quarter of 2022, and Biohaven Pharmaceutical Holding Company Ltd. (Biohaven), which, upon completion, will require upfront capital investments totaling approximately $13.3 billion.

As of July 28, 2022, Pfizer’s remaining share repurchase authorization is $3.3 billion. Current financial guidance does not anticipate any additional share repurchases in 2022.

Second-quarter 2022 diluted weighted-average shares outstanding used to calculate Reported⁽²⁾ and Adjusted⁽³⁾ diluted EPS was 5,712 million shares, an increase of 35 million shares, primarily due to shares issued for employee compensation programs, partially offset by the impact of shares repurchased in first-quarter 2022, which resulted in a $0.01 reduction to Reported⁽²⁾ and Adjusted⁽³⁾ diluted EPS compared to the prior-year quarter.

QUARTERLY FINANCIAL HIGHLIGHTS (Second-Quarter 2022 vs. Second-Quarter 2021)

Second-quarter 2022 revenues totaled $27.7 billion, an increase of $8.8 billion, or 47%, compared to the prior-year quarter, reflecting operational growth of $10.1 billion, or 53%, as well as an unfavorable impact of foreign exchange of $1.3 billion, or 7%. Excluding growth from Paxlovid and Comirnaty⁽¹⁾, company revenues grew $128 million, or 1%, operationally.

Second-quarter 2022 operational growth was primarily driven by:

• Paxlovid, which contributed $8.1 billion in global sales, driven by the U.S. launch under emergency use authorization in December 2021 and international launches in late 2021 and early 2022 following regulatory approvals or emergency use authorizations;
• Comirnaty⁽¹⁾ globally, up 20% operationally, driven by strong operational growth in international markets, led by increased sales of doses to serve emerging markets and increased deliveries to certain international developed markets, partially offset by a slower pace of deliveries to the U.S. and Canada;
• Eliquis globally, up 23% operationally, driven primarily by continued oral anti-coagulant adoption and market share gains in non-valvular atrial fibrillation, particularly in the U.S. and certain markets in Europe, as well as favorable changes in channel mix in the U.S.;
• Prevnar family (Prevnar 13 & 20) in the U.S., up 41%, driven by strong stocking and patient demand following the launch of Prevnar 20 for the adult population, partially offset by unfavorable timing of government and private purchasing of Prevnar 13 for the pediatric indication; and
• Vyndaqel/Vyndamax globally, up 16% operationally, driven by continued strong uptake of the transthyretin amyloid cardiomyopathy indication, primarily in the U.S. and developed Europe, partially offset by a planned price decrease which recently went into effect in Japan,

partially offset primarily by lower revenues for:

• Chantix globally, down 99% operationally, which continues to be negatively impacted by a global pause in shipments of Chantix due to the presence of N-nitroso-varenicline above an acceptable level of intake set by various global regulators, the ultimate timing for resolution of which may vary by country;
• Xeljanz in the U.S., down 35%, driven primarily by declines in net price due to unfavorable changes in channel mix, decreased prescription volumes resulting from ongoing shifts in prescribing patterns related to Janus kinase (JAK) class label changes, and unfavorable wholesaler inventory buying patterns; and
• Sutent globally, down 47% operationally, primarily reflecting lower volume demand in the U.S. and Europe following its loss of exclusivity in August 2021 and January 2022, respectively.

GAAP Reported⁽²⁾ Income Statement Highlights

SELECTED REPORTED COSTS AND EXPENSES⁽²⁾

Second-quarter 2022 Cost of Sales⁽²⁾ as a percentage of revenues decreased 5.8 percentage points compared with the prior-year quarter. The drivers for the decrease include, among other things:

• favorable changes in sales mix, including significant sales of Paxlovid as well as higher alliance revenues, which have no associated cost of sales; and
• favorable impacts resulting from changes in foreign exchange rates,

partially offset by:

• higher sales of Comirnaty⁽¹⁾, which includes a charge for the 50% gross profit split with BioNTech and applicable royalty expenses; and
• a $450 million write-off of inventory related to COVID-19 products that have exceeded or are expected to exceed their approved shelf-lives prior to being used.

SI&A Expenses⁽²⁾ increased 7% operationally in second-quarter 2022 compared with the prior-year quarter, primarily reflecting higher investments for Paxlovid and Comirnaty and a higher provision for healthcare reform fees based on sales of Paxlovid and Comirnaty, partially offset by a decrease in deferred compensation savings plan expenses.

Second-quarter 2022 R&D Expenses⁽²⁾ increased 27% operationally compared with the prior-year quarter, primarily driven by increased investments across multiple late-stage clinical programs, including development costs and at-risk manufacturing for programs to prevent and treat COVID-19, as well as costs to develop recently acquired assets.

Acquired IPR&D Expenses⁽²⁾ decreased 100% operationally in second-quarter 2022 compared with the prior-year quarter, primarily reflecting the acquisition of Amplyx Pharmaceuticals, Inc. in second-quarter 2021, and no transactions giving rise to acquired IPR&D expenses in second-quarter 2022.

Pfizer recorded $772 million of other deductions––net⁽²⁾ in second-quarter 2022 compared with $1.3 billion of other income––net⁽²⁾ in second-quarter 2021. The period-over-period change was primarily driven by:

• net losses on equity securities in second-quarter 2022 versus net gains on equity securities recognized in the prior-year quarter; and
• net periodic benefit costs associated with pension and postretirement plans incurred in second-quarter 2022 versus net periodic benefit credits recognized in second-quarter 2021.

Pfizer’s effective tax rate on Reported income⁽²⁾ for second-quarter 2022 decreased compared to the prior-year quarter primarily due to a favorable change in the jurisdictional mix of earnings.

Adjusted⁽³⁾ Income Statement Highlights

SELECTED ADJUSTED⁽³⁾ COSTS AND EXPENSES

Reconciliations of certain Reported⁽²⁾ to Adjusted⁽³⁾ financial measures and associated footnotes can be found in the financial tables section of the press release located at the hyperlink below.

RECENT NOTABLE DEVELOPMENTS (Since May 3, 2022)

Product Developments

• Comirnaty (COVID-19 vaccine, mRNA)⁽⁸⁾
  • Clinical and Research Developments
    • In May 2022, Pfizer and BioNTech announced topline safety, immunogenicity and vaccine efficacy data from a Phase 2/3 trial evaluating a third 3-µg dose of the vaccine in children 6 months to under 5 years of age. Following a third dose in this age group, the vaccine was found to elicit a strong immune response, with a favorable safety profile similar to placebo. A formal analysis will be performed when at least 21 cases have accrued from seven days after the third dose, and will be shared once available.
    • In June 2022, Pfizer and BioNTech announced positive data evaluating the safety, tolerability and immunogenicity of two Omicron-adapted COVID-19 vaccine candidates: one monovalent and the other bivalent, a combination of the current COVID-19 vaccine and a vaccine candidate targeting the spike protein of the Omicron BA.1 variant of concern. Data from the Phase 2/3 trial found that a booster dose of both Omicron-adapted vaccine candidates elicited a substantially higher immune response against Omicron BA.1 as compared to the companies’ current COVID-19 vaccine. The robust immune response was seen across two investigational dose levels, 30-µg and 60-µg. One month after administration, a booster dose of the Omicron-adapted monovalent candidates (30-µg and 60-µg) increased neutralizing geometric mean titers (GMT) against Omicron BA.1 13.5 and 19.6-fold above pre-booster dose levels, while a booster dose of the Omicron-adapted bivalent candidates conferred a 9.1 and 10.9-fold increase in neutralizing GMTs against Omicron BA.1. Both Omicron-adapted vaccine candidates were well-tolerated in participants who received one or the other Omicron-adapted vaccine.
    • In July 2022, Pfizer and BioNTech announced the initiation of a randomized, active-controlled, observer-blind, Phase 2 study to evaluate the safety, tolerability, and immune response of an enhanced COVID-19 mRNA-based vaccine candidate at a 30-µg dose level. This next-generation bivalent COVID-19 vaccine candidate, BNT162b5, consists of RNAs encoding enhanced prefusion spike proteins for the SARS-CoV-2 ancestral strain (wild-type) and an Omicron variant. The enhanced spike protein encoded from the mRNAs in BNT162b5 have been modified with the aim of increasing the magnitude and breadth of the immune response that could better protect against COVID-19. This is the first of multiple vaccine candidates with an enhanced design which the companies plan to evaluate as part of a long-term scientific COVID-19 vaccine strategy to potentially generate more robust, longer-lasting and broader immune responses against SARS-CoV-2 infections and associated COVID-19.
  • Regulatory Developments
    • In May 2022, Pfizer and BioNTech announced that the U.S. Food and Drug Administration (FDA) expanded the emergency use authorization (EUA) for Comirnaty to include a booster dose after completion of the primary series of the vaccine in children 5 through 11 years of age. The 10-µg booster dose is given at least five months after the second dose of the two-dose 10-µg primary series.
    • In June 2022, the FDA’s Vaccines and Related Biological Products Advisory Committee (VRBPAC) voted to include a SARS-CoV-2 Omicron component for COVID-19 boosters in the U.S. for the fall of 2022. Following the meeting, an official recommendation stated that the FDA has asked manufacturers, including Pfizer, to develop and begin clinical trials with a modified vaccine containing an Omicron BA.4/BA.5 component.
    • In June 2022, Pfizer and BioNTech announced that the European Medicines Agency (EMA) has initiated a rolling review for a variant-adapted version of the companies’ COVID-19 vaccine. This rolling review is initially based on chemistry, manufacturing, and controls (CMC) data shared with EMA earlier in June. As clinical data become available, including data on immunogenicity against Omicron and its subvariants, it will be added to the rolling submission.
    • In June 2022, Pfizer and BioNTech announced the FDA granted EUA of Comirnaty as a three 3-µg dose series for children 6 months through 4 years of age (also referred to as 6 months to less than 5 years of age). The 3-µg dose was carefully selected as the preferred dose for children under 5 years of age based on safety, tolerability and immunogenicity data.
    • In July 2022, Pfizer and BioNTech announced that the companies have submitted a variation to the EMA requesting to update the Conditional Marketing Authorization (CMA) in the European Union (EU) with data supporting the vaccination of children ages 6 months to less than 5 years of age with the 3-µg dose of Comirnaty as a three-dose series.
    • In July 2022, Pfizer and BioNTech announced the FDA approved the companies’ supplemental Biologics License Application (sBLA) for Comirnaty to include individuals 12 through 15 years of age. The vaccine was previously made available to this age group in the U.S. under EUA, and to date more than 9 million 12- to 15-year-old adolescents in the U.S. have completed a primary series. Pfizer and BioNTech have also filed for regulatory approval of the vaccine for this age group with the EMA and other regulatory authorities around the world.
  • Commercial Developments
    • In May 2022, Pfizer and BioNTech announced an agreement with the European Commission (EC) to amend their originally agreed contractual delivery schedules for Comirnaty. The amendment rephases planned deliveries to help support the EC and Member States’ ongoing immunization programs and is aligned to the companies’ commitment to working collaboratively to identify pragmatic solutions to address the evolving pandemic needs. Doses scheduled for delivery in June through August 2022 will now be delivered in September through fourth-quarter 2022. This change of delivery schedule did not impact the companies’ full-year 2022 revenue guidance or the full-year commitment of doses to be delivered to EC Member States in 2022.
    • In June 2022, Pfizer and BioNTech announced a new vaccine supply agreement with the U.S. government to provide an additional 105 million COVID-19 doses (30-µg, 10-µg and 3-µg) that may include adult Omicron-adapted COVID-19 vaccines, subject to authorization from the FDA. The doses are planned to be delivered as soon as late summer 2022 and continue into the fourth quarter of this year. The U.S. government will pay the companies $3.2 billion upon delivery of the first 105 million doses. The U.S. government also has the option to purchase up to 195 million additional doses, bringing the total number of potential doses to 300 million.
• Ibrance (palbociclib)
  • In May 2022, Pfizer announced the presentation of real-world evidence of 2,888 patients demonstrating an associated benefit for hormone receptor-positive (HR+), human epidermal growth factor receptor 2-negative (HER2-) metastatic breast cancer (mBC) patients treated with Ibrance in combination with an aromatase inhibitor (AI), as compared to AI alone, in the first-line setting. After balancing for baseline demographic and clinical characteristics, palbociclib + AI versus AI alone was associated with a 24% reduction in the risk of death (HR=0.76 [95% CI, 0.65–0.87]) and a 30% reduction in the risk of disease progression (HR=0.70 [95% CI, 0.62–0.78]) in the observational, retrospective real-world analysis. Safety data were not collected as part of this analysis.
  • In June 2022, Pfizer announced overall survival (OS) results from the Phase 3 PALOMA-2 trial, which evaluated Ibrance in combination with letrozole compared to placebo plus letrozole for the first-line treatment of postmenopausal women with estrogen receptor-positive (ER+), HER2- mBC. With a median follow-up of 90 months, patients receiving Ibrance in combination with letrozole had numerically longer OS compared to placebo plus letrozole (median (95% CI) 53.9 months (49.8–60.8) vs median 51.2 months (43.7–58.9)); the results were not statistically significant. The PALOMA-2 trial was designed for a primary endpoint of progression-free survival (PFS), which was met in 2016, with OS as one of the secondary endpoints.
• Myfembree (relugolix 40 mg, estradiol 1.0 mg and norethindrone acetate 0.5 mg)
  • In May 2022, Myovant Sciences (Myovant) and Pfizer announced the FDA had extended the review period for the supplemental New Drug Application (sNDA) for Myfembree for the management of moderate to severe pain associated with endometriosis. The FDA requires extended time to review additional information it had requested from the companies regarding bone mineral density. The extended Prescription Drug User Fee Act (PDUFA) goal date is August 6, 2022.
  • In June 2022, Myovant and Pfizer announced that the FDA accepted for review a sNDA for Myfembree proposing updates to Myfembree’s U.S. Prescribing Information based on safety and efficacy data from the Phase 3 LIBERTY randomized withdrawal study in premenopausal women with heavy menstrual bleeding associated with uterine fibroids for up to two years. The PDUFA goal date for this sNDA is January 29, 2023.
  • In June 2022, Myovant and Pfizer announced that results of the Phase 3 SPIRIT 1 and SPIRIT 2 studies of investigational once-daily Myfembree in over 1,200 women with moderate to severe pain associated with endometriosis were published in The Lancet. SPIRIT 1 and 2 each met their co-primary endpoints with 75% of women in the relugolix combination therapy group in both studies achieving a clinically meaningful reduction in dysmenorrhea compared with 27% and 30% of women in the placebo groups at Week 24, respectively (both p < 0.0001). For non-menstrual pelvic pain, relugolix combination therapy achieved a clinically meaningful reduction in 59% and 66% of women, compared with 40% and 43% of women in the placebo groups (p < 0.0001). In both studies, relugolix combination therapy was associated with a generally well-tolerated safety profile, including bone mineral density loss of <1% over 24 weeks.
• Paxlovid (nirmatrelvir [PF-07321332] tablets and ritonavir tablets)⁽⁸⁾
  • Clinical and Research Developments
    • In June 2022, Pfizer announced data from the Phase 2/3 EPIC-SR (Evaluation of Protease Inhibition for COVID-19 in Standard-Risk Patients) study evaluating the use of Paxlovid in patients who are at standard risk for developing severe COVID-19. In the EPIC-SR study, the novel primary endpoint of self-reported, sustained alleviation of all symptoms for four consecutive days was not met, as previously reported. While not all statistically significant, data from standard-risk patients, both vaccinated and unvaccinated, are supportive of efficacy data observed in the EPIC-HR study. Due to a very low rate of hospitalization or death observed in the standard-risk patient population, Pfizer decided to cease enrollment into EPIC-SR and include available data in the New Drug Application (NDA) submission to the FDA to support the use of Paxlovid in appropriate individuals at high risk of progression to severe illness.
  • Regulatory Developments
    • In June 2022, Pfizer announced the submission of an NDA to the FDA for approval of Paxlovid for the treatment of COVID-19 in both vaccinated and unvaccinated individuals who are at high risk for progression to severe illness from COVID-19, consistent with current emergency use authorization. The submission provides the longer-term follow-up data necessary for acceptance and potential approval. According to the U.S. Centers for Disease Control and Prevention’s (CDC) defined risk factors, 50-60% of the U.S. population aged 12 and older is estimated to have one or more risk factors for progressing to severe COVID-19 illness.

Pipeline Developments

A comprehensive update of Pfizer’s development pipeline was published today and is now available at www.pfizer.com/science/drug-product-pipeline. It includes an overview of Pfizer’s research and a list of compounds in development with targeted indication and phase of development, as well as mechanism of action for some candidates in Phase 1 and all candidates from Phase 2 through registration.

• Elranatamab (PF-06863135) -- In June 2022, Pfizer announced new data from a planned interim analysis of the Phase 2 MagnetisMM-3 registration-enabling trial of elranatamab, an investigational B-cell maturation antigen (BCMA) CD3-targeted bispecific antibody, in people with relapsed/refractory multiple myeloma whose disease is refractory to at least one agent in each of three major classes of medications approved for the disease. With a median follow up of 3.71 months, initial efficacy results showed that the objective response rate for elranatamab was 60.6%. The trial is still ongoing to the primary endpoint analysis with results expected later this year, which, if positive, would form the basis of potential regulatory filings.
• Etrasimod (Selective S1P Receptor Modulator) -- In May 2022, Pfizer presented detailed results from two pivotal studies that make up the ELEVATE UC Phase 3 registrational program evaluating etrasimod, a once-daily, oral, selective sphingosine 1-phosphate (S1P) receptor modulator candidate for the treatment of moderately-to-severely active ulcerative colitis (UC). Both Phase 3, multi-center, randomized, placebo-controlled trials achieved all primary and key secondary endpoints, with etrasimod demonstrating a safety profile consistent with previous studies. In the 52-week ELEVATE UC 52 study, clinical remission was 27.0% for patients receiving etrasimod compared to 7.4% for patients receiving placebo at week 12 (19.8% differential, P=˂.001) and was 32.1% compared to 6.7% at week 52 (25.4% differential, P=˂.001). In the 12-week ELEVATE UC 12 study, clinical remission was achieved among 24.8% of patients receiving etrasimod compared to 15.2% of patients receiving placebo (9.7% differential, P=.0264). The data are expected to form the basis for planned future regulatory filings, which will be initiated later this year.
• Ervogastat (PF-06865571)/Clesacostat (PF-05221304) Combination Therapy -- In May 2022, Pfizer announced the FDA had granted Fast Track designation to its investigational combination therapy of ervogastat (a diacylglycerol O-acyltransferase 2 inhibitor, or DGAT2i) and clesacostat (an acetyl-CoA carboxylase inhibitor, or ACCi) for the treatment of non-alcoholic steatohepatitis (NASH) with liver fibrosis. Pfizer is currently studying the combination in an ongoing Phase 2 clinical trial evaluating the impact of treatment on resolution of NASH or improvement in liver fibrosis, expected to complete in 2024.
• TTI-622 (Signal-Regulatory Protein α-Fc Fusion Protein) -- In June 2022, Pfizer, MorphoSys U.S. Inc. (MorphoSys) and Incyte announced a clinical trial collaboration and supply agreement to investigate the immunotherapeutic combination of Pfizer’s TTI-622, a novel SIRPα-Fc fusion protein, and Monjuvi⁽⁹⁾ (tafasitamab-cxix) plus lenalidomide in patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) who are not eligible for autologous stem cell transplantation (ASCT). Under the terms of the agreement, Pfizer will initiate a multicenter, international Phase 1b/2 study of TTI-622 with Monjuvi and lenalidomide for patients with relapsed or refractory DLBCL who are not eligible for ASCT. MorphoSys and Incyte will provide Monjuvi for the study, which will be sponsored and funded by Pfizer and is planned to be conducted in North America, Europe and Asia-Pacific.

Corporate Developments

• In May 2022, Pfizer and Biohaven announced that the companies have entered into a definitive agreement under which Pfizer will acquire Biohaven and its calcitonin gene-related peptide (CGRP) programs, including rimegepant, zavegepant and a portfolio of five pre-clinical CGRP assets. Under the terms of the agreement, Pfizer will acquire all outstanding common shares of Biohaven not already owned by Pfizer for $148.50 per share in cash. Biohaven common shareholders, including Pfizer, will also receive 0.5 of a share of New Biohaven, a new publicly traded company that will retain Biohaven’s non-CGRP development stage pipeline compounds, per Biohaven common share. Pfizer will pay transaction consideration totaling approximately $11.6 billion in cash. Pfizer will also make payments at closing to settle Biohaven’s third party debt and for the redemption of all outstanding shares of Biohaven’s redeemable preferred stock. New Biohaven will also have the right to receive tiered royalties from Pfizer on any annual net sales of rimegepant and zavegepant in the U.S. in excess of $5.25 billion. The proposed transaction is expected to close by early 2023, subject to the completion of the New Biohaven spin-off transaction and other customary closing conditions. All required antitrust clearances have been received.
• In May 2022, Pfizer launched ‘An Accord for a Healthier World’, a groundbreaking initiative that seeks to greatly reduce the health inequities that exist between many lower-income countries and the rest of the world. The initiative aims to provide all of Pfizer’s current and future patented, high-quality medicines and vaccines available in the U.S. or the EU on a not-for-profit basis to 1.2 billion people in 45 lower-income countries.
• In June 2022, Pfizer provided an update on its ownership interest in Haleon plc (Haleon), the newly independent company which holds the joint Consumer Healthcare business of GSK plc (GSK) and Pfizer following the demerger of approximately 80% of GSK’s ownership interest in the business to GSK’s shareholders and the listing of Haleon on the London Stock Exchange, which occurred in July 2022. In addition, Haleon listed American Depositary Shares (ADSs) representing Haleon ordinary shares on the New York Stock Exchange. In keeping with Pfizer’s transformation into a more focused, global leader in science-based innovative medicines and vaccines, Pfizer intends to exit its 32% ownership interest in Haleon in a disciplined manner, with the objective of maximizing value for Pfizer shareholders.
• In June 2022, which falls in Pfizer’s international⁽⁵⁾ third quarter of 2022, Pfizer completed its acquisition of ReViral, a privately held, clinical-stage biopharmaceutical company focused on discovering, developing, and commercializing novel antiviral therapeutics that target respiratory syncytial virus (RSV). ReViral brings to Pfizer a portfolio of promising therapeutic candidates, including sisunatovir, an orally administered inhibitor designed to block fusion of the RSV virus to the host cell currently in Phase 2 clinical development for both adult and pediatric populations.
• In June 2022, Valneva SE (Valneva) and Pfizer announced the companies have entered into an equity subscription agreement and have updated the terms of their collaboration and license agreement for Lyme disease vaccine candidate VLA15. As part of the equity subscription agreement, which closed on June 22, 2022, Pfizer invested €90.5 ($95) million in Valneva, representing 8.1% of Valneva’s share capital at a price of €9.49 per share, through a reserved capital increase. Valneva will fund 40% of the remaining shared development costs compared to 30% in the initial agreement. Pfizer will pay Valneva tiered royalties ranging from 14% to 22% of net sales of VLA15, compared to royalties starting at 19% in the initial agreement. In addition, the royalties will be complemented by up to $100 million in milestones payable to Valneva based on cumulative sales. Other development and early commercialization milestones are unchanged, of which $168 million remain, including a $25 million payment to Valneva upon Pfizer’s initiation of the Phase 3 study.
• In June 2022, Roivant Sciences (Roivant) and Pfizer announced the unveiling of Priovant Therapeutics (Priovant), a clinical-stage biotechnology company dedicated to developing and commercializing novel therapies for autoimmune diseases with the greatest morbidity and mortality. Priovant was established in September 2021 through a transaction between Roivant and Pfizer, in which Pfizer granted an exclusive license to brepocitinib and ropsacitinib to Priovant. Pfizer holds a 25% equity ownership interest in Priovant.
• In June 2022, Pfizer announced a commitment to further reduce Greenhouse Gas (GHG) emissions and aims to achieve the voluntary Net-Zero Standard by 2040, ten years earlier than the timeline described in the standard. As part of the commitment, Pfizer aims to decrease its GHG emissions by 95% and its value chain emissions by 90% from 2019 levels by 2040 through accelerating the transition away from fossil fuels and engaging suppliers to catalyze equivalent action. Pfizer also signed a pledge by the U.S. Department of Health & Human Services (HHS) that calls on stakeholders in the U.S. healthcare system – including hospitals, health systems, payers, suppliers and pharmaceutical companies – to reduce GHG emissions and build a more climate resilient healthcare infrastructure.

Please find Pfizer’s press release and associated financial tables, including reconciliations of certain GAAP reported to non-GAAP adjusted information, at the following hyperlink:

https://investors.pfizer.com/Q2-2022-PFE-Earnings-Release/

(Note: If clicking on the above link does not open up a new web page, you may need to cut and paste the above URL into your browser’s address bar.)

For additional details, see the attached financial schedules, product revenue tables attached to the press release located at the hyperlink referred to above and the attached disclosure notice.

DISCLOSURE NOTICE: Except where otherwise noted, the information contained in this earnings release and the related attachments is as of July 28, 2022. We assume no obligation to update any forward-looking statements contained in this earnings release and the related attachments as a result of new information or future events or developments.

This earnings release and the related attachments contain forward-looking statements about, among other topics, our anticipated operating and financial performance; reorganizations; business plans, strategy and prospects; our Environmental, Social and Governance (ESG) priorities and goals; expectations for our product pipeline, in-line products and product candidates, including anticipated regulatory submissions, data read-outs, study starts, approvals, clinical trial results and other developing data, revenue contribution, growth, performance, timing of exclusivity and potential benefits; strategic reviews; capital allocation objectives; dividends and share repurchases; plans for and prospects of our acquisitions, dispositions and other business development activities, and our ability to successfully capitalize on these opportunities; manufacturing and product supply; our efforts to respond to COVID-19, including the Pfizer-BioNTech COVID-19 vaccine (Comirnaty) and our oral COVID-19 treatment (Paxlovid); and our expectations regarding the impact of COVID-19 on our business, operations and financial results that involve substantial risks and uncertainties. You can identify these statements by the fact that they use future dates or use words such as “will,” “may,” “could,” “likely,” “ongoing,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “assume,” “target,” “forecast,” “guidance,” “goal,” “objective,” “aim,” “seek,” “potential,” “hope” and other words and terms of similar meaning.

Among the factors that could cause actual results to differ materially from past results and future plans and projected future results are the following:

Risks Related to Our Business, Industry and Operations, and Business Development:

• the outcome of R&D activities, including, the ability to meet anticipated pre-clinical or clinical endpoints, commencement and/or completion dates for our pre-clinical or clinical trials, regulatory submission dates, and/or regulatory approval and/or launch dates; the possibility of unfavorable pre-clinical and clinical trial results, including the possibility of unfavorable new pre-clinical or clinical data and further analyses of existing pre-clinical or clinical data; the risk that pre-clinical and clinical trial data are subject to differing interpretations and assessments, including during the peer review/publication process, in the scientific community generally, and by regulatory authorities; and whether and when additional data from our pipeline programs will be published in scientific journal publications and, if so, when and with what modifications and interpretations;
• our ability to successfully address comments received from regulatory authorities such as the FDA or the EMA, or obtain approval for new products and indications from regulators on a timely basis or at all; regulatory decisions impacting labeling, including the scope of indicated patient populations, product dosage, manufacturing processes, safety and/or other matters, including decisions relating to emerging developments regarding potential product impurities; the impact of recommendations by technical or advisory committees; and the timing of pricing approvals and product launches;
• claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates, including claims and concerns that may arise from the outcome of post-approval clinical trials, which could impact marketing approval, product labeling, and/or availability or commercial potential, including uncertainties regarding the commercial or other impact of the results of the Xeljanz ORAL Surveillance (A3921133) study or actions by regulatory authorities based on analysis of ORAL Surveillance or other data, including on other Janus kinase (JAK) inhibitors in our portfolio;
• the success and impact of external business development activities, including the ability to identify and execute on potential business development opportunities; the ability to satisfy the conditions to closing of announced transactions in the anticipated time frame or at all; the ability to realize the anticipated benefits of any such transactions in the anticipated time frame or at all; the potential need for and impact of additional equity or debt financing to pursue these opportunities, which could result in increased leverage and/or a downgrade of our credit ratings; challenges integrating the businesses and operations; disruption to business and operations relationships; risks related to growing revenues for certain acquired products; significant transaction costs; and unknown liabilities;
• competition, including from new product entrants, in-line branded products, generic products, private label products, biosimilars and product candidates that treat or prevent diseases and conditions similar to those treated or intended to be prevented by our in-line products and product candidates;
• the ability to successfully market both new and existing products, including biosimilars;
• difficulties or delays in manufacturing, sales or marketing; supply disruptions, shortages or stock-outs at our facilities or third-party facilities that we rely on; and legal or regulatory actions;
• the impact of public health outbreaks, epidemics or pandemics (such as the COVID-19 pandemic), including the impact of vaccine mandates where applicable, on our business, operations and financial condition and results, including impacts on our employees, manufacturing, supply chain, sales and marketing, research and development and clinical trials;
• risks and uncertainties related to our efforts to develop and commercialize a vaccine to help prevent COVID-19 and an oral COVID-19 treatment, as well as challenges related to their manufacturing, supply and distribution, including, among others, uncertainties inherent in research and development, including the ability to meet anticipated clinical endpoints, commencement and/or completion dates for clinical trials, regulatory submission dates, regulatory approval dates and/or launch dates, as well as risks associated with pre-clinical and clinical data (including Phase 1/2/3 or Phase 4 data for Comirnaty, any monovalent, bivalent or variant-adapted vaccine candidates or any other vaccine candidate in the BNT162 program or Paxlovid or any other future COVID-19 treatment) in any of our studies in pediatrics, adolescents or adults or real world evidence, including the possibility of unfavorable new pre-clinical, clinical or safety data and further analyses of existing pre-clinical, clinical or safety data or further information regarding the quality of pre-clinical, clinical or safety data, including by audit or inspection; the ability to produce comparable clinical or other results for Comirnaty, any monovalent, bivalent or variant-adapted vaccine candidates or other vaccines that may result from the BNT162 program, Paxlovid or any other future COVID-19 treatment or any other COVID-19 program, including the rate of effectiveness and/or efficacy, safety and tolerability profile observed to date, in additional analyses of the Phase 3 trial for Comirnaty or Paxlovid and additional studies, in real-world data studies or in larger, more diverse populations following commercialization; the ability of Comirnaty, any monovalent, bivalent or variant-adapted vaccine candidates or any future vaccine to prevent, or Paxlovid or any other future COVID-19 treatment to be effective against, COVID-19 caused by emerging virus variants; the risk that more widespread use of the vaccine or Paxlovid will lead to new information about efficacy, safety or other developments, including the risk of additional adverse reactions, some of which may be serious; the risk that pre-clinical and clinical trial data are subject to differing interpretations and assessments, including during the peer review/publication process, in the scientific community generally, and by regulatory authorities; whether and when additional data from the BNT162 mRNA vaccine program, Paxlovid or other programs will be published in scientific journal publications and, if so, when and with what modifications and interpretations; whether regulatory authorities will be satisfied with the design of and results from these and any future pre-clinical and clinical studies; whether and when submissions to request emergency use or conditional marketing authorizations for Comirnaty or any potential future vaccines in additional populations, for a booster dose for Comirnaty, any monovalent, bivalent or variant-adapted vaccine candidates or any potential future vaccines (including potential future annual boosters or re-vaccinations), and/or biologics license and/or EUA applications or amendments to any such applications may be filed in particular jurisdictions for Comirnaty, any monovalent, bivalent or variant-adapted vaccine candidates or any other potential vaccines, and if obtained, whether or when such EUA or licenses will expire or terminate; whether and when submissions to request emergency use or conditional marketing authorizations for Paxlovid or any other future COVID-19 treatment and/or any drug applications for any indication for Paxlovid or any other future COVID-19 treatment may be filed in particular jurisdictions, and if obtained, whether or when such EUA or licenses will expire or terminate; whether and when any application that may be pending or filed for Comirnaty, any monovalent, bivalent or variant-adapted vaccine candidates or other vaccines that may result from the BNT162 program, Paxlovid or any other future COVID-19 treatment or any other COVID-19 program may be approved by particular regulatory authorities, which will depend on myriad factors, including making a determination as to whether the vaccine’s or drug’s benefits outweigh its known risks and determination of the vaccine’s or drug’s efficacy and, if approved, whether it will be commercially successful; decisions by regulatory authorities impacting labeling or marketing, manufacturing processes, safety and/or other matters that could affect the availability or commercial potential of a vaccine or drug, including development of products or therapies by other companies; disruptions in the relationships between us and our collaboration partners, clinical trial sites or third-party suppliers, including our relationship with BioNTech; the risk that other companies may produce superior or competitive products; the risk that demand for any products may be reduced or no longer exist which may lead to reduced revenues or excess inventory; the possibility that COVID-19 will diminish in severity or prevalence, or disappear entirely; risks related to the availability of raw materials to manufacture or test any such products; challenges related to our vaccine’s formulation, dosing schedule and attendant storage, distribution and administration requirements, including risks related to storage and handling after delivery by Pfizer; the risk that we may not be able to successfully develop other vaccine formulations, booster doses or potential future annual boosters or re-vaccinations or new variant-based or next-generation vaccines; the risk that we may not be able to recoup costs associated with our R&D and manufacturing efforts; risks associated with any changes in the way we approach or provide research funding for the BNT162 program, Paxlovid or any other COVID-19 program; challenges and risks associated with the pace of our development programs; the risk that we may not be able to maintain or scale up manufacturing capacity on a timely basis or maintain access to logistics or supply channels commensurate with global demand for our vaccine or any treatment for COVID-19, which would negatively impact our ability to supply the estimated numbers of doses of our vaccine or treatment courses of Paxlovid within the projected time periods; risks related to our ability to achieve our revenue forecasts for Comirnaty and Paxlovid or any potential future COVID-19 vaccines or treatments; whether and when additional supply or purchase agreements will be reached; uncertainties regarding the ability to obtain recommendations from vaccine or treatment advisory or technical committees and other public health authorities and uncertainties regarding the commercial impact of any such recommendations; pricing and access challenges for such products; challenges related to public confidence or awareness of our COVID-19 vaccine or Paxlovid, including challenges driven by misinformation, access, concerns about clinical data integrity and prescriber and pharmacy education; trade restrictions; potential third-party royalties or other claims related to our COVID-19 vaccine or Paxlovid; and competitive developments;
• trends toward managed care and healthcare cost containment, and our ability to obtain or maintain timely or adequate pricing or favorable formulary placement for our products;
• interest rate and foreign currency exchange rate fluctuations, including the impact of possible currency devaluations in countries experiencing high inflation rates;
• any significant issues involving our largest wholesale distributors or government customers, which account for a substantial portion of our revenues;
• the impact of the increased presence of counterfeit medicines or vaccines in the pharmaceutical supply chain;
• any significant issues related to the outsourcing of certain operational and staff functions to third parties; and any significant issues related to our JVs and other third-party business arrangements;
• uncertainties related to general economic, political, business, industry, regulatory and market conditions including, without limitation, uncertainties related to the impact on us, our customers, suppliers and lenders and counterparties to our foreign-exchange and interest-rate agreements of challenging global economic conditions, such as inflation, and recent and possible future changes in global financial markets;
• any changes in business, political and economic conditions due to actual or threatened terrorist activity, civil unrest or military action;
• the impact of product recalls, withdrawals and other unusual items, including uncertainties related to regulator-directed risk evaluations and assessments, including our ongoing evaluation of our product portfolio for the potential presence or formation of nitrosamines;
• trade buying patterns;
• the risk of an impairment charge related to our intangible assets, goodwill or equity-method investments;
• the impact of, and risks and uncertainties related to, restructurings and internal reorganizations, as well as any other corporate strategic initiatives, and cost-reduction and productivity initiatives, each of which requires upfront costs but may fail to yield anticipated benefits and may result in unexpected costs or organizational disruption;

Risks Related to Government Regulation and Legal Proceedings:

• the impact of any U.S. healthcare reform or legislation or any significant spending reductions or cost controls affecting Medicare, Medicaid or other publicly funded or subsidized health programs or changes in the tax treatment of employer-sponsored health insurance that may be implemented;
• U.S. federal or state legislation or regulatory action and/or policy efforts affecting, among other things, pharmaceutical product pricing, intellectual property, reimbursement or access or restrictions on U.S. direct-to-consumer advertising; limitations on interactions with healthcare professionals and other industry stakeholders; as well as pricing pressures for our products as a result of highly competitive insurance markets;
• legislation or regulatory action in markets outside of the U.S., including China, affecting pharmaceutical product pricing, intellectual property, reimbursement or access, including, in particular, continued government-mandated reductions in prices and access restrictions for certain biopharmaceutical products to control costs in those markets;
• the exposure of our operations globally to possible capital and exchange controls, economic conditions, expropriation and other restrictive government actions, changes in intellectual property legal protections and remedies, as well as the impact of political unrest or civil unrest or military action, including the ongoing conflict between Russia and Ukraine and the continued economic consequences, unstable governments and legal systems and inter-governmental disputes;
• legal defense costs, insurance expenses, settlement costs and contingencies, including those related to actual or alleged environmental contamination;
• the risk and impact of an adverse decision or settlement and the adequacy of reserves related to legal proceedings;
• the risk and impact of tax related litigation;
• governmental laws and regulations affecting our operations, including, without limitation, changes in laws and regulations or their interpretation, including, among others, changes in tax laws and regulations internationally and in the U.S., including, among others, potential adoption of global minimum taxation requirements and potential changes to existing tax law by the current U.S. Presidential administration and Congress;

Risks Related to Intellectual Property, Technology and Security:

• any significant breakdown or interruption of our information technology systems and infrastructure (including cloud services);
• any business disruption, theft of confidential or proprietary information, extortion or integrity compromise resulting from a cyber-attack or other malfeasance by third parties, including, but not limited to, nation states, employees, business partners or others;
• the risk that our currently pending or future patent applications may not be granted on a timely basis or at all, or any patent-term extensions that we seek may not be granted on a timely basis, if at all; and
• our ability to protect our patents and other intellectual property, such as against claims of invalidity that could result in loss of exclusivity, including challenges faced by our collaboration or licensing partners to the validity of their patent rights, unasserted intellectual property claims and in response to any pressure, or legal or regulatory action by, various stakeholders or governments that could potentially result in us not seeking intellectual property protection for or agreeing not to enforce or being restricted from enforcing intellectual property related to our products, including our vaccine to help prevent COVID-19 and our oral COVID-19 treatment.

We cannot guarantee that any forward-looking statement will be realized. Should known or unknown risks or uncertainties materialize or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. Investors are cautioned not to put undue reliance on forward-looking statements. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in our subsequent report on Form 10-Q, in each case including in the sections thereof captioned “Forward-Looking Information and Factors That May Affect Future Results” and “Item 1A. Risk Factors,” and in our subsequent reports on Form 8-K.

This earnings release may include discussion of certain clinical studies relating to various in-line products and/or product candidates. These studies typically are part of a larger body of clinical data relating to such products or product candidates, and the discussion herein should be considered in the context of the larger body of data. In addition, clinical trial data are subject to differing interpretations, and, even when we view data as sufficient to support the safety and/or effectiveness of a product candidate or a new indication for an in-line product, regulatory authorities may not share our views and may require additional data or may deny approval altogether.

The information contained on our website or any third-party website is not incorporated by reference into this earnings release. All trademarks mentioned are the property of their owners.

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