Good day, everyone, and welcome to Pfizer's third quarter 2026 earnings conference call. Today's call is being recorded. At this time, I would like to turn the call over to Francesca DeMartino, 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 DeMartino, 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 third quarter 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, Cécile Guégant, our 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 uncertainty 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. I'm pleased with another strong quarter for Pfizer. Our excellent commercial execution, including 32% operational revenue growth in the quarter for our launched and acquired products, shows the underlying strength of our business. Financial discipline and ongoing productivity improvement are driving efficiency and contributing favorably toward our margins. And with continued progress of our high value R&D programs, we believe that we are on a pathway to the next stage of meaningful growth. Before going further, I want to welcome Cecile Guegan as our Chief Financial Officer. Cecile, brings more than 25 years of finance leadership and the proven ability to deliver new sources of growth. She stood out in a global search for her expertise, her deep knowledge of Pfizer and our industry, and the strategic vision that I believe will help Pfizer unlock sustained long-term value for patients and shareholders. I'm looking forward to Cecile's partnership and I'm confident She will help us execute with the discipline and ambition this next chapter requires. Now, let me cover several highlights of our progress in this quarter. As you know, over the last few years, we have invested close to 80 billion dollars in transactions that have equipped us with key products contributing to current commercial momentum and platforms with transformative potential. About 80% of this investment was for Sijen, Metcera and Bioheaven. And we are making good progress in maximizing the value of each one. We are pleased with the overall performance of our acquired products, which grew 37% operationally in this quarter. Our legacy Sijen portfolio grew 39% year over year in the US in the quarter, driven by the strong performance of Patsy. Bringing Cigen's medicines together with the strength and reach of our commercial organization has deepened our presence in the oncology community. We now offer physicians and care teams a broader set of options and more expertise, helping patients and driving growth for Pfizer. Cigen did more than strengthen our commercial position. It also expanded our ability to discover oncology breakthroughs, doubling the size of our early stage pipeline at the time we closed the acquisition. In our late stage development programs, we are advancing potential antibody drug conjugates that could bring meaningful improvements for patients with cancer. I'm pleased with the pace of progress over the past year. with our expansive clinical development program across our obesity portfolio. We plan to advance 10 active and planned phase three trials in 2026, including one evaluating a switch from approved weekly therapies to our investigational monthly GLP-1 peptide, verobenatide. We have made significant progress with enrollment across our pivotal verobenatide program as well as our amylin combination program where our phase 2b study is now fully enrolled. We are working toward the first in a series of potential approvals for berbenatide in 2028 with planning of our go-to-market strategy well underway. Bioheaven also has been a strategically important addition for Pfizer. In the quarter, Nurtek grew by 33% operationally driven by underlying demand and excellent commercial execution. We see a real opportunity to help patients with migraine and for the oral CGRP class to be a key growth driver, even as we manage market dynamics in a competitive field. We are leading the oral CGRP class in the US and are working to extend that position internationally. We are seeing international growth as more patients can now get this treatment in key countries, including the UK, Italy, and Japan. We are also encouraged by strong adoption when we are able to expand access. 2026 execution in R&D has been strong. and we continue to prioritize the highest value opportunities for patients and future growth across our four therapeutic focus areas. Our excellent progress showcases our momentum in advancing our strategy. In recent months, we achieved two key regulatory decisions, one key pivotal readout and eight key pivotal study starts alongside strong data we presented at several recent Medical Congresses. We are excited by the pipeline opportunities in areas of strategic focus and commercial strength. This includes late-stage programs across tumor types in oncology, including multiple myeloma, breast cancer, and lung cancer, within inflammation and immunology, and of course in pneumococcal vaccines. Chris will share more detail about our recent advancement in the recent months. Our pipeline strategy is grounded in disciplined prioritization and accelerated execution. And we are confident that we are advancing our most significant opportunities for future patient impact and growth. Today, we are raising our guidance for full year 2026 revenue and adjusted earnings per share. This reflects our strong performance through the third quarter and confidence in our ability to execute our strategy. Along with our financial discipline and the progress we continue to make with our R&D pipeline, we believe Pfizer is well positioned to drive growth towards the end of the decade and create sustained value for patients and shareholders over the long term. We have deployed AI in our business with the goal of improving efficiency in manufacturing and sharpening how we engage physicians and patients. In R&D, we are working to accelerate innovation with faster target validation and better molecule and biomarker selection. The recent launch of Genesys A new pharmacovigilance platform shows our commitment to harnessing advanced AI and intelligent automation for global safety monitoring. This typically involves a lengthy manual process for more than 600 products in over 120 countries. Genesys takes on the administrative burden so our safety scientists can spend their time where it matters most, assessing causality, Detecting Safety Signals and Protecting Patients. With that, I will turn it over to Cecile.

Thank you, Albert, and good morning. I am proud to speak to you today as Pfizer's CFO. I'm looking forward to continuing to work alongside the executive leadership team and lead a world-class finance organization. I am genuinely excited about what we can achieve together and I will approach this role with financial discipline and a focus on translating Pfizer's scientific and commercial progress into durable shareholder value. I am confident in our strategy and that as a team, we can deliver durable long-term value for shareholders with rigorous capital allocation and disciplined execution. Now, I am pleased to share our third quarter results, which demonstrate continuous commercial execution and financial discipline. Revenues from our non-COVID product delivered solid growth, while product mix, productivity, and cost management supported margin expansion and enabled continuous investment across a robust pipeline. This year's performance gives us the confidence to raise our full year 2026 revenue guidance as well as raise and narrow our adjusted diluted EPS guidance. Now onto the results. Third quarter 2026 revenue of $16.6 billion came in ahead of our expectation with strong 7% operational revenue growth of our non-COVID products. driven by key brands in the US and select international markets, offset by lower revenues from our COVID-19 products. On the bottom line, CertCore 2026 reported diluted EPS was 56 cents. In addition, adjusted diluted EPS of 87 cents exceeded our expectation and includes the 10 cents charge related to the InnoVant transaction. This outperformance reflects cost discipline and improved productivity across the organization, even as we increase investment towards future growth rivalries and advance several phase three study stocks. We saw solid revenue contributions in the core from Eliquis, PetSafe, the Vindicale family, Nurtek and Lorbrane, while our COVID-19 products and the Prevnar family declined in the quarter. Our launched and acquired product contributed $3.8 billion in revenues and grew 32% operationally in the quarter, primarily driven by PatSafe up $255 million, Nartech up $135 million, and La Brena up $114 million. We continue to invest behind this group of products to mitigate LOE headwinds over the next several years. In addition, this course performance demonstrates clear progress against our objective of returning to growth towards the end of the decade. Cross-discipline and continued optimization across the company, including our manufacturing footprint, remain priorities. We are making meaningful progress with our productivity initiatives and remain on track to deliver nearly all of the anticipated $7.2 billion of net savings by the end of 2026 for ongoing cost improvement programs. As we announced last quarter, we're initiating the next phase of these programs to deliver and anticipated additional $2.5 billion of net cost savings from 2027 through 2029. These savings support increased operating efficiency and contribute favorably to our margins. At the same time, we continue to prioritize investment in pipeline programs that we believe have the greatest potential to deliver meaningful breakthroughs for patients and create long-term value for our shareholders. Adjusted gross margin for the third quarter was 77%, primarily reflecting favorable product mix and continued cost management. When we look at the components of adjusted operating expenses of $6.8 billion, Adjusted SIN expenses increased 2% operationally, reflecting in part an increase due to a lower favorable adjustment of U.S. health care reform fees year-over-year offset partially by lower and targeted marketing and promotional investments toward growth drivers and ongoing cost productivity improvements. Adjusted R&D expenses increased 18% operationally, which includes planned investment in priority oncology and obesity programs, including several phase three study stocks. An acquired in-progress R&D decreased 52% operationally, primarily reflecting a $650 million charge related to the in-event transaction this quarter compared to $1.35 billion charge in the prior quarter. related to the 3S biotransaction. Start quarter 2026 adjusted operating margin was 36%, reflecting effective cost management, strong non-COVID revenue performance, higher investment in the business, and I will note, was tampered by the AI PR&D charge related to the innovant transaction. And as I mentioned earlier, CERN Core Adjusted Diluted EPS was 87 cents. Based on our year-to-date performance, including continued growth across our non-COVID product and disciplined execution, we are raising our full year 2026 revenue guidance by $1.5 billion at the midpoint to a range of $62 to $64 billion. We are reaffirming our expectation of approximately $4 billion for the COVID products with a majority of the Comirnatio revenues expected in the fourth quarter consistent with the vaccination season. Ex-COVID utilization will continue to be influenced by infection rates and treatment demand. In addition, we now expect full year 2026 R&D expense to be in the range of $10.8 to $11.8 billion. We are raising and narrowing our full year 2026 adjusted diluted EPS guidance to a range of $2.95 to $3.05. This represents an increase of 10 cents at the midpoint while absorbing the 10 cents per share impact of the InnoVant transaction. We are reaffirming all other components of our financial guidance. Our updated outlook reflects our confidence in the non-COVID product, progress across our cost improvement initiative, an expectation of full year adjusted gross margin in the mid 70% range, and continued investment in our priority pipeline programs. Turning to capital allocation. Our capital allocation priorities remain unchanged. We invest in the business at appropriate returns, maintain an overtime growth or dividend and deliver shareholder returns while preserving flexibility for future value enhancing actions. including share repurchases. Following the InnoVant transaction, which closed in the start quarter, our current BD capacity is approximately $6 billion. In the first nine months of 2026, we invested $9.2 billion in internal and external R&D and returned $7.3 billion to shareholders through our quarterly dividend. Our start quarter year-to-date 2026 operating cash flow was $8.8 billion and leverage ended the quarter at 2.6 times, slightly below our 2026 target of 2.7 times. Given the impact of upcoming LOEs, we expect leverage to remain around current levels or modestly higher during the LOE transition period. We remain focused on maintaining a strong financial position while continuing to invest in innovation and support shareholder returns. In conclusion, I want to leave you with two key takeaways. First, operational excellence. The non-COVID product continued to perform well, growing 7% operational. and our launch and acquired product was 32% operational, providing further evidence of our strong capabilities and consistent execution. Second, financial discipline. We are improving operating efficiency while enabling increased pipeline investment in program Weaver offers the greatest potential for patients and shareholders. Together, this performance demonstrates that we are executing our strategy, managing the upcoming LOE transition, and strengthening the foundation for a return to growth towards the end of the decade. With that, I'll turn it over to Chris.

Thanks, Cecile. Across our four therapeutic areas, we made strong progress last quarter. I'll provide color on recent developments for some of these programs, starting with Alrexvio, our internally discovered BCMA bispecific, which has now delivered two positive phase three readouts in double-class exposed multiple myeloma. Most recently, in MM32, Alrexvio monotherapy demonstrated a statistically significant and clinically meaningful improvement in progression-free survival versus investigators' choice of three established standard of care regimens. This is important because the choice of three standard of care regimens provides a robust representation of how CD38 refractory multiple myeloma is treated today in a patient population that is growing as anti-CD38 therapy moves in the first-line setting. And the results themselves were strong. At the time of the interim analysis, More than 75% of patients receiving Alrexio had not experienced disease progression or death from any cause, and the estimated 18 months progression-free survival rate was approximately 68%. Safety in MM32 was consistent with Alrexio's known profile and also potentially differentiated, with infection prophylaxis measures incorporated From the start of MM32, rates of grade 3 or higher infections were lower than those observed in MM5, Alrexio's first positive pivotal trial in double-class exposed multiple myeloma. For context, such infection prophylaxis measures were not in place at the start of MM5. These were instituted following early deaths due to infections that were concentrated in China and two other countries during the COVID wave, impacting the overall hazard ratio of MM5. MM5 data are expected at a medical meeting before year end and will provide further information on efficacy and safety. Taken together, these positive phase 3 results from MM32 and MM5 strengthen our confidence in moving Alrexfea into earlier lines of treatment. We are building a compelling case of fixed-dose Alrexfea monotherapy from first relapse regardless of prior CD38 exposure. And with additional pivotal studies in newly diagnosed multiple myeloma underway, Alrexfea's eligible patient population could grow approximately five-fold Fending Clinical and Regulatory Success. Moving next to a thermocyclic, our potential first-in-class, highly selective CDK4 inhibitor. Building on the leadership we established with iBrands, we are advancing a thermocyclic as a potential next-generation backbone for first-line and early HR-positive breast cancer. Our Cat6 inhibitor, Prevetrostat, is being developed in later-line settings. Athermocyclic was designed in-house to improve upon CDK4 inhibitors, the current standard of care backbone for HR-positive breast cancer. A key limitation of this class is safety and tolerability, with CDK6 inhibition being a key contributor to adverse events. We designed athermocyclic to maximize efficacy through greater CDK4 inhibition while improving tolerability by minimizing CDK6 engagement. Athermocyclob is 33 times more selective for CDK4 versus CDK6, comparing favorably versus the standard of care. Here are two datasets fueling enthusiasm for athermocyclob. On the left are data presented at ESMO from the phase two folate one study of athermocyclob plus fulvestrin in patients with HR-positive HER2-negative breast cancer. All participants had previously received a CDK4-6 inhibitor, and notably 92% of athermocyclic participants were randomized within three months of discontinuing a CDK4-6 inhibitor. The athermocyclic regimen reduced the risk of disease progression or death by 40% compared to investigators' choice of fulvestrant or everolimus plus eczema stain. These results in a population with highly refractory or resistant disease increase our confidence in our ongoing phase 3 trial of a thermocyclic versus investigatist choice of CDK4-6 inhibitor in the first line setting. On the right are data for a thermocyclic phase 2 study in early breast cancer. With a combination of a thermocyclic plus letrozole, 88% of participants' tumors demonstrated complete cell cycle arrest compared to only 18% versus letrozole alone. These results support our plan to combine a thermocyclic with a selective estrogen receptor degrader, Geridestrand, in a phase 3 early breast cancer trial expected to initiate within the next few months. This study design has been aligned with regulators, building on the expected approval for Geridestrand in this setting. This slide shows Forlite-1 safety and tolerability data alongside results from pivotal studies of the three approved CDK4-6 inhibitors plus Fulvestrin. These are cross-trial comparisons. Therefore, definitive conclusions cannot be drawn. These data further suggest that high CDK4 selectivity drives improved safety and tolerability, enabling continuous dosing Excellent adherence and potentially great efficacy. Grade 3 or higher neutropenia was numerically lower with athermocyclib than with any of the approved agents with no grade 4 or 5 neutropenia reported. Any grade diarrhea was lower than with abemocyclib and comparable to palbocyclib and ribocyclib. Dose reductions due to adverse events were 14% with athermocyclib compared to 32% to 43% with the approved agents. Turning to tubonatomic, we are advancing an extensive program for this potentially best-in-class PD-1 VEGF bispecific antibody with over 1,200 patients treated globally and a consistent safety profile. This includes two ongoing phase 3 trials with two additional phase 3 trials expected to begin this year. Updated results at ESMO strengthen our confidence as we expand tibunatomic's development. Since CITC25, confirmed response rate for the pivotal dose of tibunatomic plus doublet chemotherapy from the ongoing Phase II study have risen by roughly 20 percentage points in non-squamous and squamous first-line non-small cell lung cancer. They now stand at approximately 80%, exceeding those of teslilizumab plus chemotherapy in this study. Medium progressive free survival was nearly 14 months for both histologies, an improvement of roughly four to five months versus the comparators. Notably, teslalizumab's efficacy was consistent with historical phase three results for the leading PD-1 antibody pembrolizumab, which supports the relevance of the control arms. We are also encouraged by how Tevanatomic efficacy and safety results compare with Phase III data for the PD-1 VEGF bispecific antibody Ivonisumab, while recognizing the limitations of cross-trial comparisons. Now for INI, Tilrecamic, a potential first-in-class tri-specific antibody. Tilrecamic was designed in-house to simultaneously target multiple complementary drivers of type 2 inflammation IL-4, IL-13, and TSLP. Phase 2 results in atopic dermatitis provide compelling proof of concept. At the top monthly doses, Tilrecamic treatment led to placebo-adjusted response rate of about 50, for EZ75 to find a 75% or greater improvement in the eczema area and severity index. While cross-trial comparisons have limitations, these Phase II data suggest the potential for superiority over dupilumab, the current standard of care biologic. These secondary endpoints in our ongoing Phase III program are powered to test this hypothesis in a head-to-head setting. For safety, to recommend demonstrated a favorable profile at subcutaneous doses up to 400 milligrams once every four weeks, the observed frequency of conjunctivitis and injection site reactions were lower than rates reported with dupilumab and comparable to placebo. Biontotropic Dermatitis offers a pipeline and a product opportunity targeting pathways that are validated by approved therapies across nine different diseases. Late-stage studies are underway in severe asthma and moderate to severe COPD. Moving to our potential best-in-class pneumococcal conjugate vaccine program, Building on PREFNA's 25-plus-year legacy of effectiveness and safety, we're advancing next-generation candidates designed for leading serotype and invasive disease coverage. In pediatrics, PCV25 delivered strong Phase II results. All 20 serotypes shared with PREFNA20 met the twofold post-dose IV IgG criterion, historically used to establish non-inferiority. Since the pediatric licensure of PREFNA 20 in 2023, the FDA established an updated, more stringent, 1.5-fold non-inferiority criterion that is incorporated into our Phase 3 design. Given the Phase 2 results and tighter confidence intervals expected with a much larger sample size in Phase 3, modeling predicts this criterion will be met for at least 22 of 25 serotypes in our pivotal study. Taken together with seroresponse data, functional OPA, TTIS, and the totality of evidence approach to licensure, these results provide confidence as we aim to deliver a best-in-class pediatric pneumococcal vaccine protecting against serotypes that collectively cause an estimated 84% of invasive disease cases in U.S. children under five. This would represent an incremental increase of approximately 25 percentage points versus PREFNA20. Our Phase 3 program is well underway with the Phase 3 lot-to-lot consistency study already fully enrolled. In adults, PCB35 extends the enhanced serotype 3 technology we validated with PCB25 to other key serotypes with a Phase 1 start expected this year. Looking ahead, We expect a strong cadence of regulatory decisions, data readouts, and pivotal study starts over the next 12 months. These include a readout from MEFRA 1, which based on the current event rate, is now expected in the first quarter of 2027. If successful, MEFRA 1 could support approval for MEFRA Metastat, our in-house discovered potential first-in-class EZH2 inhibitor for prostate cancer, expanding our franchise. With that, I'll hand it back to Albert.

Thank you, Chris. And in closing, operational excellence is driving a commercial momentum across our key growth brands. And I would say importantly, with our launched and acquired products. Our capital allocation strategy, on the other hand, is designed to create long-term shareholder value. And our late-stage pipeline progress, with a significant number of pivotal readouts expected near-term, is strengthening our opportunity to extend our leadership in key areas and make a difference for patients. I'm confident Pfizer is well positioned for growth towards the end of this decade and for long-term shareholder value creation. We have line of sight to our aim of delivering a risk-adjusted, high single-digit revenue CAGR from year-end 2022 NDA through year-end Now we will move to Q&A. And 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 Chris Schott with JPMorgan. Your line is now open.

Great. Thanks so much for the questions. I just had two pipeline ones. Maybe first on the tri-specific, Tarek Omeg, how are you thinking about the positioning of this one in atopic derm as we consider, I guess, first line versus second line usage as we just think about the very strong data you presented versus a very well-entrenched standard of care? And maybe just a second part of that, just talk about the timelines for the indications beyond AD that you're pursuing. The second question was then just pivoting over to the upcoming Phase 1, 2A, amylin, and combo data that we're going to see. Here, can you just help set some expectations about how you're thinking about that data and then the type of titration schedule that's being used in that study just to help us kind of frame out what we're going to see with that readout? Thanks so much.

No, thank you. Chris, would you like to cover the timelines of Trispecific and, of course, the amylin and barobenetide questions? And then maybe, Alexander, you can speak a little bit about the commercial positioning.

Thank you very much for the question. So, as you know, we've now started the phase three program for Turecumib in atopic dermatitis, two studies. One of those studies include a head-to-head against dupilumab. And we also started the phase two, three study, a continuous design for COPD and phase three studies for Severe Asthma, with expected readouts in 2028 and 2029. Regarding ambulance GLP-1, as you're aware, the SOLACE-1 study has now completely recruited. That is the robustly designed Phase 2B study. for amylin single agent and amylin plus and barabenetide in different doses and different titrations. We expect the readout for that study for efficacy the second half of 2027. The ongoing Phase 1, Phase 2a study will give an update at the end of this year recognising that study was designed for safety and PK, clinical pharmacology, not for efficacy.

Thank you. And then what about the positioning of the tri-specifics?

Yes, Chris, thanks for the questions. I think we all know that this is a very large category. What we have learned with RCBinco and overall dermatology franchises, there is a lot of patients' profile that requires different type of therapy. And we see that very much with the JAK versus the MAD. And we see that there are some patients that actually move from one to the other, the drop-off. There is a lot of circulation of those patients. We are building capabilities across US and internationals and we see that we are making good progress. For instance, as you saw in this quarter in international, we reached like 100 million combined between our two assets in dermatology for the quarter. So we start having a nice phase. And as I said, as we move into the result of the study, we will be able to actually capture some of those lapsed patients and naive patients with a very specific profile that we are defining. First in Class, Strong Efficacy, and clearly Unmet Medical Lead in this category. Thank you very much. Next question, please.

Our next question comes from Dave Reisinger with Learing Partners. Please go ahead.

Yes, thanks very much. And I wanted to say congratulations to Cecile on your new role as CFO of Pfizer and look forward to working with you. My question is on U.S. net price in the third quarter and going forward. Could you comment on any gross to net benefits to net sales in the third quarter, including from any 340B scrubbing, and discuss U.S. net price prospects looking forward in the near term? Thank you.

Thanks very much. First, for your good wishes. So as it relates to the pricing in Q3, with the exception of, as we were expecting, the impact on adequacy, which started in Q3 of the January price decrease, I would say there is not really any very material change into our growth to net dynamics during the third quarter. So the performance that we are seeing is, for the most part, driven by strong market performance and volume rather than dynamics around the growth units. As we are looking into the future, obviously not commenting today on 2027, but we will obviously reflect into our guidance for 2027, the various dynamics that we are seeing, being IRA with two of our product entering in 2027, and any of the dynamics around the stream for TB impact and changes including the credit rebate model implemented starting in January and also obviously some of the MFN impacts that we have following the agreement we have with the government. But as a summary, the performance into Q3 is really a reflection of the strong execution rather than dynamics around growth to net that would not continue.

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

Our next question comes from Umar Rafat with Evercore ISI. Your line is now open.

Hi, guys. Thanks for taking my question. Albert, there's clearly been a lot of progress on SG&A improvements over the last couple of years, and I acknowledge that. It's not step function, but there's been improvement. But then I recall Dave, before he moved on, had mentioned That majority of the total net cost savings of $7.2 billion will be delivered by the end of 26. So when I look now back at the Pfizer PNL, I'm seeing SGN and R&D was about $24.5 billion back in 2022. It's about the same in 2026 as well. And I acknowledge R&D has gone up a bit, SGN has come back a bit, but the broader dynamics on OPEX are still broadly in that $24 to $25 billion camp. And I guess, how do you think about that heading into The dividend integrity, the cost lever heading into patent expiries. Thank you.

Cecil, why don't you take this question?

Yes, so as I mentioned earlier, we are on track to delivering the $7.2 billion of savings that we had implemented as part of our first phase of the cost improvement programs. Those savings were in different places. There's one in our manufacturing footprint or cost Two in R&D but reinvested and we are indeed increasing our R&D investment in order to support the pipeline product and programs that we have in addition to obviously the acquisition that we made and then on the SINA side mostly coming from the commercial and marketing expenses as well as ESG&S. So what we are seeing today in our operating expenses and I wouldn't relate to just the third quarter which had some one-time dynamics that drove the SINA up. We are still expecting based on guidance to see a decline in SINA versus last year. So that's the first piece that I would say. Going forward, we have announced our second phase of the program with a $2.5 billion of savings, both in SG&A and in our cost of manufacturing. Those will translate into savings. So we are expecting to see those translating and mitigating the margin erosion as part of the LOE transition in 2027 to 2029.

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

We'll go next to Akash Tiwari with Jefferies. Your line is now open.

Hey, thanks so much. Just a couple. I know in the spring you had a kind of 45-50 patient biomarker analysis on your STAT6. and you were going to make a decision on whether to go from stage one to stage two. Is there an update on that program? And really, how do you think about tarp reduction and biomarker reduction to what we've seen with some of the degraders? And then on your GLT-1 amlin, I think your phase one, two, you just updated on ClinTrials to 201 patients. I think it was originally planned to be closer to 400. Any color on what drove that decision with the Amlin GLT-1 combo with Mathsera. Thank you.

Chris, both questions go to you.

Okay, thank you very much. So the first is on STAT6, potentially first-in-class oral STAT6 programs. Thanks for the question. This is an area very important for us, for the INI portfolio. As we previously stated, we've adapted the program to incorporate some additional DDI studies, so we should give you a readout for the STAT6 later this year. Regarding the Amelin, and Vera Benetide. As I stated earlier, the SOLACE-1 study is fully recruited. That study is for efficacy reading out end of next year. And the PHASE-1 2A study was adapted for the additional PK studies we are doing. But there's nothing really, nothing material changed in the trial.

Thank you. Next question, please.

We'll go next to Ramal Dhawan with Guggenheim. Your line is now open.

Great. Thanks for taking my questions. Again, maybe on the pipeline. One, we noticed that you posted a new phase one trial for your PI3K inhibitor on CT.gov last week. Heard what you said around a termocycloid in your Cat6. Curious if you can maybe just talk about how you see that asset sort of fitting into your broader breast cancer strategy. And then the other question may be coming from Esmo. We saw the Volga data, the AstraZeneca release that could suggest maybe less need for the use of fewer cycles of PADSEV in patients with bladder cancer. Curious if you have any reactions to that data set or how it might impact how you think the use of PADSEV may play out in the future.

Yes, so firstly on the PI3K, we started to face one study on an internally discovered PIK3CA inhibitor, a reminder that Geratolacep with Salkuity is also Pfizer-discovered medicine. We have an ongoing clinical trial with Relay with their PIK3CA alpha pan-alpha isoform-selected inhibitor called Zovigalesev. And the advantage, also in combination with termocyclib, the advantage of termocyclib is we do not see DDIs, which has been experienced with all the other CDK4-6 inhibitors, combining with the PIK3-CI. So it's a potentially significant advantage. To your point, up to 40% of breast cancer, ER-positive breast cancer, up to 20-25% of two positive breast cancer will harbor a PIK3-CI mutation. So it's an important area for us. The second question was on the bulk of data, just I'll start briefly. Firstly, this reinforces the use of PADCF for muscle invasive bladder cancer. It reinforces the use of PADCF in combination with the PD-1 for muscle invasive bladder cancer. It also reinforces the confidence we have in the study we've just started, 309, which is bladder sparing PADCF, PEMBRO, Fendralizumab in a bladder sparing setting, as well as the ongoing planned phase three trial with Padslip plus Cubonetamib, which should also start later this year. I just want to remind on the Volga study, this was a no cisplatin eligible population. Patological complete remission was lower than what we've seen with Pembro plus Patset, which is important, including slightly lower event-free survival. And most importantly, this is a curative incentive setting, so we're not clear yet which patients can be de-escalated. So that's important for physicians. Who can you actually give less therapy to? Thank you.

Thank you very much. Next question, please.

We'll go next to Evan Siegerman with BMO Capital Markets. Your line is now open.

Hi, guys. Hi, guys. Thank you so much for taking my question. Cecile, so as you inherit the capital allocation framework kind of established by your predecessor, how do you think about the marginal dollars that you can kind of invest from here between internal R&D and other bolt-on you talked about, BD capacity, deleveraging, and eventually restarting buybacks? Where do you currently see the highest prospective return for shareholders? Yes, Cecile.

Thanks, Evan. Our priorities are clear and they are not changing versus what was in place. I think we have a solid plan to get us through LOE and post-LOE. So our priorities, invest for growth, maintain or grow our dividend over time, and then keep a strong balance. So through the LOE period, our operating cash flow, financial asset and access to capital market will give us the ability to continue to invest and maintain the dividend. As we go post-AOE period, our operating cash flow grows with the levers, and we have other options to continue to increase shareholder value. And in that situation, share repurchases become, again, one of the levers that we have in order to be able to continue and enhance that shareholder value.

Thank you very much. Next question, please.

We'll go next to Steve Scala with TD Cowen. Please go ahead.

Oh, thank you. Two questions. Given the push out of MevPro1, were there any changes to MevPro2 and 3 timelines? So that's the first question. Second question is for Cecile. So you started at Pfizer when Warner Lambert was being consolidated, have been through the acquisitions of Pharmacia, Wyeth, and Cgen, and many BD deals, including that for Eliquis. I think it could be argued that Pfizer's most successful products have come through deals. And in each of those years, as it is now, Pfizer viewed its pipeline as very good. So given this history, why doesn't Pfizer make another big deal its primary focus? Or would you say that the pipeline is significantly better now than at any time in the last 25 years? Thank you.

Good question. Cecile, what do you think?

Thank you. And just for the record, I came with WIUS and I don't have the history on all the deals, but I think WIUS was one of the best acquisitions that we did. And I've seen since then a transformation of Pfizer and a strengthening definitely of our pipeline over the last 25 years. So what I would say is in terms of our priorities, right? So we have, as Albert reiterated earlier, we have invested very significantly over the past few years in key transaction and key acquisition that are today already kind of like a driving success. We're talking about PADSEC, we're talking about NARTEC, and we see a lot of opportunities that still remains in the pipeline, in CGEN, in MATSERA. So where we have a lot to execute both commercially and on the NARTEC side and on the commercial side. So really, as we look about, as we look at BD going forward, and considering our capital allocation priorities, Our focus is really on more bolt-on acquisitions that are going to complement the large and rich portfolios that we have in the four therapeutic areas that we are having. So looking at a BD acquisition is obviously strategically aligned, building upon our expertise, and then obviously providing the financial returns, appropriate returns that we would be expecting.

Thank you, Cecil. Chris, you want to comment a little bit on the timelines of Mephro and given the interest on the product, maybe Aamir also you say a few things about the potential.

Thank you very much. I'll be brief. Since we last spoke about it, the timelines have been updated for Mephro 1 and Mephro 2. A reminder, these are bent So it's based on when we expect events to happen. So MEPHRO 1 will now read out Q1 2027 and MEPHRO 2 Q3 2027. And as you've seen at ESMA, we've got additional data, including compelling 8.9 months PFS. Just to correct, MEVRO 2 is actually Q4 2027, the updated in clinicaltrials.gov. Thank you.

And I think MEVRO 1 you expect around February. Around February, correct. This is the projections right now based on the way that events are accruing. And Aamir, why are we so excited about MEVRO in terms of the commercial opportunities?

I think three things are probably why we're excited. One, I would just remind everybody that our current commercial footprint is anchored in the U.S. alongside Astellas. But Mevro for us is a fully global opportunity in the U.S. and outside the U.S. So that is very significant and exciting. Second, as Chris mentioned, Mevro 2 and 3, across Mevro 1, 2, and 3, I think we have the potential to position Mevro as a multi-indication franchise. So that gives us lots of surface area to compete in. And finally, if we just think of the total patient populations, we're talking about over 50,000 in the US, close to 50,000 in the EU, foreign UK, another 14,000 in Japan, and 30% of that population could be addressed even with Mevro1. So there's a significant patient population A global opportunity and clearly an area that we have deep commercial expertise. Those are the things that get us excited about it.

Thank you, Aamir. And, you know, sometimes people forget that extended, which is one of our very big and strong products, we basically have half of the extended in the US and that's it. Here we are going to have the whole US and the whole global international market. Next question, please.

We'll go next to Jeff Meacham with Citibank. Please go ahead.

Great morning, everyone. Thanks so much for the question. Just to add to the first bigger picture, Albert, from a policy perspective, I know obviously hard to have certainty on, especially given today. But as you look to 2027, you know, what are your thoughts on the potential risks of changes to MSN or perhaps greater scrutiny on the prior OUS agreements? and the second question for Chris on vera-benetide. And you guys have studied, have started a lot of studies across metabolic indications and beyond obesity, diabetes. I want to get your thoughts on expanding vera-benetide as a combo strategy into inflammation or neuropsych or even oncology, for example. Obviously, the science is really evolving here on the GLP-1 synergies. Thank you.

And really, thank you, Jeff. On the Policy perspectives. Clearly, policy affects a lot our industry and we are monitoring it very carefully. We are waiting to see what will happen today in the elections. But I think that in any case, it looks like we will have a split government. So I don't think that many things can move legislation wise. I don't expect any changes in MFN. I think the agreements are signed and are going until the end of the term of this government. And I expect that there will be a renewed interest in the Congress to investigate several things. But I don't expect policy changes, frankly. It's a very big contrast with what I was telling you a year ago. In 2025, I was really scared about the implications that either tariffs or MFN could have. I think through the successful navigation of those issues, we brought the stability that it is now projected to last and has brought, I think, this confidence back to the investors to invest in the industry in our sector. Now, with that, I will turn it to Chris to comment on the GLP-1 and other things.

Yeah, I'll just quickly start. So our goal is initially to establish verbenotide as a potentially best-in-class monthly subcutaneous GLP-1 for obesity, and this is globally. We are starting, as you've seen, additional studies now for knee osteoarthritis as well as for obstructive sleep apnea with or without PAP. and we also will announce additional Phase 3 studies in the coming months. In 2027, you're absolutely correct, we hope to announce some additional studies looking at the backbone of our portfolio including ionite, potential in oncology, you're right, this is an interesting area, and you'll also see the acceleration of Phase 1 programs and current programs that's pre-clinically that's highly differentiated in this space. Thank you.

Very good. Next question, please.

We'll go next to Alex Hammett with Wolf Research. Your line is open.

Thank you. Two from me. So as you look at Cywin BioSense's GLP-1 launch in China, how are both the obesity and the diabetes markets playing out so far? And how is that shaping your thoughts on the commercial opportunity for barobinotide OUS? And then on the line to these vaccines, can you update us on the regulatory path forward following the recent submission in Europe? How are your discussions with FDA progressing? And are there any meaningful differences between the FDA and EMA? Thank you.

I'm not sure I understood the second question? Lyme disease. Lyme vaccine. Ah, the Lyme vaccine. Okay. Yes. So, Alexander, thank you, Alex, very much. Alexander, maybe you speak a little bit about our GLP-1 in China and what you expect from it.

That's right. So, thanks for the question. As you said, Alex, we've introduced Echinoblutide in China at the end of April of this year, and we are satisfied with the way we are progressing. We're learning a lot through the launch of Echinoblutide in China. And the things that we are clearly The understanding is there are very different segments within this overall chronic weight management categories with patients that are all qualifying for the definition of chronic weight management, but some of them have more an aesthetic-driven purpose with a very different profile of product that they will be looking. And their way of acquiring this product is actually very different than the way on the other opposite direction, which are very heavy people looking for much more efficacy, tolerability, It becomes a second point point. And so clearly what we are learning is it's confirming our strategy that if we want to be successful in quality point management, we need to have a portfolio. And you need to have a portfolio also because you will need to activate all those different channels and the cost of activations of those channels will be advertised across the portfolio. So those are very, very key confirmation of our strategy. Now, specifically to ignoblitides, as you know, We also understood from the get-go that to be successful in chronic weight management in China in particular, you need two things. Of course, you need a good profile, and we have a very competitive profile, but you also need to have type 2 diabetes because it's opened up the hospital channel, but it's also opened up for local regulations, the e-commerce channels. I'm very happy to say that since the end of October, we actually got the approval of our type 2 diabetes, which opened up that channel. Second thing, our competitors have also access to reimbursements, and this is very important to compete effectively. And so I'm also very happy to report that since June, we passed the NRDL committees, and now we're expecting the final review by the end of this month, so that hopefully we can introduce our products into the overall hospital reimbursement system. The combination of those two things will really be the start of penetration of the market. Thank you.

And from my perspective, it's fascinating to see how the commercial model around the obesity is so different then anything else and for us reminds us really the times of the Viagra loans because there are a lot of similarities people are willing to pay out of pocket for products that they value irrelevant if they are reimbursed or not that creates dramatically different size in the international markets the second was that because of the consumer nature of this launch the e-commerce and the internet as it happened with Viagra that was the first product that was available basically on internet plays a key role and of course we are pretty much into that space already rather than if we haven't already launched an obesity product because our vaccines and our Pax Clovit and our migraine products, they are really having significant channel through the Pfizer for all, which is our consumer, let's say, web port to the website. So I think we are learning a lot right now in China after we have learned a lot in our biography. And to add another dimension, AI is changing. The way that promotions are happening right now, and not only at the physician's level, actually even more importantly at the patient's level. So we are learning a lot and we are very happy that we are entering this market because I think it is cut for our capabilities. With that, I will ask Chris to comment on the Lyme disease.

Thank you for the question. We all know Lyme disease incidence is now, the burden of the disease is increasing globally. The EMA has validated the MAA for Pfizer and Valneva's Lyme disease vaccine candidate. With the validation, the CHMP will now begin its assessment of the MAA and the CHMP CHMP is expected to issue an opinion on marketing authorisation 2027. We've also now filed in Canada and we continue our discussions with the FDA and should provide an update regarding this in Q4 this year. Thank you.

Alexander, any comments here? Yeah, no, I think it's a very exciting opportunity just to remind you that we already have an FSME franchise in Europe. And we know how to activate tick-borne populations in those endemic areas because we have a sales force, we have a commercial play with pharmacies. And so we are very excited with the opportunity. The level of awareness of the population is significantly higher than what we have in FSME. So as we have built these muscles commercially, once we have the approval, we're very much looking forward for the opportunity to commercialize this vaccine.

Yeah, and the awareness of the disease, of course, in the U.S., it's skyrocketing right now because we do have an increase of severity and incidence. So we are looking forward to concluding the discussion with FDA and submitting our file. Let's go to the next question, please.

Our next question comes from Michael Yee with UBS. Please go ahead.

Great, thanks. Maybe two quick pipeline questions for Chris. On NevPro, you guys continue to be pretty bullish. I know there was a formulation change to lower the Cmax and improve the tolerability. Maybe you could comment on how you feel about dropouts and the change in formulation to drive your effect. And then to recommend your tri-specific, again, something you're pretty bullish on, can you just comment on neutralizing antibodies or ADAS, things that can be tricky for bispecifics and trispecifics and how you feel about that.

Thank you. Thank you very much. On the first question on meprometastat, As you pointed out, we did, for the Phase 3 study, adapted to have a more tolerable dose with food, where we decreased the Cmax, but similar IUC to what we've seen in Phase 1. So we're very confident in the PK data and the dose that was selected for the Phase 3 study. So, regarding Tilrigamic, we have not seen functional neutralizing antibodies or functional ADAs thus far. You're absolutely correct, for any bispecific or trispecific, that's a long-term risk. But so far, we haven't seen anything impacting efficacy. And in fact, longer-term follow-up on the studies we've previously demonstrated or showed, show us that we do not have an impact on efficacy. So, so far, so good.

Very good. Let's keep it that way if you can. Next question, please.

Our final question today comes from Asad Haider with Goldman Sachs. Your line is now open.

Great. Thanks for taking the question and congrats on the quarter, Cecile, and also many congrats and best of luck to you. A couple for you. First, just on 2027, appreciate the context provided earlier on price dynamics. with respect to IRA and 340B, et cetera. But just any additional high-level qualitative framing on other pushes and pulls next year to be aware of ahead of formal guidance, and how should we be thinking about your guidance philosophy relative to Dave's broadly speaking? And then looking at longer term, you are reiterating line of sight to high single-digit revenue CAGR towards the end of the decade off of a 2028 base, as well as citing operating leverage and margin expansion given the cost realignment initiatives. But consensus numbers are not ready for modeling that. There does seem to be a disconnect on both revenue and the earnings lines versus your own expectations. So as you examined street forecasts, what are the key assumptions that you think are getting most mismodeled in the P&L relative to your own internal expectations as you look out towards that period? Thank you.

Cecil, please make the comments on both.

So thanks, Asad, for your question and also for your good wishes. So, we'll provide 2027 guidance around middle of December like we did last year. So, I will only for now provide high-level key drivers that we are seeing in 2027. This one obviously is the LOE impact, not only in the U.S. with hybrids and Xtendi and some other products, but also in international where we are seeing Eliquis being LOE at the end of 2026. The other thing that I would say is obviously offsetting that is the ramp up of our launch and acquired portfolio, which again, as you have seen, is having a very strong performance opportunity for growth. And then obviously pricing and including MF and NRA, which we will reflect in our guidance. And then on our cost initiative program that will allow us to continue to one, Invest towards the growth drivers that we have on the SINA marketing and commercial space and then increase the productivity and deliver savings both on the commercial spend and as well on the general and administrative spend. So that's kind of like the key trends for 2027, but again, more to come as we release guidance later in the year. As it relates to our high single digit growth aspiration, versus The Street. is if you look at where that difference is coming from, it's not really coming from one place on one product, and so is our growth trajectory either. So what we are seeing as a building block for our growth trajectory, obviously one is a continued growth of our new and acquired product, not only because the market is still growing, our penetration is still increasing, but also on top of it, we are bringing new indications onto those products in order to be able to continue to address more patients and grow our presence on the market. The second thing is on the pipeline. So while there are some obvious products that are making a key difference in our view versus the street view, obesity being one, some of the oncology products being one, what I will say is our growth trajectory doesn't rely on one single product or one single therapeutic area. We have a broad portfolio of products several phase three ongoing as well as upcoming catalyst over the 18 to 24 months which should give confidence to the outside world also to see the opportunities that we are having in bringing breakthrough to patients in significant area of unmetness.

Thank you, Cecile. And I would add that me as a CEO, when I see the difference between our internal projections and the street projections, that, of course, creates to me the urgency to check our assumptions, to make sure that in light of different opinions from the analysts, we are correct or not. So we have done that repeatedly. and we came to the conclusion that we tell you that we expect to have a high single digit from 28 to 33 and we know very well where are the discrepancies between the the products and as Cecile said there are not only on the pipeline which many analysts they do not cover so you have the phenomenon that from 12-13 analysts that are forming the overall performance of year 2031 For some products, only five analysts, they have this one and the others they don't. So that's, this is something that is expected in pipeline. But we see also very big discrepancies in already launched new products that there's big difference. I will mention two as just examples that I think people need to reevaluate their assessment. One, it is regarding Noether. that we are already close to two billion dollars this way if you analyze it and the street has us almost two and a half by year 2030. So I think there is a discrepancy there. I will also mention another example of the Rexfield where for a competing product the street is forecasting five billions and for us 600 millions. We aspire to present a profile that is very similar in efficacy and better in tolerability and in side effects. Now, remains to be proven, but I don't think the 600 million will be 5 billion. It is justifiable, even with the current information. So I think that as more information is coming for our pipeline and readouts. I think as more information is coming for the performance, actually, of the new products, and that includes new launches and acquired products, I think the street probably will start adjusting their numbers and there will be a conversion post-election. But with that, I think that we come to the end of our call. I want to say that I'm very proud of our performance through the third quarter and the execution. And my thanks goes to my Pfizer colleagues. As I visit with our people, and I do that in our labs and in manufacturing sites and in markets across the world, I see a team with tremendous talent, dedication, striving for breakthroughs that change patients' lives. We look forward to sharing additional updates about our progress and thank you for joining our call today and thank you for your interesting advice.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.