Steve Scala

Steve Scala questioned AstraZeneca's aggressive strategy in the highly competitive and potentially undifferentiated obesity market, asking about the underlying assumptions regarding market fundamentals, pricing, and growth, and the role of combination therapies.

Answer

Ruud Dobber, EVP, BioPharmaceuticals Business Unit, explained that the market is immature with significant room for improvement, especially with combination therapies for cardiovascular risk reduction. He highlighted international market opportunities and R&D focus on quality of weight loss (preserving lean muscle, targeting visceral fat) for next-generation anti-obesity medicines.

Steve Scala questioned AstraZeneca's aggressive pursuit of the obesity market, which he described as competitive and undifferentiated, asking what factors (e.g., improved fundamentals, pricing stabilization, resumed growth) AstraZeneca is assuming.

Answer

Ruud Dobber, EVP, BioPharmaceuticals Business Unit, AstraZeneca, explained that the obesity market is still immature with significant room for improvement, especially with combination therapies to reduce cardiovascular events. He highlighted the potential for growth in international markets and AstraZeneca's focus on research into the quality of weight loss (preserving lean muscle, attacking visceral fat) to develop next-generation anti-obesity medicines. Pascal Soriot, CEO, AstraZeneca, added that cardiometabolic issues are a major global health challenge, and the company's R&D, commercial, and manufacturing strengths position it to succeed.

Steve Scala asked if Calquence's peak sales guidance of $3 billion-$5 billion is still achievable given competitor data, its 2027 IRA negotiated price, and Imbruvica's IRA price. He also asked if Calquence's IRA price was in line with expectations.

Answer

EVP of Oncology Business Unit Dave Fredrickson stated that Calquence's IRA negotiated price will be public later this quarter. He affirmed that the 2030 ambition for Calquence (as an IRA product) and positive AMPLIFY data are consistent with expectations, noting better-than-expected volume growth in the U.S. and opportunities in frontline CLL without BTK/BCL2 combinations.

Steve Scala questioned if the upper end of Calquence's peak sales guidance ($3 billion-$5 billion) is still achievable, considering competitor data, its 2027 IRA negotiated price, and Imbruvica's IRA price. He also asked if Calquence's IRA price was in line with expectations.

Answer

EVP of Oncology Business Unit Dave Fredrickson stated that the Calquence IRA negotiated price would be made public later in the quarter. He affirmed that the peak year sales ambition for Calquence, set in 2024, already factored in its anticipated IRA status and positive Amplify data. He noted better-than-expected volume growth in the U.S. and highlighted the opportunity for Calquence in finite treatment settings for CLL.

Steve Scala sought confirmation that potential U.S. tariffs would not be material to the group and questioned if the safety profile of Enhertu in the first-line DB09 setting needs to be better than its known profile, and if it would contribute to 2025 sales.

Answer

CEO Pascal Soriot confirmed that any tariff impact would be limited and manageable within a couple of years due to the company's flexible global manufacturing network, making it not material long-term. EVP, Oncology, David Fredrickson responded that the DB09 result reflects a positive overall benefit-risk assessment, including a trend in overall survival. He noted that while the company won't promote off-label, data presentations can sometimes lead to spontaneous use ahead of approval.

Steve Scala of TD Cowen questioned the outlook for Tagrisso, asking if growth is predicated on the adjuvant setting and how it's influenced by competitor data. He also asked about the implications of the import duty assessment being made against corporate AstraZeneca in China.

Answer

David Fredrickson, EVP of Oncology, stated that Tagrisso's growth is driven by both adjuvant use and a strong first-line position, with FLAURA2 data remaining highly competitive. CEO Pascal Soriot reiterated that under Chinese law, the implication of the duty assessment is a repayment of the duty ($0.9M) plus a potential fine of 1-5 times that amount, a clearly defined consequence.

Steve Scala questioned why Eliquis is projected for double-digit growth in 2026 but a billion-dollar decline in 2027, seeking clarity on U.S. pricing dynamics and the impact of ex-U.S. patent expirations. He also asked about the P&L impact of contributing $7 billion of Eliquis API to the U.S. government.

Answer

Adam Lenkowsky, Executive Vice President and Chief Commercial Officer, explained that Eliquis's 2026 growth is driven by strong demand and U.S. price reductions eliminating inflationary penalties. The 2027 step-down is primarily due to the loss of exclusivity in Europe in November 2026, expecting rapid and steep declines similar to other small molecules ex-U.S. Chris Boerner, Board Chair and CEO, clarified that the strategic reserve contribution of Eliquis API is not a material impact on the overall business or P&L.

Steve Scala asked for clarification on why Eliquis is projected to grow double-digit in 2026 but experience a billion-dollar decline in 2027, specifically questioning if U.S. prices are expected to come down in 2027 and the impact of contributing $7 billion of Eliquis API to the U.S. government on the P&L.

Answer

Adam Lenkowsky (Executive Vice President and Chief Commercial Officer, Bristol Myers Squibb) explained that Eliquis's strong demand and the 2026 U.S. price reduction (eliminating inflationary penalties) contribute to its growth. The 2027 step down is primarily due to the loss of exclusivity in Europe in November 2026, which is expected to lead to a rapid and steep decline in ex-U.S. sales. Chris Boerner (Board Chair and CEO, Bristol Myers Squibb) clarified that the contribution of Eliquis API to the U.S. strategic reserve is not a material impact on the overall business's P&L.

Steve Scala asked if Bristol Myers Squibb had concluded its IRA negotiations for POMALYST and how the results compared to expectations, referencing GSK's recent positive comments on their own negotiations.

Answer

Chief Commercialization Officer Adam Lenkowsky stated that IRA negotiations officially conclude tomorrow and are currently being finalized. He noted that by the time the Maximum Fair Price (MSP) is effectuated in January 2027, POMALYST will have lost exclusivity in the U.S., and therefore, the negotiation outcome is not expected to impact the company's outlook. He anticipates the price will be made public by November 30th at the latest.

Steve Scala inquired about the conclusion of IRA negotiations for Pomalyst and how the results compare to expectations, referencing GSK's positive experience with their own negotiations.

Answer

Adam Lenkowsky, Chief Commercialization Officer, stated that IRA negotiations officially conclude tomorrow and are currently being finalized. He clarified that the negotiations were for pomitomig, which is expected to lose exclusivity in the U.S. by January 2027, and therefore, the outcome is not anticipated to impact the company's outlook. He expects the price to be made public by November 30th at the latest.

Steve Scala sought clarity on whether Bristol sees a potential regulatory path forward based on the existing ARISE data for Cobenfy. He also asked if the milvexian Phase III trial's enrollment benefited from a competitor's trial stoppage and why that hasn't accelerated the study's timeline.

Answer

CMO Samit Hirawat stated that the company would not speculate on a regulatory path for ARISE until a full data analysis is complete. Regarding milvexian, he noted that while enrollment for the AFib trial is complete, the event rate remains low, and the timeline has not been reprojected. He confirmed they will communicate any changes.

Steve Scala of TD Cowen asked about the profile and development plans for a second-generation TYK2 inhibitor and inquired if the Milvexian Phase III trials were tracking for a 2026 readout.

Answer

CMO Samit Hirawat stated that while the Phase I study for the backup TYK2 is complete, the company's current focus is squarely on maximizing the opportunity for Sotyktu, and the backup agent is not in development. He confirmed that for Milvexian, events and enrollment are tracking well for a readout in the latter half of 2026, with a 2025 readout not expected.

Steve Scala sought clarification on two points: whether the full-year revenue guidance increase was solely due to Revlimid, and why a lower-than-expected event rate in the milvexian trial is considered encouraging.

Answer

CFO David Elkins clarified that while the Revlimid guidance increase was a key factor, strong performance in the growth portfolio also contributed to the raised outlook. Head of Global Drug Development Samit Hirawat explained the milvexian event rate is encouraging because their blended rate is lower than planned, which is a favorable situation compared to a competitor's trial that failed due to a high event rate in the treatment arm.

Steve Scala from TD Cowen questioned if Eli Lilly's 2026 revenue guidance, significantly higher than 2025, could be achieved without Orforglipron becoming a $5 billion product, and if the guidance implies market expansion rather than cannibalization by oral GLP-1s.

Answer

Lucas Montarce, Chief Financial Officer, explained that the guidance is a bottom-up approach, factoring in Medicare expansion, Orforglipron launch, and continued growth in U.S. and international markets. He highlighted a low to mid-teens price erosion component for 2026. Regarding Orforglipron, he noted that competitor oral GLP-1 launch data (last 4 weeks) primarily shows market expansion, consistent with Lilly's expectations and guidance, and they will update guidance based on continued market growth. Mike Czapar, SVP of Investor Relations, directed the question.

Steve Scala asked about Lilly's 2026 revenue guidance, which is $15 billion-$20 billion higher than 2025, inquiring if these incremental sales can be achieved without Orforglipron being a $5 billion product in 2026 and if the guidance implies market expansion rather than cannibalization by oral GLP-1s.

Answer

Lucas Montarce, Chief Financial Officer, explained that the guidance is based on a bottom-up approach, factoring in Medicare expansion, Orforglipron's launch, and continued growth in U.S. and OUS markets. He noted a significant price erosion component (low to mid-teens) embedded in the 2026 guide. He emphasized that competitor oral GLP-1 launch data suggests market expansion, consistent with Lilly's expectations and guidance, rather than cannibalization.

Steve Scala questioned the status of the Trailblazer ALS3 interim analysis, noting Lilly's previous detailed comments on it, and suggested that initiating remternetug in the same setting might not be a positive sign for donanemab in Alzheimer's prevention.

Answer

Anne White, President of Lilly Neuroscience, reiterated Lilly's policy not to comment on interims but confirmed Trailblazer 3 enrollment is complete, awaiting sufficient events (ClinicalTrials.gov lists 2027, but potentially earlier). She highlighted momentum in the space, enthusiastic enrollment in the TRAILRUNNER-ALZ 3 preclinical study, and innovation with remternetug's subcutaneous dosing, emphasizing the need for awareness and simple blood tests for preclinical Alzheimer's diagnosis.

Steve Scala asked about the TRAILBLAZER-ALZ 3 interim data for donanemab in Alzheimer's prevention and whether the initiation of remternetug in the same setting signals concerns for donanemab.

Answer

Anne White, President of Lilly Neuroscience, reiterated the policy of not commenting on interims. She confirmed TRAILBLAZER-ALZ 3 enrollment completion, noting it's an event-based trial with a 2027 target. She highlighted the innovation of subcutaneous remternetug in preclinical Alzheimer's.

Steve Scala of TD Cowen noted that Lilly's description of the CVS formulary change impact shifted from 'modest' to a 'headwind,' and asked what changed in the injectable marketplace to prompt this.

Answer

Ilya Yuffa, President of Lilly USA, clarified that the commentary refers to a headwind on the *rate* of new patient growth, not overall growth, which remains healthy. He reiterated that the volume impact is still expected to be limited and pointed to strong July prescription trends as evidence of continued momentum for Zepbound across other market segments.

Steve Scala drew a parallel to Lilly's past, asking if the company used aggressive formulary positioning with Taltz against IL-17 competitors to reduce choice, and how that historical experience might inform the outlook for Zepbound's situation with CVS.

Answer

CEO David Ricks offered a different recollection, stating that with Taltz, Lilly was the follower and sought to move the market from exclusive 'one-of-one' contracts to 'two-of-two' to increase choice. He argued that payer behavior favoring exclusivity is more common with multiple players and similar clinical profiles, neither of which is true in the current obesity market. He reiterated that using payers to exclusively drive share has never been Lilly's primary strategy.

Steve Scala of TD Cowen asked if, despite the positive narrative, there have been any internal conversations questioning if the obesity market is being overestimated and if the manufacturing build-out is too aggressive.

Answer

CEO David Ricks stated emphatically that he has zero doubt more building is needed and that current capacity is insufficient to meet global demand. He characterized the current situation as early days in a massive market and said the company remains extremely bullish long-term.

Steve Scala from TD Cowen questioned the necessity of DTC advertising for Zepbound, given strong demand and prior supply issues, suggesting it might signal concerns about patient volumes or competition.

Answer

Patrik Jonsson, President of Lilly Cardiometabolic Health and Lilly USA, explained that DTC was delayed to ensure a good customer experience and is now being used to drive patient activation in a market with very low penetration. CEO David Ricks added that unaided brand awareness for Zepbound is not high, and it is time to formally introduce the brand to consumers.

Steve Scala questioned strategies to neutralize growing competition for Skyrizi in IBD and sought clarification on the 'exemption from future pricing mandates' in the drug pricing deal with President Trump.

Answer

Jeff Stewart, EVP, Chief Commercial Officer, reiterated Skyrizi's stable capture rates and leadership in IBD, highlighting strategies like an upcoming head-to-head study versus Entyvio and closing the subcutaneous induction gap in early 2027. Rob Michael, Chairman and CEO, confirmed the agreement provides exemption from tariffs and pricing mandates, including demonstration projects, balancing affordability, access, and innovation.

Steve Scala asked how AbbVie plans to neutralize the growing competition impacting Skyrizi in IBD and for clarification on the exemption from future pricing mandates in the drug pricing deal with the U.S. government.

Answer

Jeff Stewart, Executive Vice President, Chief Commercial Officer, reiterated confidence in Skyrizi's leadership in IBD, noting stable capture rates and significant growth. He highlighted an upcoming head-to-head study with Entyvio and the anticipated subcutaneous induction for Skyrizi in early 2027 as strategies to maintain momentum. Rob Michael, Chairman and Chief Executive Officer, confirmed that the agreement with the Trump administration exempts AbbVie from tariffs and pricing mandates, including demonstration projects, during its term, balancing affordability, access, and innovation.

Steve Scala asked if deeper IRA discounts would impact the 2026 outlook and why the RINVOQ Phase III HS completion date on ct.gov was updated from 2026 to 2028.

Answer

Rob Michael, Chairman and CEO, clarified that IRA prices for VRAYLAR and LINZESS will not take effect until 2027, thus having no impact on the 2026 outlook. Roopal Thakkar, Executive Vice President, Research and Development, Chief Scientific Officer, stated that the RINVOQ HS Phase III completion date update on ct.gov is likely due to changes in the duration of the open-label extension, not endpoint enrollment, with double-blinded week 16 data still expected by end of next year.

Steve Scala asked if the deeper IRA discounts this year would impact the 2026 outlook, and why the RINVOQ Phase 3 HS trial completion date was updated from 2026 to 2028.

Answer

Chairman and CEO Rob Michael clarified that IRA price negotiations for Vraylar and Linzess will not impact the 2026 outlook as prices take effect in 2027, and the long-term guidance remains unaffected. EVP, Research and Development, and CSO Roopal Thakkar explained that the RINVOQ HS trial's double-blinded week 16 data is still expected by the end of next year, with the updated completion date likely reflecting changes in the duration of open-label extension follow-up.

Steve Scala from TD Cowen asked why the current economic downturn is impacting the aesthetics business more severely than past periods and requested an update on AbbVie's anti-amyloid monoclonal antibody for Alzheimer's.

Answer

EVP & CCO Jeffrey Stewart suggested the current economic pressure is more chronic. CEO Robert Michael added that market share remains stable; the issue is market growth. EVP & CSO Roopal Thakkar discussed their next-gen Alzheimer's asset from the ALIATA acquisition, which has enhanced CNS penetration and will enter patient studies next year.

Steve Scala from TD Cowen asked about the path forward for emaracladine in schizophrenia and questioned AbbVie's strategy regarding its large manufacturing footprint in Ireland versus investing in the U.S., also inquiring about plant utilization rates.

Answer

CSO Roopal Thakkar stated that AbbVie still sees potential in emaracladine and will take a stepwise approach, starting with a dose escalation study this year to inform a potential Phase II trial. CEO Robert Michael addressed the manufacturing footprint, emphasizing that AbbVie's strategy prioritizes assurance of supply and that its largest product, Skyrizi, is made in the U.S. He reiterated the plan to invest over $10 billion in the U.S. to support volume growth and new capabilities like peptide manufacturing.

Steve Scala noted the Part D redesign headwind guidance changed from 3% to 4% and asked if IRA pricing is spilling over to the commercial market. He also asked for a specific number for the updated 2030 aesthetics guidance.

Answer

EVP & CFO Scott Reents explained the Part D headwind increased from 3% to 4% due to a business mix shift toward products with higher Part D channel exposure, not a change in understanding the mechanics. EVP & CCO Jeffrey Stewart stated they have seen no spillover of IRA pricing into commercial negotiations. Scott Reents clarified the new aesthetics guidance implies a revenue figure north of $7 billion by 2029, based on a high single-digit CAGR from the 2025 base.

Steve Scala from Cowen expressed surprise at the significant focus on Cerevel in prepared remarks ahead of the pivotal emraclidine data, asking if this signaled increased confidence in the outcome.

Answer

CEO Robert Michael clarified the focus was due to the transaction closing and positive Tavapadon Phase III data, both significant events in the quarter, and advised not to read further into it. CSO Roopal Thakkar added that Tavapadon is a major development for Parkinson's and reiterated confidence in emraclidine's competitive profile.

Steve Scala asked about the delay in the Pelacarsen Horizon trial readout, inquiring whether it stems from overestimating baseline risk or underestimating treatment effect, and if an overestimated baseline risk would question the value of lowering Lp(a).

Answer

Vasant Narasimhan, CEO of Novartis, stated that he could only offer an opinion as they are blinded to the data. He believes they appropriately estimated baseline risk, suggesting it might be more prominent at higher Lp(a) thresholds where Lp(a) becomes the dominant risk factor. He acknowledged the possibility of a larger-than-expected treatment effect but emphasized there's no way to know at this time.

Steve Scala asked for Novartis's view on the reason for the Pelacarsen Horizon trial readout delay, specifically whether it stems from overestimating baseline risk or underestimating treatment effect, and if it questions the value of lowering Lp(a).

Answer

Vasant Narasimhan, CEO of Novartis, explained that the company is completely blinded to the data, but believes they appropriately estimated baseline risk, which might be more prominent at higher Lp(a) thresholds. He speculated that Lp(a) becomes a more dominant risk factor at higher levels, and while hoping for a larger treatment effect, there's no way to confirm this at present.

Steve Scala asked about the recently announced $23 billion U.S. manufacturing expansion, questioning the timeline for completion by 2028 and why the strategic pivot didn't begin sooner. He also asked if the company's ability to manage U.S. policy changes includes Most Favored Nation (MFN) legislation.

Answer

CEO Vasant Narasimhan acknowledged the decision to expand U.S. manufacturing could have been made earlier but is now a key strategic priority to ensure supply chain stability, independent of politics. He clarified that a broad MFN policy would be 'devastating' to the industry and would force a re-evaluation of long-term outlooks, as it would effectively import European price controls.

Steve Scala asked about the purpose of the pooled analysis for Camlipixant if two positive trials are required for filing, and whether the FDA would accept a filing based on pooled data if one trial is negative. He also inquired about Shingrix sales to Zhifei in Q4 and GSK's confidence level for the drug in 2026.

Answer

Tony Wood, Chief Scientific Officer, stated that while he couldn't detail regulatory strategy, the pooled analysis provides options for both independent and pooled study approaches, expressing confidence in the outcomes for CAMEO-1 and CAMEO-2. Luke Miels, Chief Commercial Officer, confirmed Shingrix sales to Zhifei were GBP 100 million in Q4, noting improving underlying demand in China (up six times since early 2025) and a 93% market share versus Ganwei, driven by a shifted strategy. Julie Brown, CFO, confirmed the Q4 Zhifei sales figure.

Steve Scala from TD Cowen asked about Camlipixant, specifically the purpose of a pooled analysis if two positive trials are required for filing, and whether the FDA has confirmed acceptance of a filing based on pooled data if one trial is negative. He also inquired about Shingrix sales to GFA in Q4 and GSK's confidence level for the drug in 2026.

Answer

Tony Wood (Chief Scientific Officer) stated that he would not get into regulatory strategy details but confirmed that the pooled analysis provides the option to approach regulatory bodies with both independent and ultimately pooled studies, expressing confidence in the outcomes for both COM one and COM two. Luke Miels (Chief Commercial Officer) mentioned a GBP 100 million shipment of Shingrix to GFA in December, noting improving underlying demand in China (up six times since early 2025) and a 93% market share versus Ganwei, driven by a shifted strategy. He indicated more color would be provided in the Q1 update.

Steve Scala asked about Shingrix trends in China, requested a detailed update on the pneumococcal vaccine program, and questioned if the recent FDA CBER leadership change impacts the Blenrep outlook.

Answer

CEO Dame Emma Walmsley stated there was no connection between the FDA leadership change and Blenrep. CCO Luke Miels described the China Shingrix market as challenging but showing 'small green shoots.' Chief Scientific Officer Tony Wood explained that GSK is now prioritizing its 30+ valent pneumococcal vaccine, with a first-in-human study starting late this year, positioning it to be competitive towards the end of the decade.

Steve Scala of TD Cowen questioned if Nucala's exacerbation data for COPD is competitive with Dupixent and sought clarification on GSK's expectation for changes to U.S. vaccine policy, which contrasted with another company's recent statements.

Answer

CEO Emma Walmsley clarified their guidance reflects the uncertain U.S. vaccine policy environment but noted recent political commentary has been supportive of the status quo. Chief Scientific Officer Tony Wood and CCO Luke Miels positioned Nucala as the first potential biologic for the full spectrum of COPD, including difficult-to-treat emphysema patients, a broader population than that of Dupixent's trial. They stressed their intent to compete vigorously by focusing on tougher-to-treat patients and hospitalizations.

Steve Scala from TD Cowen asked about the weight change observed in the placebo arm of the VESPER-3 data and inquired if Pfizer would consider any strategies, such as settlements, to extend the life of Vyndaqel beyond its assumed patent loss in December 2028.

Answer

Dr. Albert Bourla, Chairman and CEO, Pfizer, stated that the company is currently assuming Vyndaqel's patent will be lost at the end of 2028 and declined to comment further on sensitive topics like patent strategies. Dr. Chris Boshoff, Chief Scientific Officer, Pfizer, added that the full VESPER-3 data, including placebo arm details, would be presented at ADA, but noted that the placebo arm was very stable in this study.

Steve Scala asked whether the placebo arm in the VESPER-3 data gained or lost weight, and inquired about Pfizer's strategy for VYNDAQEL beyond December 2028, specifically if any patent settlement strategies with generic companies are being considered.

Answer

CEO Albert Bourla stated that Pfizer is currently assuming patent loss for VYNDAQEL at the end of 2028 and declined to comment further on sensitive patent topics. Chief Scientific Officer Chris Boshoff noted that the placebo arm in VESPER-3 was very stable, with no significant weight gain or loss, and full data would be presented at ADA.

Steve Scala asked what the drug pricing deal with the U.S. Government allows Pfizer to do that other companies (excluding AstraZeneca) cannot. He also questioned whether Pfizer's determination to persist with the Metsera acquisition is based on substantial confidential data or merely a desire to enter the obesity market, and if Pfizer would consider walking away.

Answer

Albert Bourla, Chairman and CEO, Pfizer, stated he could not disclose confidential details of the drug pricing agreement with the administration. Regarding Metsera, he reiterated that Pfizer conducted extensive due diligence and believes the asset offers tremendous value. He characterized Novo Nordisk's competing offer as an anti-competitive attempt to 'cut and kill' an emerging competitor by evading regulatory scrutiny. Dave Denton, CFO, Pfizer, also contributed.

Steve Scala asked what unique benefits Pfizer's drug pricing deal with the U.S. government provided compared to other companies. He also questioned Pfizer's determination to pursue MedSera, asking if it was based on confidential data, a desire to enter the obesity market, or if Pfizer might reconsider its stance given perceived similarities to competitors and transparency issues.

Answer

Albert Bourla, Chairman and CEO, stated he could not disclose details of other companies' drug pricing deals due to confidentiality. Regarding MedSera, he affirmed Pfizer conducted extensive due diligence and priced the asset for significant shareholder value. He reiterated that Novo Nordisk's actions were an attempt to 'cut and kill this emerging competitor' (Pfizer) by evading antitrust scrutiny and gaining de facto control.

Steve Scala of TD Cowen asked for clarification on the implied magnitude of the MFN impact in guidance and questioned how COVID-19 expectations have changed given that revenue guidance is flat despite other positive factors.

Answer

EVP & CFO Dave Denton reiterated that the company has de-risked the COVID-19 revenue delivery for Q3 and Q4 within its guidance due to the business's inherent volatility, rather than a fundamental change in expectations. He declined to comment on the specific financial assumptions related to MFN.

Steve Scala of TD Cowen asked for clarification on the implied large financial impact from MFN in 2025 and 2026, and questioned how COVID expectations have changed given that overall revenue guidance remains flat despite strong underlying performance.

Answer

CFO Dave Denton declined to comment on specific MFN impact numbers. Regarding guidance, he explained that while internal targets for COVID remain, the revised guidance reflects a 'derisking' of the COVID performance expected in Q3 and Q4, given the inherent volatility of that business, which allows the underlying strength to flow to the EPS line.

Steve Scala questioned the likelihood of Most Favored Nation (MFN) legislation being enacted and asked about the current manufacturing capacity utilization of Pfizer's U.S. plants.

Answer

CEO Albert Bourla noted that MFN was absent from a recent executive order, which instead prioritized PBM reform, 340B reform, and lowering patient out-of-pocket costs. Regarding U.S. manufacturing, he stated that utilization is quite good and there is sufficient headroom to transfer production, particularly for injectables, without needing to build new facilities.

Steve Scala inquired about the potential outcomes for the danuglipron dose optimization study, including the possibility of discontinuing the compound, and asked new R&D head Chris Boshoff to identify areas for improvement within Pfizer's R&D system.

Answer

Chris Boshoff, an executive leading R&D, stated that data for the danuglipron study is expected in Q1 and will guide future decisions. He also explained that R&D has been refocused into four end-to-end therapeutic areas to prioritize high-value opportunities. CEO Albert Bourla added praise for the speed of these changes.

Steve Scala asked for the long-term sales outlook for COVID products based on 2024 trends and whether Pfizer's RSV vaccine booster data shows a similar drop-off in immunogenicity as GSK's vaccine.

Answer

Commercial executives and CEO Albert Bourla described the COVID business as durable and stabilizing, with PAXLOVID utilization nearly identical to the prior year. Chief Scientific Officer Mikael Dolsten stated that for the RSV vaccine, titers remain robust after two years and a booster around the three-year mark would likely be meaningful, indicating the vaccine is performing as expected for a high-quality product.

Steve Scala posed a broader question to Rob Davis regarding Merck's long-term growth trajectory, asking if the minimal top-line growth in 2025 and projected for 2026, despite Keytruda's LOE still being a few years off, is indicative of Merck's future as a modestly growing company or if sustainable strong sales growth is achievable in the decade ahead.

Answer

Rob Davis, Chairman and CEO, Merck & Co. Inc, disagreed with the characterization of Merck as a modest-growth company, pointing to the $70 billion non-risk adjusted commercial potential by the mid-2030s, which is more than double Keytruda's peak consensus. He emphasized the broad and deep pipeline, expected de-risking of assets by 2027, and additional growth from animal health and future business development. He clarified that adjusting for one-time LOE impacts (Januvia, Dificid, Bridion, Lagevrio, Koselugo), Merck's underlying strategic growth guidance for 2026 is in the 4-8% range, indicating strong sustainable growth.

Steve Scala posed a broader question about Merck's long-term growth trajectory, noting minimal top-line growth in 2025 and 2026, and asked if this modest growth should be the new expectation or if the company could achieve sustainable strong sales growth in the decade ahead despite challenges.

Answer

Rob Davis, Chairman and CEO, disagreed with the characterization of Merck as a modest-growth company, emphasizing the $70 billion potential from the pipeline, which is more than double Keytruda's peak. He highlighted the breadth of the pipeline, the de-risking of assets by 2027, and the expected growth from the animal health business. He also noted that adjusting for one-time LOE impacts, the underlying growth rate was stronger (4-7% or 5-8%).

Steve Scala from TD Cowen asked about the newly disclosed global slowdown for GARDASIL, the viability of the previous $11 billion target, and whether 2025 is still considered a trough year.

Answer

CFO Caroline Litchfield clarified the commentary reflects the end of a successful catch-up program in Japan and headwinds in China. She confirmed the $11 billion target was withdrawn last quarter due to the China situation but noted the company still expects strong double-digit growth for GARDASIL excluding China.

Steve Scala from TD Cowen asked if global GARDASIL growth is still possible in 2025 and questioned what 'will take time' for the China recovery if the company already has visibility on a $2-$3 billion sales number.

Answer

CEO Robert Davis declined to provide specific 2025 product-line guidance for global GARDASIL but reiterated confidence in 'solid overall growth' for Merck as a company. He clarified that the 'time' needed refers to the process of working down existing inventory while simultaneously building new demand, particularly for the male indication, which he expects will take through 2025.

Steve Scala questioned why Sanofi has been less forthcoming than Regeneron regarding Dupixent's life cycle extension programs and whether this reflects lower confidence. He also asked why the 'number one in new-to-brand Rx' and 'total brand share' metrics for Dupixent were omitted from the slides, speculating if it was due to competition from Ebglyss.

Answer

Brian Foard, EVP and Head of Specialty Care, apologized for the omission, confirming Dupixent remains number one in new-to-brand Rx and total brand share across all indications and specialists. He stated that Sanofi has been building an LCM strategy with the Alliance and will provide an update in the first half of the year, also mentioning ongoing collaboration with Regeneron on a next-generation IL-4Ra.

Steve Scala questioned why Sanofi has not been as forthcoming as Regeneron on Dupixent life cycle extension programs, asking if this indicates less confidence. He also asked why Dupixent's number one new-to-brand Rx and total brand share in the U.S. were omitted from the Q4 slide, inquiring if it was due to competition from Ebglyss.

Answer

Paul Hudson, CEO, and Brian Foard, EVP and Head of Specialty Care, apologized for the omission, confirming Dupixent remains number one in new-to-brand Rx and total brand share across all indications and specialists. Regarding life cycle management (LCM), they stated that Sanofi has been building an LCM strategy with the Alliance and will provide an update in the first half of this year, potentially including formulation-related developments. They also noted ongoing collaboration with Regeneron on a next-generation IL-4Ra and openness to future collaborations.

Steve Scala asked about Roche's statement regarding taking patients back from Altuvio, inquiring about the patient nature and implications for Altuvio's growth. He also questioned if tolibrutinib's SPMS approval would be limited to subgroups and what portion of the market this would represent.

Answer

Head of R&D Houman Ashrafian clarified that Sanofi has not considered subgroups for tolibrutinib's SPMS approval, noting the SPMS population is ~170,000. Head of General Medicines Brian Foard reported Altuvio's strong quarter, confirming it as the number one switched asset in hemophilia A, with 10% of switches coming from Hemlibra, and reiterated commitment to its blockbuster status this year.

Steve Scala asked about Roche taking patients back from Altuvio, the nature of these patients, and Altuvio's long-term growth outlook. He also inquired about tolibrutinib SPMS approval in subgroups, the likely subgroups, and their portion of the overall SPMS market.

Answer

Brian Foard (Head of General Medicines) reported Altuvio had another strong quarter, being the number one switched asset in hemophilia A, with two-thirds of switches from competitors and 10% from Hemlibra, and is on track for blockbuster status. Houman Ashrafian (Head of R&D) clarified that Sanofi has not entertained the notion of tolibrutinib SPMS approval in subgroups, stating the SPMS population is about 170,000, with regulatory discussions ongoing ahead of the December 28th PDUFA date.

Steve Scala from TD Cowen questioned if the TL1A asset's profile holds up in biologic-experienced patients and asked about the confidence that the FDA won't require additional data for tolebrutinib's approval.

Answer

Executive Houman Ashrafian invited attendees to the ECCO meeting for detailed TL1A data, suggesting they would be 'pleasantly surprised.' Regarding tolebrutinib, he noted the FDA encouraged the SPMS submission and that any label monitoring requirements would likely align with the Phase III protocol, which Sanofi would fully support for patient safety.

Chris, on behalf of Steve Scala, asked if the animal health sector has been granted an exemption from recently announced EU pharma tariffs and whether the overall tariff environment is impacting consumer spending on animal health.

Answer

CEO Kristin Peck stated that the tariff environment remains dynamic and it is not yet clear if animal health is included or excluded from potential tariffs in the UK or Europe. She emphasized Zoetis's resilience, noting that 60% of its global manufacturing and 75% of products sold in the U.S. are made in the U.S. She confirmed that the company's raised guidance already incorporates the impact of enacted and announced tariffs, expressing confidence in their ability to manage the costs.