Pfizer Reports First-Quarter 2022 Results

• First-Quarter 2022 Revenues of $25.7 Billion, Reflecting 82% Operational Growth; Excluding Contributions from Comirnaty⁽¹⁾ and Paxlovid, Revenues Increased 2% Operationally
• First-Quarter 2022 Reported Diluted EPS⁽²⁾ of $1.37 and Adjusted Diluted EPS⁽³⁾ of $1.62
  • Both Reported⁽²⁾ and Adjusted⁽³⁾ Diluted EPS Include a $0.05 Negative Impact for Acquired In-Process R&D Expenses⁽⁴⁾, Which Prior to First-Quarter 2022 Had Largely Been Excluded From Adjusted⁽³⁾ Results
• Reaffirms Full-Year 2022 Financial Guidance⁽⁴⁾ for Revenues of $98.0 to $102.0 Billion, Which Includes Operational Increases Offset by Approximately $2 Billion of Negative Foreign Exchange Impacts
  • Reaffirms 2022 Revenue Guidance for Comirnaty⁽¹⁾ of Approximately $32 Billion, Despite a ~$1 Billion Unfavorable Impact from Foreign Exchange
  • Reaffirms 2022 Revenue Guidance for Paxlovid of Approximately $22 Billion, Despite a ~$0.5 Billion Unfavorable Impact from Foreign Exchange
• Full-Year 2022 Financial Guidance⁽⁴⁾ for Adjusted Diluted EPS⁽³⁾ Revised to a Range of $6.25 to $6.45 Solely to Reflect an $0.11 Negative Impact for an Accounting Policy Change to Include All Acquired In-Process R&D Expenses⁽⁴⁾ in Adjusted⁽³⁾ Results
  • Operational Increases Offset the Additional Negative Impact of $0.11 Due to Unfavorable Foreign Exchange
• Provides Updates and New Data for Select Clinical Programs Related to COVID-19, Inflammation & Immunology, Vaccines, Oncology and Rare Disease on Analyst Conference Call

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

The first-quarter 2022 earnings presentation and accompanying prepared remarks from management as well as the quarterly update to Pfizer’s R&D pipeline can be found on the Pfizer website.

EXECUTIVE COMMENTARY

Dr. Albert Bourla, Chairman and Chief Executive Officer, stated: “I am very proud of our performance this quarter, both from a financial perspective and from the standpoint of trying to be a force for good in the world. We continue to supply the world with Comirnaty, which remains a critical tool for helping patients and societies avoid the worst impacts of the COVID-19 pandemic, and we are on track to fulfill our commitment to deliver at least 2 billion doses to low- and middle-income countries in 2021 and 2022, including at least 1 billion doses this year. In addition, we are delivering on our production commitments for Paxlovid, which is already having a profound impact on the lives of patients. In response to the devastating war in Ukraine, and as a company that is dedicated to promoting human health, we have chosen to continue to supply the people of Russia with the medications they need, and are donating all profits from our Russian subsidiary to humanitarian efforts in Ukraine. We will continue to do all we can to support the health of all people, which is in line with our purpose: Breakthroughs that change patients’ lives.”

Frank D’Amelio, Chief Financial Officer and Executive Vice President, stated: “I am pleased to report another solid quarter for the company, highlighted by 82% operational revenue growth overall and 2% operational growth excluding Comirnaty and Paxlovid. Operational growth this quarter excluding these COVID-19 products would have been 5% if not for a 2% negative impact from losses of patent exclusivity for certain products and a 1% negative impact from fewer selling days this quarter compared to the prior-year quarter. We also entered the open market to repurchase shares of our stock for the first time since 2019. We will continue to thoughtfully deploy our capital in a variety of shareholder-friendly ways with the goal of maximizing the value we provide to all of our stakeholders, including patients and shareholders.”

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

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Beginning in the first quarter of 2022, Adjusted⁽³⁾ financial measures include expenses for all acquired in-process research and development (IPR&D) costs incurred in connection with upfront and milestone payments on collaboration and in-license agreements, including premiums on equity securities, as well as asset acquisitions of acquired IPR&D. Previously, certain of these items were excluded from Adjusted⁽³⁾ results. The change to include all acquired IPR&D expenses negatively impacted Adjusted⁽³⁾ diluted EPS by $0.05 in first-quarter 2022 and had no impact on Adjusted⁽³⁾ diluted EPS in first-quarter 2021. In connection with this change, acquired IPR&D expenses are now reported as a separate income statement line item and will equally impact both Reported⁽²⁾ and Adjusted⁽³⁾ results. These costs were previously recorded within the R&D expenses line item. Prior period amounts have been revised to conform to the current period presentation.

Also in the first quarter of 2022, Pfizer implemented a change in policy to exclude all amortization of intangibles from Adjusted⁽³⁾ income, which favorably impacted Adjusted⁽³⁾ diluted EPS by $0.01 in first-quarter 2022 and by $0.02 in first-quarter 2021. Prior period amounts have been revised to conform to the current period presentation.

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

2022 FINANCIAL GUIDANCE⁽⁴⁾

Pfizer’s 2022 financial guidance is presented below. This guidance includes management’s expectations for contributions from the entire company, including Comirnaty⁽¹⁾ and Paxlovid. It also includes for the first time a new line item for acquired IPR&D expenses which, beginning in first-quarter 2022, are fully included within Adjusted⁽³⁾ results for all periods presented.

The guidance range for revenues remains unchanged and represents 27% operational growth from 2021 revenues at the midpoint. In addition, this guidance includes the following reaffirmed assumptions for Pfizer’s COVID-19-related products:

• Comirnaty⁽¹⁾ revenues of approximately $32 billion, which reflects anticipated operational increases offset by an unfavorable impact from foreign exchange of approximately $1 billion. This guidance includes doses expected to be delivered in fiscal 2022⁽⁵⁾ under contracts signed as of mid-April 2022.
• Paxlovid revenues of approximately $22 billion, which reflects anticipated operational increases offset by an unfavorable impact from foreign exchange of approximately $0.5 billion. This guidance includes treatment courses expected to be delivered in fiscal 2022⁽⁵⁾, primarily relating to supply contracts signed or committed as of mid-April 2022.

Guidance for Adjusted⁽³⁾ R&D expenses is being increased as a result of planned incremental investments in COVID-19-related vaccine and anti-viral life-cycle management programs as well as various other projects. In addition, a new line item has been added to financial guidance for acquired IPR&D expenses, which will now be fully included within Adjusted⁽³⁾ results.

The midpoint of the guidance range for Adjusted diluted EPS⁽³⁾ reflects a 61% operational increase over the 2021 Adjusted diluted EPS⁽³⁾ of $4.06, which has been revised from its original presentation to exclude all amortization of intangibles and to include the impact of all acquired IPR&D expenses.

The following table illustrates the main drivers of updates to financial guidance for revenues and Adjusted diluted EPS⁽³⁾ since the previous guidance update on February 8, 2022:

Financial guidance for Adjusted diluted EPS⁽³⁾ is calculated using approximately 5.75 billion weighted average shares outstanding, and assumes no additional share repurchases in 2022. The expected increase in weighted average shares outstanding compared to 2021 of approximately 50 million shares has an unfavorable impact on 2022 Adjusted diluted EPS⁽³⁾ of $0.04 at the midpoint of the guidance range.

CAPITAL ALLOCATION

• During the first three months of 2022, Pfizer returned $4.2 billion directly to shareholders through a combination of:
  • $2.2 billion of cash dividends, or $0.40 per share of common stock, and
  • $2.0 billion, which was used to repurchase 39.1 million shares on the open market in March 2022, at an average cost of $51.10 per share.
• As of May 3, 2022, Pfizer’s remaining share repurchase authorization is $3.3 billion. Current financial guidance does not anticipate any additional share repurchases in 2022.
• First-quarter 2022 diluted weighted-average shares outstanding used to calculate Reported⁽²⁾ and Adjusted⁽³⁾ diluted EPS was 5,758 million shares, an increase of 96 million shares, primarily due to shares issued for employee compensation programs, partially offset by the weighted average impact of shares repurchased in the period, which resulted in a $0.02 reduction to Reported⁽²⁾ and a $0.03 reduction to Adjusted⁽³⁾ diluted EPS compared to the prior-year quarter.

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

First-quarter 2022 revenues totaled $25.7 billion, an increase of $11.1 billion, or 77%, compared to the prior-year quarter, reflecting operational growth of $11.9 billion, or 82%, as well as an unfavorable impact of foreign exchange of $778 million, or 5%.

Compared to the prior-year quarter, first-quarter 2022 revenue growth was unfavorably impacted by approximately $200 million as a result of having one fewer selling day in the U.S. and one fewer selling day in international markets. This unfavorable impact is expected to reverse in the fourth quarter of 2022.

First-quarter 2022 operational growth was primarily driven by:

• Comirnaty⁽¹⁾ globally, which grew $10.2 billion operationally to $13.2 billion in direct sales and alliance revenues, driven by global uptake including pediatric and booster doses, following a growing number of regulatory approvals and temporary authorizations;
• Paxlovid, which contributed $1.5 billion in global sales, driven by the U.S. launch in December 2021 and international launches in late 2021 and early 2022 following regulatory approvals or temporary authorizations;
• Prevnar family (Prevnar/Prevenar 13 & 20) in the U.S., up 59%, driven by strong retail and wholesaler stocking of Prevnar 20 for the adult indication and favorable timing of government purchases of Prevnar 13 for the pediatric indication;
• Eliquis globally, up 12% operationally, driven primarily by continued oral anti-coagulant adoption and market share gains in non-valvular atrial fibrillation, partially offset by the non-recurrence of an $80 million favorable adjustment related to the Medicare “coverage gap” provision recorded in first-quarter 2021;
• Vyndaqel/Vyndamax globally, up 41% operationally, primarily driven by continued strong uptake of the transthyretin amyloid cardiomyopathy indication in developed Europe, the U.S. and Japan;
• Oncology biosimilars, which grew 35% operationally to $464 million, primarily driven by strong U.S. growth of Zirabev (bevacizumab-bvzr), Ruxience (rituximab-pvvr) and Retacrit (epoetin alfa-epbx); and
• Ibrance outside the U.S., up 12% operationally, driven by accelerating demand as the delays in diagnosis and treatment initiations caused by the COVID-19 pandemic show signs of recovery across several international markets,

partially offset primarily by lower revenues for:

• Chantix globally, down 99% operationally, which continues to be negatively impacted by a global pause in shipments of Chantix due to the presence of N-nitroso-varenicline above an acceptable level of intake set by various global regulators, the ultimate timing for resolution of which may vary by country;
• Xeljanz globally, down 29% operationally, driven primarily by decreased prescription volumes globally resulting from ongoing shifts in prescribing patterns related to Janus kinase (JAK) class label changes and, to a lesser extent, unfavorable wholesaler inventory buying patterns and declines in net price in the U.S. due to unfavorable changes in channel mix; and
• Ibrance in the U.S., down 5%, due primarily to an increase in the proportion of patients accessing Ibrance through Pfizer’s Patient Assistance Program compared to the prior-year quarter, despite total demand for Ibrance in first-quarter 2022 matching all-time highs and its continued market leadership within the growing CDK 4/6 class.

^{* Indicates calculation not meaningful.}

First-quarter 2022 Cost of Sales⁽²⁾ as a percentage of revenues increased 10.3 percentage points compared with the prior-year quarter. The drivers for the increase include, among other things:

• an increase of approximately 14 percentage points associated with sales of Comirnaty⁽¹⁾, which includes a charge for the 50% gross profit split with BioNTech and applicable royalty expenses,

partially offset by:

• net favorable changes in the sales mix of other products, including the impact of Paxlovid and higher alliance revenues; and
• favorable impacts resulting from changes in foreign exchange rates.

SI&A Expenses⁽²⁾ decreased 5% operationally in first-quarter 2022 compared with the prior-year quarter, reflecting, among other things:

• lower spending within Pfizer’s corporate enabling functions;
• a decrease in deferred compensation savings plan expenses; and
• lower spending within Pfizer’s Biopharmaceuticals segment, excluding COVID-19-related products,

partially offset by:

• increased spending on Paxlovid and Comirnaty.

First-quarter 2022 R&D Expenses⁽²⁾ increased 16% operationally compared with the prior-year quarter, primarily driven by increased investments across multiple late-stage clinical programs, as well as additional spending on programs to prevent and treat COVID-19.

Acquired IPR&D Expenses⁽²⁾ are being disclosed separately from other R&D expenses beginning this quarter. The increase in acquired IPR&D Expenses⁽²⁾ compared to the prior-year quarter was driven by an upfront cash payment and a premium paid on an equity investment in connection with Pfizer’s collaboration agreement with Biohaven Pharmaceutical Holding Company Ltd. (Biohaven), as well as a premium paid on an equity investment associated with Pfizer’s collaboration agreement with BioNTech to develop a potential mRNA vaccine against shingles.

Pfizer recorded $350 million of other deductions––net⁽²⁾ in first-quarter 2022 compared with $1.0 billion of other income––net⁽²⁾ in first-quarter 2021. The period-over-period change was primarily driven by:

• net losses on equity securities in first-quarter 2022 versus net gains on equity securities recognized in the prior-year quarter; and
• lower income from collaborations and outlicensing agreements in first-quarter 2022 compared to first-quarter 2021.

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

^{* Indicates calculation not meaningful.}

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

RECENT NOTABLE DEVELOPMENTS (Since February 8, 2022)

Product Developments

• Abrilada (adalimumab-afzb) -- In February 2022, Pfizer announced that the U.S. Food and Drug Administration (FDA) accepted for review the Prior Approval Supplement (PAS) to the Biologics License Application (BLA) for Abrilada as an interchangeable biosimilar to Humira⁽⁹⁾ (adalimumab). The Biosimilar User Fee Act (BsUFA) goal date for an FDA decision is in fourth-quarter 2022. Pfizer currently plans to launch Abrilada in the U.S. as early as July 2023 in accordance with the terms of its agreement with AbbVie Inc.
• Comirnaty (BNT162b2, COVID-19 vaccine, mRNA)
  • Clinical and Research Developments
    • In April 2022, Pfizer and BioNTech announced positive results from a Phase 2/3 clinical trial evaluating the safety, tolerability and immunogenicity of a 10-µg booster (third) dose of the vaccine in healthy children 5 through 11 years of age. These data demonstrate an increase in SARS-CoV-2 Omicron variant and wild-type strain neutralizing titers following a booster dose of the vaccine compared to two doses. These data reinforce the potential function of a third dose of the vaccine in maintaining high levels of protection against the virus in this age group.
  • Regulatory Developments
    • In February 2022, Pfizer and BioNTech announced plans to extend the rolling submission seeking to amend the emergency use⁽⁸⁾ authorization (EUA) for Comirnaty to include children 6 months through 4 years of age, which had been requested by the FDA. The extension is to allow the FDA time to receive updated data from the ongoing trial in this age group, which was expanded in December 2021 to include a third 3 µg dose given at least two months after the initial two-dose 3 µg series in this age group.
    • In February 2022, Pfizer and BioNTech announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) issued a positive opinion on the administration of Comirnaty as a booster dose (30 µg) at least six months after the second dose in adolescents 12 through 17 years of age. The European Commission (EC) subsequently reviewed the CHMP recommendation and granted a variation to the Conditional Marketing Authorization for this indication.
    • In March 2022, Pfizer and BioNTech announced the FDA had expanded the EUA for Comirnaty to include a second booster dose in adults ages 50 years and older who have previously received a first booster of any authorized COVID-19 vaccine. The FDA also authorized a second booster dose of Comirnaty for individuals 12 years of age and older who have been determined to have certain kinds of immunocompromise and who have received a first booster dose of any authorized COVID-19 vaccine. The additional booster is to be administered at least four months after the first booster and is the same formulation and strength as prior Comirnaty vaccine doses.
    • In April 2022, Pfizer and BioNTech announced the submission of an application to the FDA for EUA of a 10 µg booster dose of Comirnaty for children 5 through 11 years of age. The submission included data from the Phase 2/3 clinical trial in children ages 5 through 11 years who received a booster dose approximately 6 months after the second dose of the 10 µg two-dose primary series, which was authorized under EUA for this age group in October 2021.
• Lorbrena/Lorviqua (lorlatinib) -- In April 2022, Pfizer announced updated results from the Phase 3 CROWN trial, which evaluated Lorbrena (lorlatinib, available in Europe under the brand name Lorviqua) versus Xalkori (crizotinib) in people with previously untreated anaplastic lymphoma kinase (ALK)-positive advanced non-small cell lung cancer (NSCLC). In this analysis, which was conducted after a median follow-up of three years, 64% of people treated with Lorbrena were without disease progression after three years compared to 19% for people treated with Xalkori, corresponding to a 73% reduction in the rate of progression or death. Additionally, Lorbrena treatment resulted in a 92% reduction in the rate of intracranial progression compared to treatment with Xalkori, as well as a 98% reduction in the rate of intracranial progression for people without brain metastases at baseline.
• Myfembree (relugolix 40 mg, estradiol 1.0 mg and norethindrone acetate 0.5 mg) -- In April 2022, Myovant Sciences (Myovant) and Pfizer announced an update on the Supplemental New Drug Application (sNDA) for Myfembree for the management of moderate to severe pain associated with endometriosis. The FDA provided notice to the companies that it identified deficiencies that preclude discussion of labeling and/or post-marketing requirements and commitments at this time, but noted that the letter does not reflect a final decision on the pending sNDA and that the application is still under review. Myovant and Pfizer will continue to work with the FDA to determine next steps with the application.
• Ngenla (somatrogon) -- In February 2022, Pfizer and OPKO Health, Inc.

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