The Covid-era swagger is gone. The cost cuts are mostly done. The executives are “cautiously optimistic.” And the stock is up.
On Wednesday, Pfizer stayed away from some of its bolder promises of recent years and emphasized the work it’s doing to rebound from a dismal 2023. No moment exemplified Pfizer’s cautious optimism — a phrase explicitly used by CEO Albert Bourla and other execs 11 times in the 90-minute call — more than CFO Dave Denton ruling out almost all bolt-on M&A for the near future.
Dave Denton“Our first priority and number one priority is supporting both the dividend as well as de-levering our balance sheet,” Denton said. “As it relates to bolt-on acquisitions, in the near term you would not expect us to do much there.”
At the end of last year, Pfizer announced a $3.5 billion cost-cutting program that has led to layoffs across the company. Those reductions are now “largely complete,” Denton said.
Investors appeared satisfied, sending Pfizer’s stock $PFE up more than 6% on Wednesday, after a year when Pfizer was the worst performing large pharma stock of 2023, falling nearly 50%.
The company is not without challenges. Sales from Covid-19 vaccines and antiviral Paxlovid remain choppy as they decline to a far lower post-pandemic level and likely fall into a seasonal rhythm. Vaccine revenue in the first quarter was only $354 million globally, a decline of 88% from the same time last year.
Similar year-over-year declines could be in store as 2024 continues and Covid fatigue dampens demand, TD Cowen analyst Yaron Werber wrote in a note to investors. But Pfizer is maintaining projections of about $5 billion in yearly Covid vaccine sales, down from $11.2 billion in 2023 and $37.8 billion in 2022.
Future success for the vaccine may depend on the combo flu/Covid-19 shots in development, Werber said. As Pfizer looks to return to bigger profits, Bourla said the “big misalignment” over Covid revenues represents another reason for caution.
“We know credibility is extremely important for us,” Bourla said. “So everything we say, we feel rock solid. But we will see. And we don’t say anything more than that.”
Execs faced other questions on Wednesday’s earnings call on a range of topics, including RSV vaccine sales, the progress of integrating Seagen and obesity efforts with its danuglipron program. But analyst questions around the RSV shots, sold under the name Abrysvo, appeared to take on a slight sense of urgency given GSK’s early dominance and strong first quarter in this new and emerging market. Pfizer execs touted a recent data readout in people aged 18 to 59 in an effort to mollify concerns about market share.
Pfizer still hasn’t said when it plans to submit the data to the FDA. GSK read out a vaccine trial for high-risk adults aged 50 to 59 last October, and an FDA decision for that population is expected by June 7.