Pfizer Inc. (PFE) CEO Albert Bourla Presents at Goldman Sachs 41st Annual Global Healthcare Conference (Transcript)

Pfizer Inc. (NYSE:PFE) Goldman Sachs 41st Annual Global Healthcare Conference June 9, 2020 1:20 PM ET

Company Participants

Albert Bourla - Chairman and CEO

Conference Call Participants

Terence Flynn - Goldman Sachs

Terence Flynn

Great. Good afternoon everybody, thank you for joining us. I'm Terence Flynn, the biopharma analyst at Goldman Sachs. I'm very pleased to welcome Pfizer for this session. Joining us from the company is Chairman and CEO, Albert Bourla. Albert, thank you very much for joining us today, really appreciate your time, and thank you for everything that the company is doing with respect to COVID-19, on both the vaccine and treatment front. I know it's a tremendous effort, and we appreciate everything you're doing.

Albert Bourla

Thank you very much, Terence, and it's a great privilege and a great responsibility these days to work on a solution.

Question-and-Answer Session

Q - Terence Flynn

Great. Maybe to get started, COVID-19 is obviously going to have near and long-ranging impacts on the system, companies' business models from delivery of care, clinical trial conducts, supply chain, any preliminary perspective that you can share from kind of where you sit in terms of how this is going to change or evolve both the business and your strategy as you approach the forward?

Albert Bourla

Actually I was reading earlier today a report that you circulate about the -- your assessment about how that could change the industry, and pretty much I agree with everything that you said. I think there are a lot of trends that are emerging as a result of COVID. I think the fundamental that will impact our industry, it is the fact that right now the hopes of billions of people and hundreds of millions of businesses, hundreds of governments are on this industry to find the solution, and that brings obviously the value proposition in the forefront of society, and that was not the case before, because there were a lot of lack of popularity and not very good reputation, and now is a great opportunity to of course to reset all this.

I won't declare any victory yet, because I think reputation comes in drops, but you can lose it in buckets, though it's going to be much slower to gain back, and a mistake can also throw it out there, but I'm very optimistic with the way that I see the industry is moving. That set aside, of the reputation of the industry, I think that brings also a lot of changes. Some will be very positive; some will be more or less -- or on the negative side. I think local governments will likely value much more innovation. You can see, I think much more premium based on the innovation right now. On the other hand, I think there will be some fear that will drive more nationalization or in-storing on-storing type of supply chains. That's a mistake. I think it's very complicated, the supply chains, highly sophisticated, and by the way, they will not on the -- they didn't present any issues, but I think they were tested very well right now.

I think on the -- with a question of many people are asking me, I certainly see that there is a change shift right now, particularly in the U.S., and I can see that both from people that they were very big fan of the innovations, I mean politicians or public servants that they were in favor of innovation, but they were tempering their speech. Now they are much more outspoken there, because they see the value on the population. Also I see in people that were very strict critics of us, and they were criticizing a lot of the interest, I think they are slowing down their criticism now. All of that has to do with the fact that there is -- that the reputations, as I said, and the popularity is going up in the eyes of the constituents. I can see structural changes, I think, in the way that we do research. I think with digital, pretty sure the question why only COVID will come, if we can make vaccines -- if we prove that we can make vaccines in less than a year, okay, why can't we do that with other medicines, with cancer medicines, and I think there is a -- I think that will give a very big boost in the way that lifecycles of the productivity R&D will enhance, and I can go on, I think the post-COVID world will be different, and hopefully better.

Terence Flynn

Great. Well, that's a great place to start. I guess that now that we're into June, a lot of states are starting to reopen, other countries are reopening. You guys have a big global presence obviously. You gave -- you reiterated your expectations for guidance on your first quarter call. Now that we're into June, can you just share a little bit about what you're seeing as some states and countries are reopening across the globe?

Albert Bourla

Yes, everything we see, and that includes not only, let's say, the things that everybody is seeing, but also we are watching on our performance in the market month after month, et cetera, is in line with what [technical difficulty] we were expecting at -- when we reiterated our guidance, including absorbing a significant amount for foreign exchange. No change, I think we had a very, very good quarter in the first one, and we said the second is the one that will be the bottom of the crisis, and I think that will be the case, but still is holding very nicely, I think, and then we hope that third and fourth will come back. Then the leading indicators which is visits to physicians, we patients, scripts, et cetera, et cetera, already started to show a positive trend, and we are still in the second quarter, right. So, the impact of everything -- and also, there is a lot of absorptions of inventories that maybe hospitals or other organizations built. We never had stock build in the first quarter at wholesale as we're controlling, nothing. It was very -- very small, so all the performance was nothing to do with the inventories that we control, but I suspect that maybe hospitals or end-users, they were building some more, which I think will go away from the second quarter, and then we'll have the full impact in third and fourth.

Terence Flynn

Okay, great. Maybe then the last COVID topic is just on the vaccine front. You've been partnered with BioNTech making a lot of progress. Maybe just remind us at a high level the approach that you guys are taking, and how it differs from some of the other companies, and then just any update in terms of when we might see the initial Phase 1 data, I know a lot of focus on that front as well.

Albert Bourla

Yes, thank you. There are several efforts right now for vaccines, as you know. What I know in the clinic, at least in the U.S/Europe that there are three companies, four, and there are two different technologies. We are using an RNA modified RNA technology. I know that there is -- but they're also using the same technology. We are using four different approaches that include two different antigens. One antigen that we are using it is the entire spike protein, which is I think the same like the Moderna is using, and then we are using also the -- what you call the BD, which is the head of the spike, the antigen. So, we are using both, just in case, and also we are using three different constructs. We are using modified RNA, we are using unmodified enhanced RNA, and we are using [indiscernible]. So, not everything works the same, I can tell you that, as we are in the clinic. So, I think we'll be -- it doesn't matter the technology, I think you can have a good or bad results with the same technology, and we are well into humans now, and we are testing all of that, and we will continue, we are about to pick two of the four so that we can continue. We are working also on the dose. I want -- as regards data, we keep seeing data, both from preclinical data and clinical data from the humans. I will not make any comment on the data what we see right now. We made the pledge that we will not speak publicly about how good or bad the vaccine is without the same -- publishing date on peer magazines.

Terence Flynn

Okay.

Albert Bourla

But we do have plans to publish data. So, once we publish the first data we will speak about that. General comment now about the vaccine, and indeed, as I said, at the end of June we will have very good visibility of a lot of data. I want to reiterate again everything what I have said so far publicly for this vaccine. I just said that there are four; we are going to pick two. We are planning and we are in very good collaboration with FDA to run large scale trials July-August. If things are -- if things go well and it is so far, but you never know until the end, it's a very complicated process, but if things goes well we think that we will have enough data that will make us feel comfortable about the safety and efficacy, and as a result will submit to FDA so that they can see if they feel comfortable with efficacy and safety, in the October timeframe. So I think we can submit earlier to the FDA.

So, if that's the case, so -- and FDA or EMA or others, and ourselves, I repeat, because we are a very big organization we are very careful with these things, we feel good about safety and efficacy, we will have a manufacturing -- we will have manufactured doses [indiscernible]. So, we will be able in case we get either accelerated approval or emergency use approval we could provide millions of doses this year and hundreds of millions of doses next year. Again, I don't say how many exactly, because I know others have spoken, because a lot depends what will be dose. We are taking dose vials of 1 to 10. If we take 10, it's less than if we take the one. We are trying to see if we can use multi-dose vials if that could be acceptable, for example, by U.S. or different countries, as I speak with them, so they will define the quantities, but definitely in the hundreds or millions in the worse case scenario.

Terence Flynn

Yes, and just a follow-up in terms of the amount of data, it sounds like the discussions are real-time with regulators here. Obviously, safety is the most important first thing to check, but in terms of efficacy, do you have any preliminary sense of kind of what they are looking for, is this going to title level data like immunogenicity, or they are looking to see actual kind of infection rates from a study, maybe somewhere in between?

Albert Bourla

I can't talk about the -- for them, right, I think they are independent, and frankly I think what they will do as always they will have a holistic view of the situation. They will see how much efficacy data has, how much in primates, how much in humans, what is the titles, I think they would see everything, and they will make decision themselves. I don't want to speak about them. We are ready to go all the way to prove the -- say, the efficacy in large scale trials if that is required, and this is what we have been doing.

Terence Flynn

And would you -- you mentioned that picking two out of the four, would then be there be another choice where you choose one of those two to ramp up commercially if everything goes well, or do you think you could ultimately maybe have two vaccines because obviously there is great demand across the board, or would you focus all your efforts on one those [indiscernible]?

Albert Bourla

I think -- let me comment, I think it would be likely huge demand, and no matter how many companies would be able to cross the line, still the demand will be higher than the offer. That's my assessment right now, particularly for the first 12 months, let's say '21.

The second is likely we will pick one of the too early enough, and this is the one that we will push in our clinical trials, and that we will do, because I think two or one is the same in terms of manufacturing, right. So, I think we will exhaust our manufacturing capacity relevant if we do one or two, but we are going to work on the next generation that already started right now, but will not be the first wave, a much better hopefully, but likely we will come later, beginning in, let's say in '21 later, but right now, the things that we are speaking, we are speaking about likely one, but we will run into a very big clinical trial after doing all this experiments and selecting different variations that will give us safety and efficacy data.

Terence Flynn

Okay. And maybe the last one before we go on to other topic is just how do you think about obviously there is a huge focus on treatments and vaccines in terms of public health et cetera implications. How do you think about any longer term commercial opportunity here beyond the initial needs as you think about the kind of puts and takes on the commercial side of the equation?

Albert Bourla

Yes. One to start to is that from day one we said this is not business as usual. So, our decision to go into the vaccine or not was not driven at all by return on investment, and I made it very clear to everyone, okay, it is return on effort. So, what we are going to invest in, it is things that we believe the effort could bring results, irrelevant if we going to get our money or not, and actually one of the reasons why we are the only company that didn't take any money from government -- the U.S. government and there were plenty available as you read billions here and there, or any other government per se, it is because we felt that we can move much faster if we are alone because when you take money of course you have to discuss how to spend it, how you progress, how you do this, how you do that, and given that the goal was for return on effort, so we didn't factor in that we are going to take money.

Now, as a result, the efforts -- the focus of me was always, "Let's bring a vaccine and then speak later." So, I wasn't even thinking about commercialization, and it commercial now or later, but everybody is asking me, so I start thinking about it, and again, what I can tell it is, I do not think that when the vaccine is available, if the vaccine is available, and when, and by the way, I do feel, but it's more a question of when rather than if, but I say both to be on the safe side even when. Likely the demand will be so big and likely the value that the vaccine can bring, if we try to calculate the value of the vaccine for the pricing like any other vaccine we have, will come so shoot because obviously, you're having here now closed economy or open economy, right, but if we were to implement free open market principles in pricing the product, we could go to huge surprises and sell everything we can manufacture. That will be unethical, we will not do it, right because that's really taking advantage of a situation, people will not forget if you do that. So, I'm more into, I think I will price, we will price, the vaccine if it is available in the price of all the other vaccines that already exist in the market without taking into consideration the huge need sort of a huge demand and offer. So that we will not have any type of this room, still if you make the calculation, that's a huge commercial opportunity.

Terence Flynn

Yes, okay, great. We appreciate the perspective and best of luck over the next several months. Obviously, other big picture topic, which is fairly relevant now, is there's a surprising setback for Ibrance in adjuvant setting about a week ago and you reiterated your expectations for 6% top line growth through 2025. I recognize that's a risk adjusted figure. So there's some puts and takes on either side, but how much pressure does that really put on the other franchises that you guys have and maybe also on the other side of it on the inorganic side, how much pressure does it put on the M&A side, the business development side of the equation as you think about reaching that 6% target?

Albert Bourla

Again, I want to be very transparent and speak let's say, first of all, I was surprised that PALLAS didn't make it in the interim result. I wasn't certain, because it's a Phase 3 study. So you never know if it works or not, but it's on everything that you had preclinically and even the mode of action. I never thought that we stopped at the interim analysis for futility. So, that's the fate of science, but what it does into our overall portfolio and our growth trajectory, I had already said, that is not I did the moves to focus the company into science, because I felt very good about one, our R&D productivity, again the work of my predecessor and myself, and Mikael Dolsten, but it was under Ian, but that was accomplished, and because of the portfolio that we have, I think it's very deep and it has a lot of very broad portfolio. So on a risk adjusted basis, it is difficult to miss the 6% because if something fails, something else succeeds.

So, you take down the probability of that fails and you take up the probability of the one that the success, PALLAS for example, because many people are asking, we had 50% probability of success in our models. And frankly, I don't do that often, but because of the importance, we had $2 billion of big sales for PALLAS in addition to the Ibrance and then risk adjusted to one, and again, why we had all of that in our models was because the PALLAS could almost double the population, which is addressable. So that's one element, but also we temper that opportunity by the fact that the CDK penetration in a population that has very different risk profile, people were not dying or this isn't having an adjuvant treatment it's not taking something for someone who has a death sentence, right. So that was going to be much risk. We're expecting that if we are successful, competition will be successful on that, and the studies were coming not far away one from another, like the first indication that we came years back, and also as we are very sophisticated in building our models. We knew that in the beginning, we could have a bulk of sales, because there's a bolus, but then the bases are recycled. If you trade them before, then you have less to trade when the government does as well. With all that in mind, that was the number that we had. So basically, for the 6% we had to absorb a billion right now.

Terence Flynn

Right, okay.

Albert Bourla

What's happened by that we said the 6%, many other things happened also on the positive side.

Terence Flynn

Okay.

Albert Bourla

We didn't have the Prevenar to end the adult pivotal studies. As I said, it is not pivotal, you have very low probabilities. I mean if it's very straight you can have 50% or whatever. When you go to a pivotal study positive and the probabilities are going much higher in pediatric to ending. By the way, to end the adult, we are going to file this year, right?

Terence Flynn

Yes.

Albert Bourla

It's like the first to file. Pediatric, we had pivotal not that we had proof-of-concept successful and we started pivotal already, we had the data, proof-of-concepts from a pneumococcal and valent that we didn't have, we had the proof-of-concept for RSV, we didn't have. We are starting pivotal studies, all of that. We had the positive pivotal studies for Abrocitinib, which is actually not one, more. So, when we do Vyndaqel, so we took Ibrance from 50 to zero in the PALLAS, and then we increase appropriately. The other are still in a very good say for 6%.

Terence Flynn

Okay. And do you think are those the key opportunities that you think may be investors are under appreciating, because I think consensus had probably, I would assume like higher Ibrance numbers and so as a result probably lower numbers and some of these other franchises. So, as you look at those numbers, no, you're not giving product level guidance, but do you think that's kind of the key variable between where the street shaking out and maybe where you guys are as you're optimistic about some of these other pipeline assets?

Albert Bourla

I am optimistic and I know there are many more, but I think right now I have seen so far very little in the modeling, Prevnar for example, I spoke, I think they've a lot of model. So, Prevnar 20, and adults and pediatric, they're all having it in their models, but I don't think anyone has procedure in the [indiscernible], which is for a disease that doesn't have a vaccine, 30,000 people are dying every year from this disease, spends in the U.S. only, and we are expecting pivotal data this year. I don't think anyone has anything for pentavalent meningococcal, the first and only meningococcal vaccine that is in development right now, and we have very strong Phase 2 data. Now, as I said in Phase 3, I don't think that anyone had any before RSV. Again, it is very strong. I don't think anyone is factoring in for valent vaccine, but we just licensed. In general, we have right now seven vaccines that we do not have another vaccines, so they are first-in-class, all seven in the clinic.

Let me go to immunooncology. I think that everybody is factoring and modeling something on abrocitinib. I think everybody is raising the point, but right now we have five different molecules in 10 different indications in immunoinflammation. Just to clarify and I would say once more. We have a very, very different strategy than anybody else, who is jumping on Jack's right now, because she is in an attractive area, sexy I would say around that area, everybody is having a strategy that they test molecules, they are picking a winner, and then they develop this winner for all indications. That's more or less the strategy all they have. We followed years back, very different strategy. We are picking a single winner for an indication and for another indication, another winner and for the third another winner, because you have seen a very big difference, very big difference when it comes to skin or when it comes to arthritis or when it comes to the gut et cetera. So we believe we're going to have best-in-class in all of it because of this approach. I don't think that everybody is again planning Tafamidis in their early disease portfolio out there, but no one is doing anything for hemophilia A, hemophilia B in terms of gene therapy or the same muscle dystrophy, instead of gene therapy maybe the same muscle dystrophy, because there is a lot of debate, not because of us, because what that means to the biotech that has a competing product and I hope both are successful again, but this is why there is so much debate, but nobody is factoring anything on that. I can go on and on. Next week, for example, we release data and we will present and we will have also a bit -- a quick, let's say, investor analyst review for internal medicine or GLP. So it's a lot of things that are happening and we call it's a tremendous portfolio. So that's why I think these are tangible losses. It's not things I have good vaccines portfolio. I have seven in clinical trials, most of them in Phase 3.

Terence Flynn

Right.

Albert Bourla

And they are -- so -- yes, so when they are first-in-class, I think that means something, I don't think still the strategy is going into more detail, and I hope our Investor Day also will make people see that, and I hope people will see earlier and they will not miss the opportunity.

Terence Flynn

Yes, great. Yes, now I think that'll be a great opportunity to walk through a lot of this in September. I know you guys have prepared a lot for that and had to push it out obviously because of COVID to September, but they're really looking forward to the Investor Day in September. I guess the corollary. So it sounds you're extremely confident in everything in the pipeline. So then what's the approach going to be on the business development front? Obviously, you've done -- you did the Array deal for bolt-on, brought in some revenues in cancer, also brings in some discovery engine, but what's the approach to M&A here? Again, it sounds like you don't really feel like you need to do anything because of the depths of the pipeline. So how are you approaching the need for additional BD M&A?

Albert Bourla

Yes, excellent question, and it's exactly the same thing that I have said before and -- but let me reiterate, because I want to be also realistic. I don't say that I feel extremely confident for everything in our pipeline, but I feel extremely confident for the pipeline as a whole, because has robust science, multiple assets, multiple assets and the appropriate risk adjusted. So I feel that statistics will work, and we could have an upside, but I think statistics will work. Now, what does this mean for our strategy in terms of business development? Business development is not a strategy. It's a tool. So I want to start with all investors. It would be not of interest of our shareholders. If I say, I'm excluding this or that, everything we never say never to anything, but also I want to be fair with also the investing and share my thoughts, my strategic thinking, how I see the growth in the business development, and it is what I say.

I think organically, I feel very confident right now that we can go all the way to 26 with 6% growth, anything in business development that adds growth now is going to be just to make it higher, and this is another thing what really we need right now. Of course, we will do things, but it's not what we need. I think there is a lot of discussion. What if this growth post 26 is sustainable and because products will start losing patent again, and I'm replying to them, I feel confident. First of all, it's normal, but products will start to losing. We're going to lose, some they are summing altogether, but it's all four, five years -- four, five years period of time, but those will happen. It's one every year, right? It's very normal to lose one patent every year. Our internal pipeline, the way that we are planning it is that post 26 still we will have growth. But I think that to sustain that high level of growth, we are going to do business development, but includes Phase 2, Phase 3, early assets programs, research programs that will give us medicines potentially 23, 24, 25, 26, et cetera, so that they can propel the growth at this time.

Terence Flynn

Yes, okay. And the core therapeutic areas, you guys have talked about this at all, so I'm assuming no change on that front. The size of the deals it sounds like more clinical stage is kind of really the core focus here as opposed to later stage commercial or larger deals. It sounds like that's again, given everything you've said, that's completely off the table?

Albert Bourla

Yes. I think if you are speaking, as I said, nothing is off the table, I never say never, is not going to the interest of anyone to corner myself, right?

Terence Flynn

Okay.

Albert Bourla

But I understand that people want to see what is the strategic thinking, and you're right, it could be some, but they are on the later stage and likely will be more expensive, but the bulk of them will be on the Phase 2, Phase 3, and yes, and now on the therapeutic areas, again, I don't expect to have significant changes in the therapeutic areas. And the reason is because when you invest a lot on earlier science, you need to make sure that you invest in areas that you know what you are doing.

Terence Flynn

Right.

Albert Bourla

I don't buy a product, but it's already done, so that I can only sell it and I'm confident on my commercial. In oncology, vaccines, immunoinflammation, rare disease, including gene therapy, internal medicines, metabolic diseases, those are the five core areas. There are areas that will make - we will make our scientists fewer mistakes in selecting the right assets, and we will make way fewer mistakes in developing them because the development path is super important than the potential of the molecule. So these are the areas I think that will have the best return on investment right now. Okay, we can do some here and there, but the major focus is the areas that I just said.

Terence Flynn

Yes, maybe a big picture kind of on the commercial side in terms of your therapeutic area. So you talked, investors are fairly familiar with cancer immunology in terms of how to think about these markets and the size of the potential market opportunity. Vaccines, I'd argue now, we as a society are probably going to be putting higher values on vaccines, given everything we've seen from COVID, and it sounds like that's another big effort at Pfizer. Gene therapy is the one where I think there's maybe more of a debate in terms of understanding kind of the commercial model, especially maybe if you're a second to market or third to market. So how do you think about that commercial model evolving in gene therapy, obviously it's another big important area for you, you're moving into Phase 3 for DMD and hemophilia as you mentioned, so how do you see the commercial model evolving and how important is it to be first versus maybe second with a better therapy?

Albert Bourla

Yes, I think that the commercial model is still one of the unknowns. And there is one is because gene therapies are coming with a significant sticker shock, right. The tag price is very high. The value is very good, when you try to amortize, but the fact that you have to pay all upfront, it is going to create potential issue with payers, not now because we have one or two, but if it's a very big wave comes, I think this is something that everybody is recognizing and we're all trying to work on creative models, how the pricing could work and what happens if you can do in installments, if you can do it, you can have it resolved, et cetera, et cetera. Despite the fact that there is a little bit of uncertainty on how the model will be developed, myself, I have very high certainty, but it will develop. And the reason is because the results of gene therapy are transformational. I don't know any other technology right now in development that gives the promise of such transformational therapeutic impact than the gene therapy, people that are living with hemophilia for example and particularly those are there in the high risk groups, they have to do weekly injections, right. Suddenly, these kids, they're getting one injection and they are in the fifth year and they're having 98% reduction of breathings without going every week.

Okay, that is pretty much you can put to that. So, when you have that or same muscle dystrophy kids that they have very poor prognosis and after the second decade of their lives, unfortunately, they die most of them and they have very poor quality of life, they can move, they can hit. And when you have a product that with one injection improves dramatically that, I'm sure that when the value is there, despite it will find a way to pay for it. Now, is it going to be the first or the best that that will get everything? I really don't know. I think will be a lot of things that will be on play, your ability to manufacture I think it's much more of a good question to ask right now in gene therapy because that seems to be bottleneck for everything particularly when you can do muscle, which requires significant volume.

Gene therapy is the beginning word for I and that required very small quantities, you can do it in a lab. Then you went hemophilia, you speak much bigger quantities because you need to target the liver. Then you go to Duchenne or other, you go to much bigger volumes because you're talking about muscle, we have invested. And right now we have, I believe the largest manufacturing capacity under construction in North Carolina in the world for gene therapy, and that not only will allow us to be in this area to provide for supply for our own products, but makes us a partner of choice for smaller biotech that would like to partner and need the partner so that they can advance their position and not everybody can give manufacturing capacity, only those that they have, they can give. So I think that's also another advancement.

Terence Flynn

Great, maybe in the last few minutes, we'd just be curious and kind of as you think about the outlook for margins under kind of the new Pfizer, the Biopharma business, how should we think about that evolving, obviously, there are a number of puts and takes, sounds like you're going to do some additional streamlining. You have new products coming onboard, but then kind of back-half of the decade there are some other products coming off, and do you feel pretty comfortable about being able to at least have flat margins kind of over that period. Maybe just at a high level you could kind of talk about some of the puts and takes?

Albert Bourla

No, I didn't say that I will have flat; I think our margins will grow, will expand. I think when your top line, irrelevant what you do with your expenses, let's set aside that for a moment, okay. But in this business, in pharma, if your top line grows 6%, there is only one name for bottom line, leverage, right. You need really to screw it big time in way you manage your P&L not to have leverage. Now, in addition to that, and the fact that the not only our 6% -- the top line is growing but also the gross margin, because these are very innovative products and what we going -- so the 6% is very innovative growth, so they have very high gross margins.

Also, we are going to attack, as we said always, the indirect SI&A expenses. And we have a very big program that we are trying to -- we are coming to a conclusion now that speaks about the enabling functions for a corporation like us. We have three core functions, every pharma company. We have a research engine function, makes all are products, we have the manufacturing that produce them, and then we have a commercial to make sure that there is the patients. But then we have in our case $4.5 billion annual expense in HR, legal, digital facilities, you name it, and this is the area that we try to make ourselves much more productive, not just by cutting cost, but by implementing simplification initiatives that will allow us to be much more effective, and that will have, also in addition to what I said, that the top line growing will leverage on the bottom that will be an additional boost to the bottom line.

Terence Flynn

Great. Maybe just the last one, you mentioned in your JAK portfolio and the confidence there in the differentiated approach you're taking. Again, it is a fairly competitive area, but you do have a big presence with Xeljanz, you have a very deep pipeline. What's the kind of key differentiated feature, as you see it, and how do you think about the competitive landscape from both other JAK inhibitors, kind of these next gens but also some of the biologics, like a drug like Dupixent, which you did a head-to-head study against?

Albert Bourla

Yes. No, I think the best-in-class is what will win in this. That's why we took the strategy that we took at that time, and best-in-class is a combination of efficacy and safety profile. So -- and the more efficacious your molecule is typically the lower those you have, so the less side effects you will have to achieve the therapeutic effect. So by ourselves this was the bet that we took, by saying that let me find in preclinical and then proof of concepts which molecule works better for atopic dermatitis, and I stay with that, and then I pick another one to do psoriasis, even in [indiscernible] even in the skin, right, we are using two different molecules. We do that because we see that in another one we could have better efficacy for psoriasis, which means that I can maintain the dose at a lower level so to achieve the clinical results that are required without exposing, let's say, the safety. So I think given that will be a lot of -- there is a lot of research there for like that the best-in-class is what will make a very big difference.

Terence Flynn

Yes, great. And maybe just one email question I got, I just as you think about the M&A environment, how do you think about valuations on kind of the biotech side now. Things have come back, but any just high level comments on biotech M&A?

Albert Bourla

I think they're very high, and they -- as you said, a lot of them went back -- went down, and then some of them I think they're coming back, but we need to understand that it's a very different story what is the market cap, and what is the Board's perception of [variable value] [Ph], and although prices went down, what didn't follow it is the boards, let's say, of different biotechs, they are still, I think, some of them in denial, okay, "So, no, no, it's much higher," but still so this is a very expensive environment. We do have the means to play in this expensive environment, but I want to be very careful how we spend the money. If we have to do to pay something that I think is on the edge of the variation, because it really brings what we need we will do it, all right, but I'm not going to go to levels that I have seen or the billions of dollars that were spent to one molecule that maybe will make it, I don't like that.

Terence Flynn

Okay, great. Well, I think we're up on time, Albert, but thank you so much for your comments. Really appreciate your time today, and again, thank you for everything you're doing on the COVID front and best of luck over the coming months and years.

Albert Bourla

No, thank you very much, and I will [technical difficulty] finish with that. I hope all the companies that they are working solutions right now, vaccines, for example, or on the virus will be successful, because it's much more likely than not that the demand will be so big that the offer cannot cope it even if we are all approved.

Terence Flynn

Right. Thank you. Thank you, Albert. Thank you everybody.

Albert Bourla

Thank you very much.