Raphael Stevens

Pfizer is betting on cancer drugs to help it regain its footing after a rocky year marked by the rapid decline of its Covid business.
The pharmaceutical giant has been trying to shore up investor sentiment after its shares fell more than 40% in 2023.
Pfizer says its combined drug pipeline with cancer drugmaker Seagen could produce at least eight blockbuster medicines by 2030.

Nurphoto | Nurphoto | Getty Images

Pfizer is ready to move on from Covid. 
Now, the company is betting on cancer drugs to help it regain its footing after a rocky year marked by the rapid decline of its Covid business. It just might take a while before that bet pays off. 

Pfizer pitched its deeper push into oncology during a four-hour investor event last week. And it had a splashy 60-second Super Bowl ad that touted its initiative to “outdo cancer.” 
The shift comes at a crucial time for Pfizer. The pharmaceutical giant has been trying to shore up investor sentiment after its shares fell more than 40% in 2023. That share drop erased more than $100 billion in Pfizer’s market value.
Along with plummeting demand for its Covid products, Pfizer disappointed Wall Street last year with the underwhelming launch of a new RSV shot, a twice-daily weight loss pill that fell short in clinical trials and a 2024 forecast that missed expectations. The company has launched a $4 billion cost-cutting program, laying off hundreds of employees and shaving down its research and development spending. 
During the investor day, Pfizer laid out its priorities now that it has fully integrated with the targeted cancer drugmaker Seagen. That $43 billion Seagen acquisition doubled Pfizer’s oncology drug pipeline to 60 different experimental programs. 
With Seagen under its belt, Pfizer says its drug pipeline could produce at least eight blockbuster medicines by 2030, up from just five today. But the company did not disclose which drugs it believes could offer that potential. 

Some analysts noted that it might take a few years for some of Pfizer’s cancer drugs in mid-stage development to show pivotal clinical trial data and become less risky. 
Pfizer’s existing oncology portfolio is also facing some competitive pressure. Revenue from the blockbuster breast cancer drug Ibrance and prostate cancer treatment Xtandi, which Pfizer shares with Astellas Pharma, has declined over the past year. Both drugs are expected to lose market exclusivity in 2027. 
Still, some analysts came out of the investor day feeling encouraged. 
“The company is facing a number of challenges, but we believe the event was a success in laying out a path for the oncology business to help offset upcoming patent losses, and drive growth in the future,” Guggenheim analysts wrote in a note Tuesday. 

Long-term commercial strategy

Pfizer used the investor event to formally introduce its new business division dedicated to cancer research and to lay out a long-term strategy for it through the end of the decade.
That oncology unit hosts a sprawling portfolio of experimental medicines that Pfizer and Seagen discovered or acquired through deals, as well as the treatments both companies have long been selling. 
The unit is led by Chris Boshoff, a longtime Pfizer executive who most recently served as the company’s head of cancer research and development. 
“As a newly combined organization, our expertise and collective capabilities are now amplified to deliver even more impact for patients than each company could do by itself,” Boshoff said last week to kick off the event.  
Boshoff highlighted the scale of Pfizer’s capabilities, noting it has 10 manufacturing sites producing cancer drugs on three continents, while Seagen had just one. He also pointed to Pfizer’s commercial presence in more than 100 countries and a customer-facing commercial team that is triple the size of Seagen’s. 
Pfizer did not provide a specific sales projection for its oncology franchise by 2030. But the company said it expects roughly two-thirds of risk-adjusted oncology revenue to come from new drugs and new indications — or treatment uses — for existing products by the end of the decade.

Signage outside Seagen headquarters in Bothell, Washington, on Tuesday, March 14, 2023.
David Ryder | Bloomberg | Getty Images

Pfizer reiterated its expectation that the Seagen acquisition will bring in $10 billion in sales by 2030. 
But the company provided little guidance on what Seagen’s growth will look like until the end of the decade, UBS analyst Trung Huynh said in a note Thursday. 

A new focus 

Pfizer also highlighted a huge shift in its drug pipeline strategy. 
Boshoff said the oncology division plans to shift to biologic drugs as its main source of revenue, increasing the proportion of those treatments in its pipeline from 6% to 65% by 2030.
Biologics are treatments derived from living sources such as animals or humans, including vaccines, stem cell treatments and gene therapies. They are among the most expensive prescription drugs in the U.S.
Before the Seagen deal, 94% of Pfizer’s cancer products were small-molecule drugs. Those medicines are made of chemicals and have low molecular weights. 

Boshoff said biologics represent “a more durable revenue potential” based on several factors. That includes upcoming patent expirations and potential pressure from President Joe Biden’s Inflation Reduction Act. 
A provision of that law allows Medicare to start negotiating the prices of biologics as early as 13 years after they receive Food and Drug Administration approval, compared with just nine years for small-molecule drugs. The pharmaceutical industry has argued that would deter drugmakers from investing in small molecules.
Pfizer’s decision to rely more on biologics may also offer “better protection” against competition from cheaper copycats, Guggenheim analysts said in their note. Those copycats, or biosimilars, have historically had trouble gaining market share from biologic treatments. That’s unlike with drugs called generics, which are exact copies of small-molecule treatments. 
Small molecules will remain one of three core drug types of Pfizer’s oncology division. The other two are biologics, namely bispecific antibodies, and antibody-drug conjugates, or ADCs. 

Pfizer’s three core oncology drug types

Small-molecule drugs: Treatments with a low molecular weight made up of chemicals created in a lab. 
Bispecific antibodies: Treatments that can bind to two different antigens — or any substance that causes the body to have an immune response — at the same time. Those drugs are biologics because they are developed from living sources that produce antibodies.
Antibody-drug conjugates: Medications that deliver a cancer-killing therapy to specifically target and kill cancer cells and minimize damage to healthy ones. The treatments represent a hybrid between biologics and small-molecule drugs, but the FDA classifies ADCs as biologics.

Notably, the company is developing a “next-generation” platform for ADCs that combines Pfizer’s protein engineering and antibody design capabilities with Seagen’s ADC technology. Together, the companies have 12 ADCs in development, six of which are in early clinical trials or studies on animals.
JPMorgan analyst Chris Schott wrote in a note last week that the firm walked away from the investor event encouraged by the breadth of Pfizer’s mid-stage oncology pipeline. But he noted that it will take time before a number of the treatments show “pivotal data.”

Four core cancer types

Pfizer plans to focus on four main types of cancer: breast cancer; genitourinary cancer, which impacts urinary and genital organs or functions; thoracic cancer, such as lung, head and neck cancer; and hematology-oncology, or cancers of the blood, such as multiple myeloma and lymphomas. 
Pfizer expects breast cancer’s contribution to total oncology sales to drop to about 10% by 2030 from roughly 40% last year, the company’s oncology commercial chief Suneet Varma said during the event. 
That decline accounts for the upcoming loss of exclusivity of top-seller Ibrance, which raked in $4.75 billion in sales in 2023. 
But the company said it has a handful of breast cancer drugs in development that could become “potential growth drivers” as Ibrance sales fall. That includes a certain type of treatment called atirmociclib that could potentially be more effective and easier for patients to tolerate. 
Pfizer is testing the medicine as a second-line treatment for a certain type of breast cancer in a phase three trial. A second-line therapy is given when an initial treatment doesn’t work or stops working. 
The company also plans to start a separate late-stage trial on atirmociclib as a first treatment for the same condition in the second half of the year.

Pfizer expects genitourinary cancer to make up an estimated 35% of oncology sales by 2030, which would make it the largest franchise of the cancer business. That’s up from 20% in 2023. 
Pfizer is testing an experimental ADC called disitamab vedotin — which Seagen licensed from Chinese firm RemeGe — as a treatment for certain bladder cancers, with data from mid-stage and late-stage trials expected in 2025 and 2026.
Notably, RemeGe already sells that drug in China. Pfizer is also examining the medicine’s potential to treat breast cancer and other tumor types.
Meanwhile, Padcev, an ADC Pfizer shares with Astellas Pharma, in combination with Merck’s immunotherapy Keytruda is becoming a new first-line standard of care for bladder cancer. Pfizer executives last week said Padcev had “mega-blockbuster” potential, which the company defines as raking in annual sales of more than $3 billion. 

Pfizer’s key cancer drugs on the U.S. market

Ibrance: treatment for certain breast cancers.
Xtandi: treatment for four types of advanced prostate cancer.
Adcetris: treatment for certain lymphomas from Seagen.
Padcev: treatment for some types of advanced bladder cancer, either alone or in combination with Keytruda.
Elrexfio: treatment for certain adults with multiple myeloma.
Talzenna: treatment for some breast cancers.
Lorbrena: treatment for a type of non-small cell lung cancer.

Pfizer executives expect thoracic cancer to double its revenue contributions by 2030. 
Seagen brings an ADC called sigvotatug vedotin to this franchise. The drug recently entered a late-stage trial as a second-line treatment for a certain type of lung cancer, with data expected around 2026 to 2027. Pfizer also plans to test the ADC as a first-line treatment.
Guggenheim analysts said they expect the treatment to be one of Pfizer’s blockbuster oncology drugs by the end of the decade. Those analysts also expect a bispecific drug called Elrexfio, which falls under Pfizer’s hematology-oncology portfolio, to eventually become a top seller.
The hematology-oncology franchise is expected to account for 25% of the cancer unit’s sales by 2030, up from just 10% in 2023. 
The FDA has approved Elrexfio for patients with multiple myeloma who have tried at least four prior types of therapy. But Pfizer is conducting two late-stage clinical trials on Elrexfio as a second-line treatment, with data not expected until around 2025 and 2026. 

Drugs outside of cancer

Pfizer is splitting the rest of its business outside of oncology into two divisions: a U.S. commercial unit and an international commercial unit. Those divisions are focusing on vaccines, along with metabolic and inflammatory conditions. 
This fall, Pfizer plans to roll out another updated version of its Covid vaccine that will target a new strain of the virus. 
The company previously outlined plans to develop “next-generation” versions of its Covid shot, which aim to broaden and extend the protection people get to a full year. 
But Pfizer hasn’t decided whether to move forward with those plans because the company needs to be convinced that there is still an “eagerness to embrace Covid intervention,” Dr. Mikael Dolsten, the company’s chief scientific officer, told CNBC in an interview last week.

The new vaccine COMIRNATY® (Covid-19 vaccine, mRNA) by Pfizer, available at CVS Pharmacy in Eagle Rock, California.
Irfan Khan | Los Angeles Times | Getty Images

Dolsten pointed to two other “strong pillars” in the company’s vaccine portfolio: bacterial and viral shots. The company is testing a “fourth-generation” version of its vaccine to prevent pneumococcal disease, which is caused by a bacteria that can attack different parts of the body.
Pfizer is also working to expand the use of its shot against respiratory syncytial virus, commonly called RSV, to high-risk patients ages 18 to 59. It’s currently approved in the U.S. for expectant mothers and adults age 60 and above. 
The company is also testing combination vaccines targeting multiple respiratory viruses, including a shot for Covid and the flu in late-stage development.
Outside of vaccines, the company is developing an oral treatment for sickle cell disease called GBT601. Pfizer views that drug as a potentially more effective successor to its drug Oxbryta, which is already approved for the condition.
Pfizer also expects to release mid-stage trial data on its experimental treatment for cancer cachexia, or what Dolsten called “the opposite of obesity.” It refers to the loss of body weight and muscle mass, along with weakness that may occur in patients with cancer, AIDS or other chronic diseases.
Another area that’s top of mind for investors is obesity. Pfizer expects to release early-stage trial data on a once-daily version of its experimental weight loss pill, danuglipron, in the first half of the year. The company is also working on a second drug for obesity, but has not disclosed how it will work. 
Dolsten touted the potential of a weight-loss drug pill, which could help meet the soaring demand for obesity treatments. Much of the existing injectable drugs for the condition are in shortage in the U.S. He also noted that a pill would likely be priced differently than injections, which cost around $1,000 per month before insurance. 
“A pill would allow you also to have more access,” Dolsten said. “If you have 300 million patients per year, it will be one of the biggest medications ever.” More

As the population of the Sun Belt climbs, restaurant chains such as McDonald’s and Portillo’s are looking to those states for future sales growth.
Customers have moved from the Midwest and Northeast to states such as Texas, Florida and North Carolina.
The Sun Belt states largely have reputations for being more friendly to businesses.

A Portillo’s Beef Bus in Kissimmee, Florida.
Source: Portillo’s

When Chicago-based Portillo’s enters a new market, it sends its “Beef Bus” ahead of time, slinging its hot dogs and Italian beef sandwiches to new customers for weeks, introducing them to the brand and whetting their appetites before a new restaurant finally opens.
Recently, the Beef Bus has been making a lot of trips to the Sun Belt.

“Texas, by itself, has grown more people in the last decade than eight midwestern states that we have a presence in combined,” Portillo’s CEO Michael Osanloo told CNBC. “So it’s kind of a no brainer to go where the growth is.”
The chain’s sales are “way stronger” in Texas, Arizona and Florida than in midwestern states such as Indiana and Wisconsin, according to Osanloo. Portillo’s opened its first location in Texas a little more than a year ago. In its first 12 months, the location generated $13 million in sales, the restaurant equivalent to a $1 billion box-office hit.
While the exact states included in the Sun Belt can vary, the name refers to the southern third of the U.S. known for its sunny weather. In recent years, the region has seen booming population growth, setting it apart from the Northeast and Midwest. The trend accelerated during the Covid-19 pandemic as consumers sought more space, warmer weather, fewer government restrictions and cheaper housing in cities such as Charlotte and Phoenix, which count among the most populous in the U.S. along with Texas cities such as Houston and Dallas.
Due to that shift in population, restaurants are now looking to the region to drive sales. Smaller chains are expanding into the Sun Belt earlier, rather than the Midwest or Northeast. For more mature companies such as McDonald’s, it means accelerating new restaurant growth in areas where it’s now underrepresented.
“We always say that retail follows rooftops, so when you’ve got lots and lots of people moving to an area, there’s lots of demand,” said Justin Greider, senior vice president of Florida retail for real estate firm JLL. “Combined with the overall increase in consumer spending towards restaurants we’ve seen, it’s sort of the perfect storm to create a really ripe environment from a lot of restaurant groups who want to be here.”

It isn’t just restaurants looking to the Sun Belt for sales growth. Fort Worth-based American Airlines is updating its routes to reflect the population shift, executives said Monday at an investor event. Macy’s has been opening smaller stores in suburban strip malls, starting in the Dallas and Atlanta areas. Real estate investment trusts such as Phillips Edison & Company that invested in the region earlier have seen the southern migration boost their shopping centers.

Golden arches meet golden rays

As the third-largest restaurant chain in the U.S. by number of stores, McDonald’s can’t be accused of ignoring the Sun Belt, but it has been slower to pick up the trend and saturate those growing markets.
“In our U.S. markets, our store counts have grown much slower than the population in the fastest-growing areas,” McDonald’s Global Chief Customer Officer Manu Steijaert said during the company’s investor day in December. “We do have a significant opportunity to right-size that ratio.”
McDonald’s is aiming to open 900 new restaurants through 2027 in the U.S. Most of those locations will be concentrated in Florida, Texas, Arizona, Georgia and North Carolina, according to JPMorgan.
“What we’ve seen is because of the scale that they already have. That adaptation to grow in the Southeast has not been quite as proactive,” Greider said, speaking about McDonald’s.
But other chains have been quicker to see the opportunity in the Sun Belt. Greider named chicken chain Raising Cane’s, Chipotle Mexican Grill and Starbucks as three companies that have been focused on growing their footprints in the Sun Belt even before the pandemic.
In addition to well-known chains, Greider has also seen restaurants with chef-driven name recognition traveling south from New York and Chicago.
“In the back half of [the pandemic] and post Covid, we saw a number of full-service and chef-driven restaurant groups that have really pushed hard into the Sun Belt, because they’ve seen that’s not just where there’s great opportunities for growth, but where their existing customers have been relocated,” Greider said.
For example, New York City’s celebrity hotspot Carbone, owned by Major Food Group, opened a location in Miami in 2021 and another in Dallas in 2022.

Chains see opportunity in warm weather

For regional chains looking to expand nationwide, the Sun Belt also presents an opportunity to grow their footprint with customers who already know the brand.
For example, 89-year-old chain Friendly’s has largely stuck to the Northeast since its founding in Massachusetts in 1935. Under a new owner, the chain is finally looking to expand beyond the Mississippi River. 
Brix Holdings acquired Friendly’s in 2021, several months after the company filed for Chapter 11 bankruptcy protection. At the time, Friendly’s had more than 100 locations, down significantly from its footprint of 850 restaurants in its heyday.
The chain’s sales are growing again, according to Brix Holdings CEO Sherif Mityas, making it an opportune time to expand Friendly’s footprint.
“More strategically, from a growth perspective, we want to start moving west,” Mityas said.
Many of Friendly’s customers grew up with the brand in the Northeast before moving down to the Sun Belt. Plus, the chain is best known for its ice cream, making warmer climates a better business environment than the Midwest.
Warmer weather is also one reason why coffee chain Dutch Bros. is betting on the Sun Belt.
“More than 80% of our business is cold [drinks], so we find that warmer markets do better — but that doesn’t mean we wouldn’t do well in Minneapolis or the Great Lakes region or the northeast, but we’re just staying out of those for now,” Dutch Bros. CEO Christine Barone told CNBC in a January interview.
The chain is planning to open 150 locations this year, most of which will be in Texas and Southern California. In the next 10 to 15 years, the company aims to operate at least 4,000 locations, with a footprint that looks like a smiley face across the U.S., starting in California, dipping down to Texas and back up to Virginia.

Better for business?

The region’s reputation as friendly to businesses has also played a role in its rise. Seven of the top 10 states in CNBC’s America’s Top States for Business in 2023 were in the Sun Belt.
Although there are some notable exceptions, such as California with its upcoming hike on fast-food wages, states such as Texas and Florida have touted their lower taxes and lax regulation to lure companies. For two consecutive years, Texas has been home to the most Fortune 500 companies, supplanting California and New York.
“In addition to the population growth dynamics, many states in the Sun Belt region have ‘friendlier’ business environments that are also appealing to restaurant operators,” said Kevin Schimpf, director of industry research at Technomic. “[That means] things like fewer restrictions on franchising, lower labor costs and less red tape on new commercial developments.”
That’s part of the appeal for Friendly’s, which wants franchisees to run the new locations.
“From an entrepreneur perspective, and a business perspective, the Sun Belt is really growing faster than the rest of the country,” Mityas said.

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The Food and Drug Administration approved Novo Nordisk’s blockbuster weight loss drug Wegovy for use in slashing the risk of serious cardiovascular complications in people with obesity and heart disease, the company said.
That decision could widen insurance coverage for the drug and similar treatments for obesity, which has been a major barrier to access for patients.
Wegovy and its diabetes counterpart Ozempic sparked a weight loss industry gold rush over the past year for their ability to help patients shed pounds.

Injection pens of Novo Nordisk’s weight-loss drug Wegovy are shown in this photo illustration in Oslo, Norway, Nov. 21, 2023.
Victoria Klesty | Reuters

The Food and Drug Administration on Friday approved Novo Nordisk’s blockbuster weight loss drug Wegovy for use in slashing the risk of serious cardiovascular complications in adults with obesity and heart disease.
Millions of patients already use the popular injectable treatment. But the agency’s decision could widen insurance coverage for the costly drug and similar treatments for obesity, which has been a major barrier to access for patients.

The approval also demonstrates that weight loss drugs have significant health benefits beyond shedding unwanted pounds and regulating blood sugar. Weekly injections of Wegovy slashed the overall risk of heart attack, stroke and death from cardiovascular causes by 20%, according to a landmark late-stage trial on the drug.
Wegovy is now the first-ever weight loss medication to gain an expanded approval for that purpose, Dr. John Sharretts, director of the Division of Diabetes, Lipid Disorders, and Obesity in the FDA’s Center for Drug Evaluation and Research, said in a release.
He noted that adults with obesity and heart disease are at increased risk of those cardiovascular complications, so providing a treatment option that is proven to lower that risk “is a major advance for public health.”
The FDA said Wegovy patients should use Wegovy in addition to a reduced calorie diet and increased physical activity.
Wegovy and its lower-dose diabetes counterpart Ozempic soared in demand and slipped into shortages over the past year for their ability to help patients lose significant weight over time.

They are part of a class of drugs that mimic a hormone produced in the gut called GLP-1 to suppress a person’s appetite. Both Wegovy and Ozempic cost around $1,000 per month before insurance.
In a statement on Friday, Novo Nordisk said the approval represents a “pivotal step forward in addressing some of the most pressing issues of our time.” The company added that it is working to increase manufacturing capacity to “responsibly supply this important medicine.”
Novo Nordisk expects to receive a similar Wegovy approval in the EU this year.
The FDA’s approval was based on a landmark phase three trial called SELECT. The study tested Wegovy in roughly 17,500 people with obesity and heart disease but who did not have diabetes. 
Wegovy reduced the risk of non-fatal heart attack by 28% in the five-year trial. It produced a smaller 7% reduction in the occurrence of non-fatal stroke, though few strokes were seen in the trial overall.
Wegovy also started to show a reduction in overall cardiovascular events within months after participants started the drug. The difference between the drug and placebo widened as the study continued.
Nearly 17% of people receiving Wegovy in the trial stopped taking the drug, mainly because of gastrointestinal issues like vomiting and diarrhea. That’s double the rate of people who discontinued the placebo.
Another limitation of the study was its lack of diversity. Almost three-quarters of the participants were male, and even more were white. Just about 4% of participants were Black.
The new data could also help the Danish drugmaker maintain its lead over Eli Lilly, whose competing weight-loss drug Zepbound was approved in the U.S. in November. Zepbound has been shown to help people lose more weight, but it has yet to demonstrate an effect on cardiovascular outcomes.  More

Satellite manufacturer Terran Orbital is “looking at everything” regarding the company’s future, CEO Marc Bell told CNBC.
Lockheed Martin last week submitted a bid to buy Terran Orbital.
“We’ve had many conversations with many people and continue to run our process. We have no deadline to our process, and our goal is to have maximum value for all of our shareholders,” Bell said.

Terran Orbital

Satellite manufacturer Terran Orbital is “looking at everything” regarding the company’s future, CEO Marc Bell told CNBC, as it considers Lockheed Martin’s acquisition offer.
“We found out about [Lockheed’s takeover bid] when the rest of the world found out about it,” Bell said on CNBC’s “Manifest Space” podcast.

Lockheed’s proposal submitted last week values Terran Orbital at nearly $600 million, or about a third of its equity valuation from when the company went public via a special purpose acquisition company, or SPAC, two years ago. The defense giant is already a significant stakeholder in Terran Orbital, with a 28.3% stake at the time of the proposal.
Terran Orbital declined to comment on a shareholder lawsuit filed Wednesday in response to the company’s board adopting a “poison pill” stock rights plan after Lockheed’s offer.

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Bell emphasized that Lockheed has been “a partner of ours for many years,” but noted that Terran Orbital hired Jefferies in December to lead a strategic review of its path forward, with options ranging from new investors to a potential sale of the company.
“We’ve had many conversations with many people and continue to run our process. We have no deadline to our process, and our goal is to have maximum value for all of our shareholders,” Bell said.
Bell added that Terran Orbital is “thrilled with the validation” that Lockheed’s offer gave it.

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