GSK Q3 2023 Earnings Call Transcript

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Provided by Quartr
November 1, 2023

There are 16 speakers on the call.

Operator

Hello, everyone. It's Nick Stone, Head of Investor Relations. Welcome to our year to date and Q3 2023 results conference call and webcast for investors and analysts. The presentation was sent out to our distribution list by e mail, and you can also find it on gsk.com. Please turn to Slide 2.

Operator

This is the usual Safe Harbor statement. We'll comment on our performance using constant exchange rates or CR unless stated otherwise. As a reminder, following the Consumer Healthcare demeasure in 2022 to form Halion, we're presenting performance and growth of the continuing operations for GSK. Please turn to Slide 3. Today's call will last approximately 1 hour, with the management presentation taking around 30 minutes and the remaining time for your questions.

Operator

And we would request that you ask 1 to 2 questions so that everyone has a chance to participate. Our speakers are Emma Walmsley, Tony Wood, Luke Miles, Deborah Waterhouse and Julie Brown, with David Redfern joining the rest of the team for the Q and A portion of the call. I'll now hand the call over to Emma.

Speaker 1

Thanks, Nick, And welcome to everybody joining us today. I'm delighted to be presenting to you all with another set of excellent quarterly results. Please turn to the next slide. Sales and profits grew double digits for the quarter with sales up 16 percent to £8,100,000,000 adjusted operating profit up 22 percent to £2,800,000,000 And adjusted earnings per share up 25 percent to 50.4p, all excluding Pandemic Solutions. Our strong performance was broadly based and benefited particularly from the outstanding U.

Speaker 1

S. Launch of our RSV vaccine, Orexvi, on track to be a blockbuster in its 1st year on the market. This excellent execution together with our drive for efficiency and margin accretion means we can upgrade our 2023 sales, adjusted operating And adjusted EPS guidance. For the year, we now expect sales to increase between 12% 13%, Adjusted operating profit to increase between 13% 15% and adjusted EPS to increase between 17% 20%. Within sales, we are upgrading the outlooks across all segments for the year, reflecting our clear momentum.

Speaker 1

Our performance also clearly demonstrates delivery of the strategic choices we've made to invest in prevention as well as the treatment of disease. New products launched since 2017 have contributed sales of £7,800,000,000 so far this year, with nearly 80% of them coming from vaccines and specialty medicines. Approvals this year for Orexpi And Apretude together with 2 important oncology medicines, Gemperley and most recently Ajarra further strengthened this new product portfolio and offer meaningful sources of profitable growth. So taken all together, this is a strong and sustained performance heading into 2024. Next slide, please.

Speaker 1

This quarter further underscore the importance and strength of our vaccines business. Prevention is an increasing focus for healthcare systems all around the world. GSK is a world leader in vaccines and is Extremely well placed to deliver innovation and offer value to both individuals and payers. The introduction of Orexpi in the U. S.

Speaker 1

Is evidence of this, demonstrating our strong launch capabilities With over £700,000,000 of sales in its very first quarter, as we protect people at scale from this life threatening disease and especially those with comorbidities. Generating further clinical evidence for Orexvi remains a clear priority, And we were pleased to present positive data in adults aged 50 to 59 years at the CDC's Advisory Committee on Immunization Practices last month. We also added the outstanding clinical profile for Shingrix this quarter. Results of a large post marketing study in China demonstrating 100% efficacy. And alongside this, we're additionally significantly expanding availability of Shingrix in Our exclusive partnership with Jupae signed last month is going to support and accelerate our goal to Shingrix annual sales of more than £4,000,000,000 by 2026 and with opportunities to expand this partnership further, including potentially with Orexvi.

Speaker 1

Our innovation in RSV, shingles, meningitis and pediatrics all demonstrate our world leading vaccines capabilities. And we have further substantial innovation in the pipeline, where we have our comprehensive and leading suite of vaccine platform technologies, including Next generation mRNA, our multiple antigen presenting system or MAPS as well as, of course, as our adjuvant systems. All of these offer exciting new opportunities in seasonal respiratory, bacterial and chronic viral infections, And we continue to explore the science beyond infectious diseases. Next slide, please. Alongside delivering stronger shareholder returns, we also continue to build trust by delivering across the 6 key areas we prioritize for ESG.

Speaker 1

This quarter, I'm highlighting our continued commitment to fight malaria with innovation. GSK scientists working with Johns Hopkins Institute and others published their groundbreaking discovery of reoccurring bacterium that can significantly reduce the malaria parasite load in mosquitoes, indicating the potential to inhibit transmission of malaria And we also continue to deliver our environment and diversity, equity and inclusion goals. Further details along with more on all six key areas are included in the Q3 results announcement. Now let's hear more from the team on our progress, starting with Tony and R and D.

Speaker 2

Thank you, Emma. My priority is investing in our pipeline and accelerating R and D to deliver new vaccines and medicines for patients. Today, the pipeline comprises 67 assets in clinical development, 2 thirds of these prevent and treat infectious diseases and HIV. During the quarter, we've seen continued progress. In infectious diseases, we're focused on seasonal respiratory viruses, bacterial, fungal and chronic viral infections.

Speaker 2

In seasonal respiratory viruses, Orexvy received approval in Japan as the country's first RSV vaccine for older adults. And we also shared positive data for 50 to 59 year olds with the Advisory Committee on Immunization Practices in the U. S. In chronic viral infections, we will present data later this month on bupiravirsen, a potentially transformative treatment for chronic hepatitis B. I'll talk more about these data shortly.

Speaker 2

In HIV, the European Medicines Agency approved Apretude as the first and only HIV prevention option in combination with safer sex practices to reduce the risk of sexually acquired HIV infection in high risk adults and adolescents. For Respiratory, Japan accepted the regulatory submission of Nucala for chronic rhinosinusitis with nasal polyps. And later this month, alongside Luke, I look forward to providing you with insights into our respiratory strategy and medicines at the next Focused Meet the Management event. For oncology, the European Medicines Agency recommended not renewing Conditional marketing authorization for Glenrep. As a reminder, given the changing regulatory environment, our expectations remain low for event driven DREAM 7 and DREAM 8 Phase 3 trials.

Speaker 2

We now expect to read these out in 2024. This quarter, we also reached an exclusive licensing agreement with Hanzo for a Phase 1 B7H4 targeted antibody drug conjugate or ADC. We believe this has best in class potential in ovarian and endometrial cancer with opportunities in other solid tumors. Lastly, we are delighted with the U. S.

Speaker 2

FDA approval of Ajarra or mormelotinib, which is indicated for treating myelofibrosis in adults with anemia and the approval of Gemperli, our highly effective PD-one inhibitor as the first new frontline treatment for patients with DMMR MSI high Primary, advanced or recurrent endometrial cancer. The profile with Fort Gemperley was strengthened by the recent interim analysis of RWBY Part 1, which reported a statistically significant and clinically meaningful survival benefit in the overall population enrolled. We aim to present these OS data at a conference early next year. Next slide, please. Last week, we presented further safety and immunogenicity data for Orexvi to ACIP.

Speaker 2

The vaccine met its co primary endpoints and demonstrated non inferiority in people aged 50 to 59 years of age when compared with adults of 60 years and older, including those at increased risk of RSV lower respiratory These data continue to demonstrate the consistent strength of Orexi's profile in protecting the most vulnerable. We will make a supplementary biological licenses application to the U. S. FDA before the end of this year in time for next year's ACIP to further support potential label updates. For Shingrix, we continue to build our knowledge with new data demonstrating 100% efficacy in the prevention of Shingles in China for adults aged 50 and over, a remarkable result.

Speaker 2

We expect to publish these data in a peer reviewed scientific journal before the end of the year. Slide 11, please. Continuing with infectious diseases, viperavirsen, our triple action antisense oligonucleotide, has the potential to be the cornerstone of functional cure for patients with chronic hepatitis B. It inhibits viral replication, reducing viral DNA And thus the production of viral proteins, including the hepatitis B surface antigen. And importantly, it stimulates the body's innate immune system.

Speaker 2

We believe this triple mechanism of action is the reason for bepi's unique profile. There are more than 300,000,000 people living with hepatitis B And our goal is to provide patients with the 1st clinically meaningful functional cure for hepatitis B, eliminating the need for continued therapy And ultimately reducing the long term risk of developing liver cirrhosis and cancer. We now have 2 completed Phase II trials for which data are consistent And demonstrate that patients with low surface antigen have the greatest chance of a functional cure when treated with BEPI. In the case of B2Gether, this is not significantly improved by sequential PEG interferon treatment. However, the recent exclusive license of Janssen's Phase 2 small interfering RNA based therapeutic provides a complementary opportunity to develop a potential novel sequential regimen to benefit a broader patient population and potentially drive Lastly, we hope data from B.

Speaker 2

Sure will be presented later this month at AASLD. This will demonstrate a durable response for a significant proportion of patients treated with bepi. Our Phase III trials, B well I and B well II are Progressing as planned in 31 countries with data anticipated in 2025. Turning to my final slide. This slide highlights important clinical data readouts and regulatory events over the upcoming months.

Speaker 2

You can find a comprehensive overview in the appendix. In summary, I'm pleased with our progress so far this year. We have clear plans to move forward at pace, deliver on our key objectives for R and D And support GSK's overall growth ambitions. I'll now hand it over to Luc on Slide 13.

Speaker 3

Thanks, Tony. In Q3, we again delivered growth across vaccines and specialty medicines in each region with £8,100,000,000 of sales, Up 16% versus last year, excluding pandemic solutions. Please turn to Slide 15. In vaccines, we saw strong growth of 34% in the quarter, Excluding Pandemic Solutions, led by the excellent launch of Orexvy, which contributed £709,000,000 On the same basis, we now expect Full year vaccine sales growth to be around 20%. On Orexvi, I want to highlight the excitement our organization has had behind the launch that we've seen in the U.

Speaker 3

S. Following an initial inventory build, we saw high demand and received 2 out of every 3 retail prescriptions. In the quarter, we saw around 50% of Orexvi doses were co administered with flu and we're pleased with our commercial positioning in all major pharmacies, including competitive contracts with 11 key accounts. We strategically chose to highlight our 94.6% efficacy in the comorbid population, And that message seems to resonate well with strong HCP brand recognition. There's a long runway for Rexvi in the U.

Speaker 3

S, During the quarter, we vaccinated more than 1,400,000 adults of the 83,000,000 at risk and ex U. S. As launches are underway across Europe and Canada. In September, we also received approval in Japan. We remain confident in our peak sales being greater than £3,000,000,000 For the full year, we expect sales to be between £900,000,000 and £1,000,000,000 based on an analog of flu vaccination seasonality.

Speaker 3

However, there continue to be unknown factors, including annual vaccination patterns, duration of protection and what re vaccination recommendations might be. We will continue to keep you informed, of course, as we learn more. Next slide, please. Moving to Shingrix, this remains an important vaccine for our portfolio up 15% versus last year with the ex U. S.

Speaker 3

Contribution now representing 50% of sales. In addition to the U. S, Shingrix is available in 38 additional countries with less than 3% penetration in most markets And we continue to have unconstrained supply. In the U. S, we've reached the most motivated consumers With 33% penetration of more than 120,000,000 adults recommended to receive Shingrix.

Speaker 3

We remain encouraged by the growth in retail, which was up 4% in the quarter and are investing in strategic initiatives to actively target consumers And HCPs to access the next tranche of customers. In October, we announced a deal with Jifai to co promote Shingrix in China And this partnership materially expands the number of Chinese adults who can benefit from Shingrix over the next 3 years through a company with a track record Driving access to innovative medicines and vaccines in China. GFA has a significant reach across China with an extensive service network Covering more than 30,000 points of vaccination versus the current 9,500 we have now. As Emma mentioned, we expect this partnership to support and accelerate our expectations for Shingrix to reach more than £4,000,000,000 by 2026. Next slide, please.

Speaker 3

In Specialty Medicines, including HIV, which Deborah will cover shortly, We've increased our sales by 17%, excluding Zavuti. For the full year, we now expect low double digit sales growth. Our market leading medicines, BENLYSTRA and NUKALA, continues to deliver double digit growth. BENLYSTRA was up 20% in the quarter With growth across all major markets and a promising opportunity with updated EULA guidelines now recommending use earlier as part of a standard of care for lupus and nouveau cyphitis. Nucala was up 19% in the quarter and remains the 1st and only biologic approved in 4 eosinophilic diseases.

Speaker 3

We expect to see COPD data for NACALA in the second half of next year. Both of these medicines continue to have room to grow with relatively low buyer penetration And lifecycle opportunities underscoring our confidence in the long term opportunity for both. In oncology, sales were up 26% in the quarter with Gemelli now being used in the first line for appropriate endometrial cancer patients And Zejula is up 22% due to stocking of our new tablet formulation, providing an improved patient experience. We expect this stock will be utilized by the end of the year. And on this slide, I wanted to highlight the recent approval of our myelofibrosis medicine, Ojara.

Speaker 3

In addition to a line agnostic label in the U. S, Regulators acknowledged our unique benefit in anemia, an especially important characteristic for these patients as we know that anemia status and Primus of transfusion directly correlate with poor survival prognosis and quality of life. And as you can see on this chart, if you're a myelofibrosis Patient with no anemia, you have a median 8 year life expectancy. Conversely, you have a 2 year life expectancy if you're severely anemic. So For example, your hemoglobin level is below 8.

Speaker 3

We look forward to making this medicine available to patients and have already recorded sales in September. And with these updates, we're raising our full year oncology sales expectations to increase the low single digit. Please turn to Slide 18. Finally, our general medicines portfolio continues to contribute more than £2,000,000,000 in the quarter, led by TRELEGY, which was up 23%. Trelegy is the fastest growing triple therapy for COPD and asthma with room to grow as the SIT class still only has 28% penetration of the COPD patient Class share in the U.

Speaker 3

S. Overall, General Medicines were down 2% for the quarter due to negative RAR impacts slightly offset by TRELEGY demand And continued post pandemic recovery of the EU and international antibiotic market. Taking everything into account, we now anticipate low to mid single digit growth this year. And with that, I'll now hand over to Deborah to cover HIV.

Speaker 4

Thank you, Luke. Our HIV business Delivered sales of £1,600,000,000 in the 3rd quarter, growing 15%. This growth was primarily driven by patient demand, which contributed 10 percentage points of growth with the majority of the remaining 5 points from tender phasing in our international business. Our continued strong performance through this quarter means we are now increasing our guidance for full year growth to around 10%. Our performance benefited from strong patient demand for our oral 2 drug regimens and long acting injectable medicines, which are now 53% of our total portfolio value.

Speaker 4

Dovato delivered £477,000,000 in the quarter. Market performance reflects HCP belief in Dovato, which has firmly consolidated its position as the leading oral Tudor Greshamen. I'd like to spend a few moments describing our expectations around Onetegraphy as loss of exclusivity. In Europe, the composition of matter patent expires in July 2029. In the U.

Speaker 4

S, dolutegravir is protected by a composition of matter patent until April 2028, which includes an additional 6 months of exclusivity following the completion of our pediatric studies. Dovato and Juluca are also protected by formulation and other patients in the U. S, which have expiry dates after the composition of matter patent. Therefore, we A longer exclusivity period in the U. S.

Speaker 4

For Dovato until December 2029 and Juluca until July 2030. Turning to our long acting injectable portfolio. Cabanueva sales for the quarter were £182,000,000 reflecting strong patient demand with high levels of market access and reimbursement across the U. S. And Europe.

Speaker 4

Cabanuba continues to be supported by strong labor evolution and data, which underpins confidence. Patient awareness of Caban Uber is high at over 70% and around 2 thirds of switches are coming from competitor products. Moving on to prevention. Sales of Apertoide, the world's first long acting injectable for the prevention of HIV, We delivered £37,000,000 in the quarter, and we are pleased by the momentum across the U. S.

Speaker 4

This, Alongside the desire by prescribers, payers and governments for a new solution to help end the HIV epidemic, gives confidence that the PrEP market in the U. S. Will continue to grow strongly. We were also pleased to receive European approval for Apretude in September. We're also pleased by the progress of our pipeline, which is focused on innovative long acting regimens.

Speaker 4

We have 3 clear target medicine profiles to provide the world's 1st self administered long acting regimen for treatment and to provide ultra long acting regimens for treatment and prevention. In our recent HIV Meet the Management event, We confirmed that we are currently on track to deliver an every 4 month injectable regimen. This would enable us to double the dosing interval, enabling clinic visits to be halved to just 3 per year, meaningfully increasing the benefit of long acting regimens for patients and healthcare systems. For 4 monthly dosing and prevention, We said we currently expect approval in the 2026 timeframe and for 4 monthly treatments in 2027. We also provided greater clarity on our roadmap to further extend the dosing interval of our long acting regimens in treatment and prevention to enable every 6 month dosing towards the end of the decade.

Speaker 4

To conclude, we remain very confident in our ambition to achieve a 5 year sales CAGR to 2026 of 6% to 8% and to maintain our innovation leadership in HIV. This, combined with the continued growth of the long acting market, gives us the potential to significantly replace the revenue from the dolutegravir loss of exclusivity. I will now hand over to Julie.

Speaker 5

Thank you, Deborah, and good afternoon, everyone. As you heard from the team, we've made great progress on our road map since the Q2 results, and we're well positioned heading into the end of the year. We continue to be focused on execution, our pipeline, capital allocation and investor engagement. And as Tony mentioned, we've had several regulatory approvals, including Azyara and Gemperley during the Q3. And following our HIV Meet the Management event in September, we look forward to holding a similar event focused on respiratory on the 30th November.

Speaker 5

Please now turn to Slide 22. Turning to the quarter, as I cover the financials, references to growth are at constant exchange rates, and I'll focus my comments on adjusted results. So starting with the income statement. Sales increased 16%, excluding COVID solutions, and were up 10% overall, reflecting continued strong execution with the extremely successful launch of Orexvi. Gross margin improved 80 basis points excluding COVID And 3 60 basis points at CER, including the impact of lower sales of Zabudhi.

Speaker 5

SG and A growth was 14%, excluding COVID. And as a reminder, in Q3 last year, we had foreign exchange gains on the Via collaboration, which contributed 3 points of reported SG and A growth this quarter due to the credit last year. Adjusted operating profit grew 22%, excluding COVID Solutions and 15% overall. The margin increased 34%, driven largely by cost of goods improvements and operating leverage. Turning to the reported results.

Speaker 5

Total operating profit increased 83 8 percent to £1,900,000,000 and this was driven by overall performance as well as favorable CCL movements and fair value gains from our stake in Helion. The reconciliation of total to adjusted results is included in the appendix. On currency, there was an adverse 6 point impact on sales and 9 points on adjusted operating profit, primarily due to the strengthening of sterling against the U. S. Dollar.

Speaker 5

Please now turn to Slide 23. Moving to the adjusted operating margin dynamics in the quarter. The margin increased 170 basis points to 35% at CER and improved 180 basis points excluding COVID Solutions. Overall, cost of goods has been favorable, primarily reflecting reduced sales of lower margins of Udi and an improvement in mix towards specialty and vaccines. Regarding SG and A, we are in an investment cycle, supporting our priority products.

Speaker 5

Our spend is focused on maximizing the launch of Orexvy, Building awareness of RSV and catalyzing the global market expansion opportunity for Shingrix. We now have approval in 39 countries for Shingrix and 18 countries for Orexvy. Specialty medicines is also a targeted investment area with clear opportunities for the long acting HIV franchise and the launch of AZURA in oncology. We confirm our guidance for SG and A this year with growth broadly in line with sales. It is important to say that following a period of investment, we now expect to move to a period of delivering returns on that investment and building on the great foundation of performance.

Speaker 5

In this new cycle, SG and A growth will step down and will be accretive to profits in 2024. Next slide, please. Adjusted earnings per share grew 17% overall and benefited from lower net finance following debt restructuring and a favorable tax rate, partly offset by higher beef profits, leading to an increase in non controlling interests. Next slide, please. Cash generated from operations was £4,400,000,000 in the year £8,000,000,000 and secondly, the increase in working capital influenced by stronger XP sales in Q3 and lower Zabudy collections.

Speaker 5

The Eurexpress sales will come through in the 4th quarter cash flow. Free cash flow more than doubled to $1,700,000,000 in the 3rd quarter And brought the 9 month year to date to an inflow of $1,300,000,000 Cash expectations for the year have improved, But we still anticipate that 2023 cash generated from operations will be slightly lower than 2022 due to the one off receipt from Gilead last year. We confirm our commitment of more than €10,000,000,000 of cash generated from ops by 2026. Net debt stands at £17,600,000,000 with free cash inflow and proceeds from the Halion stake partly deployed through business development and the acquisition of Billis Healthcare. Turning now to the guidance on Slide 26.

Speaker 5

Given our sustained strong performance across all segments of the business, we are upgrading our guidance at CER for the full year. And as a reminder, guidance excludes the impact of COVID-nineteen. We now expect sales to increase 12% to 13%. We expect adjusted operating profit to increase between 13% 15% and adjusted earnings per share to increase 17% to 20%. The strength of the Orexvi launch has been ahead of our initial expectations and is the main source of the guidance upgrade.

Speaker 5

Q3 sales of Orexvi benefited from strong demand and initial channel inventory build, with TRx volumes representing Around 1 third of the volume sold. As Luke referenced, we are projecting our forecast for the season in line with the High dose flu analogues and therefore expect full year sales of around £0.9 billion to £1,000,000,000 There is, however, still much to learn given the novel nature of this new vaccine, including annual vaccination patterns, duration of protection, competitor dynamics and what expert recommendations might be. And we anticipate further insight following the end of the U. S. Flu season, which will inform our outlook for 2024.

Speaker 5

We look forward to updating you further As part of our full year results, I remain confident in our longer term revenue ambition for Orexvi. Turning to the dynamics within upgraded guidance. Within sales, we're increasing our expectations across all product groups. We now anticipate vaccine growth of around 20%, Specialty medicines to grow low double digits and within this, HIV to grow around 10% and general medicines to grow low to mid single digits. Moving down the P and L to operating profit.

Speaker 5

We now expect royalties to be around 900,000,000 With no change to our expectations for the other lines of the P and L. To EPS, we expect lower interest expense of between £650,000,000 £700,000,000 In terms of currency, if exchange rates were to hold At the closing rates on the 30th September for the rest of the year, the estimated adverse impact on sterling turnover growth for the full year would be minus 2%. And on adjusted operating profit growth, it would be minus 4%. Finally, We remind you of a few modeling assumptions in 2024, namely the impact of AMCAAP, The loss of Gardasil royalties and the tax rate likely being a couple of percentage points higher due to OECD legislation. More details on these are included in our pre quarterly aid memoir, and I look forward to guiding more fully at the end of the year.

Speaker 5

And thank you. And with that, I will hand back to Emma.

Speaker 1

Thanks, Julie. Turning lastly to Slide 27. So in summary, we are seeing strong and sustained improvements in our performance. This quarter marks the 7th consecutive quarter of competitive sales and profit growth, which supports an upgrade to our guidance for the year. We also remain very focused on strengthening our pipeline and our longer term outlooks with progress Development of our long acting HIV portfolio and new prospects in respiratory, all pointing to new growth opportunities for GSK.

Speaker 1

We have strong performance as we enter 2024, and we look forward to keeping you updated on our progress. Thank you for listening. And let's now please we'll move to the Q and A.

Operator

Thanks, Emma. And we request that you ask 1 to 2 questions so that everyone has the chance to participate. With that, I'd like to take our first Question from Graham Parry. Graham, over to you.

Speaker 6

Great. Thanks for taking my questions. So I'll start with the REX fee. So it's a question on the level of discounting in the initial launch. So 2 thirds of your 709 was inventory and you've administered some of 1,400,000, 1,500,000 doses.

Speaker 6

That means underlying sales are in the sort of 230 to 240 range and that would imply net price Probably more than 30% below the list price. So can I just check that's the right sort of ballpark? And is that mostly wholesaler discounting Or retail pharmacy discounting to drive an initial the initial inventory build and something which we might see sort of ameliorate a little bit over time. Was that just kind of where The competitive nature of the market is at the moment. And then secondly, I know Julie touched on this, but dynamics into next year, just be interest You obviously won't have the initial inventory build, but how much of that inventory do you think is just sort of You don't have the return of the page to be vaccinated this year.

Speaker 6

So any thoughts you have so far on How far penetrated you are into the easy wins of the more elderly comorbid, etcetera? And how much tougher it might be to get return or to new People to get vaccinated next year. Thank you.

Speaker 1

Thanks, Graham. Well, we'll come to Julie in a minute on guidance And thoughts around next year, although obviously, we will mainly be giving you thoughts around next year When we come to February 2024, I would just remind everybody that whilst we are Absolutely delighted with the fast and competitive start here on RSV. It is just the start of the 1st season, and we remain very ambitious for the ZAR3 1,000,000,000 at least that we expect this asset to represent. But let's go to Luke first, noting, Graham, you will fully understand we're not going to be declaring all our commercial details On this call, but Lee, do you want to comment more broadly?

Speaker 3

Yes. Graham, thank you. I mean, I think we've been quite disciplined Taking a longer term around pricing and contracting and it's landed quite well. I won't give you any more color than that in terms of the Percentages at this point because I'm sure our friends in New York have probably got up a little bit early this morning. But what I would say is To build on Emma's point, I think in the short term, things are uncertain.

Speaker 3

We're very happy with the launch. In the long term, we're very certain. I think so far, if we look at some of the metrics, which I can try and help you with, it's about 50% co administration with flu. There's a very large overlap with that population and interestingly around 15% of people are getting 3 shots when they come into the pharmacy. 85% is that 65 to 84 age population.

Speaker 3

So again, very similar to high dose flu. And yes, I think for the rest of the year in terms of demand, you're still seeing good market Research in terms of ACPs recommending it, so it's about 64% based on our latest market research, which is encouraging. And of course, the CDC is advising doctors Keep going. So that's on the positive side of the ledger. But the fact is this our working hypothesis is this is more of a flu like trajectory.

Speaker 3

And as people stop coming into pharmacies and we see a reduction in staffing levels of pharmacy who actually deliver these vaccines, Then we're going to see a drop off in demand. And that's our hypothesis at this point. We'll We have a lot more color in Q4 to give you an update. And then as Emma said, I think we're very, very confident in terms of the $3,000,000,000 number that we've outlined in the past.

Speaker 1

And obviously looking forward to rolling forward with that 50 to 59 data, too, which is another potentially meaningful cohort. Julie, anything else you want to add?

Speaker 5

No, I think actually Luke's covered it extremely well. I think we've obviously looked at the levels of stock in the channel. We've looked at the rate of immunizations. We've seen the correlation with flu, as Luke mentioned, very, very close. And that's really informed our guidance.

Speaker 5

And in terms of 2024, I mean, I think we're going to as we come through the U. S. Flu season, we're going to have a much Clearer view of 2024 when we give our full year results. So we'll definitely update you at that stage more fully. Thanks.

Speaker 5

Next question, please.

Operator

Okay. Next question is going to be from Kerry Halford at Berenberg. Kerry, over to you, please.

Speaker 7

Thank you. I have a couple of questions for Tony, please, within R and D. So firstly, on the PUREVERSE then. So now you've got the full suite of your Phase 2 data and you have recently signed that deal with J and J to look at Sequential therapy. Do you still remain confident you can offer hep B patients a functional cure, at least A proportion of them.

Speaker 7

And what do you expect that J and J SI RNA to add here? And do you stand by your more than GBP 2,000,000,000 sales target for that asset? And then secondly, a broader question on R and D budget. So here, we have seen significant growth in your budget over the past 18 months or so. And based on the pipeline you have ahead of you, are you broadly happy with the annual budget that you have effectively been given this year?

Speaker 7

And the run rate looks to be about GBP 5,500,000,000 or should we expect that R and D budget to continue to grow in the sort of low double digit range that we've seen year to date going forward? Thank you.

Speaker 2

Okay. Thanks, Carrie. Let's get Start with HBV and then I'll comment on the pipeline, but perhaps, Emma, you might want

Speaker 8

to make a comment on

Speaker 2

So first of all, I'm really pleased with this deal, Kerry. Let me just remind you because I'm going to anchor it in what we are What we know about bevy and becoming increasingly confident about that is in the context of monotherapy on top of nucleoside treatment that we achieve a Durable functional cure for a significant proportion of the HBV population, big to chronic HBV patient population. And that's for individuals that have a surface antigen count of less than 3,000. Just as a reminder, that's about 40% Of the 300,000,000 individuals who are living with chronic hepatitis B. To put it in a nutshell, What the new deal with the J and J, siRNA does

Speaker 8

is it

Speaker 2

takes the broader population Down to that target population of about 3,000 below. So you should expect and we're excited about the prospects, therefore, of Seeing both an increased coverage in an ITT population and also a deepening of the therapeutic And this is important. If you look at the mechanism of action of the J and J siRNA, it works in a Excuse me, a complementary fashion to bepi, so further lowering viral DNA and the consequences of that, as I mentioned in the presentation. The other important thing is that we've built a complex PKPD model around response, which this will And in addition, using AI ML and some really deep phenotyping on nearly 500 patients, Establishing an understanding of the immune status required at the beginning of treatment for response. We're going to continue to add to that because with Jay With the deal in question, we get a number of ongoing Phase 2 studies.

Speaker 2

So I'm really very pleased about where we are with that particular deal. For me, it strengthens My expectations in terms of our ability to deliver a functional cure for a broader population of patients living with this disease. Let me just in terms of the question about R and D budget and growth, perhaps I'd just say a few brief things about the portfolio and then hand over to Emma. So again, I'm really very pleased with where we are in the portfolio. Emma mentioned the strength that we have in our growing vaccines portfolio, particularly next Darius, you'll see more data coming from our mRNA platform, from MAKS, and we have a number of important studies like, for example, therapeutic Herpes Simplex vaccine readout on POC that will again continue to hopefully deepen the importance of our adjuvant technology That is underscoring, I think, the fantastic clinical performance we see for Shingrix and for Oraxly.

Speaker 2

Luke and I will say more, I mean, the management about the cornerstones of dapimocumab, Nucala and camlopixent In our respiratory portfolio, of course, I've just mentioned, Becky. And then moving just briefly into oncology, Jem Purley, most recently through the OS data that I mentioned earlier, continues to show its credentials as a very highly effective PD-one inhibitor. And with all of that in place, I think we're well set with regards to our future ambitions and the budget required for that Ambition, I'm in good shape about it.

Speaker 1

Thanks, Tony. I mean, I think there are 2 important things to emphasize strongly here. First of all, we've been Very clear in our capital allocation framework, the number one priority for the company is to invest in the pipeline organic and Inorganically. And that is why over the last 5 years you've seen a significant step up in our R and D spending. What matters is not how much you spend, but that you spend it super smartly and that is ever improving And that we're continuing to fuel competitive profitable growth for our shareholders.

Speaker 1

So the first thing is, it is a priority, but it's about how we spend it. And I think we are broadly It's more industry norm levels in terms of spending, but very much focused on the returns of that. And the second thing is we are Absolutely committed to profitable growth, and we're in that chapter now. We're now in, I think, 7 consecutive quarters of Competitive growth, glad to upgrade guidance for the year, very confident about our 'twenty six outlooks and our double digit Profit CAGR, this year we expect R and D spend to increase Slightly below our turnover levels. And we're not going to set an explicit target around it, but you can be very confident that the outlooks We've previously laid out we're completely committed to and delighted about our progress against.

Speaker 1

Next question, please.

Operator

Okay. Next question is from Simon Baker Redburn, Simon, over to you, please.

Speaker 9

Thank you, Nick. Thank you for taking my questions. 2, if I may, please, both on the pipeline. And apologies if I missed it because I did lose sound at one point. But it looks like depamokimab is running Slightly ahead of previous expectations.

Speaker 9

I just wonder if you could give us an update there on the shift in the SWIFT II study time line. And then secondly, on the Hanseo ADC, I wonder if you could just elaborate a bit on what attracted you to that asset. Obviously, we've not seen much data. You'll have seen more than us. And I was wondering if it was data driven or whether it was driven by the fact that The payload and the link of BAR-one or two carbons is identical to Datto DXD and therefore gives you a high level of confidence in the Thanks.

Speaker 1

Well, coming to Tony on both of those, just to flag, please do join us on the 30th or at least Tony and Luke, I should So the 30th November, when they will update you on some of the very exciting scale assets we have in Obviously, our homeland and our heartland, including Depay and Cam Lipixent as well. And look, Tayla, you might want to comment A bit more on the trials that are ongoing and then also on the ADC, which is obviously completely in line with our onc Strategy?

Speaker 2

Sure. Thanks, Emma. Hi, Simon. Yes, I'm pleased with the progress we're making on SWIFT 1 and 2. As you've We've seen a slight acceleration in that.

Speaker 2

That was associated actually with also an acceleration in the ANCHOR study for On nasal polyps, what that means is that the safety database that we need to underpin the file is now Complete. You should expect though that we'll stay on schedule with regards to the analysis and publication of the data, and I won't be doing that until we get the results for the 2nd swift analysis, which still places us in the first half of next year. As far as the ADC deal It's a concern, Simon. So yes, as you quite rightly point out, in terms of linker payload, there are similarities To DataDx, and therefore, we derive confidence from the improved profile that you see for ADCs carrying that link of payload. 2 important things, though, to In the context of this deal, one, the antigen B7H4 is selectively expressed on gynecologic For cancers, that's why we went after the mechanism in line with our strategy for focus on women's cancers and heme.

Speaker 2

And lastly, in that area as well, there is ample evidence of use of tocoisomerase inhibitors as standard of care for chemotherapy. That's related in part probably to the fact that you see a lot of DNA instability in those cancers. And as I'm sure you're aware, Tokai summarizes work on that mechanism.

Operator

So next question is going to be from Andrew Baum at Citi. Andrew, over to you, please. Andrew, you then?

Speaker 3

Yes, I

Speaker 10

am sorry about that. Two questions, please. One for Luc and the other one for Tony. So for Luc, could you talk to the impact of the removal of the Medicaid cap, the MP cap on your Gen Med business, particularly respiratory next year in terms of Quantifying the impact on revenue and earnings. And then for Tony or I guess Kim, if she's on, There was recently reported the ATHENA cohort with cabotegravirilpivirine.

Speaker 10

There was a number of cases of viral rebound resistance, particularly in patients with high BMI or weight gain. Should we expect any label change as a function of observations in that cohort? And it was limited number, but still it was notable and remarked upon. Thank you.

Speaker 1

Thanks, Andrew. Look, we'll come to Deborah actually on the HIV pipeline first and then loop back to you on the AMCA.

Speaker 11

Thanks, Andrew. So the ATHENA is a cohort study. It was presented at EACS 8 to 10 days ago. Actually, the finding is exactly in line with our clinical studies. So as you know, there are kind of 3 Characterize things that give you a higher likelihood of failing with Cab plus rilpivirine, weight is 1, so high BMI is 1.

Speaker 11

And then obviously, A6, A1 sort of subtypes. And then lastly, if you're Resistant to rilpivirine. So we clearly guide that those patients, if you have 2 of those risk factors, you're more likely to fail. We guide that And that's exactly what we saw in the ATHENA study in terms of the characteristics of those that failed. And it was in proportion with what we saw in the clinical Study, which is obviously less than 1%.

Speaker 11

So no surprises whatsoever, exactly what you would expect. And it just Makes it more important that we continue to communicate through our sort of multivariate analysis data for whom CabAnoura is Right. And who probably shouldn't be taking the medicine, but it's a tiny proportion of the overall patient base that will get benefit from this medicine. And nothing

Speaker 1

new. Luke?

Speaker 3

Sure. Thanks, Andrew. I mean, as I said at Q2 that the exposure is US700 $1,000,000 But of course, we've had notice. So we've got authorized generics in place. We've done some withdrawals that we've announced.

Speaker 3

We've done WACC adjustment with Lamictal. The other products impacted, of course, the Advair and Flovant and Servant. Look, I think the impact is going to be sizable. We've started to reflect that in our adjustments now, But we need to judge to see what level of returns ultimately come back. There's also some variables in terms of the percentage of switch to authorized generics.

Speaker 3

But we do have competitive generics, for example, with Flovent. So they may pick up more volume, making it a bit hard To forecast, so long story short, I mean, we've been prepared for this. We've been working on it for a couple of years. I think we're in the strongest position possible, but there is going to be a material impact on that 700,000,000 And that's why it's reflected in the outlook for General Medicines next year.

Speaker 1

I mean that's the really important point is it's a 24 hit, but it's all included In our medium term guidance of being broadly flat in this business where we've obviously seen a nice uptick in performance, not least as Trelegy continues to path forward and lead the way. So all factored in and planned for. Next question, please.

Operator

So next question is going to be from Richard Parks at BNP Paribas. Richard, over to you, please.

Speaker 12

Thanks, Nick. Yes. Just a couple of questions. Firstly, on Orexvi. Can you talk about the unmet need in terms of severe disease in the 50 to 60 year old Patient population, just so that we can get a sense of and also kind of what you would expect in terms of ACIP recommendations so we can get a sense of how that Label update might impact the opportunity going into next year.

Speaker 12

And then second question is on Gemperley. Just Wondered if you could talk about your confidence in expanding the approval into the MMR proficient population. Obviously, I think there's sort of 2 options there. 1 is the Overall survival data from Part 1 of the study, so maybe you could talk about consistency of that benefit across those subgroups. And then the PARP inhibitor arm of Part 2 of the trial, I noticed you don't include Zejula's When you talk about Part 2 as an opportunity, so just wondered about your confidence in the PARP inhibitor maintenance arm of that study as well.

Speaker 12

Thank you.

Speaker 1

Thanks. We'll come to only a minute on oncology, but perhaps, Lou, you can talk about the 50,000,000 to 59,000,000 opportunity, which is another 40,000,000 people, by the way, in the U.

Speaker 3

Yes. I mean, I think there's 2 advantages. 1 is just the access to the 40,000,000 people. And again, that lines up nicely with The overall Shingrix cohort, so there's lots of synergies there we can achieve. And then there's the broader advantage when we're contracting In the retail and non retail settings because we'll be the only one there.

Speaker 3

Our expectation at this point is it's going to be shared clinical decision making. But as we speculated before the launch and I think so far that's holding up, that's not been a barrier during this initial phase of adoption. If you look at that 50 to 60 plus population, there's a sizable proportion of them that also had 1 or more comorbidities. So It's attractive, and certainly it resonates well with primary care doctors in terms of their support of the brand, which is around 71% in terms of their preference Overall, for Roxy.

Operator

Right.

Speaker 8

Okay.

Speaker 2

In terms then of ruby, particularly ruby part 2, just And indeed the MMRP population from the results that we described earlier this week. Important to recognize that the RUPEL1 study was not powered to look at OS in the MMRP population, but rather OS So the overall population, the way to think about this in context of both Part 1 and Part 2 It's definitely isolating out the MMRP population and asking under what circumstances are we likely to see the most meaningful therapeutic effect for those. There are, for example, genotype considerations associated with BOP response in the BOP 2 population that are important. I don't want to get caught on the details of those at this point in time. We're still waiting for the readouts, but it's fair to say that the The filing strategy that we'll put around Jen Purley in first line EC will take account of all of the factors that I just described as well as the competitive position.

Speaker 3

Yes. And I think to build on that competitive position, Amit, I think we're optimistic in terms of how the NCCN may read that. Of course, as you know, GY18 is not designed around an overall survival signal. And it's very interesting since that initial label, We've gone from 300 to 900 accounts now stocking Jed Hurley in the U. S.

Speaker 3

So that has a flow on effect and sales are up 10 times after SGO. And it's intriguing just looking at the market shares. If you look at that first line setting where that was obviously non promoted initially, I mean, Keytruda was picking up around 40% of that business. Keymode had dropped from 40% down to 27%, And we had around 13% of that market. So I think there's an opportunity now to start to make the case versus GY18, the elements of the design and the survival signal to try and expand the usage of Genpearly in that setting.

Speaker 3

So that's something we're quite excited about. And then of course, GIE helps inform the thinking around Ruby too.

Speaker 2

Kathy, exactly. Just a couple of things to underscore to Luke's point to remind you about GY18, different patient population. We had a larger degree of carcinosa or coma patients, which are harder to treat. And importantly as well, the RECIST sampling frequency for our Study was smaller, which obviously is going to pick up failures more quickly than the GY18 case does. So important to bear those two things in mind when you consider Harrison of the two studies.

Speaker 2

And Luke, I think, has guided you correctly in thinking about DUO E as being informative with

Operator

So next question is from James Gordon at JP Morgan.

Speaker 13

Hello, James Gordon, JPMorgan. Thanks for taking the questions. And I'm going to stick to OREX fee for my 2. The first one was about OREX fee and stocking. So it looks like about £460,000,000 of Oryx View was stocking this quarter, and the guide for this year implies about £200,000,000 to £300,000,000 of sales in Q4.

Speaker 13

But what does this assume in terms of stocking unwind in Q4? How much stock do you need to keep in the market to support the product as an ongoing run rate? And also, what are you thinking about ex U. S. Stocking in Q4?

Speaker 13

Could there be a U. S.-sized stock up that we saw in Q3 and Q4? And the second question is which sort of leads into that, which is Orexvi and the ex U. S. Launch.

Speaker 13

So ex U. S. Sales, I think, were only 9,000,000 this quarter, But the product was approved in the EU back in June. My understanding is you're not capacity constrained. So could ex U.

Speaker 13

S. Start to ramp in Q4 this year? And looking into next year, Could we see a big launch for ex U. S. Eurex?

Speaker 13

Could that be a big growth driver for next year? Or is it going to take a bit longer in Europe To get this going and what are the gating factors to get ex U. S. Or actually ramping like what we've seen this quarter in the U. S?

Speaker 1

Okay. Well, there's Julie first just to deconstruct a bit of the guidance for Q4 and then Luke around The globalization, but you're absolutely right. This is a global opportunity. And I'm even included in that the recent Commercial deals we've been doing in 2nd biggest market in the world. There could be an option on that for the future.

Speaker 1

And just to repeat, We're very ambitious with this being a multi billion asset as we've committed before. But in terms of the very short term in its 1st season, Julie, do you want to comment on the

Speaker 5

guidance Yes. Thanks very much, Emma. So what we've definitely found so far is of the sales of 709, In terms of immunizations into people's arms, we've got around the equivalent of about GBP 230,000,000 to GBP250,000,000 We were expecting I mean, the launch has been massively successful. We were expecting a stock in at this point Because it's very, very analogous to what's happening with flu. So I think I'll hand over to Luke in terms of the amount of inventory we Back to Carrie.

Speaker 5

Your figure for Q4, by the way, was absolutely spot on in terms of the level of sales we expect to see in the remainder, 200 to 300, And it's all to do with the stockings. So over to Luke.

Speaker 3

Yes. I mean, if you look at the total market, I think it's about 2.71, and we've got 1.7 of that in ARM. Yes, I won't give too much more color. I mean, as Julie said, it's 2 thirds of sales so far. And we'll obviously try and burn through that Towards the end of the year to position ourselves well, what we don't want is empty shelves or any window that Pfizer can get in there.

Speaker 3

That's why I'm being a little bit cute with the numbers here because it's Very dynamic at this point. In terms of EU, look, it's very early days. It's private. We've kept the price In a very tight collar with the U. S.

Speaker 3

Like we've done with Shingrix. And our expectation is that we need to now navigate Axis, we've got early wins in Canada. We've got some very encouraging signs coming in Europe and other markets, so we'll see the full effect of that in 2024. And of course, the advantage in the European and markets like Japan and other international markets is once we get the NIP, Then the level of resourcing we need to do to drive patients is significantly lower. And so from a P and L point of view, it's also very attractive.

Speaker 3

So 2024 For rest of Wells, for Orexi and, yes, good start in the U.

Speaker 1

S. And just to repeat, we are definitely seeing Increased openness and recognition of the value, literally financial value of investing In prevention, and so that is indefinitely in part why we're seeing this faster rate even if it's currently in the private market of approvals because it's just a lot cheaper and there isn't a health care system Well, budget isn't burdened at the moment. And they have more infrastructure in place, not least through pharmacy channels for distribution in many countries. So all of this underpins this broader confidence, but with phenomenally tight discipline from Lou and his team, as he's alluded to around The shape of the financial contribution. Next question, please.

Operator

So I'm mindful we're at just over the hour mark. And we still got 6 individuals with hands raised. So what I propose is that we try and work through as many of those as possible to a quarter past the hour and then we'll close the call there. So our next question comes from Mark Purcell at Morgan Stanley over to you. Mark?

Speaker 8

Yes. Thank you, Nick, and thanks for taking my question. On Orexpi, A little bit more color. I just wondered if there's any early indications of out of seasonal demand for RSV vaccination. Stuart, there may be more of a sort of Prevnar flu hybrid model.

Speaker 8

I know you'll know more by the end of the year, but any early indications there? And in pharmacies where Pfizer is fully stocked alongside you, given they talk about how they're not fully launched yet, What is your market share in those pharmacies where both products are present? And then a quick one for Tony. In terms of the Inflation Reduction Act considerations on R and D, where you have assets such as like your IL-eighteen, Where you could run parallel trials across a multiple number of indications. Do you see the sort of pressure to do that?

Speaker 8

I And on the IL-five, could you do a bridge study or would you have to do a separate study in COPD?

Speaker 1

Okay. Luke and Tim?

Speaker 3

Thanks, Mark. We're beating them everywhere so far. The aim is to keep that happening. So yes, I mean, look, it's really it's interesting. I mean, when you look at Pharmacist prioritization, ROCE is up there with flu and COVID, but you've seen COVID volumes drop off.

Speaker 3

And last week, we still kept growing with Orex feet, which is encouraging. I was sort of wondering whether it would start to slow down. So This next couple of weeks script data will really be interesting. It's more than 90% in the retail setting and that's another critical Component in your assumptions and we don't actually expect that to materially change. We think vaccines for maternal and OBGYN and PCP offices Will occur, which will be something we'll have to back out in future comp calculations, but we think the older adults market is going to be Very much like flu, very much like Shingrix, heading in direction of retail.

Speaker 3

So we'll just see what people's enthusiasm is over the next couple of weeks. So clearly awareness is very high. The intention to recommend is very high. So again, I'm very happy to sort of back the truck up with everything that we know in Q4 And give you much more color around the market research that we'll have at that point.

Speaker 1

And Tony, anything to add?

Speaker 2

Yes. Just 2 very quick ones then in terms of the IL-eighteen question. Look, the key question we're asking with IL-eighteen at the moment is its efficacy relative to GP in atopic dermatitis. So the medium term, as we build out our biomarker strategy and look for markers of efficacy at Phase 1, that's exactly I would then want to have the confidence to go forward into multiple indications. You probably have in mind that in case of IL-eighteen,

Speaker 3

the Mendelian randomization also points to inflammatory bowel disease.

Speaker 2

Obviously, a range of They should also point to inflammatory bowel disease. Obviously, a range of other considerations there beyond just IRA in terms of whether or not that's A path to go. And then lastly for Matinee, and the bridge a bridge for, Deputy, let's see where we go when we get the Matinee results. We're focusing very much on the role of EOs in driving the morbidity and mortality associated with COPD. So It will be part of our strategy, but I'm focused at the moment on making sure we get the results out of the Matheny and delivering a success in the

Speaker 1

call Yes. And of course, any allocation of capital is a combination of probability of success and the assumed forecast and that assumed forecast now has to take into account the area under the curve, whether it will be by the format or Next question

Operator

is from Steve Scala, TD

Speaker 3

Thank you very much. I'm just curious if our Vexy shipments in October support your conservative guide for the full year. So were they essentially 0? I would note that in the Q1 of 2018, GSK called out stocking for Shingrix and then went on to beat in 10 of the next 12 quarters in the U. S.

Speaker 3

2nd, I know you're beating Pfizer in RSV everywhere, But to what should we attribute the success they have had? Previously, you've said that you have a better vaccine, No setting, yet they put up a big number as well. So to what do we attribute that? Thank you.

Speaker 1

Well, I'll ask Lou to overlay Stephen, thanks for the questions. This is the 1st season that we've been through. We've given our guide for the reasons that I won't repeat So we're under some timing pressure, but we will know a lot more Q4. And obviously, we remain extremely ambitious for this, And our competitive focus is to make sure that not only the size of the market is big, which is where we welcome competition, But we are able to effectively reach the patients that need us, which is this more vulnerable Yes, hospitalization cohort. Luke, anything you want to add?

Speaker 3

Yes. And look, I think Shingrix is a different case, right? I mean, I was in the middle of that. We canceled the global launch. We redirected all of the volumes to the U.

Speaker 3

S. And we also in the middle of the later year had some synergies in manufacturing, which were surprising upside In terms of loss rate and packaging. So that's why we're up to get that volume ahead for fishing rigs. Look, I think in terms of us versus Pfizer, firstly, it's great. 2 companies are out there driving volume Because this is an awareness game.

Speaker 3

No one had heard of RSV if you're the person in the population before that. So having 2 companies promote, it's good. We have enormous respect for Pfizer. We like competing with them. They are a strategic competitor for us.

Speaker 3

If you look across PCV, meningitis, RSV and potentially shingles at some point. So it's nice to have this strong start. And again, yes, we want to keep this

Speaker 1

going. Next question?

Operator

Yes. Next question is from Peter Welford at Jefferies.

Speaker 14

I'm afraid I'm sticking with the Rexby. Could we just ask just a quick note, you mentioned that retail was over 90% of the volume so far. Curious, are you why you're so confident that, that mix We'll continue. I mean, obviously, Shingrix, it's varied over time. But I think your competitor made some comments that they think Potentially, in the Q4 and the back half of the season, it's going to switch more towards the non retail segment, where they see Perhaps a greater competitive advantage.

Speaker 14

I wonder if you could comment, I guess, on both of those, both from a competitive advantage point of view and also How potentially this could change, I guess, during the course of the season? And then just secondly, I wanted to stick with vaccines. I was wondering if Tony could possibly give us an update Tal, on how you're thinking about mRNA, I know we come back to this almost every quarter, but there obviously have been some competitive developments in there. So I wonder if you could us a quick update on how you're looking at your strategy and updates from news flow we could get to your mRNA portfolio in 2024?

Speaker 1

Yes. We're very excited about MR and A, so I'm going to come to Tony first. And remember that 90% is older asset adult, but we'll come back on that to Luke in a minute. But Tony, MR and A?

Speaker 2

Yes. So just very quickly then, very pleased about the platform and how it's moving forward. We're now moving into Phase II in both COVID And flu and Phase II program for flu includes a range of options And doses that we've deduced from our Phase 1 study, looking at up to 8 antigen components, which we feel is the path forward to, I presume that resolving the B strain coverage question that exists, also worthwhile pointing out that that's likely to become a Slightly simplified proposition as the B Yamagata strain is probably going to be removed in 'twenty four. But more on this And I've got the readout from the Phase 2 data.

Speaker 1

Luke, anything

Operator

you want to add on?

Speaker 3

Yes. Peter, I mean, I just sort of look at it at a macro level. You've got $83,000,000 who are over $60,000,000 You add the 50, 59, that's another 40, so that's 120. We think 90% of those are going to still come through. If you look at a typical birth cohort, it's 4,000,000 a year.

Speaker 3

So if I look at between now and the end of the year, that's about 1,000,000 pregnant women. And then it's unknown how many of those will get a vaccine. There's the influence available to the antibody as I think the other thing to keep in mind and we're seeing this with Shingrix is there are a lot of practices that are driving patients To pharmacy because they are they don't want to navigate the IRA dimensions and then have a separate track for the commercial patients. So They're actually sending patients through to the pharmacy rather than sort of persisting with that themselves. So that's a bit unknown, but definitely Those maternal vaccines will be given in OBGYN offices.

Speaker 3

We don't have the label there, so we'll need to exclude that from our market share calculations going forward.

Speaker 1

Thank you. We've got time to

Speaker 8

get We

Speaker 2

do have time for one more.

Operator

So apologies to those of you that we won't get to, but our last question comes from Emily Field at Barclays. So Emily, over to you.

Speaker 15

Thank you so much for fitting me in. And maybe I'll just ask one last one about Ojara. I was wondering if you could provide some context about how you're thinking of speed of uptake of this launch, particularly now that you did get the line agnostic Legal and if you're expecting more sort of upfront usage versus second line usage and any early indicators you could give us? Thank you.

Speaker 3

Thanks, Emily. So first, we've got about 172 patients on so far. The bulk of those are sort of JAK failure is highly anemic, so pretty severe cases. So that initial bolus, I think, will work through. Our working assumption is that between 40% 50% of patients presenting are anemic at diagnosis.

Speaker 3

And as you know, we've got an outstanding recommendation there in terms of 2A and the most competitive profile in that subgroup. And we also know that around 46% of patients Require a transfusion within 1 year of diagnosis. So that's our target market. We think right now, your 3rd line, it's Couple of months, but we'll work our way up. 2nd line typical treatment length is 18 months, but we should be able to start to penetrate in 2024 That first line where typical treatment is around 26 months of duration, and we got the NCCN data into them 2 hours approval and we were very happy with the recommendation.

Speaker 3

So, so far so good. A lot of academic interest. That's about 55% of the volume right now, 45% in the community, of course, we expect that to change in time. But, yes, a lot of excitement and this is clearly a visible problem for hematologists. And, yes, they're very supportive of mamalotinib.

Speaker 3

So, so far so good.

Speaker 1

Wonderful. Thanks, Luke. Well, look, we'll look forward to coming back Two more of your questions over coming days and weeks. I just want to leave you with a recap that we are delivering strong and sustained performance momentum with another quarter of double digit sales and earnings growth. This is broadly based performance, but of course, Benefiting specifically from the very fast start of Orexvi, which we're looking forward to seeing its progress ahead.

Speaker 1

Pleased to have an upgrade, but also really delighted with the momentum as we look Ahead to delivering our 'twenty six results and continuing to strengthen that longer term outlook as we keep progressing the vaccines pipeline, longer

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Key Takeaways

  • Strong Q3 financial performance with sales up 16% to £8.1 billion, adjusted operating profit up 22% and EPS up 25%, leading to an upgrade of 2023 guidance to +12–13% sales growth, +13–15% profit growth and +17–20% EPS growth.
  • The U.S. launch of RSV vaccine Orexvi generated over £700 million in its first quarter, is on track to be a blockbuster with peak sales above £3 billion and has new data pending for adults aged 50–59.
  • Shingrix achieved 100% efficacy in a large post-marketing study in China, and a partnership with Jupai targets accelerating annual sales beyond £4 billion by 2026 with over half from ex-U.S. markets.
  • GSK’s pipeline of 67 clinical assets is led by prevention and infectious diseases, including a potential hepatitis B functional cure candidate (bepiravirsan) with a new siRNA collaboration, the first approvals of Apretude for HIV prevention and new oncology launches Ajarra and Gemperley.
  • Q3 free cash flow more than doubled to £1.7 billion, net debt stands at £17.6 billion, and GSK confirms disciplined investment in R&D and SG&A, with a commitment to generate over €10 billion of cash from operations by 2026.
AI Generated. May Contain Errors.
Earnings Conference Call
GSK Q3 2023
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