AstraZeneca PLC

Good day. Welcome, ladies and gentlemen, to AstraZeneca's Q1 2020 results presentation. Before I head over to AstraZeneca, I'd like to read the safe harbor statement. The company intends to utilize the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Participants on this call may make forward-looking statements with respect to the operations and financial performance of AstraZeneca. Although we believe our expectations are based on reasonable assumptions, by their very nature, forward-looking statements involve risks and uncertainties and may be influenced by factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements made on this call reflect the knowledge and information available at the time of this call. The company undertakes no obligation to update forward-looking statements. Please also carefully review the forward-looking statements disclaimer in the slide deck that accompanies this presentation and webcast. I will now hand you over to the company.

Hello, everyone. It's Pascal Soriot, CEO of AstraZeneca. Welcome to our first quarter 2020 conference call and webcast for investors and analysts. As always, the presentation can be downloaded from AstraZeneca.com, our website. and we've also sent it to people on our distribution list. So if you can turn to slide two, this is an updated Safe Harbor Statement. We will be making comments on our performance using constant exchange rates or TER, core financial numbers and other non-GAAP measures. A reconciliation between non-GAAP and GAAP data is contained in the results announcement and all numbers refer to million US dollars. and for the third quarter 2020, unless we state otherwise. Please turn to slide three. We plan to spend about half an hour on the presentation and then do Q&A for the rest of the time. For those on the phone, please join in the queue for questions and remember to press star one. There's also an option to ask questions as part of the webcast. I'd like to ask you please to ask one question only. Thank you in advance for this. Today I'm joined by David Fredrickson, our Executive Vice President of Oncology, Ruud Dobber, the EVP of Biopharmaceuticals, Marc Dunoyer, who is our CFO, José Baselga, our EVP of Oncology R&D, Manny Pangalos, our EVP of Biopharmaceuticals R&D, and also for the questions later on, we have Pam Cheng, who is our Executive Vice President for Operations and IT, and Leon Wang, who is our executive president, who is responsible for China in the emerging markets. Please turn to slide four. This is the agenda where we plan to cover all key aspects of our announcement today. Moving on to slide five. The first quarter of 2020 was a robust start to the year, despite the ongoing corona crisis. And it was supported by a strong business model and a good pipeline. Our total revenue advanced 17% and we estimate a low to meet single-digit revenue benefit from COVID-19. New medicines advanced by 49% and we saw continued strong progress across all the CRP areas and in emerging markets and across all regions of the world. The response to the COVID-19 pandemic has been strong and multifaceted and that included repurposing medicines, also the discovery of new antibodies and as well as supporting testing and providing aid around the world as we could. Our co-operating profit grew by 16% despite 19% lower operating income. With that, this decline in operating income, the underlying profit growth is about 30%, so very strong underlying business. With a tax rate of about 20%, our core EPS ended at $1.05 up 21% with leverage because it grew more than revenue. So with those very strong first quarter results, we are reconfirming our guidance, and we will be covering this in more detail later in Marc's presentation. Overall, we continue to see strong progress in the pipeline. in particular for the adjuvant use of Tagristo, which we will talk about and is definitely a practice-changing dataset. Moving to slide six, looking at the pipeline use flow since the results announcement in February, I will only pick a few highlights. There were new approvals for Mfinzi and HER2 and Loquelma. and a welcome to a brand new medicine, Koselugo, for treatment of children with neurofibromatosis type 1. There was regulatory submission progress for a couple of medicines, hopefully bringing new benefits to patients in the near future in prostate cancer but also in NF1. The highlights for phase 3 data readouts included the early trial unblinding for Tagrisso in the adjuvant setting and the early stop for Farsiga and chronic kidney disease. Turning to slide five, the first quarter of 2020 was the sixth quarter with strong total revenue growth following the return to growth in 2018. This was driven by the new medicines. Dagriso alone added more than $350 million in revenue, with Infinzi and Limpaza following suit. A number of medicines added significant amounts each including Fasenra, Partigas, Brilinta, and now Calcoins. The total new medicines added to $1 billion, and compared to past quarters, growth is now coming from a higher number of medicines that is further diversifying growth and sustainability over momentum. Jump to slide eight, please. The increased business diversification is clearly visible through oncology, which now makes up 40% of product sales. Across AstraZeneca, specialty care now makes up close to half of our business, bringing a balance to the company we intended to create with the new strategy. We now have achieved it. Another important balance is the one between established and emerging markets. Combined, China and the other emerging markets make up 36% of sales, with growth in ex-China markets of 16%, a new high point. The balanced business across types of benzines across CRP areas and geographies makes AstraZeneca WBD strategically well positioned in the current environment and well prepared to remain a very important partner for health care systems in all countries globally. Turning to slide nine, our partnerships around the world are exactly what is required in the common fight against COVID-19, the COVID-19 pandemic. Starting with the safety of our colleagues around the world, we have enabled working from home for thousands of co-workers for rapid redeployment of new technologies in January. There have been amendments made if required to ongoing clinical trials to ensure patient safety. We also work on humanitarian aid, which has helped keep frontline workers safe with donations of face masks and other protective equipment. And core to our purpose, There has been a relentless focus on the continuity of care for patients through the reliability of our medicines and the supplies. R&D efforts are focused on repurposing medicines like Calquence and Farciga, and new trials have started to test their benefits on patients. New antibodies are in development, and there have been impressive responses to governments when help was needed for testing and screening. I'm really very pleased by the effort undertaken by AstraZeneca and our more than 70,000 colleagues around the world. With this, I will hand over to Dave to cover oncology business. So please turn to slide 10. Over to you, Dave.

Thank you, Pascal. Now I'll plan an update on the performance of our oncology business before handing over to Ruud for an update on biopharmaceuticals and emerging markets. We're pleased to report strong growth of 34% for our oncology business, which is now annualizing at $10 billion. We're seeing regional expansion, particularly outside the United States, as our key lifecycle efforts start to take effect. The new launches are progressing very well with additional news flow every quarter. Please turn to slide 11. Starting with our new lung cancer franchise, we are pleased to report that both Tegriso and Infimbi demonstrated strong growth in the quarter at 58% and 57% respectively, with sales of $282 million and $462 million respectively. Tegriso is now approved in 81 countries in the first line setting. And in the quarter, we saw continued expansion in countries securing national reimbursement, which now totals 20. U.S. DeGrisso sales were up 43% as demand continued and as we see a good level of penetration in the frontline setting. We now see strong growth from Europe and emerging markets as these reimbursements and launches take effect. Japan was impacted by the previously mentioned price cut in November last year. On Infinsi, the majority of sales are still coming from the U.S. at $286 million. with a growth of 24% as we've reached high levels of penetration in the Pacific Stage 3 non-small cell lung cancer setting. We are now launching in the small cell lung cancer Caspian indication through the U.S. following early approval this month. Outside of the U.S., we are starting to see the sales of Infanzi pick up, particularly in Europe and emerging markets with sales of $75 million and $33 million. Japan delivered $56 million. The China launch of Pacific still happened in the first quarter despite the COVID-19 pandemic and we anticipate NRDL negotiations for this to commence next year. Please turn to slide 12. Lampardia demonstrated continued progress with sales of $397 million in the quarter, up by 69%, with half of sales now coming from outside of the United States. This reflected growth across all regions, as we continue to roll out the breast and ovarian cancer indications in the major markets of the US, Europe, and Japan. US sales were $197 million, up by 66%, with continued increase in demand as Lemparsa maintained its leadership in the PARP inhibitor market in both ovarian and breast cancer. Sales in Europe were $102 million, up by 61%, driven primarily by first-line ovarian cancer, and in emerging markets, sales were up by 120% to $56 million driven by the China launch and recent inclusion on the NRDL. Japan sales amounted to $34 million with growth of 53% driven by uptake in ovarian and breast cancers and we report a 14% price cut as of April this year. Please turn to slide 13. Now moving to the new launches, CalQuintz in chronic lymphocytic leukemia and in HER2 and third-line HER2-positive metastatic breast cancer, I'm very pleased to report that CalQuintz sales of $88 million in the quarter, predominantly in the U.S., with the new label in CLL taking effect at the end of 2019. Launch feedback is quite encouraging as the Phase III data are resonating very well with physicians. We're encouraged to see expansion in our prescriber base with around 60% of all new patient starts in CLL coming from new Calquence prescribers. And about a third of hematologists have now prescribed Calquence. Also, Calquence has achieved approximately 25% share of BTKI new patient starts in CLL. Following the Inher2 launch at the beginning of the year, we are pleased to have reported $14 million in collaboration revenue. based on $30 million of sales booked by Daiichi Sankyo in the first quarter of 2020. In the first quarter of launch and HER2 has achieved approximately a 30% share in the third line setting. Other launch metrics include about 800 accounts have been opened and about 1,000 patients have been treated so far. Initial feedback from physicians is strong as the safety monitoring program in place and the management of key safety aspects is well understood. Before ending, I would like to thank all of our oncology colleagues for what they do every day to the benefit of patients and our company, particularly during these challenging times. I'll now turn it over to Ruud for an update on our biopharmaceuticals business and emerging markets. Please turn to slide 14.