AstraZeneca PLC

Good afternoon, Europe, and good morning to the US. Welcome, ladies and gentlemen, to AstraZeneca's Half Year Results 2020 presentation, conference call, and webcast for investors and analysts. Before I hand over to AstraZeneca, I would 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. There will be an opportunity to ask questions after today's presentations. If joining on the telephone press star 1 to indicate you wish to ask a question at any time during the call. For those on the webcast, you will find an on-screen text box in which to type your question. I will now hand you over to the company.

Hello everyone, it's Pascal Soriot, CEO of AstraZeneca. Welcome to our first half 2020 conference call and webcast for investors and analysts. As always, the presentation was posted to AstraZeneca.com earlier today. and we've also sent it to people on our distribution list. So if we turn to slide two, this is the usual safe harbor statement. We will be making comments on our performance using constant exchange rates or CER, core financial numbers and all other non-GAAP measures. A reconciliation between the non-GAAP and the GAAP data is contained in the results announcement and all numbers used are in million US dollars and refer to first half 2020 unless stated otherwise. If we want to turn to slide three, we plan to spend about half an hour on the presentation and then do Q&A for 45 minutes. We aim to end at 1.15 UK time. If you keep questions short, we'll try and keep answers short too. For those on the phone, please join in the queue for questions by pressing star one. There's also an option to ask questions as part of the webcast We ask you to please ask one question only, and thank you for that. In the speaking order, I'm joined by Dave Fredrickson, our EVP for the Oncology Business Unit, Ruud Dobber, EVP of Biopharmaceuticals, Marc Dinoyer, our CFO, José Baselga, our EVP of Oncology R&D, Menefine Gallos, our EVP of Biopharmaceuticals R&D, and also joining us for the questions are Pam Cheng, our EVP for operations and IT, and Leon Wang, who is the EVP in charge of China in the emerging markets. So we'll move to slide four. This is the agenda where we plan to cover all the key aspects of the results today and moving then to slide five. In the first half of 2020, performance underpinned. A leading response to COVID-19, the business was resilient and where COVID-19 had an adverse impact, all the medicines compensated. Total revenue advanced 14% in the half and we estimate only a modest benefit from COVID-19 stocking. New medicines advanced by 45% and we saw continued strong progress across all CRP areas and also in the emerging markets. In a quarter, respiratory was impacted from pulmicort in China, but as I said earlier, and other medicines more than compensated. Co-operating profit grew by 23% despite 13% lower other operating income. With a tax rate of 21%, Core EPS ended at $2.01, up by 26% and much more than revenue, delivering operating leverage. As a result, our guidance is unchanged today. We continue to see strong progress in the pipeline, mostly on regulatory approvals. And finally, the leading response to the COVID-19 pandemic includes advancing a vaccine candidate while repositioning other medicines. You've heard a lot about the vaccine candidate, but we also have other projects, antibodies, but also Calcoins and Sarsiga trying to help patients with COVID disease. There is a relentless focus on patient access, supply, and of course, employee safety and continuity of our work. So if we turn to slide six, looking at the pipeline news flow since the results announcement in April, just mention a few highlights. There were a number of approvals for Limpaza across multiple cancer types and geographies. Since the launch at the end of 2014, Limpaza has seen significant progress with more to come. Plastiga received its important approval in the US for heart failure. and the inhaled respiratory portfolio increased its reach with Bevespe in China and importantly, the closed triple combination medicine breast in the US. Outside approvals, it's really encouraging to see the progress for HER2 in breast and gastric cancers. Later on today, Jose will cover the expanded collaboration with Daiichi Sankyo on the new antibody drug conjugate. All in all, another great period for the pipeline. If I move to slide seven, the second quarter of 2020 was the seventh quarter now with strong growth in total revenue. Again, this was driven by the new medicine. Tagrisso crossed now the quarterly one billion mark with Limparza and Infinsi continuing their strong growth trajectories. The growth from the new medicine is now coming from a broader range of medicines as we saw in the first quarter revenue from Crossey Lugo in a rare disease indication. In total, new medicines added $2 billion of additional revenue, further diversifying growth and sustainability. As a result of our strategy execution, new medicines now make up more than half of our revenue. Please turn to slide eight. The increased business diversification, you can also see it through oncology, Now more than 40% of product sales. Across AstraZeneca, specialty care medicines account for more than half of the business. Combined, China and the other emerging markets make up 35% of sales, with growth in ex-China markets at 15%, and in China 14% despite the COVID-19 impact on Pulmic Corp, which I'm sure we will talk about later. In summary, the results for the first half support the guidance and also a future of sustainable growth across medicines and geographical markets. AstraZeneca remains strategically well positioned in the current environment, and we are well prepared to remain an important partner for healthcare systems globally, as evidenced also by the vaccine effort. Before I hand over to Dave to cover our oncology business, I would like to express my sincere thanks to all AstraZeneca co-workers across the globe that have made this and our response to COVID-19 possible. Everybody has done an absolutely stellar job across the entire company despite sometimes very challenging circumstances and I'm very, very grateful for everyone's contribution. So with this, Dave, over to you. Thank you, Pascal.

Thank you, Pascal. And if we can, just as I go through this, I plan to update on the performance of our oncology business before handing it over to Ruud, who will give an update on biopharmaceuticals and emerging markets. We are pleased to report a strong growth in total revenue of 31% for oncology to $5.3 billion and a half, a business that's now annualizing at over $10 billion. We're seeing regional expansion, particularly outside of the U.S. as our lifecycle efforts start to take effect. The new launches are progressing well, which is supported by additional news flow of data and approvals. Please turn to slide 10. Starting with our lung cancer franchise, we are pleased to report that both Tegriso and Infinsi showed strong growth in the quarter at 45 and 52% respectively, with revenue of $2,954,000,000 respectively. Tegresso is now approved in 86 countries in the first-line setting, and in the half we saw continued expansion in countries with national reimbursement, which now totals 28. U.S. Tegresso revenue was up 30% as demand growth continued despite some negative inventory movements, and we see strong growth from Europe and emerging markets as reimbursements and launches take effect. Japan was impacted by the previously mentioned price cut in November last year. Infinsi reported $954 million in the half, with the majority of revenues still coming from the U.S. at $574 million, with a growth of 21% as we've reached high levels of penetration in the Pacific Stage 3 non-small cell lung cancer setting. We're now launching the Caspian Indication in extensive stage small cell lung cancer in the U.S. following approval earlier in the year. Outside the U.S., we are starting to see revenue of infancy pick up, particularly in Europe and emerging markets, with revenue of $167 million and $63 million. Japan delivered $124 million, and the China launch of Pacific still happened in the first quarter, despite the COVID-19 pandemic, and we anticipate NRDL negotiations to commence next year. Please turn to slide 11. Limparza showed continued progress with product sales of $860 million and a half, up by 60%, with half of sales coming from outside the US. This reflected growth across all regions as we continued to roll out the breast and ovarian cancer indications in the major markets of the US, in Europe, and Japan. US sales were $406 million, up by 55%, with continued increase in demand as Limparza maintained its leadership in the PARP inhibitor market Thank you for joining us. driven by the uptake in ovarian and breast cancers following the previously mentioned 14% price cut as of April of this year. Please turn to slide 12. Turning now to the new launches, CalQuintz in chronic lymphocytic leukemia and in HER2 and third-line HER2-positive metastatic breast cancer. I am pleased to report CalQuintz revenue of $195 million and a half predominantly in the U.S. with the new label in CLL taking effect at the end of 2019. The launch feedback has been very encouraging as the impressive Phase III data are resonating very well with physicians. We're encouraged to see expansion in our prescriber base with around 70% of all new starts in CLL coming from new to Calquins prescribers and about one in three CLL patients now starting on Calquins. Following the INHER2 launch at the beginning of the year, we're pleased to have reported $36 million in collaboration revenue based on $76 million of sales booked by Daiichi Senkyo in the first half of 2020. INHER2 has now achieved approximately one-third patient share in the third line setting. Before I end, I'd like to thank all of our oncology colleagues for what they do every day to benefit the patients and our company, especially during this global pandemic. I'll now turn over to Ruud for an update on our biopharmaceuticals business and emerging markets.