AstraZeneca PLC

Good morning to those joining from the UK and the US. Good afternoon to those in Central Europe. Welcome, ladies and gentlemen, to AstraZeneca's year-to-date 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. An opportunity to ask questions after today's presentations. If joining on the telephone, please 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. And with that, I will now hand you over to the company.

Hello everyone, it's Pascal Soriot, CEO of AstraZeneca. Welcome to the year to date and the third quarter 2020 conference call and our webcast for investors and analysts. As usual, the presentation was posted to AstraZeneca.com earlier today and we have also sent it to people on our distribution list. So if you can please turn to slide two. This is the usual self-harbor statement. We'll be making comments on our performance using constant exchange rates, or CER, core financial numbers and other non-GAAP measures. A reconciliation between non-GAAP and non-GAAP data is contained in the results announcement. All numbers used are in million US dollars and refer to year-to-date September 2020, unless we state otherwise. So turning to slide three, we plan to review the presentation first and then do the Q&A until 1.15 PM UK time. If you keep questions short, we will try to 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. Thanks for the help here. And in speaking order, I'm joined by Dave Fredrickson, EVP of the Oncology Business Unit, Ruud Dobber, EVP of the Biopharmaceutical Business Unit, Marc Dunoyer, Executive Director and Chief Financial Officer, Mene Pangalos, who is EVP of the Biopharmaceuticals R&D Group, and José Bastelga, who is the EVP of Oncology R&D. For the questions later, we also have Pam Cheng, EVP of operations and IT, and Leon Wang, who is the EVP for the China and emerging markets. Please turn to slide four. This is the agenda where we plan to cover all key aspects of our results today. So if we now start with slide five. In the first nine months of 2020, our performance remained strong and resilient despite some impact from the COVID-19 pandemic. and our business performed in line with our expectations. Our total revenue advanced 10% in the year to date despite some headwinds from the pandemic. New medicines were up 36% and we saw continued performance across all therapy areas and in emerging markets. We had a substantial negative impact from Pumilco that affected respiratory immunology cells in particular in China. and in China it was negative by around 15% in each case. But one can see strong growth excluding this. Co-operating profit grew by 13% despite 15% lower other operating income. With a tax rate of 21%, core APS ended at $2.95 and it is up by 16% more than revenue delivering operating leverage. As a result, guidance remains unchanged today. We continue to see strong progress in the pipeline, mostly on approvals, supporting cells today and tomorrow. Next year, we're back with many phase three trials redoubts after the regulatory focus this year, following extensive data redoubts in 2019. The efforts against the COVID-19 pandemic include advancing the vaccine candidates, and now importantly, initiating phase three trials for long-acting antibody combination. She's incredibly promising and it's a potential new medicine called AZD7442. And please turn to slide six. Looking at the pipeline news flow Since the results announcement in July, a few new highlights. There were a number of approvals for the key cancer medicines across users and geographies. We made regulatory submissions for a number of new users for leading medicines and we obtained several priority reviews. As I mentioned earlier, 2020 has seen a lot of regulatory news flow. Well, we anticipate more new phase three data readouts in 2021. We'll detail this news flow a little later. All in all, another great period for the pipeline and only this week and including this morning, we received additional approvals for some of our new indications. So very exciting pipeline progression. We start to turn to slide seven. After the financial headline in the pipeline, we now take a deeper dive into our revenue. Total revenue advanced by 3% in the third quarter, with growth reduced by Limparda milestones in the comparative period. In the quarter, if you exclude the milestones, our sales growth was 7%, and in fact, as I mentioned earlier, Pulmicort was the most affected product by this. Especially in China, that affected the number of asthma exacerbations, sorry, and therefore the cells were substantially impacted. If you exclude the effect of pulmic heart, our cell growth was about 10%. So the message is the underlying cell growth is still very, very strong across the portfolio, and it actually reflects The strengths of our model, the diversified portfolio and the diversified geographical footprint, we have ups and downs, and we'll cover across this presentation. Some products are up, some others are down, but we have a very resilient portfolio across. As I mentioned earlier, there was some impact from COVID-19, in particular Pulmicor China, of course, but also Berlin, Taino regions. We've seen an impact of COVID on the number of hospitalizations for heart attacks, and Bravinta is initiated in hospitals, so we see an impact there. And it has also affected infusion of injectable medicines like Infinzi and Facenram. Despite this, new medicines added $2.6 billion of additional revenue. Year-to-date, with Stagrisol, Infinzi and Limparza as the biggest contributors, followed by Farciga, Calquence, and Facenra. In particular, Calquence is making very rapid progress. We now have 13 new medicines contributing growth and adding further diversification to the revenue as we look ahead. If we turn to slide eight, if we aggregate the medicines into therapy areas, we had solid double-digit growth for oncology and new CVRM with respiratory immunology seeing the impact from Pulmicort Excluding the Pulmicard, there was, as I said earlier, an absolute double-digit growth there of about 10%, so very strong. From a regional viewpoint, there was everywhere, with Europe impacted by the timing of Limparda milestones, which I mentioned earlier, a strong sales growth excluding the milestone, which we expect to come in Q4. In summary, the results here today support the guidance and also a future of sustainable growth across medicines and geographical markets. With our global revenue base and our diversified portfolio of new medicines, AstraZeneca is well strategically positioned in the current environment and we are ready to be entrepreneurial when needed, as we have shown with the effort against COVID-19. We want to remain a trusted collaborator for global healthcare system. Before I hand over to Dave to go into details on the oncology business, I would like to say how grateful I am for the support and hard work from the more than 75,000 colleagues around the world. And I would like to thank everyone for their efforts in the current situation fighting the virus. As I said earlier, we've had some impact from COVID on some of our medicines. The biggest impact is Pulmicort. But we see strong resilience across the portfolio. And importantly, as you will hear during the call, we see a return to normality for Permicorps in China. It's a slow but steady return to normality. So for Q4, we still expect Thank you, Pascal.

We are pleased to report a strong growth in total revenue of 24% for oncology to $8.2 billion year to date. While we did see continued impact in the quarter from fewer patients diagnosed due to COVID, we are seeing nice robustness of our business as sales grew across all of our oncology new brands. And this came from regional expansions and new launches. Please turn to slide 10. Starting with our lung cancer franchise, we're pleased to report that both Tegriso and Infinsi showed strong growth in the quarter year-to-date at 39% and 43% respectively, with revenue of $3.2 billion and $1.5 billion respectively. Tegriso continues its global rollout and is now approved in 87 countries in the first-line setting, and we saw continued expansion in countries with national reimbursement, which now totals 32%. U.S. Tegrisa revenue was up 26% where we saw continued single-digit demand growth and also benefited from a one-off gross to net adjustment in the quarter. The majority of Infinzi revenue continued to come from the U.S. as the launch of the Caspian indication, an extensive stage small cell lung cancer, has really begun to take effect despite henwoods from COVID-19 on patient diagnoses. Outside of the U.S., we're starting to see the revenue of Infinzi pickup, particularly in Europe and the emerging markets as we continue the rollout with more approvals granted. We await the Caspian indication to drive further growth outside of the U.S. where the ability to combine with both cisplatin and carboplatin represents further benefit for patients. For both medicines, we anticipate that if the China NRDL negotiations are reached, we could have the usual sales impact towards the end of the year, as we would then look to provide access to a greater proportion of patients. But right now, we can't say what that outcome will be. Please turn now to slide 11. On Limparza, Limparza showed continued progress with product sales up by 53% with about half of sales coming from outside the U.S. This reflected growth across all regions as we continued to roll out the breast and ovarian cancer indications in the major markets of the U.S. in Europe and Japan. Total revenue was impacted by the phasing of milestone payments from Merck with further milestones anticipated in quarter four of this year. U.S. sales continue to grow by 46% with continued increase in demand as Lymparza maintained its leadership in the PARP inhibitor market in both ovarian and breast cancer as we launched the PALO1 indication in first-line HRD-positive ovarian cancer and the profound prostate cancer indication. Europe sales were up by 51%, driven primarily by first-line ovarian cancer launches, as we now look forward to the ovarian PAULA and prostate launches in Europe following the approvals that we announced earlier this morning. Emerging market sales were up by 105%, driven by the China launch and the recent inclusion on the NRDL. Japan sales amounted to $119 million with growth of 30% driven by uptake in ovarian and breast cancers. Please turn to slide 12. Turning now to our more recent launches, CalQuence in chronic lymphocytic leukemia and in HER2 and third line HER2 positive metastatic breast cancer. I'm very pleased to report CalQuint's revenue of $340 million in the year to date predominantly coming from the U.S. where the new approval and CLL took effect at the end of 2019. The launch feedback is very encouraging as the very impressive phase three data are resonating well with physicians. were encouraged to see expansion in our prescriber base with CalQuint's now achieving over 35% of new patient starts across all lines in CLL. We await the regulatory decision imminently following the positive CHMP recommendation earlier this year. Following the Inher2 launch at the beginning of the year, we're pleased to have reported $63 million in collaboration revenue based on $136 million of U.S. sales booked by Daiichi Sankyo in the year to date. Inher2 is now the most prescribed medicine in the third-line and fourth-line settings of HER2-positive metastatic breast cancer. Before I end, I want to thank all of our oncology colleagues for what they do every day to the benefit of patients and to our company, especially during the ongoing global pandemic. I'll now turn it over to Ruud for an update on our biopharmaceuticals business and emerging markets. Please turn to slide 13.