AstraZeneca PLC

Good morning to those joining from the UK and US. Good afternoon to those in Central Europe. Welcome, ladies and gentlemen, to AstraZeneca's full year 2020 results conference call and webcast for investors and analysts. Before I hand over to AstraZeneca, I'd like to read the safe harbour statement. The company intends to utilise the safe harbour 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, 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 full year 2020 conference call and our webcast for investors and analysts. As usual, the presentation was posted to AstraZeneca.com, and we have also sent it to people on our distribution list. Please turn to slide two. These are the usual self-harbor statements, including an election-related bonus on slide three. We will be making comments on our performance using constant exchange rates, or CER, core financial numbers, and non-GAAP measures, A reconciliation between non-GAAP and GAAP data is contained in the results announcement. All numbers are in million US dollars and refer to full year 2020, unless we state otherwise. And finally, compared to past quarters, we need to be a little bit more hamstrung with financial guidance this time due to the ongoing work with elections. Thank you for your understanding here. as we are limited in our potential comments in particular on 2021. Please turn to slide four. We plan to review the presentation first and then do a Q&A until 1.15 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 your help on this one. In speaking order, I'm joined by Dave Fredrickson, who is our EVP of the Oncology Business Unit, Ruud Dobber, the EVP of the Biopharmaceuticals Business Unit, Marvin Royer, our CFO, Mene Pangalos, our EVP of the Biopharmaceutical R&D Group, and then again, Dave, to cover for Rosse Baselga today, on oncology R&D before handing back. For the questions later, we also have Pam Cheng, EVP for operations and also IT. And we also have Leon Wang, who is the EVP responsible for China and the emerging markets. We also have online with us Susan Galbraith, who many of you know, and Christian Massassetti, who are both senior vice presidents in oncology R&D. Suzanne for the early part and Christian is in charge of the late stage pipeline in Oncology R&D. We plan to first take questions on the ongoing business and then we save any questions on the vaccine for the last part of the conference call in the webcast. We hope that works for everyone. Please turn to slide five. This is the agenda where we plan to cover all key aspects of our results today. Moving on to slide six. In 2020, performance was strong and resilient, and we delivered the guidance as promised. The 10% increase in revenue was underpinned by the focused R&D and our SG&A investment, and despite the headwinds from the pandemic in many parts of the global business. New medicines were up 33%, and we saw continued performance from oncology and new CVRM. Respiratory and immunology were stable, but it improved a lot in the last quarter and the emerging markets were up by 10% with growth impacted by COVID-19 on Fumicor. Co-operating profit grew by 17% despite 2% lower co-operating income. With a tax rate of 20%, core EPS ended at $4.02, up by 18% and more than revenue, delivering operating leverage. As a result, guidance was achieved as we promised for the year. Our cash flow improved, including net cash inflow from operating activities, now $4.8 billion, supporting the Progressive Dividend Policy. We continue to see strong progress in the pipeline, mostly on approvals, supporting sales today and, of course, tomorrow. This year, we are back with more phase three trial results, like Kalkwans recently. The efforts against the COVID-19 pandemic continued with the first authorization for the vaccine. Let me assure everyone today that we are doing our very best to deliver it to governments as promised. During this first half, we anticipate phase three data for the long-acting antibody combination, the potential new medicine AZD7442. Our production of the vaccine is very substantial, and in the months of February, we expect to manufacture 100 million doses globally. across our supply chain consortium, and 200 million doses per month starting in April. In 2021, we anticipate another year of double-digit revenue growth in the low teens, with that revenue growth accompanied by even faster growth in core EPS between $4.75 and $5, all of this at constant exchange rates. Mark will provide more details later. Please turn to slide seven. If we look at the pipeline news flow since the results announcement in November, a few highlights. There were a high number of approvals for the key cancer medicines across users and geographies. We met regulatory submissions for a number of new users of our leading medicines in all CRP areas, and we've obtained several priority reviews as well. Our clinical trial readouts also picked up. and we anticipate more of this as we move further into 2021. We will detail this news flow a little later. All in all, an increase in activity levels and more progress to the future benefit of patients. We're not slowing down. If anything, we are actually speeding up. Please turn to slide eight. After the financial headlines in our pipeline, we now take a deeper dive into revenue. Total revenue advanced by 10% in the last quarter. with growth benefiting from the Limparza Cells milestone that we have discussed at the last conference call. Looking only at product sales, the growth was 11%. There was some negative impact from COVID-19 on some of our new medicines, in particular Brilinta and some on Mfinzi and Facenra. Despite this, new medicines added $3.5 billion of additional revenue, with Tagrisso, Mfinzi, Farciga, Limparza, Calcoens, and Facenra as the biggest contributor. This is the strength of our company, the broad geographical coverage and the broad pipeline. We are powered by several products. And of course, if one or two are impacted by COVID, some others can do well. And overall, you can see the progress is very strong. We now have eight Blockbuster medicines overall and 13 new medicines. contributing growth and adding further diversification to revenue as we look ahead. So if we turn to slide nine, aggregating medicines into therapy areas, we have solid double-digit growth for oncology and high single-digit growth for new CVRM with respiratory and immunology stable and improving their last quarter despite the COVID-19 impact on Pumicor. Excluding Pumicor, there was 12% If we look at things from a regional viewpoint, there was growth everywhere with Europe improving growth markedly and the emerging markets continuing to grow with the U.S. back as the largest region now. In summary, the results for 2020 confirm the strategic direction of our company and our confidence in our business and the future of sustainable and durable growth. across medicines and across geographical markets. With a global revenue base and the diversified portfolio of new medicines and with more to come, AstraZeneca remains well positioned in the current pandemic environment. We want to remain agile and ready to act entrepreneurially when opportunities arise, as evidenced in our efforts against COVID-19, as well as the proposed acquisition of Alexion. So please turn to slide 10. On Alexion, we've made good progress ahead of the anticipated closing in the third quarter. Alexion continues to offer a compelling scientific and business complementarity and will allow us to build out in immunology long term, helping Alexion build better rare medicines using some of our platforms and help us expand into new and broader indications in immunology. So a very strong scientific complementarity that will strengthen the portfolio of our existing business, but also the portfolio of Alexion. In the short and medium term, the combined company will offer faster growth, improved profitability, and cash flow, and that will sustain the positive strategic developments achieved since 2013. Before closing, I would like to say how grateful I am for the support and the hard work from our more than 70,000 colleagues in AstraZeneca, and also the potential new colleagues in Alexion. and I would like to thank everyone for their efforts in the current situation fighting the virus but always putting patients and their own medical needs first across all of these areas and the geographical regions. I will now hand over to Dave. He will go into detail about oncology business. Please go ahead, Dave, and please turn to slide 11.

Thank you, Pascal. We're pleased to report a strong growth in total revenue of 24% for the oncology business to $11.5 billion in the year. COVID did continue to have impact with fewer cancer patients diagnosed and treated, but we saw resilience in our business as sales grew across all of our new oncology medicines from regional expansions and new launches. Please turn to slide 12. Starting with our lung cancer franchise, we're pleased to report that both Tegriso and Infinzi showed strong growth in the year at 36% and 39% respectively, with revenue of $4.3 billion and $2 billion. 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 $40 billion. U.S. Tegrisa revenue was up 24% where we saw continued single-digit demand growth, and we're now focused on bringing Tegrisa to patients with the earlier stage lung cancer setting in the U.S. following the approval based upon the ADORA Phase III trial as we await regulatory decisions outside of the U.S. In China, we are pleased to be able to successfully negotiate reimbursement to enable even more patients to access to Grisso as a first-line treatment in the metastatic setting. The majority of Infinzi revenue continued to come from the United States as the launch of the Caspian indication and extensive stage small cell lung cancer continued to take effect, although we did see impacts here from COVID on patient diagnoses. Outside of the U.S., we continue to see revenue of Infinzi pick up, particularly in Europe and emerging markets as we are now able to provide Infinzi to a more small cell cancer patients globally. The unique ability to combine with both cisplatin and carboplatin chemotherapy will further benefit patients. Please turn to slide 13. Lymparza continued to demonstrate progress with sales up by 49% with just over half of sales coming from outside of the United States. This is a result of growth across all regions as more breast and ovarian cancer patients gained access to Lymparza in the major regions of the U.S., in Europe, and in Japan. U.S. sales continued to grow by 40% with increased demand as Lymparza maintained its leadership in the part market in both ovarian and prostate cancer as we launched the PALO1 indication and first-line HRD-positive ovarian cancer and the profound prostate cancer indication. Europe sales were up by 51% as more first-line ovarian cancer patients received Lymparza as we now look forward to the ovarian Pala-1 and prostate launches in Europe following the recent approvals towards the end of last year. Emerging market sales grew by 108% driven by the China launch and the recent inclusion on the NRDL. This should be further aided by an additional successful reimbursement decision awarded this year. Japan sales amounted to $167 million with growth of 27% driven by uptake in ovarian and breast cancers. Please turn to slide 14. Turning now to the newer launches, CalQuence in chronic lymphocytic leukemia and in HER2 and third line HER2 positive metastatic breast cancer. I'm pleased to report that CalQuence revenue of $522 million in the year, almost exclusively in the United States, as the 2019 CLL launch really took effect. The launch feedback continues to be very encouraging as the very impressive Phase III data are resonating well with physicians, including the recently announced head-to-head data versus the incumbent BTK inhibitor, reinforcing our belief in Calquence as a potential best-in-class medicine. We are encouraged to see that Calquence is now one-third share of frontline CLL new patient starts in the BTK inhibitor class in the U.S. We look forward to bringing Calquence to CLL patients in Europe and Japan following the recent approvals at the beginning of 2021. Following the Inher2 launch at the beginning of the year, we're pleased to have reported $96 million in collaboration revenue based on $200 million of U.S. sales booked by Daiichi Sankyo in the year. and Hertu is the most prescribed medicine in the third line setting of Hertu positive metastatic breast cancer. I'll now turn over to Ruud for an update on our biopharmaceuticals business and emerging markets. Please turn to slide 15.