AstraZeneca PLC

Hello everyone, Pascal Soriot here, CEO of AstraZeneca. Welcome to the first quarter of 2021 conference call in our webcast for investors and analysts. As always, the presentation was posted to AstraZeneca.com earlier today and we also sent it out by email. So please turn to slide 2. For slide 2 and slide 3, those are the usual self-harvest statements. including one on election, on election being slide three, will be making comments on our performance using constant exchange rates or CER, core financial numbers and other non-GAAP measures including total revenue and core APS excluding any revenue or profit impact from the COVID-19 vaccine for pandemic use. A reconciliation between non-GAAP and GAAP data is contained in the results announcement. All numbers used are in million U.S. dollars and they refer to the first quarter of 2021, unless stated otherwise. And finally, similar to the first quarter, we need to be a little bit more limited with financial guidance due to the ongoing work with Alexia. I hope you understand, so thanks for your understanding with this. Please turn to slide four. We plan to resume the presentations first and then do Q&A until 1.15pm UK time. We need to end on time due to a shareholder engagement delay starting after this meeting in lieu of a physical meeting which is not allowed due to the current COVID-19 restrictions. 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 1. 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 your help with this. In speaking of, I'm joined by David Fredrickson, EVP for the Oncology Business Unit, Ruud Dobber, EVP for the Biopharmaceuticals Business Unit, Marvin Reye, our Chief Financial Officer. Many thank you for EVP for Biopharma R&D. and then again Dave to call Oncology R&D before handing back. For the questions, we also have Pam Cheng, sorry, our EVP for operations and IT, Leon Wang, who is our EVP responsible for China in the emerging market, and we also have Susan Galbraith and Christian Massachetti, who are both EVPs in charge of Oncology R&D. We plan to first take questions on the ongoing business, and then save any questions on the vaccine for ASPA or the conference call in the webcast. We hope that it works for everyone. Please turn to slide five. This is the agenda where we plan to cover all key aspects of our results today. If we move to slide six. 2021 started well. The increase in revenue was boosted by for the COVID-19 vaccine for pandemic use. The revenue used for guidance excluding the COVID-19 vaccines for pandemic use was at 7% per CR and it was held back by stocking last year of a low to mid-single digit percentage with a very strong first quarter last year, if you remember, with very strong growth. And therefore, we estimate that the normalized revenue growth has been double digits, low double digits in the first quarter in support of our four-year guidance. Oncology increased by 16% and new CVRM by 15%. Respiratory immunology was down by 4%. Impacted by last year's stocking of medicine by the federal Simbicorp, but also the launch of the authorized generic of Simbicorp in the United States. Emerging markets were up by 10%. Co-operating profit grew by 24%, supported by other operating income. With a tax rate of only 8% due to the divestment of the ownership of Yela, Core EPS ended at $1.63 and rose up by 53%. There was a negative impact of $0.03 per share from the pandemic vaccine. We continue to move forward with our pipeline, and they support itself today, but importantly tomorrow as well. And the new flow is anticipated to pick up in the second half of the year. On the COVID-19 vaccine for pandemic use, we shipped and invoiced 68 million doses in the first quarter, with supply increasing. An effort that is supported by a very dedicated team here, but also with our collaborators around the world. A very quick note, what you see here is what we at Sardinica invoice, ship and invoice, 68 million doses. Our total production was much higher than this for our global network of partners. As you know, we've established a global network and we have many sites manufacturing and partners invoicing the vaccines. The good start of this year supports a reconfirmation of our four-year guidelines. Looking at the pipeline news flow since February, just a few highlights. First of all, the approval for the Gristo for Adjuvant Lung Cancer in China and the CHN people's opinion in the EU. There were a couple of regulatory clean-ups within Finzeal, Limpaza, and Bredik. Importantly, Phase III trial readouts were positive with adjuvant data for Limpaza, Embry-Cabotet and Breast Cancer, but also for Nersedimib immunization against the RSV, the Esperanto-Russian Seizure Virus. We will detail this news a little later. Also later, we'll detail upcoming use flow with a pickup in activity in the second half of the year. Turning to slide eight, after financial and public headlines, we now take a deeper dive into revenue. Total revenue increased by 11% in the first quarter. The COVID-19 vaccine for pandemic use contributed 4% to growth. Clearly, marked here is revenue growth excluding the COVID-19 vaccine for pandemic use at 7% and double digits were adjusting for stocking in the comparable period last year. There was a negative impact from COVID-19 on Brilinta, but the new medicines added over $800 million in new cells with Farciga and the key oncology medicines leading the way. So COVID created a negative headwind on a number of products across the pipeline. And of course, we have this negative effect here, as you see on the top. Overall, we have accumulated sales over the past four quarters from those medicines. And we have 13 new medicines now that contribute to growth and our further diversification to revenue as we look ahead. Please turn to slide nine. Aggregating medicines into these areas, we have solid double digit growth for oncology and UCBI with respiratory immunology down by 4%, mainly, as I said before, due to stocking last year. Other medicines continue to decline slightly as we become less dependent on hotel medicine. I have to say that there was an effect of stocking, but on respiratory, we also had a negative headwind in the first quarter this year on products like Fimicort and Simicort due to COVID. So a double effect here that suddenly is impacting those products in the first quarter. As promised last quarter, full details are provided here on the COVID-19 vaccines for pandemic use. From a regional viewpoint, there was growth everywhere, with Europe seeing the biggest vaccine impact. The emerging markets are back at the largest region, as you can see on the slide. And so in summary, a good start in 2021, despite some headwinds due to COVID and a tough comparison to Q1 last year. And our performance supports our full-year guidance. We continue making progress in all disease areas and key medicines. And that really reinforced our strategic decisions and our focus over the past years, as well as our commitment to continue the strong durable top-line goals. With the global revenue made and our diversified portfolio of new medicines with more to come, AstraZeneca remains really well positioned in the current situation. If we turn to slide 10, a few words on elections. We've made very good progress here, and we are moving towards a closing in the third quarter. Since February, we received important USFCC clearance as well as other regulatory clearances with a full list that is available on our website. Alexion continues to offer a compelling scientific and business complementarity and will allow us to build up in rare diseases and in immunology. In the short and medium term, the combat company will offer faster growth, improved profitability and cash flow, And that will sustain our positive strategy development achieved since 2013. I will now hand over to Dave to go into details in oncology. Thank you very much. And Dave, please go ahead. Please turn to slide 8.

Thank you, Pascal. We're pleased to report a strong growth in total revenue of 16% for the oncology business, now to $3 billion in the quarter. COVID did continue to have an impact as we still see fewer cancer patients diagnosed and treated. But despite this, 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 Infinsi showed strong growth in the year at 13 and 17% respectively, with revenue of $1.2 billion and $556 million. We saw a notable impact to non-small cell lung cancer diagnosis rates due to COVID. Tegriso continues its global rollout and is now approved in 89 countries in the first line setting and 17 countries in the adjuvant EGFR mutated setting. U.S. Tegrisa revenue was up 12% where we saw continued single-digit demand growth as we start to focus now on bringing Tegrisa to patients with earlier stage lung cancer. In China, sales were impacted with the usual stocking impacts following the first line NRDL inclusion, which took effect on the 1st of March this year. The majority of Infinzi revenue continued to come from the U.S., where we saw a prominent impact from COVID, despite the launch of Caspian indication and extensive stage small cell lung cancer. Outside of the U.S., we continue to see the revenue of Infinzi pick up, particularly in Europe and the emerging markets, as we're now able to provide Infinzi to 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. Lemparsa continued to demonstrate progress with sales up by 33% with over half of sales coming from outside the United States. This is a result of growth across all regions as more breast and ovarian cancer patients gained access to Lemparsa in the major regions of the US, Europe, and Japan. U.S. sales continued to grow by 28% with increases in demand as Limparsa maintained its leadership in the PARP inhibitor market in both ovarian and prostate cancers as we launched the PALO1 indication and frontline HRD-positive ovarian cancer and the profound prostate cancer indication. Europe's sales were up by 33% as more first-line ovarian cancer patients received Limparsa as we now look forward to the ovarian PALO1 and prostate launches in Europe. Emerging market sales grew by 54% driven by the China launch and the recent inclusion in the NRDL. Japan sales amounted to $42 million with growth of 17% driven again by uptake in ovarian and breast cancers. Please turn to slide 14. I'll turn 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 $209 million in a year almost exclusively in the U.S. as the CLL launch continues to take effect. We're pleased to announce that Calquence is now used in four in 10 new patient starts in the frontline CLL BTK setting in the U.S. The launch feedback continues to be very encouraging and as the impressive head-to-head data versus the incumbent BTK inhibitor reinforce our beliefs in a potential best-in-class medicine. We look forward to bringing CalQuence to CLL patients in Europe and Japan following the recent approvals that happened at the beginning of 2021. Following the InHER2 launch at the beginning of the year, we're pleased to have reported $40 million in total revenue based on $81 million of global sales ex-Japan booked by Daiichi Sankyo and AstraZeneca in the quarter. InHER2 is the most prescribed medicine in the third-line setting of HER2-positive metastatic breast cancer. I'll now turn you over to Ruud for an update on our biopharmaceuticals business and emerging markets. Please turn to slide 15.

Many thanks, Dave. Today I'm pleased to talk to you about the biopharmaceuticals business. Total revenue of biopharmaceuticals comprising new cardiovascular, renal, metabolism, and respiratory immunology was $2.9 billion in the quarter, growing at 4% despite the COVID pandemic. Starting with needle CVM, revenue was up by 15%, with total revenue at $1.3 billion, with continued strength from Fasiga. Farsiga maintained volume market share globally with high double-digit volume growth across all regions as the fastest growing SDLT2 inhibitor outgrowing the SDLT2 class globally in the US, Europe, and Japan. In the US, Farsiga grew 60% driven by the additional indication in heart failure. Outside the US, we saw strong performances, particularly in Europe, with growth of 36% is volume-driven growth increasing, and China benefiting from the NRDL listing. Please turn to slide 16. Turning to respiratory and immunology, we reported revenue of $1.5 billion, decreasing at 4% in the quarter, mainly due to one-off Symbicort Altrai generic in the United States, COVID impact for Pomicort in China, and COVID stocking in quarter one 2020. Symbicort sales were $691 million, with a decline of 15%, mainly due to the stocking and inventory build last year. The U.S. saw a decline of 14%, however, underlying demand growth continues. Globally, Simicorp remained the leader in value and volume market share in the ICS Lava class. Europe and Japan continued to see headwinds due to generic competition, whereas emerging markets were up 3% to $165 million. Simbicort was down 18% in the quarter, with revenue of $330 million, which continues to be impacted by COVID, particularly in the hospital-treated patients in China. We continue to focus on growing revenue of Simbicort, as well as Breast 3, following the successful addition to the NRDL. Please turn to slide 17. Now I will focus on the new launch medicines. Facenra contributed $260 million of revenue in the quarter, with strong growth despite COVID-19, with the majority continuing to come from the US, Germany, and Japan. In the United States, Fasenra continued as the leading novel biologic, up by 30%, with $165 million in revenue. Fasenra maintained its position as the dominant IL-5 blocking medicine in total asthma prescriptions in the top seven countries. Europe and Japan revenues were $63 and $26 million, respectively, as Fasenra continues to be the leading novel biologic medicine for severe uncontrolled asthma. The launch of Brev3 for COPD is progressing well, with revenue of $27 million in the quarter. Brev3 is now approved in 34 countries, including in the EU, US, China, and Japan, for the treatment of patients with COPD. As we look to kidney disease, Locama achieved potassium-binding market leadership in the U.S. Revenue in the quarter was $33 million, predominantly from the U.S. On Roxodustat, we reported revenue of $41 million in the quarter, coming from China. As of January 2021, AstraZeneca started recognizing the overwhelming majority of Chinese revenue as product sales, following an amendment to the existing license agreement. We will continue to work closely with our collaborator on the next step for Ruxudustep in the US following the additional analyses sent to the FDA and with the anticipated advisory committee in July. We now expect a regulatory decision in the second half of 2021. Please turn to slide 18. Emerging markets, where revenue grew by 10% in the quarter, continue to track ahead of our long-term performance ambition, which is to grow sales on average by a mid to a high single-digit percentage. Outside China, total revenue was up by 11%, with growth spread across the regions. China delivered resilient growth at 10% and continued to see some impact from pomichord, as well as some stocking due to the recent NRDL inclusions. We look forward to the new NRDL inclusions taking effect throughout the year. New medicines grew by 30%, contributing over a third of total revenue in the region. with a strong performance driven by home quality and new CVRM. With this, I will hand over to Marc. Please turn to slide 19.