AstraZeneca PLC

Good morning to those joining from the UK and the US. Good afternoon to those in Central Europe and good evening to those listening in Asia. Welcome, ladies and gentlemen, to AstraZeneca's Half Year and Q2 Results 2023 webinar for investors and analysts. Before I hand 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 webinar. There will be an opportunity to ask questions after today's presentations. Please use the raise a hand feature at any time to indicate you wish to ask a question. And please remember to unmute your line when invited to speak. And with that, I'll now hand you over to the company.

Thank you, Operator, and welcome, everybody. I'm Andy Barnett, Head of Investor Relations at AstraZeneca, and I'm very pleased to welcome you to AstraZeneca's first half and second quarter of 2023 conference call. As usual, all materials presented are on our website. This slide contains our usual safe harbor statement. We will be making comments on our performance using constant exchange rates or CER, core financial numbers and other non-GAAP measures. A non-GAAP to GAAP reconciliation is contained within the results announcement. Numbers used are in millions of US dollars unless otherwise stated. This slide shows our agenda for today's call. Following our prepared remarks, we will open the line for questions. We will try and address as many questions as we can during the allotted time, although I'd ask the participants to limit the number of questions you ask to allow others a fair chance to participate in the Q&A. As a reminder, to ask a question, please use the raise a hand function in Zoom, or alternatively, you can click the Q&A button and write your questions. With that... Pascal, I will hand the call over to you.

Thank you. Hello everyone and welcome. Please move on to the next slide. Total revenue in the first half of the year increased 4% to $22.3 billion, with 16% growth in our non-COVID medicines, offsetting a $2.2 billion decline in our COVID-19 medicines revenue. Core earnings per share increased 21% to $4.04, This increase reflects both our robust business performance as well as a gain following an update to our contractual relationships for before Tuesday in the US. We continue to benefit from our diverse commercial portfolio in our global footprint. Given our strong execution in the first half, we remain confident in our outlook for the remainder of the year and we have reiterated our 2023 guidance. Next slide, please. Taking a closer look at the performance of our non-COVID business across our regions and these areas, growth in the emerging markets continues to be strong, in particular outside of China. Emerging markets outside of China collectively grew by 38% in the first half. This growth underscores our confidence that these markets will become increasingly important to our business. We also saw double-digit growth across the EU and Europe in the period. On the right-hand side, you will see that we delivered robust double-digit growth across oncology, CVRM, RNA, and rare disease. And as expected, we saw declines in VNI. This growth reflects from medicines' performance across these areas. Please advance to the next slide. When we look at performance across our portfolio, in the first half, we had eight medicines deliver over $1 billion each in product sales. A broad range of these products are driving our growth, as you can see from this slide. For effective life cycle management, we've seen an acceleration in the rate of growth for several medicines, such as Mfinzi and Farciga, with new indications making important contributions to revenues. Ultramir is growth to that once again, and is the result of both successful conversion from Soliris, as well as growth in patient numbers. We've also seen promising global growth from some of our more recently launched medicines, including Onher2, Kalkoens, Breasttree, Tespire, and Safnello, all of which are helping to change the course of their respective diseases. Next slide, please. Confidence in our long-term outlook is supported by our robust Let's Touch pipeline, which now has well over 120 active projects. Importantly, we maintain a rigorous approach to R&D development, setting a high bar for lead-stage trial initiations, and advancing only the most promising projects. We strive to stay at the front of the innovation curve, and we have already progressed 14 new molecular entities into lead-stage development. We're making good progress towards initiating 30 new pivotal trials this year, having those nine in the year to date, with recent additions including the LITHOS trial for breast-train asthma, and two next-generation propellant trials which will support expansion of our PMDI portfolio. As we indicated last quarter, most of the new pivotal trials are expected to those in the second half of this year. Our pipeline continues to make exciting progress with eight positive pivotal oncology trials already this year. These are shown on the right-hand side of this slide. In particular, we are encouraged by the positive results from the tropion lung one, trial of DETO DXD and are excited to unlock the full potential of this promising medicine. On the next slide, Aradhana can take you through our financial highlights in the first half, as well as provide some further insights into how we are embracing the power of artificial intelligence across our manufacturing and supply chain. Over to you, Aradhana.

Thank you, Pascal, and good afternoon, everyone. As usual, I will start with our reported P&L. Please advance to the next slide. As Pascal mentioned, total revenue increased by 4% to $22.3 billion in the first half. Total revenue excluding COVID-19 medicines increased 16%. Alliance revenue of $627 million includes $475 million of unheard to profit sharing from geographies where Daiichi Sankyo books product sales. Collaboration revenue of $220 million includes a $180 million license fee from the Serum Institute of India, booked in the second quarter, relating to our COVID-19 antibodies license agreement. Please advance to the next slide, which shows our core P&L. The core product sales gross margin in the first half was 82.9%, benefiting from lower production costs in prior quarters and certain non-recurring items in the first quarter. As previously communicated, we expect the product sales gross margin in the second half to be negatively impacted, similar to in prior years by seasonality for Flumis and certain other medicines, the mandatory price reduction for Degresso in Japan, as well as the full impact of inflation. We still expect the product sales gross margin on a full year basis to be slightly higher than pre-COVID-19 levels. Looking ahead beyond 2023, we expect product sales gross margin percentage will be negatively impacted by profit sharing arrangements. While we already see this dynamic with Limporza, we anticipate the impact to increase as we start seeing higher sales from medicines such as Inher2 and Aspire in regions where we book product sales and then pay out a portion of profits to our partners through cost of sales. Over the long term, we're focusing on driving productivity improvements to counter the impact on our gross margins from inflation, Continued growth in emerging markets and more complex and expensive manufacturing of new modalities we're investing in. Core operating expenses in the half increased by 8%. R&D costs increased by 9% driven by continued investments in our pipeline. The increase in SG&A costs partly reflects spent behind new launches such as Topaz and Himalaya, which are driving the strong growth of Infancy and Imjudo, for example, as well as existing brands like Persiga and Breast Free, and geographic expansion of the rare disease medicines portfolio. We previously guided for total core operating expenses to increase by low to mid single-digit percentage in 2023, and we now expect to finish the year towards the upper end of this range. Similar to the phasing we observed in 2022, we expect R&D and SG&A spend to be weighted towards the second half. Other operating income of $1.1 billion includes $712 million related to the previously announced updated agreements on BEFORTIS which was booked in the second quarter. The increase in other operating income is in line with the guidance set out at the start of the year where we said that other operating income would be higher versus last year. The tax rate in the second quarter was lower than our full year guidance due to certain tax incentives and mix of profits and lower tax legal entities. For the full year, we continue to expect that core tax rate will be between 8% and 22%. Core EPS of $4.07 in the first half represents an increase of 21% at constant exchange rates. Next slide, please. Our net cash inflow from operating activities increased by $400 million to $4.9 billion, and we continue to see improvement in our cash conversion. Net debt increased by a billion dollars to 24 billion, driven by the payment of the second interim dividend in March and $2.4 billion in deal payments, which include the second payment to Asserta made in the first quarter. As a reminder, we will pay the third and final payment in 2024. For the full year, we continue to anticipate deal payments related to prior business transactions to be in line with last year around 2 billion, excluding Asserta. we have paid just under a billion in the first half. Our net debt to EBITDA ratio continues to decrease and is now at 1.9 times or 1.7 times if excluding the non-cash adjustment for the Alexion inventory fair value uplift, which will soon disappear as we have now minimal inventory remaining from the time of the acquisition. Today, we are reiterating our 2023 total revenue and core EPS guidance. Total revenues are expected to increase by low to mid single-digit percentage. Excluding COVID-19, total revenue are expected to increase by low double-digit percentage. Growth in the second half will be hampered by patent expiries, including Simpacord in the US and Nexium in Japan, where we saw first generics end of last year. We now anticipate revenue in China to increase by low to mid single-digit percentage, And as I mentioned earlier, we now anticipate total operating expenses on the upper end of the range, with phasing of SG&A costs towards the second half of the year similar to prior years. In addition, given that we anticipate starting several new phase three trials in the second half of the year, R&D and associated clinical and new product costs will be higher in the second half. Based on June average FX rates, we now anticipate a low single digit adverse FX impact on total revenue and a low to mid single digit adverse impact on core APS. Please advance to the next slide. Continuing with the artificial intelligence theme, today I want to highlight global operations and how we are leveraging AI to accelerate drug development, manufacturing processes and drive supply chain efficiencies. To share three specific examples here. First, in drug development, with our in-house AI-enabled tool, Root Manager, we have reduced in-root synthesis lead times from nine to 12 months to five to six months, and we're striving to further reduce lead times to less than three months. Additionally, with this tool, we've been able to reduce the number of experimental trials, cutting lead times and driving efficiencies in cause, while also providing sustainability benefits through fewer synthetic steps. Next, with AI-powered visualization of data, our operators are able to improve process performance for synthetic and biologic medicine by identifying critical variables that will affect yield and make real-time optimization adjustments. In the future, advanced continuous process verification will drive further robustness and yield increases. Third example, we have implemented AI-enabled enhancements across our supply chain. For example, Sweden is one of our largest global sites, manufacturing over 12 billion tablets and capsules every year. Here we use AI-powered digital twins that can leverage multiple data sources simultaneously, such as production orders, dispensing stations, and cleaning status to optimize production schedules. This technology has already delivered a 90% improvement in scheduling time, meaning we can now develop a dispensing plan in 45 minutes where it used to take eight hours. Our ambition is to leverage many of these tools and roll them throughout our manufacturing and supply network. This is, of course, a journey, but the work is already underway to use technology to drive efficiencies, while our operations team continues to deliver on seamless supply and new product launch delivery. With that, please advance to the next slide, and I will hand over to Dave to walk through our oncology business performance.

Thank you, Aradhana. Next slide, please. We're pleased to report our oncology medicines delivered total revenues in the first half of $8.8 billion, an increase of 22% versus the prior year. We delivered double-digit product sales growth across all regions. Turning to individual medicine performance in the second quarter, Tegristo Global revenues grew 10%, reflecting strong underlying demand for Adora and Flora across all regions. As expected, affected this June, we realized a mandatory price reduction in Japan, and in China, second quarter revenues reflect the first full quarter renewal pricing following reenlistment this March. Following the ASCO plenary presentation of ADORA overall survival data last month, we expect expanded use of Tegriso in the adjuvant setting, as well as potential for new reimbursements in certain geographies. Lastly, as we consider the future impact from IRA, our current interpretation of CMS final guidance supports the potential exclusion for TIGRISO under orphan drug protections. Lymparza remains the leading PARP inhibitor globally and delivered second sales growth of 9%. In the U.S., we saw sequential demand decline across the PARP inhibitor class following competitor label restrictions in second-line ovarian cancer. We continue to work on opportunities for U.S. demand expansion in ovarian and HR-positive breast cancer, but still expect this to be more challenging. Outside of the U.S., we saw double-digit product sales growth across the EU, established rest of world, and emerging markets. In Q2, Infinsi total revenues, inclusive of Mjudo, surpassed $1 billion in a quarter for the first time. up 58% and largely driven by new launches of Topaz, Himalaya, and Poseidon. I'll touch on specific Infinsi growth drivers a bit later, but needless to say, we're excited by what the team has accomplished within a competitive IO class. CalQuint's total revenues increased 34% year-on-year, supported by ex-U.S. demand growth, particularly in Europe. And in the U.S., CalQuint's continues to maintain leadership and frontline CLL with the majority of new patients starts in this setting. However, we continue to see some new patient share loss in the relapsed refractory setting. In HER2, total revenues of $322 million in the second quarter increased 176% year-on-year. In the U.S. in HER2, new patient share in the HER2-positive metastatic breast cancer setting remains at 50%, and in the hormone receptor-positive HER2-low post-chemo metastatic breast cancer share is now grown to above 50%. Importantly, we're seeing strong continued demand across the globe, particularly in European markets. Following the exciting approval for Destiny Breast 03 in China last quarter, we received approval for an HER2 and HER2-Low metastatic breast cancer. Also during the period, we received approval for Propel in the U.S. and anticipate a potential regulatory milestone to be paid in the second half of the year. And finally, we were granted priority review in the U.S. for Capitello 291. Next slide, please. We've seen remarkable Infinsian M. judo growth driven by the recent launches of Topaz, Himalaya, and Poseidon. We're excited about the current trajectory of these launches and the broader potential of Infinsi as supported by the suite of ongoing lifecycle management programs. First, Himalaya, an unresectable hepatocellular carcinoma, has established a clear foothold for Infinsian GI cancers. Last month at ESMO World GI, we presented unprecedented four-year overall survival data, the longest follow-up to date in unresectable HCC. This sustained benefit coupled with strong safety will continue to support rapid adoption and the establishment of a new standard of care. The launch of Topaz represents a step change innovation in biliary tract cancer, and the strength of this data demonstrates the transformative benefit of IO in this setting. In the U.S., Topaz has become the undisputed standard of care within months, and the EU and Japan launches are already outpacing the U.S. trajectory. We're making progress with Poseidon in the U.S. and in Europe with a crowded and competitive setting. This launch, together with our efforts with Pacific and Caspian, continue to solidify a strong leadership position within lung cancer. In the first half of this year, we delivered four positive phase three trials of novel and FENZY combinations across lung, GI, and GYN settings. Matterhorn and gastric and gastroesophageal junction cancer was the first global phase three trial of IO plus FLOT to demonstrate statistically significant pathologic complete response. In endometrial cancer, we are excited to report that DUO-E showed Infinzi plus Lamparsa and Infinzi alone significantly improved progression-free survival. And Susan will cover these trials in more detail shortly. Over the balance of the year, we look forward to additional Phase 3 readouts with Pacific 2 in lung cancer and Emerald 1 in GI. Building on Himalaya, Emerald 1 and Emerald 2 will enable our leadership in HCC. Finally, we'll continue to advance our next wave of I.O. with our novel bispecifics, Borustamig and Rivagustamig and Savagustamig. With that, please advance to the next slide, and I'll hand over to Susan to cover key R&D highlights in the quarter.

Thank you, Dave. Next slide, please. It's been an exciting first half of the year with eight positive pivotal trial readouts. We had a large presence at ASCO with more than 130 abstracts featuring 22 approved and potential medicines, highlighting the momentum of our pipeline. ASCO highlights included the final overall survival data from the DeGrisso ADORA trial, demonstrating unprecedented survival in early-stage EGFR-mutated lung cancer. as well as the first data from the DURO-O trial, highlighting the potential of PARP inhibition plus immunotherapy in advanced ovarian cancer. Additionally, interim data from the DESTINY pan tumour O2 trial found INHER2 to be the first therapy to show broad activity across a range of HER2-expressing advanced solid tumours. Since ASCO, updated data showed INHER2 resulted in clinically meaningful progression-free survival and overall survival, and I'm pleased to share that our initial interactions with the FDA have been encouraging. As mentioned previously, we reported high-level results for eight pivotal trials this quarter. I'll touch on three of those readouts now. First, FLORA2 demonstrated a strong, clinically meaningful improvement in progression-free survival for patients with EGFR-mutated non-small-cell lung cancer. Considering the EGFR-mutated lung cancer landscape as a whole, we believe Teguisa monotherapy will remain standard of care in first line. see the opportunity for FLORA2 to become a valuable regimen for patients with higher tumor burden. We're delighted that these dates have been selected for a presidential plenary presentation at the World Conference on Lung Cancer in September. GEO-E is the first phase three trial of immunotherapy plus PARP inhibition to demonstrate clinical benefit in advanced endometrial cancer. More than 400,000 patients are diagnosed with endometrial cancer each year, and in advanced disease, survival remains poor. with only one in five patients living beyond five years. In Duo E, both Infimsi plus Limpaza and Infimsi alone significantly improved progression-free survival when added to chemotherapy, with the greatest clinically meaningful benefit observed with the combination of Infimsi and Limpaza as maintenance treatment. Finally, over one million patients are diagnosed with gastric cancer each year, 45% of whom are eligible for perioperative chemotherapy. An early read from Matterhorn demonstrated a statistically significant and clinically meaningful improvement within FIMSI plus FLOT versus FLOT chemotherapy alone in the key secondary endpoint of pathologic complete response, which we hope to see translate into an improvement in event-free survival over time. Please advance to the next slide. We recently announced positive high-level results from the first Phase III trial for DASA-DXD, the Tropion Lung O1 trial. This trial investigated data DXD versus docetaxel in second and third line non-small cell lung cancer and demonstrated a statistically significant improvement in progression-free survival and an early trend in overall survival. The adverse event profile of data DXD was overall consistent with previous trials, including rates of all grade ILD. Whilst there were some cases of grade five ILD observed in the trial, we are confident in the positive benefit risk profile for data DXD. These data reinforce our view that DatoDxD will be an important potential medicine in multiple cancers, including lung cancer. Initial interactions with the FDA have been encouraging, and we are proceeding to file Tropion Lung 01. In addition to Tropion Lung 01, we have three active Phase III trials in the frontline setting, investigating DatoDxD in combination with immune checkpoint inhibitors, Tropion Lung 07, 08, and Avanzar. Outcomes in this setting remain poor. Less than half of patients treated with initial IO plus chemotherapy living past two years. Combination Datto DXD plus IO has already demonstrated encouraging clinical efficacy in the Tropion Lung O2 trial with durable objective response rates of 50% for Datto DXD plus Pembrolizumab and 57% for the Datto DXD plus Pembrolizumab and platinum-based chemotherapy across first-line patients. We will have further data to support the combination in lung cancer from Tropion Lung 04, which is a late-breaking abstract at the World Conference on Lung Cancer. The combination has also shown benefit in breast cancer with begonia, where we saw a 91% disease control rate with durable responses in first-line triple negative breast cancer. These results support stronger benefit of the combination of data DXD and immune checkpoint inhibition. Moving now on to breast cancer. Our first phase three trial is due to read out later this year. Tropion Breast 01 investigates data DXD versus chemotherapy in patients with hormone receptor positive HER2 negative metastatic breast cancer that have received at least one prior line of chemotherapy. Our confidence in this trial is twofold. First, we saw encouraging signals from the HR positive cohort of Tropion Pantumia 01 with a disease control rate of 85%, and a median PFS of 8.3 months in a more heavily pre-treated population compared with TB01. Second, we already have proof of concept for TROP2-directed treatment in this space, with Phase 3 data for another compound demonstrating efficacy in a late-line HR-positive population. We also have two Phase 3s focused on triple-negative breast cancer. Tropium Breast O2 investigates whether Datto DXD can replace chemotherapy in first-line patients not eligible for PD-1 or PD-L1 inhibition. Entropium breast O3 investigates the role of adjuvant data DXD, with or without infimacy, in early triple negative disease. We are on track to deliver on the promise of data DXD in lung and breast cancer. Entropium pan tumor O1 and O3 are generating the data needed to support further investments in the future. And with that, please advance to the next slide and I'll pass over to Ruud to cover biopharmaceuticals performance.

Thank you, Susan. Next slide, please. Biopharmaceuticals deliver total revenue of $9.1 billion in the first half, with both CVRM and RNA posting double-digit growth. Within global CVRM, Farsiga total revenue grew 41% to $1.5 billion in the quarter, driven by continued uptake in CKD and heart failure. Farsiga is now approved in 62 countries for patients with heart failure with preserved ejection fraction. and this quarter we were pleased to gain approval in the United States for the liver, which means heart failure patients can now benefit from FASIGA regardless of the left ventricular ejection fraction status. Fasenra, Restreet, Tespire and Savnello continued their strong momentum, delivering combined growths of 48% in the first half. These brands are becoming a large driver of our overall performance. In the second quarter, these brands made up 46% of our R&I total revenue, up from 36% in the first quarter. Next year, we will add another innovative medicine to our portfolio with the launch of Air Supra in 2024. In the second quarter, Fasenra grew 16% to $406 million, driven by strong demand in the US and Europe, as well as some favorable inventory movements in the quarter. We recently filed for Senra for its first approval in China, following positive high-level results from the miracle trial. Tespire delivered $81 million in total revenue in the second quarter, up from just $30 million last year. When we look at the combined global sales by AstraZeneca and our partner Amgen, Tespire reached $257 million in the half, an impressive achievement in only one year since launch. The SPY is now available in 11 markets and has enjoyed notable early success in the US, Japan and Germany, with more European launches to come later this year. Symbicor total revenue in the second quarter remains stable. However, we still anticipate the entry of generic competition in the United States in the back half of the year. In VNI, we saw the first product sales for Bay Fortis, which is now approved in the United States following a unanimous vote by the FDA Antimicrobial Drugs Advisory Committee, supporting Bay Fortis' benefit risk profile. AstraZeneca manufactures Bay Fortis and then supplies product to Sanofi for distribution, and we record our sales to Sanofi as product sales. We also book alliance revenue earned on Sanofi's Bay Fortis sales outside the U.S., where we share profits with Sanofi. We're looking to make Bay Fortis available to protect infants in the U.S. and Europe ahead of the 2023 RSV season. Next slide, please. The continued growth of Farsega is the result of a decade-long development plan to broaden its use from diabetes to chronic kidney disease and heart failure patients. Our pioneering research has led to Fasiga becoming the leading medicine in its class, bringing its mortality benefits to millions of patients globally. We see further opportunities to come for the DACA molecule and other combination therapies, giving us the potential to address additional unmet needs among cardiorenal patients and other indications. Our Fasiga combinations remain on track with plans for phase three decisions later this year. With that, please advance to the next slide, and I will hand over to Mehmet.

Thanks, Ruud. This slide outlines our participation at recent medical congresses where we showcased data for toziracumab, our anti-L33 monoclonal antibody. We also highlighted the importance of real-world data and patient outcomes across RNI and CVRM. Firstly, at the American Thoracic Society Congress, Lung tissue samples taken from patients with COVID-19 were stained and analyzed. And the images I'm showing you here show localization of higher levels of IL-33 in the airway tissues, providing further scientific rationale for targeting IL-33 in severe viral infections in our phase three TILIA trial. Also at ATS, real-world data highlighted the importance of prompt intervention with BreastTree. Initiating treatment within 30 days following a moderate or severe COPD exacerbation decreased the risk of future exacerbations by 24% versus delaying treatment by six months, and by 34% versus delaying treatment six months to one year. At the European Renal Association, we presented real-world evidence underscoring the importance of early diagnosis of CKD. Multinational study RevealCKD demonstrated that 85% to 95% of stage 3 CKD remains undiagnosed. Data also showed that delaying diagnosis by just one year resulted in increased risk of deterioration, kidney transplant, or long-term dialysis treatment. The ZORA study supported continued concomitant use of potassium binders in RAS-E patients who experienced hyperkalemia. In response, we've already seen updates to a number of CKD and heart failure treatment guidelines. Please advance to the next slide. I wanted to also take the opportunity to highlight the broad modalities and technologies we now have in our armory. Over the past decade, we have built these capabilities to provide our scientists with access to the most relevant biological pathways and targets. And as you can see, these are starting to mature and gain momentum. We have a portfolio of antisense oligonucleotides across amyloidosis, NASH, and CKD in clinical development. These are precision medicine approaches that target the underlying biology of the disease in specific patient subpopulations. For example, our PMPLA3 AZD2693 dosed in phase 2B in NASH this quarter, following promising phase 1 data, which showed a steatosis reduction and positive gene knockdown at 12 weeks. In advanced biologics, AZD8630 is a human anti-TSLP fragment antibody formulated for inhaled dry powder delivery. AZD8368630 is currently in phase one in patients with poorly controlled asthma with data expected later this year. Also later this year, we're expecting data from our NGF-TNA bispecific monoclonal antibody currently in phase two for the treatment of OA pain and neuropathic pain. In autoimmune disease, we recently announced a collaboration with Pearl Therapeutics to develop engineered Treg-based cell therapies for autoimmune. Combined with our own expertise in this space, we can accelerate the development of this novel therapeutic approach with the potential to be curative in type 1 diabetes and in inflammatory bowel disease. With the acquisition of Alexion, our gene therapy ambitions have also accelerated significantly. Utilizing our proprietary CRISPR gene editing platform to address challenging rare diseases, we're together building an approach we hope will offer better safety margins. We're also working with Alexion teams to optimize the therapeutic window through the use of novel tissue-directed capsids and tissue-specific promoters. The possibility of curative treatment for rare genetic disease becomes achievable when combined with the Alexion rare disease expertise. With that, I will now hand over to Mark, who will cover the rare disease genomic strategy in more detail, along with rare disease highlights in the period. Please advance to the next slide.

Thank you, Mene. Can I see the next slide? In the first half, rare disease total revenue grew 12%, contributing $3.8 billion. Growth in the period was driven by increased demand and benefited from timing of tender market orders, slightly offset by the one-time pricing adjustment in the international region recognized in the second quarter of last year. Across the portfolio, our global patient numbers continue to grow and notably, this is the first quarter Ultomeris patients exceeded those of Soliris. Ultomeris grew 60% in the second quarter, driven by continued naive patient growth in generalized Myasthenia gravis, new market launches, and successful conversion from Soliris across the shared indications. As a consequence of this dynamic, Soliris declined 19%. Though I'm excited by our performance, as I mentioned in the first quarter, we expect some headwinds in the second half of the year. These include pricing pressure related to renegotiation as Ultramiris launches in larger neurological indications and potential for Soliris biosimilar entry in Europe. Also, as a reminder, we benefited from tender market order timing in the second half of last year. Timing of these orders are variable throughout the course of the year, impacting growth versus prior periods. Beyond C5, both Strensic and Kosolugo grew 25 and 30% respectively, reflecting underlying patient demand and expansion into new markets. Please advance to the next slide. During the quarter, Alexion 2220 Phase 1 data were presented at the European Society of Cardiology in patients with transthyretin amyloid cardiomyopathy. As a reminder, RTTR-CM is a progressive and fatal disease caused by misfolding transthyretin depositing in heart tissue. The safety and pharmacokinetic profiles of Alexion 2220 were assessed and cardiac imaging studies were performed. As shown, the images detail a remarkable reduction in cardiac amyloid deposition over 4 and 12 months. These observations were supported by change in level of cardiac bone markers as well as functional measures. Alexion 2220 is the first and only medicine to clear amyloid deposition and it has the potential to reverse a course of disease, both as a complementary therapy with other modalities, but also as a monotherapy. We are excited by this phase 1b data, and as previously shared, we plan to initiate a phase 3 trial later this year. Across AstraZeneca and Alexion, we are looking to transform the care of transthyretin amyloidosis through multiple therapeutic modalities. Our broader amylosis portfolio includes and stabilizer Acoramidis, for which we have rights in Japan. Recently, we saw positive 30 months for Acoramidis. We've demonstrated a 50% relative risk reduction in cardiovascular-related hospitalization, building confidence in the medicine ability to stabilize disease progression. Eplon-Tersen met its primary endpoints in hereditary trastiretin-mediated amyloid polyneuropathy, and we have ongoing phase three trials in ATT-RCM. We believe this portfolio of medicine with differentiating mechanism of action will address the full spectrum of disease severity. Next slide, please. As you may have seen, we have done a series of small to medium-sized business development deals, expanding our technologies and platforming research. I wanted to take the opportunity to highlight some of these and affirm our long-term ambition to be an industry leader in genomic medicines. Approximately 80% of rare diseases are genetic, driven by inherited or acquired gene mutations. by leveraging AstraZeneca technologies in non-viral delivery systems and nucleases such as CRISPR, logic bio gene ride and savvy platforms, GCR, G-brain cargo for delivery to the central system of CNS. As well as our own property platforms, we aim to address a number of genetic diseases across liver, kidney, heart and muscle, and CNS. The agreement announced this morning to acquire a portfolio of gene therapy program for rare disease from Pfizer accelerates our timeframe to bring this potentially transformative and curative treatment to patients. We look forward to welcoming Pfizer employees who have been driving this program forward, increasing our gene therapy team to over 80 specialists. Together with all my colleagues at Alexion, we are excited to continue our work developing enhanced platform in technologies, leveraging the expertise across a larger group to deliver life-changing medicines to patients where they are limited or no long-term treatment option. And with that, please advance to the next slide, and I will now give the call to Pascal for closing remarks.

Thank you, Mark. Next slide, please. Before I make my concluding remarks, I would like to take a minute to recognize the important steps we are taking to tackle the climate crisis. In particular, our Ambition Zero Carbon program is on track, and we have made significant steps toward achieving our science-based targets. Firstly, we announced our partnership with Vanguard Renewables, allowing us to deliver renewable natural gas, a source of clean heat, to all our U.S. sites. manufacturing and R&D sites by the end of 2026. We also significantly expanded our Easy Forest program with a commitment of $100 million to plant and maintain 200 million trees across six continents by 2030. The expanded program will sequester carbon, support biodiversity, and deliver benefits to local communities, positively impacting an estimated 80,000 livelihoods. lastly our transition plan is verified by the science-based targets initiative which focuses on deep decarbonization allowing for only 10 residual emissions removals by 2045. scope 3 remains to be our largest challenge and we are committed to partnering with our suppliers last week private sector members of the smis Health System Task Force, which I convene, sent an open letter calling on suppliers to commit to joint minimal climate and sustainability targets that contribute to decarbonizing the healthcare value chain. We're playing a leading role in this space, doing our part to limit the impacts on climate change while unlocking opportunities to deliver a more sustainable healthcare system. Please move to the next slide. We have an exciting second half of the year ahead with a number of important pivotal trial readouts, including two trials in breast cancer, Tropion Breast 01 and Capitello 290. Two trials, we also have two trials of Infinzi and non-small cell lung cancer, NHCC. We have a trial with Fasenha and EGPA, as well as the first results of our next generation COVID-19 antibody AZD3152. We also have a rich catalyst path in 2024, which given current event prediction rates will now include destiny breast O6 and lower results, both of which are now expected in the first half of 2024. The progress that we are making in our pipeline overall is inspiring, and I'm excited for when we have the opportunity to share the full data from the many studies we have showcased during this call at upcoming medical congresses. Now please advance to the next slide. Finally, before we turn to Q&A, earlier today we announced that Mene Pangalos will retire after almost 14 years with the company and a great 35-year career. Mene will be succeeded by Shah Anbar, currently head of research and product development at Alexion. When Alexion joined AstraZeneca two years ago, a key priority was ensuring that our shared organization would benefit from the world-class talent that Alexion brings. From day one, Sharon stood out as an exceptional scientific leader. Sharon brings tremendous experience that will prove essential to advancing our pharmaceuticals pipeline, along with a strong track record for driving productivity and fostering innovation. This experience, coupled with her leadership style and passion for developing people, places her perfectly to take over the reins from Mene and help us to ride the next chapter of success. Over the coming months, Mene and Sharon will complete an extensive handover, supporting a smooth transition of responsibility and ensuring there are no delays to the advancement of projects. Which brings me to Mene, someone who is always quick to praise others, but must take credit himself for all he has done to transform how we approach R&D, delivering a greater than five-fold improvement in productivity, driving deeper collaborations with academic, biotech, and peer organizations, pioneering programs to promote open innovation, and championing the use of new technologies and mentality. and last but not least leading up our contribution to the uk life sciences sector and in particular building our very important presence in cambridge in the uk many thank you for your contribution to our company and i wish you only the best in your retirement personally i will miss your wonderful sense of humor and your intellectual wit But the quality of the medicines you've brought to patients and the pipeline and capabilities you've built will be your legacy for many years to come. With that, I will hand the call back to Andy for our Q&A session.

We will now go to the Q&A with all of our executive members participating, shown here. As a reminder, you can raise your hand on Zoom or type your questions in via the Q&A button. We'll try and answer as many questions as we can during the call, but please do limit the number of questions you ask to allow others a fair chance to participate in the Q&A. And with that, we'll move to the first question.

Sachin Jain, Bank of America. Over to you, Sachin.

Thanks for taking the questions. Sachin Jain, Bank of America. Two topics. Firstly, Datto in first line, long if I may. So part of the reaction to TropLung01 was investor fading confidence in first line on both efficacy and safety. So I wonder if you could touch on that. Could you remind us how you interpret the eight months of PFS we saw from TLO2 and ASCO just with a comparator keynote one in nine months? And if, Susan, you could frame expectations of what our focus should be into TLO4 that you flagged at World Lung. And then the second question is on breast cancer. A lot of news for breast cancer in the next 12 months. We've been particularly vocal, but I wonder if you could just touch on two reads. Firstly, TBO1, which you talked about, but the potential for that to be better than tropics O2, you noted the eight-month PFS. Are you confident that can repeat and better the Tridel v5.5 months? And then secondly, you didn't mention DB09, but you've pulled that forward into 24. So again, just talk to the confidence you've got there. Prior data suggests potential to double the PFS comparator of Herceptin-Vegeta. Thank you.

Thanks, Sachin. So these are the questions for you, Susanna.

Okay. Thanks for the questions, Sachin. So let's start with data in first-line lung. First of all, I would just say that, you know, given that TLR1 is a positive study, there are things that we can learn from that. The first-line lung studies are ongoing. We've obviously got tropion lung 07, 08, and Avanza, which are complementary trials in first-line. predominantly in patients without genomic alterations versus the respective standard of care. And that is always investigating patients regardless of PD-L1 status or tumor histology. So they are complementary segments of first-line lung. What I would say is that we've now treated across all of these studies together with TLO2 and TLO4 for over 200 patients on the data DXD plus immune checkpoint inhibitor combination. And we're comfortable with the safety profile that we've seen across that patient population. So I think it's important to just remember that from an ILD perspective, We know that some tumour types have a higher risk of ILD than others and that later line patients who've had multiple prior lines of chemotherapy are at higher risk of ILD. And so I think it's important that that ongoing safety profile in first line lung is underpinning our confidence there. When you look at tropion lung O2 data that you highlighted, we're encouraged both by the response rate and the durability of response that we've seen from tropion lung O2 for both the combination with the doublet of Datto DXD plus Pembro and also the triplet when platinum-based chemotherapy is added. What you'll see in tropion lung O4 That's a phase 1b study that also looks at the combination of data plus immune checkpoint inhibition in lung cancer. So it's an additional data set to tropion lung O2. And again, we're happy to talk to you after the data presented at World Congress on Lung Cancer. Breast cancer, you asked two questions. One is about tropion breast O1. Again, the confidence in tropion breast O1 is based on the data that we've seen that you've already highlighted and that you've already mentioned. I mean, you know, I'll just say that for the design of Datto DXD, we think is the best in class ADC. It's got an excellent stable linker and a proven warhead already. And so when we look across cross-trial comparisons with all the caveats that those have, we've seen numerically higher response rates across a number of different settings and that really underpins our potential to have better efficacy and have a best-in-class profile in that setting. But obviously we have to wait for the actual readout of the trial. For Destiny Breast 09, I think actually the readout time has not hugely shifted here. Obviously, all of the inherited trials are recurring rapidly, and that helps with the timelines, but these are also event-driven trials that we look for the outcome. So I don't think there's anything more than that to interpret in the shift in the timelines. I hope that addresses all your questions.

Thanks, Suzanne. Tim Anderson. Go ahead, Tim.

Great. Thank you. So just staying on the topic of data DXT, in the light of what TRIP and LOMO 1 has shown, I know you guys say you're enthusiastic about the program. Is your enthusiasm, you know, less or tempered at all by how TLO 1 read out? because the benefit, I mean, you guys pretty much said it, is modest. So I'm wondering if that does kind of temper your expectations for that program overall and what that can deliver in other tumor types or even in, you know, other settings for lung cancer. And then a second question, where are you with the retrospective biomarker analysis of TLO1? Is there anything you can say yet looking at results by stroke to expression levels?

Okay. Thank you, Tim. So Let me just reiterate that we're confident in the data that we've seen for Tropion Longo 1. As we've shared already, we've had initial conversations with the FDA, which have been encouraging, and we're moving to file. So we're looking forward to sharing the full data, which I think will be helpful for everybody at an upcoming conference, and that will obviously provide a more complete picture. But we're confident that the data that we've seen really, really enforces that data DXD is going to be important potential medicine in multiple cancer types, but also including in lung cancer. In terms of the biomarker analysis, work is, as you say, ongoing. And obviously, you know, one important source of data is going to be the Tropion Lung 01 data set. So I look forward to updating you with data once we've had the chance to complete that analysis.

Excellent. The next question is from .

Thank you. So, another question, one for Susan and one for Mark. So, you filed or you plan to file the tropion lung O1 data with the FDA. Can I ask which population, presumably given you've got modest PFS, the OF isn't mature, One would imagine there's a subgroup in the second line that is persuasible, third line for the FDA. Could you just comment on which indication you are seeking, which population? Is it third line, second line, histology? I ask knowing the likely response, but I'm interested anyway. And then second, to Mark, in relation to your amyloid monotonal, where we share your enthusiasm. When we think about the outcome trial, are you going to mirror that conducted by Bridge Bio with a sort of embedded six-minute walk as well as an outcome for mortality, for morbid mortality, or do you think you can get it approved solely on a six-minute walk in order to expedite the time to market?

Suzanne, you want to start?

Yeah, sure. Thanks for the question, Andrew. You know, obviously in the top line results, we've not specified performance by patient subsets. That's entirely in line with our normal practice. TLA1 was stratified by the most immediate prior therapy, including anti-PDL1 or PD1 immunotherapy, geographical region, and histology, squamous versus non-squamous. It did include patients with actionable genomic alterations, but that was a later protocol amendment, and it's a minority of the patients that were included. I can't really comment on ongoing dialogue with the FDA at this point.

Maybe the one thing that we could add here is that, Andrew, from what we've seen, we think this agent is going to be useful in a large population of lung cancer patients. Mark, do you want to cover the second question? Yes.

Thank you, Andrew, for your interesting... So we are planning this phase three and we are in ongoing discussion with the FDA to confirm the protocol. You asked a very precise question on whether we were going to include the six minute walking test in our endpoints and the answer is no. We are probably going to finalize the endpoints on mortality and cardiovascular morbidity, possibly with the addition of a third-tier endpoint, but it won't include six-minute walking distance.

Thank you, Mike. Mark Russell, Morgan Stanley. Mark, go ahead.

Thanks very much, Pascal. A couple of questions. Firstly, on Calquins, and one for Dave. Dave, could you help us understand the cell split for Calquins and for the the BTK market in CLL between first-line and second-line stroke refractory patients. And if you can help us on the second-line side to understand the sort of shared dynamics there, that could be really useful. Secondly, on the tropium breast O1 market opportunity, obviously a large number of patients, I guess, in just the third-line setting, around 85,000 patients in the G8, Could you help us understand how this fits within HER2 and the HER2 low setting as well? So trying to think about the market opportunity before we get the data themselves. And then lastly for Susan, just to follow on to all the TROPE2 testing, Could you help us understand going forward the importance of TROP2 testing for TROP2 ADCs and from a regulatory standpoint the acceptance of retrospective data on TROP2 expression and the potential to incorporate TROP2 testing into trials which have recently started such as TLO7 and TLO8? Thank you very much.

Yeah, thank you, Mark, for the question. So, starting first with your CalQuence question. In terms of just the overall new patient starts within the BTKI class, we see about half of new patient starts of total BTKI starts are happening in CLL in the front line, and then you have about half of those starts that are happening in the relapsed refractory setting. And then you can split that half in the relapsed refractory setting into about Half of those, so 25%, are in patients who are naive. And the other balance of that is in patients that have been pretreated with BTKIs. So that gives you a general sense for how the class splits out. In terms of our share of those classes, I've been very pleased with the U.S. performance in the second quarter. As we've seen in the frontline setting, our share position has held strong as we've seen the entrance of new competition within the class. In the second line setting, as I mentioned in my prepared remarks, we have seen erosion of our share in that relapse refractory setting, particularly within the naive. We remain, as we see it, still the leaders within this space. That said, it is a pretty tight share split among the three players as we see it within that space. In terms of now switching to the commercial opportunity for Tropion Breast 01, I think that maybe the primary thing that I lay out here is that I think what we're really seeking on this is category leadership within breast cancer. I think that as you quite rightly point out, across the G7 countries. There are a large number, you know, over 35,000 fourth line and beyond patients treated across the G7 in hormone receptor positive and HER2 negative disease. And I think that what we'll really be looking to do is understanding how patient selection and sequencing can create opportunities both for and HER2, as well as for Datto DX. And I think that an important part of the approach that we're taking is to try to have an AstraZeneca medicine that is appropriate for patients with various different subtypes and also in various different sequence over time. And I think that I would look at the opportunity to replace chemotherapy across late-line breast cancer as a category is how we're thinking about the portfolio of medicines.

So to answer the question about biomarker development for data DXDA, so in principle antibody drug conjugates are targeted medicines and I think as a general principle we want biomarkers to identify the right patients for targeted medicines across that class. And so as we've indicated we are working on a biomarker for the TREB2 program and we will use the data that we've got from TLO1 to help with that effort and we can update you on that once those analyses are completed. I think, you know, your comment about retrospective versus prospective, you know, obviously in an ideal world you want prospective selection in order to make sure that you've got a balance and you often stratify for that presence in such trials, but there are multiple examples of where retrospective analysis based on a prospective definition of that have enabled an approval in that setting.

Thank you, Suzanne. The next question is from Gonzalo Artiak at ABG. Go ahead, Gonzalo. Is that OK? Yeah, we can hear you. Go ahead. We can't hear you. So let's move to the next question. Yes, now, can you hear me?

Oh, yeah, Gonzalo, go ahead. We can hear you now. Oh, great, great. So first one, it's regarding yesterday's news on DestinyPan Tumor O2. With the data presented yesterday of improved BFS and OS in line with what you showed at ASCO, how much does this help for a potential tumor agnostic approval? And here, what is your view on this debate of the use of HER2 grades or different expression levels as a biomarker for potential treatment approach? And specifically in Parcras, you didn't see any major improvements in terms of ORR, but could you share anything on how does these new parameters, PFS and OS, look like? Thank you.

Okay, thank you for the question. So as we shared at ASCO, what we've seen within HER2 in the pan-tumor O2 study is impressive response rate and durability of response across multiple tumor types, particularly impressive in the gynecologic cancers of endometrial cancer, ovarian and cervical, but also encouraging data across multiple other tumors. And of course, what we saw in that study was an enhanced response rate in the IHC3 plus compared with the IHC2 plus populations. So it's important just to remember that there's a mixed nature in this trial. You've got multiple different genotypes with different lines of therapy, but generally heavily pre-treated patient population. And what you saw there was a response rate, durability response, which is beyond what you would reasonably expect, and certainly in the IHC3 plus population for a standard of care chemotherapy in that setting. So I think it's encouraging now that we've got the progression-free survival and overall survival to back up that response rate and durability of response. I do think there are differences in this setting between IHC 3 plus and 2 plus, which is something we've also seen in other settings as well. And that, if you like, establishes the differentiation from the standard of care. I also think it's true to say, though, that there are patients beyond the IHC 3 plus that are clearly benefiting beyond what you might expect from that standard of care chemotherapy. So what I would say is that, you know, conversations with regulatory authorities, including the FDA, are ongoing, as I said. initial discussions are encouraging and as those develop we can provide more details.

Thanks Suzanne. Next question is from Richard Parks at Exxon. Richard, over to you.

Hi, thanks Pascal. Yeah, just a couple of questions. Firstly, just to push a little bit more on TL01. Just to help me understand the difference in the level of optimism at the time of the press release and what you're communicating now, because as you'll know, your omission of the words clinically meaningful is what's caused nervousness, but clearly given the decision to file and your optimism today, you do see the overall benefit as meaningful. So can you just help us understand a little better the context for that contradiction somewhat in the communication? Is it additional analysis you've done since the readout, or was there some other reason why you felt you couldn't include that wording in the press release? Second question, a bit simpler, just could you update us on progress for Volustamig to phase three? I know we're waiting for the durability of response data at the lower dose to be presented. And I just wonder, will that be at ESMO or Worldline? Thank you.

So the definition of clinically meaningful, you know, in terms of what clinicians are looking for, will take into account not only the difference in medians, but shape of the KM curves, obviously the hazard ratio, which is what the trial is often designed to power. together with the response rate, durability response and the safety profile as well as the patient population that's included. So, you know, I think what I would just reiterate really is that when we look at the data and we find data in there that is encouraging and we've had discussions with the FDA and on the basis of encouraging response we are proceeding to file, I can't go into more details today, but we'd be happy to have more conversations when we've actually had the opportunity to present the data as an upcoming medical congress. With regards to your question on Volvastimic. you know, the program is advancing at pace and we have indicated that we've got a number of phase three trials in planning. We're proceeding again, you know, at pace with those and as we initiate those and as we have more mature data, we will share those data, but not necessarily, you know, on the timelines that you're asking for. So, you know, at the appropriate time we will share the data in the public congress.

Thank you. I mean, Richard, just to add, I mean, our partner, the HSNQ, and us, actually, we have a policy of only disclosing the high-level results, as you know, and not the details. So what you saw is the announcement related to the high-level results. What we have seen is the detailed results, and that probably also explains some of the discrepancies. But, you know, you'll understand better when you see the results at a future Congress. The next question is from Christopher at SAB.

Hi there, Christopher . So I have a question on supernova and the COVID antibody update in general. So obviously, so I saw that the timeline seems to be reiterated. But, you know, we're moving toward the latter part of the half. Not so much time to get it to patients before the end of the year. So perhaps could you just remind us a little bit about the factors determining the time from top line to EUA? And can you also talk a little bit about how you're planning to brand it? it seems that it won't be, um, uh, but, uh, I guess, uh, that has advantages and disadvantages. Um, so perhaps you could talk about that. And then, um, in terms of the Sunra, um, the growth levers, uh, going forward and, and also thinking about, um, uh, I saw GSK has, uh, an ultra, uh, extended half-life aisle five. So, um, What are your thoughts around competition? Thank you.

Thank you, Christopher. Iskall, do you want to take the first one, and would you take the next one?

Thanks, Christopher. Thanks for the question, and also thanks for your continuous interest in this area. So we continue to rapidly advance AZD3152, which is a new long-acting monoclonal antibody for prevention and treatment of COVID-19 for immunocompromised patients, and I'm pleased to say that Supernova trial is on track. As you are mentioning, we did update the trial, and that was as a result of the trial design, and that was as a result of the consultation and agreement with the FDA. because we believe that is the fastest way how to achieve emergency approval for the patients in U.S. And currently the trial is updated with a sub-study of immunobridging data. As a reminder, this is a precedent study design and will allow us. to have the data late this year. Obviously, as we are moving from the beginning, at pace, we will do our best to deliver AZD3152 to the immunocompromised patients in U.S. by end of this year. Equally, we are continuing the supernova trial with the efficacy endpoint, and we believe that the efficacy data readout will happen in the first quarter of next year. that will allow us to have the approval globally outside of U.S. On your branding question, thanks for that. I do agree that not having a brand name for our next-generation monoclonal antibody has its good and bad sides. We are currently in discussion both with FDA and EMA, and we will provide the update on the brand name as soon as we get agreement from those agencies.

Okay, thank you so much, Chris. Quickly, the growth drivers for Fasenra in the foreseeable future. There are three big ones. First of all, by far the biggest one is still biopenetration is at the low side for biologics in severe uncontrolled asthma. Depending on where you are, it's everything between 15% and 25%. So there's still a huge room to maneuver. in a positive way. The second one, what I said in my remarks, is that China is an important growth driver. We have found in China, based on the outstanding miracle trial, so hopefully next year we will see the results. And last but not least, later this year we will see the outcome of Fasanra and eGPA, which is another very important growth driver for the brand. So all in all, we truly believe that there's still a very bright future for Fasanra. Quickly, your remark about long acting. Of course, we have our own Fasenra every two months, so we don't foresee a major impact of our molecules. The class is very competitive, but once again, biopenetration across the board is still at a very low level, so more competitors will grow the market in an acceptable and good way. Thank you, Owen.

James Gordon, JP Morgan.

Hello, James Gordon, JP Morgan. Thanks for taking the questions. Firstly, a question on data, which would be, is the plan to change anything on the back of the recent data update, and what might you change? For instance, could you tweak any of the trials to involve patients which you think are going to show stronger efficacy in some sort of subpopulation? And is it CHOP2 or is it something more sophisticated that you're actually looking at? Because I saw CHOP2 expression was like a filler on the slide laying out the DATO program. But is it something else where you might end up stratifying? And will you kick off any more DATO phase three trials from now? Or are you going to wait until you've got a bit more data from other trials to work out where the strongest efficacy is going to be generated? And then just one other question, which was in FinSea, so very strong growth today. But is there anything one-off here that helped performance? Or actually, if we put data aside, is Infimity and Her2 really going to be the two key growth drivers from now until the end of the decade? Can we really extrapolate the strong growth forward for Infimity today? Suzanne?

Okay. All right. So in terms of data DXD new trials, let me start with that one. Yes, we are continuing to plan new phase three trials with data DXD, as we had indicated at the end of last year. And we continue to be excited about the potential for this molecule in multiple different settings. In terms of the biomarker, TROP2 is highly expressed across many different tumor types, including lung cancer. I think in general about ADCs and prediction of outcome. Receptor expression is one element. Receptor internalization is another element. And sensitivity to warhead is a third element. So there are multiple elements to consider about predicting the patients that are most likely to respond. And of course, we're looking at those different elements in what we're working on from a biomarker perspective.

Thanks, Susan. James, on Infinzi, I mean, I think the first thing I'd note is that we double clicked into it, into the prepared remarks, because we think that the opportunity for Infinzi going forward is an important one. We've made a series of investments into the lifecycle plan and the clinical development plan for Infinzi, and those now are paying off in terms of positive readouts, and we're commercially taking advantage of that. I think that to go a little bit more specifically, Somewhere between 20% and 30% of the Infinsi growth that we're seeing is coming from the established portfolio, so the Pacific and Caspian indications, where we're seeing strength in Pacific across the globe as we kind of get further away from some of the COVID-19 challenges. We're continuing to progress against Caspian in parts of the globe where we have opportunities, but really it's the new launches of Topaz, Himalaya, and Poseidon that are making up the balance of that. Topaz has rapidly gotten to a place in the markets where we've launched where we have market share that's well north of 50%. I'd say Himalaya has had a nice uptake, but still quite a bit of opportunity to continue to move with Himalaya. It is a competitive context. And it's one where we are certainly coming up against therapeutic alternatives, but we like the uptake that we've had. Maybe the last proof point just to offer on this While with Topaz and Himalaya, we have regulatory approvals in over 50-plus markets across the globe, we only now today have reimbursement in just around 10. Now, they're 10 of the largest, so it's the U.S. and Japan, and we have early access that exists within France. But we still have a number of countries within Europe and a lot of countries within international which yet to come on board. So we think the outlook for Infanzia Forward is strong.

Thank you, Dave. Emily Field, Barclays. Emily, go ahead.

Hi. Thanks for taking my questions. I was just asked two. The first one, just on Lemparsa and maybe digging in a little bit more to the dynamics going on in ovarian, how much of sales is second-line ovarian? And just You know, kind of we're aware of the registration being pulled for the competitor asset, but sort of why is this impact bleeding over into LIMPARSA? Do you expect to return to growth in the U.S. for this asset? And then just a question on raised guidance. You know, I was just wondering, is this truly based on sort of improving demand in the region? You know, is this impacted in any way by some of the price adjustments that are happening with the product from the NRTL just any incremental colors you can get there. Thank you.

Deb, do you want to cover the first one and Leon could cover the second one?

Yes. Emily, thanks for the question. So, first part of this is that if we take a look at PARP class starts across lines in ovarian cancer over the course of the year, the starts are declining. and that is predominantly a phenomena of lower desire on the part of medical oncologists to treat in the second line setting in ovarian cancer as there's been, as you know, I think, quite a lot of changes that have been happening there with respect to competitor labels and discussion and dialogue with the FDA. Within the context of that, We've been doing a good job to continue to drive our POWLA and SOLO indications. SOLO, we really have probably fully penetrated, though there is opportunity to continue to drive HRD testing rates in the front line. Unfortunately, a bit of what's happening is that those gains are being offset by some of the second-line declines. Now, today, in terms of where we stand, the second line represents a significant minority of our ovarian cancer business. And so I'm hopeful that even with a narrower Propel label, that we have an opportunity to continue to drive growth in Limparsa with Propel and in some of the other populations that I've mentioned. But it is going to be slower progress that we're making there. I will say outside of the United States and Europe, we're making nice progress with Propel within Germany. We're continuing to drive growth opportunities that we have in breast cancer and also within ovarian cancer, But I think that the growth rates that we'll see on Lumparza, while still in front of us, will be a bit slower. I do, though, look forward with optimism to hopefully having regulatory path forward with Duo E. We'll see how things net with Duo O, and those would certainly be enthusiastic areas for us to launch into.

Yeah, regarding China guidance, I think China this year, we have some headwinds on oncology price cuts because of NRDA renewed last year. Major oncology products get a cut. and also Selecom getting to VVP, which is a large product. But actually, we should also focus on a lot of opportunities because we're launching rare disease and also Inher2 in China, Calquins in China. So lots of new products are being launched, a little bit lagging behind the global pace, but I think we are looking forward to a lot of new launches. We haven't yet launched Infinsi, Topaz, and also Himalaya. And we also have a launching strongly into Adara, the indication, and Florida, too. And for inhalation business, is a very strong growth, and after getting to NRDR second year now, so is also embracing very strong growth. And after last year's VVP, we digested and this year we back to growth now. So Fosiga is also one of our very major important growth driver, and together with ROXA and also all the other CVM portfolio doing extremely well. So I think in the next one or two years, three years, we are launching a lot of communication and new products. So a little bit behind the global, but also we also need to digest the VBP impact and some price cut of NRDL. Governing China is treating innovation better than before. So I think this is also a very good sign for NRDL policy, some of the transparency and also bring quite a... Victor Sundberg, Nordea.

Victor, over to you. Victor, we cannot hear you.

Yes, hope you can hear me now. Yes, go ahead. Yeah, sorry. So I have two questions, if I may. Thank you for taking my questions. So on the outlook for 2023, I just wanted to get a bit more details on the headwinds that keeps you from erasing or refining the guidance. So in China, you seem to be more optimistic, but the parameters going against you that you mentioned here seem to be quite well-anticipated, perhaps in the beginning of the year. So you see the situation in the U.S. and the NRDL impact from China in the second half. So are there other things here as well that keep you on the sideline here for a guidance upgrade or refinement that have surprised you a bit during the year? You mentioned inflation, so maybe a quick comment on that would be helpful. And the second question I have is on Infinsi, very strong growth across all geographies, as you said, but especially in your rest of the world category. Can you just elaborate a bit more what is driving that and how we should extrapolate in that geography and why the uptake has been so quick here? Thanks.

Thanks, Victor. Harald, do you want to take the first one and then the second one?

Yeah, sure. Thank you, Pascal. Thank you, Victor, for the question. So we are reiterating guidance for the year, and I think it's a bit of phasing and dynamics between first half and second half. In the second half, we are going to experience, as you just mentioned and I mentioned before, the Symbicor generic in the U.S., Nexium generic started to see the impact. And again, it's a progressive impact. So again, more in the later part of the year and decline in, you know, various other legacy brands there left. So if you look at some of the other, you know, the brands that are in the other, the legacy category, the trend that was mentioned by Dave around sales,

Recording and progress.

From a clinical supply standpoint, a lot of that is weighted towards the second half in R&D costs. So, again, it's more phasing than anything else, and we are reiterating our guidance for the full year. And then Dave on MFIN-Z, rest of the world.

So, Victor, it stems back to the answer to the question that I gave previously to James. Established rest of world is made up predominantly of sales from Japan. I think that if you take a look at a lot of the other international markets, they sit within emerging markets. So the success that you see in the quarter for Infinsium Judo is really driven by very rapid uptake that's been happening over the course of the half with Topaz One. And then also within the last quarter, we've had reimbursement firm Judo that's allowed us to be able to move forward with Himalaya.

Thank you, Dave. Steve Scala, do you want to go ahead, Steve?

Thank you so much. Two questions. First for Dave, in the third quarter of 2022, you said that in HER2, could be one of the largest medicines in oncology. Are you willing to say the same for DATO-DXD based on what you know? And second for Susan, does AstraZeneca plan to alter the study design of tropion lung 07 and 08 based on the results of TL01? Thank you.

Thanks, Steve. I continue to believe that INHER2 has the opportunity to be one of the largest medicines and certainly one of the most transformative medicines in the treatment of cancer. I will just come back to, we've talked a lot on INHER2 about three important pillars and the pan tumor O2 data and Susan talked about that in greater depth earlier. really does begin to open up the opportunity to take an HER2 into areas outside of breast, gastric, and lung cancer, and I think is really promising for that. And with Datto, I would say similarly that – I confirm my enthusiasm for Datto's opportunity to be potentially as big as in HER2. And I think that it's going to be an important medicine. Certainly also relative to last quarter, having a positive phase three readout reinforces confidence in the ability to be able to take a program forward. And I think that that's a big driver of it. And I think that last thing, when we did the deal on data, we knew that there was a big opportunity to replace systemic chemotherapy in lung cancer and also in breast cancer. The real opportunity for data to be bigger than in HER2 would be if we can take it into tumor types outside of those two areas. And so that's really what we look forward to seeing if we're able to effectively do it.

I just also would state the obvious, which is we have a lot more data points on HER2 than we have for DATO. We need to keep this in mind, of course, but the potential is indeed very large. Simon Baker, Simon? The second question.

Oh, sorry, there was a second question. Sorry. Thanks for the question again. So I think I said before, CHOPI and Lung01, I expected that we were going to learn some things from that trial, and indeed there are learnings in CL01, as you expect from any clinical trial, particularly the first pivotal trial. So it's normal practice for drug development that as you go along and you learn, there may be adaptations to trials. So I think that's just a normal part of drug development. And I'd just say, look, we've remain confident that that is extremely important medicine in lung cancer, including in the first-line settings of the trials that are already ongoing.

Thank you. Thanks, Suzanne. Simon, do you want to go ahead?

Thank you, Pascal. Yeah, two questions, if I may, please. Firstly, on the Pfizer deal, you did allude to it on the slide a little bit, but I wonder if you could give us a bit more colour on what you're buying. Is this more technology rather than specific products? You highlighted some of the capsids on there and specific to those, are there any characteristics that Pfizer brings that are differentiated in terms of selectivity and payload capacity? And then secondly, a question on brazicumab and inflammatory bowel disease. Now that you've written off and terminated that project, I just wonder what your level of interest in that space still was. I see you've done some work with NLRP3 inflammasone inhibitors, but is this still an area that is under active development? Thanks so much.

Thank you, Simon, to take us away a little bit from Dato, but Marc, you can go ahead, and then Mene.

Yeah, so happy to, Simon, thank you for the question, and happy to talk a little bit about gene therapy. So basically, the agreement with Pfizer concerns about a dozen preclinical constructs and assets, and also a large number of capsids that have been over the years and that can be probably further refined to get the best possible cap seed for both CNS or cardio tropical asset. So it's a combination of a dozen projects who could start clinical probably from next year or the next one, two or three years plus other technologies, including cap seeds, which could be further refined, but we need to work on those to get the ultimate tropic for the right tissue, tropism for the right tissue, sorry.

Thank you, Marc. And I think I look forward to the day when we can actually show you the progress we're making in the Alexion portfolio, the pipeline. It's very exciting, but it's also true for the cardiovascular. respiratory immunology portfolio and at some point hopefully in the future we can spend more time on those products as many of those are exciting also making progress in Vienna even though it's much more at an early stage but with that many you want to cover the question that Simon had.

It's a great question and the answer is we have an interest both in terms of building our immunology capability and autoimmune disease and specifically in diseases like IBD Now, I'll give you two examples, and again, this is, I'm sure, something that Sharon will be talking about over the coming year. The first program is an anti-CCR9 antibody that's in phase one, which has demonstrated really dramatic lowering of T regulatory cells in the gut, and it looks like a very interesting mechanism and antibody, and we're looking to see how we can accelerate that. And you may also have read about a deal we did with a small company called Quell, in the Treg space, and I talked about it today in my presentation. They have a really interesting way of locking Treg cells to maintain their anti-inflammatory state, and one of the indications that we were pursuing with them is IBD.

Thank you, Amine. We have a few more questions, so we maybe extend by five minutes, but if you don't mind, if you could ask one question each time. Simas Fernandez, go ahead.

Yeah, thanks. So just a quick question on Treg. the change in leadership and Mene's retirement. It's interesting to see that Sharon is coming in from Alexion. Is this a directional move away from, you know, sort of more primary care type opportunities? I know this is something, Pascal, you have talked about before, but there's a lot of interest in opportunities to treat metabolic diseases, Just interested if this is a strategic shift away from diabetes and metabolic disease, perhaps obesity opportunities, or if we're going to see AstraZeneca continue its efforts along those lines or perhaps even accelerate those efforts through business development going forward. Thanks.

That's a great question. Actually, what it is is very simply the appointment of a very talented scientist and an exceptional leader. It's not reflecting a change in strategy, certainly not reflecting that we want to consolidate rare disease and the biopharm business because Sharon is being replaced in a role as head of research and product development at Alexion. And it's also not reflecting a move away from all this disengagement from primary care. I mean, I'm sure you've noticed that looking at ourselves, but also our portfolio, you've noticed that suddenly over the last few years, naturally our portfolios move to more specialty care, but primary care remains important. And that's why a few minutes ago I was saying we look forward to the day when we can talk about what we have in RNI but also in cardiovascular medicines. We have quite a few quite a few projects and many maybe you want also to comment there on the portfolio we have in fact.

I think you know when we have a chance hopefully in the next 6 to 12 months to talk about all of the assets both early, mid and late stage assets across CVRM, across respiratory immunology, VNI, I mean, it's a very rich and deep portfolio with many, many opportunities, many of them significant. You know, we are moving more to specialty, but there's still a place for primary care. And Sharon, I can just second what you're going to say. She's going to be a fantastic leader for us. It doesn't reflect any change in strategy, more of continuity with hopefully, you know, going from strength to strength and building on what we have already built.

One thing that suddenly Sean can help us do is continue building this focus in immunology, sorry, that many started and that will be an important chapter of our future. Matt Weston at Credit Suisse.

Thank you, Pascal. Can I ask a question about IRA Part D reform? So at face value, Astra's oral oncology business, is going to face significant headwinds over the coming years as farmers' contribution to catastrophic cover in Part D steps up significantly. But offsetting that, there's also the potential for volume uplift on lower co-pays and reduced foundation support. I wonder if Dave could walk us through the pushes and pulls for the oncology business and whether he sees it as a meaningful net negative, something that washes its face, or maybe even a net positive. And if I am allowed, Pascal, I know you said one. Can I cheat? Susan, on TL01, when do you expect the OS data to be mature, and will you present the PFS data before the OS data is available?

Thank you. So thanks, Matt. So on the IRA, it is in terms of co-pays, et cetera. I think it's – Probably a small positive for primary care products and a bigger positive for oncology. Not only oncology, but more expensive oral medicines. And with this, I'll hand over to Dave who can comment more specifically on oncology.

Yeah, so if we take a look at the first part, Matt, of the question, we haven't shared now for decades. quite some time specific product level breakdown of percent of business that's within Medicare Part D. What we have shared that across the AstraZeneca complete portfolio, that 25 to 30 percent of it is Part D. And you're right that the oral oncolytics are above that average relative to kind of understanding the magnitude of the exposure here. So, certainly, you can model out what the impact of having to pick up catastrophic looks like. I will say, though, that it is an important offset that comes with the ability to be able to have copay capped and also smoothed over the course of the year with these expensive oncologics, really the copay exposure that patients in Medicare plans face on the affordability is quite significant. There's no mechanism for industry to be able to help in the way that we do with programs in the commercial side of things. So, while $2,000 of copay may be a barrier for a number of patients still within the United States, particularly within some of the elderly populations, we do think that there's an important reduction that's going to happen here overall. We'll have to see how much we're able to actually get patients off of free goods programs as a result of this, and we'll keep you updated on that as it unfolds. And we'll start to find out next year, actually, as co-pay moves down to a $3,500 cap on January of 2024.

So thanks for the question, Matt. As you're aware, we're not indicated when the final OS analysis is going to be conducted for TL01. When we've got – it's an event rate driven as expected, and when we've got the projected event rate, we can update that. But just for you in the meantime, when considering the outcome and the maturity, just bear in mind that this is the second, third line non-small cell lung cancer patient population, and unfortunately for those patients, Median OS is still not long. So with dosetaxel, it's in the 10 to 12 month range is typically what you would expect. It's not hugely prolonged versus progression-free survival.

Excellent. So Eric Leberigo, can I ask everybody to stick to one and not cheat, please, Eric?

I would like to try. First was on HCR3 actually as a target in ATC, still continuing to see good data coming from your partner's product. And some physicians would like you to embark into this partnership as well. Is there any option and are you still discussing to get access to it? And if not, are you nonetheless interested by these targets and are you then considering doing one proprietary product with any kind of construct? and maybe if I can try a very, very short one in rare disease, putting together solaris and ultramaris until the R&D delivers will represent probably 80% of cells for the next two or three years, with some biosimilars coming in Europe first and competition growing. Can you maybe give a little bit of confidence into the ability to maintain or slightly grow cells for the two together for the next two or three years? Thank you.

Okay, so back to the question about the HER3. I think you're talking about Petritumab and Daruxtacan. So, obviously, there's going to be some data presented at the upcoming World Congress on Lung Cancer. Obviously, we've got an ongoing clinical collaboration with Daichi Sankyo on this as part of the ORCHARD study in patients with EGFR-mutated and non-small cell lung cancer looking in combination with osimertinib in that setting. When we're looking at ADCs in general and making some of the choices that we've made in recent business development in that space, we're looking at the overall benefit-risk ratio versus what we've already got with our internal assets and already partnered assets. So we'll look forward to seeing the updated clinical data, both as monotherapy and in combination with osomertinib, which we get access to now. And I'd also just say, look, we're excited about our internal portfolio that's progressing. We have a B7H4 ADC. We now have the EGFR MET bispecific ADC and a folate receptor alpha targeted ADC, all with our proprietary linker warhead with the topoisomerase warhead. So these decisions are made in the context of that internal portfolio that we've got as well.

Eric, thank you for your question on the future of the C5 franchise. So if you refer only to Solaris and Ultramiris, there will be a continued growth and it will be supported by both regional expansion, but also by extension of indications. But I want to take the opportunity to also signal or remind you of the 1720, the mini-body, which is our C5 third generation, which is presently undergoing phase 3 trials, which could also provide some further options to physicians and patients.

Thank you, Marc. We'll take two more questions, and then we'll have to close for the day. Peter Welford, over to you, Peter.

Thank you. I will just stick to one question. So we'll start with China. I wonder, given the changes that you mentioned with regards to the NRDL and some of the recent reforms we've heard, I just wondered if AstraZeneca's attitude towards China and investment there has changed at all. I mean, recently you've sort of cooled a little bit with the expansion of spend and investment in the country. and even perhaps pull back on some resources. Just wondering your current thoughts on investment and further investment in China from here and whether there's any change at all in how you see that on the term market there with the changes. Thank you.

Let me call this one if I may, Leon, because of course it's going to be positive, right? Yes, I mean, actually, we are very committed, Peter, and China is and will remain a very important country for, I think, for the industry, but certainly for AstraZeneca. We are very committed. We are building our presence in rare diseases. We've just approved the build of a very important factory in China, in Qingdao, to make inhalers for China and potentially export out of China to some emerging markets. So we are definitely committed. We have a strong R&D team. We also, as I've said before, Leveraging our connections to partner with local biotech companies and help them develop and commercialize their products globally. So it will remain a very important country for us, not only because we have products to sell to help patients there, and as you know, there are lots of patients, but also because it's a source of innovation. And it is for us becoming, or has become some time ago already actually, a strategic center. Anything you want to add, Leon?

Yeah, I think Pascal mentioned quite completely. I think I really hope you can pay also more attention to outside China because outside China emerging market is larger than China now. and are growing much faster, and I think there will be a lot of opportunity and un-treated, un-diagnosed patients opportunities there. And within China, we still have a lot of products like Biologics for Senra and all these important new launches. We're still very excited and look forward. And it's a source of innovation, and it's a manufacturing center, and it's also a big market.

That's a good point. I mean, outside of China, the growth was 38% first half, so I'm sure you noticed that. Every region of the emerging market regions is growing very strongly. We've been catching up on the approval of new products and launching them, so a lot of growth today and also to come. So maybe the last question, Louisa Hector at Berenberg. Louisa, go ahead.

Thank you, Pascal, and maybe a chance to say thank you to Mene for sharing his insights over the years and for his discussions on R&D productivity. And so maybe a question for you on that. So your slide on the breadth of platforms in place in biopharma. My question there would be that actually much of Astra's success has come from the simplicity of small molecules and antibodies. So with these novel platforms there, does it change anything in the R&D decision-making processes? I think you're at six hours, maybe more now, but how does anything change in that decision-making given the complexities of these exciting platforms, and do they carry more risk?

Thanks, Louisa, first of all, thank you. And the reason why I wanted to show the platform is because we have been building them for a long time, and of course monoclonal antibodies and small molecules remain a very important part of the pipeline and you know many of the molecules that we have across the pipeline across both oncology and BioPharm. But these next generation platforms are important because the reason why we failed today predominantly is because our scientific hypothesis is wrong. As we go into more genetically validated targets, quite often you can't target them with a monoclonal antibody or a small molecule. So having access to gene editing, oligonucleotides, advanced biologics gives you a chance to attack more complicated pharmacology and disease and hopefully improve your probability of success. And that's what we've been trying to do. So it's not that we're not interested in small molecules or biologics. I don't think our decision-making changes. It just opens up more opportunities in terms of the biology that we can attack.

Thank you very much. Such a beautiful question to finish with. Thank you for this. So we'll end the Q&A here. Thank you again for all your great interest in our company, and I wish you all a great weekend.