AstraZeneca PLC

Good morning to those joining from the US. Good afternoon to those in the UK and Central Europe. And good evening to those listening in Asia. Welcome, ladies and gentlemen, to AstraZeneca's nine months and Q3 results 2023 conference call and 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 to indicate you wish to ask a question, and remember to unmute your line when invited to speak. And with that, I will now hand you over to the company.

Thank you, operator. I'm Andy Barnett, Head of Investor Relations at AstraZeneca, and I'm very pleased to welcome you to AstraZeneca's nine-month and third quarter of 2023 conference call. As usual, all materials presented are available 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 today are in millions of US dollars and less otherwise stated. This slide shows our agenda for today's call. Following our prepared remarks, we will open the line for questions. As usual, we will try and address as many questions as we can during the allotted time, although I'd ask 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, raise the hand function in Zoom. Alternatively, you can use the Q&A button and write your answers. And with that, Pascal, I will hand it over to you.

Thank you, Andy. Hello, everyone. Please advance to the next slide. Total revenue in the first nine months of the year increased 5% to $33.8 billion, with 15% growth from our non-COVID-19 medicines offsetting a $2.9 billion decline in revenue from our COVID-19 medicines. Core earnings per share increased 17% to $5.80. This increase is reflective of our robust company performance, our financial discipline, as well as, again, in other operating income that we announced with our half-year results. We continue to benefit from our diverse commercial portfolio and our broad global footprint. Given our confidence in the remainder of the year, we have upgraded our 2023 guidance. We now anticipate total revenue ex-COVID to increase by low teens percentage and co-APS to increase by low double digit to low teens percentage. Aradna will provide more details on our financials shortly. Next slide, please. Taking a closer look at the performance of our non-COVID revenue across our regions and disease areas, we saw double digit growth in the US and Europe in the period, reflecting strong demand for medicines and continued commercial execution. Our growth in the emerging markets continues to impress, particularly outside of China, which was up 37% in the year to date. This sustained growth underscores our confidence that this market will become increasingly important for our company. On the right-hand side of this slide, you will see that we delivered robust double-digit growth across oncology, CVRM, and rare disease. And as expected, we saw declines in VNI. RNA medicines growth more than compensated for the impact of generic competition to Simbico launched in the U.S. during the third quarter. We saw a reduction in promotional activities in China in Q3, which created some dim and softness for southern medicines in the quarter. But I have already seen recovery beginning in October. We remain confident in delivering our total revenue guidance for China for the full year, which we upgraded with our half-year results. Please move to the next slide. And like many of our peers, we have relatively low exposure to patent expiries. We have a broad, diverse portfolio of commercialized medicines, and we have an industry-leading late-stage pipeline, which includes several high-potential assets. However, our vision is not short-term. We are also striving to deliver sustainable, industry-leading growth for many years to come. And while we are maintaining a focus on discovering new small and large molecules, We have taken the strategic decision to increase investment behind new modalities that we believe have the potential to revolutionize outcomes for patients. With our ADC portfolio, we are aiming to replace the use of traditional chemotherapy across the board. Combinations of our ADCs with our next generation IO by specific portfolio offers the promise of more durable benefits for patients with improved tolerability. We are pioneering new modalities such as epigenetic, oligonucleotides, and RNA therapies to unlock entirely new treatment approaches, and we're excited by the curative potential of cell engine therapies. I'm pleased with the progress we're making in each of these areas, and I look forward to sharing updates with you over the coming years. With that, please advance to the next slide, and I will hand over to Aradna, who will take you through our final shows and also provide a closer look at how we are leveraging AI in the commercial parts of our company.

Thank you, Pascal. Please advance to the next slide. As usual, I will start with our reported P&L. As Pascal highlighted, total revenue increased by 5% in the first nine months, and product sales increased by 4% at constant exchange rates. Excluding COVID-19 medicines, total revenue and product sales increased by 15%. Alliance revenue of $1 billion was driven by increased and her to profit sharing from geographies where Daiichi Sankyo books product sales. As a reminder, Daiichi will book product sales in the US and main European countries. Please advance to the next slide. Looking at our core P&L, We saw the product sales growth margin increased by two percentage points to 82.4% driven by lower COVID sales compared to the prior year. We anticipate a lower growth margin in the fourth quarter driven by higher flu miss sales, which has a very low growth margin. The Fortis which we supply to Sanofi also has a dilutive impact on our product sales growth margins. Over time, the gross margin percentage will be diluted by both increased profit sharing for partner products such as Despair and Inher2 in territories where we book revenue and higher emerging market revenue, partly offset by favorable product sales mix. Our core operating expenses increased 7% over the period. Similar to previous years, we expect a step up in absolute cost in the fourth quarter driven by SG&A spend phasing and the number of new phase three starts. For the full year, we anticipate operating expenses around the upper end of our previous indication of low to mid single digit increase, driven by continued investment in our business to support the strong top line growth seen into year end. Core EPS of $5.80 represents a CER growth of 17%. Next slide, please. Our cash flow continues to improve, and net debt decreased in the quarter to $23.4 billion, despite an interim dividend payment of $1.5 billion. Our net debt to EBITDA now stands at 1.7 times, with the Alexion fair value inventory adjustment now behind us. Turning to our full-year guidance, we now anticipate total revenue to increase by a mid-single-digit percentage up from previously low to mid single digit. Excluding COVID-19 medicines, we now anticipate a growth in the low teens percentage range. For core EPS, we now anticipate to grow by low double digit to low teens percentage, which is an upgrade versus prior guidance of a high single digit to low double digit percentage increase. Based on current FX rates, We anticipate a low single-digit adverse FX impact on total revenue. For core EPS, we now anticipate a mid-single-digit adverse impact on core EPS, which is a change versus last quarter, reflecting current FX rates. Please advance to the next slide. Our capital allocation priorities remain unchanged. The number one priority is to reinvest in the business. By the end of the year, we will have started more phase three trials than in prior years. Our high R&D productivity will also impact SG&A costs, as we will have a number of new products to launch in the coming year, including AirSupra in the U.S. and Eplutersen, and also preparation for potential new launches of DataDXD following the positive data presented at ESMO just a couple of weeks ago. We're continuing to expand Alexion rare disease products into more international markets, now present in 64 countries. Many of the new modalities we're investing in, as well as the growth in our portfolio, will require further investment in CapEx. In addition, we're investing in our manufacturing network, optimizing our global footprint, and investing in upgrading our systems. We also remain focused on value-enhancing business development, where we believe we can best leverage our R&D and commercial capabilities. We have done a number of deals this year, including Syncor and Neogene, and today with Ecogene, and we will continue to do so where and when we see attractive opportunities. We have also a number of successful partnerships, including with Daiichi on Inher2 and Dato, and Merck on Limparsa, and Ionis on Epluterson. Overall, we will continue to invest to support growth, drive innovation, and bring innovative medicines to patients quicker. Please advance to the next slide. Continuing our commitment to showcase the use of AI across our business, in prior calls I've covered some examples of the use in R&D and manufacturing operations. Today I'll highlight the use of AI and advanced analytics to drive faster decision making within a commercial organization. Starting first with data and analytics, our in-house proprietary platform called AZBrain analyzes multiple large data sets, enriching the data to correct for inaccuracies, duplication, and data gaps to generate actionable insights. Next, we leverage AI to improve patient diagnosis and personalized treatment approaches. Even today, roughly 6% of EMR data is still unstructured. Application of novel technology to lung cancer screening enabled analysis of over 6 million handwritten documents in just one day and led to over 25,000 high-risk patients being reassessed. We plan to scale this technology to additional health systems and tumor types, including breast cancer. We also apply large multimodal data sets to our clinical trials to help identify the right patient population for trials and to deliver more personalized precision medicines and improve the success rate of our studies. Finally, we're using AI and predictive analytics to inform more precise, tailored engagement with physicians using the preferred communication channel at a time when they're most likely to engage with potentially eligible patients. Our investments in AI have yielded important actionable insights into how we can continue to best serve our patients globally. And with that, please advance to the next slide, and I will hand over to Dave.

Thank you, Radna. Next slide, please. Oncology delivered solid performance in the year-to-date period with total revenues of over $13.5 billion, an increase of 20% versus the prior year, driven by strong global demand, reinforcing both the value of our portfolio as well as the continued execution by our global teams. Turning now to our key medicines, in the third quarter, Tegriso global revenues grew 6%. fueled by continued demand for Adora and Flora. In China, we saw some market impact from the anti-corruption campaign, but we have already observed recovery into the fourth quarter. Limparza delivered 8% product sales growth in the third quarter, driven by double-digit growth in established rest of world and emerging markets. Limparza extended its leadership position in the PARP inhibitor class globally, despite decreasing class use and the second line label restriction in ovarian cancer in the United States. We continue to accelerate our I.O. portfolio with a competitive class in the third quarter. Infinsi total revenues, inclusive of M.Judo, delivered 54 percent growth driven by new launches. Calquin's total revenues increased 15 percent, driven both by expanded access in Europe and demand growth globally. And HER2 total revenues of $339 million in the third quarter increased 86 percent year on year, And in the U.S., in HER2, new patient share in HER2-positive metastatic breast cancer and HER2-low post-chemo metastatic breast cancer remain above 50%. We continue to see strong demand growth globally, particularly in European markets driven by recent launches of Destiny Breast 03 and Destiny Breast 04. In the quarter, in HER2 became the first antibody drug conjugate approved for lung cancer in Europe and Japan, and we received approval for CalQuence in China. At ESMA, we presented updated FLORA2 data, which Susan will cover shortly, and we are excited to have been granted priority review for FLORA2 in the United States. We also received FDA acceptance for Aegean. These two important potential treatment regimens advance our ambitions in lung cancer. Next slide, please. Looking ahead, we're well positioned within our oncology portfolio. Focusing on two medicines in increasingly competitive markets, Tegresso and Calquence, we are confident in sustained leadership and future growth. We're well on our way to establishing Tegresso at every stage for patients with EGFR-mutated non-small-cell lung cancer, supported by its best-in-class, once-daily oral regimen and leading benefit-risk profile. With the Dora, we have the opportunity to further accelerate testing referral and treatment rates in the respectable setting and to expand access through global reimbursements. The Laura trial anticipated to read out in the first half of next year presents the opportunity to leverage our existing presence in unresectable stage three with Pacific and offer a targeted therapy for EGFR mutated patients. Next, in the frontline metastatic setting, we continue to see increased real-world duration of treatment driven by patients gaining sustained benefit on Tigriso monotherapy. FLORA2 represents the opportunity to build on FLORA, further extending duration of treatment and offering a best-in-class option for the subset of patients that may require more intensive treatment up front. Novel lifecycle management and combination opportunities allow for continued reinforcement of TIGRISO as the backbone TKI of choice in non-small cell lung cancer. Calquence remains the leading BTK inhibitor across all indications in the face of increasing class competition, and we've seen clear recovery in the relapsed refractory setting. Going forward, we're confident Calquence will continue to maintain leadership globally despite increased competitive pressures reinforced by strong efficacy and differentiated safety. 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. Over the past quarter, we've had a significant presence at key oncology congresses, including the World Conference on Lung Cancer and ESMO. We continue to consolidate our leadership position in lung cancer with data from FLORA2 unveiled at World Congress on Lung Cancer. These data demonstrated that Degresso plus chemotherapy extended the median progression-free survival by nine months compared to Degresso alone in patients with first-line EGFR-mutated non-small cell lung cancer. This is the longest median PFS that's been seen to date in this setting. Further data at ESMO underscored the critical importance this regimen has for patients with the greatest unmet need, including those with CNS metastases at diagnosis. In these patients, TIGRISO plus chemotherapy resulted in more than 50% complete responses. FLORA2 reinforces TIGRISO as the backbone therapy in EGFR-mutated lung cancer, and the data have now been published in the New England Journal of Medicine. At ESMO, we expanded on our footprint in gynecological cancers with presentation of the GEOE data. This trial is the first to show increased benefit of combining both an immune checkpoint inhibitor and PARP inhibitor in the first-line advanced endometrial cancer setting and demonstrated a deeper benefit with Lumpasa in the proficient MMR and PD-L1 positive populations. We're in discussions with regulatory agencies around planned submission. We also had the first two positive phase three presentations for data DXD with data from both tropion lung O1 and tropion breast O1 presented at ESMO. These underscore its potential to replace backbone chemotherapy in these settings, with both trials demonstrating the clear efficacy improvement of Datto DXD versus conventional chemotherapy, together with an improved safety profile. Datto DXD best-in-class profile opens up future opportunities for combination with both IO and platinum chemotherapy and builds confidence there is potential in earlier lines and other tumor types. We're moving to filing in both lung and breast cancer. Next slide, please. Our bispecific portfolio is designed to display current sedative care immune checkpoint inhibition. These molecules are engineered to simultaneously inhibit two immune checkpoints, eliciting different biological effects compared with existing concurrent combinations. And early data suggest potential both as monotherapy and in combination with existing treatments, such as chemotherapy. We are also combining our bispecifics with our ADC portfolio in phase two trials. We're encouraged by the early data for volvastimig, our PD-1 CTLA-4 bispecific. In first-line advanced lung cancer, volvastimig at 750 milligrams plus chemotherapy resulted in similar objective response rate as the higher 1500 milligram dose with improved tolerability. In treatment-naive advanced renal cell carcinoma, data at ESMO demonstrated deep and durable responses at the 750 milligram dose, with a response rate of 48%, a complete response rate of 10%, and a 12-month progression-free survival rate of 52%. Again, we saw improved tolerability compared to the higher 1500 milligram dose. Patients with PD-L1 low lung cancer remain a group of high unmet need, and we continue to see that current PD-1 and PD-L1 agents have more limited benefit even when combined with chemotherapy within this patient population. Previous data, such as those from our phase three Poseidon trial of mFimsi plus Mdudo, demonstrate that CTLA-4 inhibition can improve the benefit in this group. This is the basis for our phase three trial Evolve Lungo 2, which investigates whether Volvistamib plus chemotherapy can improve outcomes versus standard of care Pembrolizumab plus chemotherapy. Evolve Longer 2 is just one of the four bispecific trials we've announced this year, with two others for volvostimig and one for rilvogostimig. Next slide, please. Our industry-leading ADC development program continues to move at pace, with five wholly-owned antibody drug conjugates now in the clinic and many more in preclinical development. Recent data shared at the ASCA virtual plenary illustrates the potential of our CORDIN18.2-directed antibody drug conjugate. Patients with C18.2 positive gastric or gastroesophageal cancer treated with AZD0901 showed an encouraging 33% confirmed response rate and a median progression-free survival of around five months. C18.2 is highly expressed in 50% to 60% of gastric cancers, and AZD0901 has potential to build on the important data we've already delivered within HER2 in HER2-positive gastric cancer. and the emerging data from Matterhorn for infimsy in resectable gastric cancer, thus accelerating our leadership in GI cancers. Next slide, please. Finally, I want to touch on our expanding presence in cell therapy. We now have three CAR-Ts in development, all of which include our transforming growth factor receptor beta armoring. This armoring is designed to resist the immune-suppressive tumor microenvironment and enhance the potential effectiveness in solid tumors. We've seen encouraging data in humans with our GPC3 CAR-T AZD7003, which demonstrates that this armoring is likely important for CAR-T persistence when compared to other CAR-Ts targeting GPC3 without armoring. We're also exploring the potential of our T cell receptor therapies following the acquisition of neogene therapeutics. TCRTs are an emerging modality that enable the identification of intracellular targets unlocking biology that was previously inaccessible by cell therapy. Neogene already have three open INDs, two of which have moved into clinical development. Finally, we recently announced our collaboration and investment agreement with Selectus. This collaboration leverages the Selectus TALENT technology, which has been successfully used in the clinic to solve key challenges with allogeneic CAR Ts and can precisely edit the genome in vivo to target the source of the genetically defined disease or tumor. We believe this collaboration will accelerate our development pipeline and unlock new ways to precisely target a broader range of cancers, as well as other types of disease. 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 $13.6 billion in the first nine months of 2023, driven by growth of 19% in CVRM and 9% in RNA. Key highlights from the quarter included another record-breaking performance of Fasiga, now annualizing at more than $6 billion per year. Fasiga is truly a global brand, with double-digit growth across all our main regions and the fastest expansion coming from emerging markets outside of China. In R&I, revenue growth from launches has more than offset the impact of generic competition for Symbicort in the United States. Emerging markets continues to generate strong growth particularly for inhaled products such as breast-tree, which grew by 69% in the quarter. And in VNI, the first commercial sales of Bay Fortis generated $67 million of product sales and alliance revenue for AstraZeneca. And we also received our final regulatory milestone from our partner, Sanofi, following approval by the FDA. Next slide, please. We continue to invest in long-term research that can change clinical practices and differentiate our medicines. This is a particularly important part of our growth strategy for R&I, with its portfolio of relatively young and fast-growing medicines with many years of exclusivity remaining. Combined, the key medicines that will drive R&I revenues grew by 42% year-on-year in Q3. This is being driven by a combination of class expansion for modern biological medicines and in health therapies and our share gains within those growing markets. On the slide here, we have one example. Tespire has quickly established a leading share in the first year of its launch in countries such as Germany and Japan. In other examples, BreastTree is now the fastest growing medicine within the triple therapy class. and Fasenra remains the leading biologic for severe eosinophilic asthma. We anticipate continued growth for Fasenra following recent positive readouts from Mandara trial in eGPA and the MIRACLE trial for severe eosinophilic asthma in China. The growth in our four key RNA medicines has more than offset the impact of generics on all the medicines, and they now make up nearly half of the therapy area's total revenue. And of course, we look forward to adding a fifth new medicine to this list when ASUPRA launches in 2024. In CBRM, Fasfiga maintained its position as the fundamental treatment in heart failure and CKD, and it continues to broaden its use among physicians. One of the drivers behind its recent growth has been the increase in diagnosis rates for CKD. Early diagnosis is an important factor for improving outcomes for patients. and we hope to see this trend continue, with more patients being identified at an earlier stage of their disease. Like RNI, our CVR portfolio is evolving in a way that can generate long-term sustainable growth, and after today's blockbuster products inevitably reach the end of their exclusivity period. Our cohort of development medicines includes Epondysen for ATTR, and the PDUFA date for our ATTR-PN submission is in quarter four. Assuming approval, we expect to launch that indication in early 2024. We're also developing novel molecules that target hyperkalemia, hypotenuria, and hypertension. These are areas of high medical need in patients with heart failure and CKD. For further details of the progress of those programs, I will now hand over to Sharon.

Thanks, Ruud. Next slide, please. I'm delighted to be joining my first quarterly call in my new role and would first like to thank Mene and the teams for your continued support and for helping me settle in. In the third quarter, we made significant progress on our fixed-dose combinations with Farciga, or dapagliflozin, which address pockets of high unmet medical need and where we aim to show significant benefit versus standard of care. Balsinrinone is our selective mineralocorticoid receptor modulator, and in combination with dapagliflozin, we see opportunity to see lower rates of hyperkalemia in heart failure patients with chronic kidney disease. Preclinical data has shown a separation of organ protective effects from acute effects on electrolytes, which predicts a reduced hyperkalemia risk. The Phase IIb miracle trial aims to confirm the additive benefits of belcinerinone combined with dapagliflozin, and we will have data later this year. We have shown significant benefits of zebotentin, our selective endothelin receptor antagonist, in combination with dapagliflozin in improving fluid dynamics and reducing the risk of adverse kidney events. We presented data from our Phase IIb venous CKD trial at the American Society of Nephrology, which I will cover in the next slide. And finally, we are in advanced stages of planning Phase III trials for BaxterStat monotherapy in patients with treatment-resistant uncontrolled hypertension and in combination with dapagliflozin for patients with CKD and hypertension. Baxterstat has been shown to be effective at reducing systolic blood pressure without off-target inhibition of cortisol synthesis. This treatment paradigm would offer a much needed option for patients with CKD and hypertension. We have already initiated a phase three trial for zebotentin and dapagliflozin with plans to initiate Baxterstat monotherapy by the end of the year. We are also in advanced stages of planning phase three trials for the other two combinations. Our ambition is to develop these four potential new medicines to extend cardiorenal protection while addressing specific symptoms of disease. Next slide, please. Data from the Phase II Zenith CKD trial investigating zebotentin and dapagliflozin in patients with CKD and residual high proteinuria showed clear benefit in reducing the urine-albumin-creatinine ratio, a key indicator for kidney function. Zebotentin improves fluid dynamics and reduces the risk of adverse kidney events. When combined with dapagliflozin's ability to reduce extravascular volume, These two medicines have been shown to provide significant benefit over endothelin receptor antagonists alone, where fluid retention has been a barrier to uptake. The complementary mechanisms deliver superior efficacy and acceptable tolerability. Both doses were well tolerated and offer benefits across glomerular filtration rates, supporting our path to Phase III. On the right-hand side, Our IL-33 inhibitor, toziracumab, has proven ability to inhibit dual pathways, ST2 and RAGE-EGFR. This is important as these independent pathways are involved in different inflammatory cascades. Dysregulation of ST2 pathway drives airway inflammation, while dysregulation of RAGE-EGFR pathway is linked to epithelial remodeling and mucus overproduction, hallmarks of chronic lung diseases. This September data was presented from the Accord Q trial for patients hospitalized with COVID-19. Patients receiving toziracumab had a substantially lower risk of respiratory failure or death at day 29 versus standard of care alone. These data build confidence in toziracumab and its mechanism of action in inflammatory lung diseases. The recently dosed Miranda trial updates the range of doses being investigated across our COPD program. which includes the ongoing Oberon and Titania phase three trials. We will have data from our phase two Frontier three trial in asthma, as well as Frontier four in COPD, which we hope to present in due course. Please advance to the next slide. As announced this morning, we have licensed an oral glucagon-like peptide one receptor agonist for the treatment of obesity, type two diabetes, and other cardiovascular, renal, and metabolic diseases. ECC-5004 is a once-daily oral small molecule, and preliminary results have shown a potentially differentiated clinical profile. Obesity is a significant and growing market, with over 1 billion patients living with obesity today. The majority of these patients are suffering with comorbidities such as type 2 diabetes, heart failure, hypertension, and renal disease. We are well-placed to address the spectrum of disease associated with obesity with potential oral combinations in our existing and pipeline medicines. For example, we have recently seen data on our oral PCSK9, where the product profile is in line with our expectations and is differentiated with limited food interactions. We are excited about the opportunity for a monotherapy and dyslipidemia, as well as in combination with ECC5004. we are building a robust portfolio of novel medicines to address a broad range of cardiovascular, renal, and metabolic diseases. Please move to the next slide, and I will now hand over to Mark, who will cover our rare disease portfolio.

Thank you, Sharon. Can we go to next slide, please? Rare disease delivered total revenue of $5.8 billion in the first nine months of 2023. up 12% year-over-year, driven by increased patient demand and new launches globally. Biltomeris grew 49% in the third quarter, driven by patient demand, particularly patients naive to branded treatment in generalized myasthenia gravis, as well as successful conversion from Soliris across all indications. As a consequence of this conversion dynamic, Soliris declined 12%. Beyond C5, both Transic and CoCellugo grew 21% and 81%, respectively, reflecting strong underlying patient demand. Looking at the regional breakdown in the middle, I want to highlight the performance of emerging markets, which grew 70% in the quarter. Global expansion is an important part of our strategy, and we continue to benefit significantly from the AstraZeneca footprint. We have now launched in 64 countries globally and are on track to delivering on our ambition to reach 100 countries by 2030. Lastly, I want you to provide some context regarding our C5 franchise across neurological diseases, myasthenia gravis, as well as NMOSD. as well as on ultra rare disease, atypical HUS and PNH. We continue to see neurology indication grow as launches continue globally. And in the case of MG, the patient population is significantly larger than our ultra rare diseases. The pie chart on the right panel represents revenues in the US, whereas the two other panels show global sales. Please advance to the next slide. Last week, we presented phase two data at the American Society of Nephrology, demonstrating the clinically meaningful efficacy of Wiltomeris in IgA nephropathy. Wiltomeris demonstrated rapid, complete, and sustained complement inhibition characterized by significant and potentially disease-modifying reduction in proteinuria from week four as well has a stable mean globular filtration rate over 26 weeks. IGN nephropathy is characterized by the deposition of human complexes in the kidney that activate the complement system, which then triggers inflammation and causes glomerular damage. At the most prevalent primary glomerular disease relative to other rare disease in the renal area, IGN nephropathy is associated with substantial morbidity and mortality, with approximately half of patients experiencing end-stage kidney disease or death. We see the opportunity for Eltomiris as an add-on on therapy to patients optimized on saddle of care, renin-angiotensin-aldosterone system inhibitors, and SGLT2s. This data not only affirms the role of complement in IgG nephropathy, It provides confidence for phase III, but also accelerates our ambition to expand Ultomeris into additional indication and broader patient population. With that, please advance to the next slide. And I will hand over the call back to Pascal for his closing remarks.

Thank you, Marc. Next time, please. I spoke at the heart of this call, at the start of this call, about how we are building a pipeline for the future and our aim to deliver sustainable industry-leading growth for the long term. Our recent acquisition and partnership with Ecogen is a good example of this, where we hope to deliver differentiated treatments for patients, not only addressing obesity, but developing combinations with other small molecules for a broad range of cardiovascular, renal, metabolic diseases. In the near term, we have a rich catalyst path with more than 20 Phase III studies due to readout before the end of 2024. On this slide, I have called out just a few. These include LoRa, which Dave spoke to earlier, and Destiny Breast-06, which has the potential to bring an HER2 one line earlier for the treatment of hormone receptor-positive breast cancer. as well as answer the question about how low HER2 expression can be for patients still to derive meaningful benefit from this important medicine. We should also see the first phase three results of onselamimab in light chain amyloidosis and the waypoint trial investigating test buyer for the treatment of chronic rhinosinitis with nasal polyps. That ODXD will be an important medicine in our portfolio and we are investing heavily behind this medicine. tropion breath O2 will be the next phase three study for DATO in CNBC. This is thought to be highly responsible to TROP2 directed therapies. Before concluding, I would like to welcome Sharon to this call and say how happy I am to have Sharon on board in our senior executive team. And I also want to thank Mene for his contributions over many, many years. And with that, I will hand back to Andy and we'll move to the Q&A. Thank you, Pascal.

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

Okay. Thanks, Andy. The first question is from Steve Scala at Cohen. Steve, over to you.

Thank you so much. Two questions. To the extent that the oral GLP-1 will be developed as a monotherapy for obesity, should that suggest to us that AstraZeneca believes obesity is a therapeutic opportunity that is here to stay and we are in the early innings despite access and other challenges that it may present? And secondly, apologies if I missed it, but longer-term financial targets, both total revenue growth and margin guidance, is that still intact? Thank you.

Thanks, Steve. So maybe Ruth could take the first question. And Sean, if you want to add anything, step in. And then the next one will be Arnaud, your favorite question.

Yes, of course. And thank you so much, Steve, for the question. Yes, it's obvious that we believe that obesity is here to stay. I think in the prepared remarks of Sharon, she was alluding to the very substantial number of 1 billion people around the world suffering from overweight. More importantly, we truly believe that there's a unique opportunity not only to help patients to lose weight, but also to help the cardiometabolic disorders associated with, uh, with overweight. And I think we are in a, in a, in a unique position based on our broad portfolio of products. Of course, a lot of focus on Fasiga, but our other, other pro many other products in our portfolio, which makes it relatively easy to combine, uh, this, this in licensing. of the GOP1 with other products like an oral PCSK9. We are very pleased to see the first results coming out of our R&D pipeline and hopefully in the near future you will see those results. So it makes it very attractive for combination products as well.

Steve, on your second question, I think the long-term investment thesis remains very much intact. So we've talked about the growth ambition that we have sort of in that 21 to 25 timeframe, and you've seen us deliver on a double-digit CAGR, so that remains intact. And then post 2025, 2025 to 2030, we've said we would be, we would have industry leading top line growth. And, you know, what you see today in the pipeline, whether it's the proprietary ADCs or the bispecifics or some of the new readouts on studies, I think all of that points to our confidence in that growth rate in the 2025 to 30 timeframe. As it relates to operating margins, that continues to be a focus for the company. And, you know, again, we've not given guidance on that. That is our ambition, and we continue to improve on our operating margins as we continue to invest in new product launches and new phase three studies.

Thank you, Arnaud. The next question is Gonzalo Artiak at ABG. Over to you, Gonzalo.

Thank you very much for taking my questions. Gonzalo Artiak from ABG. The first one is regarding the new drug candidate for diabetes and obesity license from Ecogene. And this licensing has been announced with quite excitement today. So could you give us some color on what are the key points on the drug candidate that you consider more interesting to potentially position the small molecule at best in class, specifically given the fact that you have already an amylin analog in development. And my second question is on the results from also announced today on the Emerald One study. I don't know if you could give us some color here on the plans going forward for this indication. Are you planning to file on TFS results, or will you wait for OS? And also, if I'm not wrong, the study had a third arm of infinsi combined with TASE only without bevacizumab. which is not reported in the press release today. So I don't know if you could comment on that too. Thank you so much.

Thanks, Gonzalo. So maybe, Sharon, you could take the first one. And Suzanne, the question?

Sure, I'd love to. And thank you for the question. I think you heard the excitement in my voice as we talked about the in-licensing of ECC5004, which we think is a best-in-class, orally bioavailable GLIP1 receptor agonist. And we are excited about what we view as a differentiated clinical profile for this molecule. It demonstrates greater tolerability than other molecules in the class with a lower reported rate of GI adverse events. We also believe that it has a simplified CMC path with a relative lower COGS relative to the competitors. And we have seen efficacy on par with competitors in this class, which we think will allow us to deliver an ideal target product profile to patients.

I mean, do you want to say?

Sure. So as you mentioned, also in our portfolio, we have a long-acting amylin. as well as a GLP-1-R glucagon dual agonist. So we are targeting both incretin and non-incretin pathways as we identify a robust cardiometabolic profile that we think will serve the complexity of disease.

Thank you. Suzanne?

Yes, sure. So M111 is a, as you say, a three-arm study with 600 patients that were randomized to TACE alone plus placebo, TACE plus infirmity, and then TACE plus INFIMSI plus bevacizumab. So it's a local regional hepatocellular carcinoma, and it's exciting that this is the first positive phase three study in this setting. I would say to your question about the INFIMSI plus TACE arm, of course, it's important for us to show the potential for contribution of components. And in terms of your question on filing on PFS, So we're excited that what we've got is a clinically meaningful improvement in progression-free survival. But given this is a local regional setting, it's always important to have data on overall survival. So, you know, as is typical, what we will do is we'll discuss with regulatory authorities. It may well be possible to file on PFS and then wait for OS to be supplemented during the follow-up period and during the review period.

Thank you, . The next question is from .

Thank you. A couple of questions. First to Sharon. Could you quantify and characterize any liver enzyme elevations you saw in the phase one with ECC5004? And then second for Rude, with the removal of the AMP cap, from Medicaid in 2024. Could you quantify for us the net impact on your revenues associated once you've taken out mitigating defensive measures? Many thanks.

Sure. So I'll jump in with the answer regarding liver toxicity and ECC 5004. In preclinical studies, we saw no evidence of liver toxicity. And in the clinical phase one study to date, we have seen no evidence of elevated ALT or AST, which we think is an additional feature that helps us differentiate this molecule from other competitors in the class.

Shall I take the second one, Pascal? So regarding your question, Andrew, about the impact of MCAP, you have seen in the presentation of Pascal that we are very pleased with the very strong U.S. growth, and that's primarily driven by volume growth, including for Fasiga. Yes, we are expecting an impact of MCAP in 2024, but we have very specific brand strategies in place. Overall, we think the impact is manageable and it will be factored in the guidance we're going to give for 2024.

Thank you, Howard. Next question is from Sachin Jain at Bank of America.

Hi there. Thanks for taking my questions. Can I have a couple for Dave and then one for Asma. So Dave, Cap of Assertive launched you from the end of this year. It's not an asset you talk about much. I wonder if you could just Comments, your optimism for the asset and size of the initial indication. Secondly, on Inter2, one of you just flesh out the comments on the slowdown in the US on the DBA4 bolus and implications for growth the asset into 24. And then just one for ARADMA. I know you're not going to like the question, but any early thoughts for 24 growth outlook? Consensus has 24 EPS faster than 23. I'm not asking for guide, but just pushes and pulls and the ability to accelerate growth in 24 relative to 23. Thank you.

All right. David?

Great. Sachin, I'm going to take the questions that you asked me just in reverse order. So if I start first with, in HER2, when we take a look at both DBO3 and DBO4, we are seeing continued opportunity for growth across the globe on both of those. On DBO4 specifically, We had seen increase or a bolus effect at launch where patients in multiple lines of therapy. So in a multiple lines of post chemo coming on to in her to just really due to a lack of options for patients in these later line advanced stages. What I'm pleased to say, and I think this is actually a really important aspect of Inher2, the duration of therapy that those patients were able to stay on Inher2 was actually longer than we had even thought. So the bolus actually has been around, if you will, as part of the TRXs for a longer period of time than we had originally anticipated it might be. We continue to see nice growth in now the incident share. So I think the DBO4 continues to grow and will be moving based upon growth in two factors. One will be incident new patient share growth, but then also DOT, which I expect will continue to grow. That DOT comment, if I could just for a second, I think also holds for DBO3. where you may recall that in 03, we had 18 months of duration of therapy within the study itself, but we know that more than a third of patients were staying on therapy for greater than 24 months. So we're continuing to see the 03 DOTs extend, and I think that that's a positive piece within that. As we take a look at CAPI, I share enthusiasm that PIVA sort of could be a very important part of our breast cancer portfolio. And then, you know, perhaps Susan can talk a little bit about some of the thoughts around the CDP that goes beyond that. I do think that it's most likely that we will see biomarker labels across the globe, though we do believe that the benefit in the ITT population was an important one. But there's a pretty significant number of people with breast cancer who can continue to benefit from endocrine based therapies in that advanced setting, and biomarker is still 40 to 50% of that marketplace. So it's a sizable opportunity, and we are looking forward hopefully any day now to an FDA announcement and approval.

Before we move to 2024, maybe, Susan, you could comment on other indications that we are considering for CAPI.

Yeah, sure. So I do think this is an opportunity in a number of settings where the AKT pathway is important in limiting benefit, either in combination with endocrine therapy in both breast and prostate cancer, but also in combination with chemotherapy as well. So as well as the 291 study, we have Capitello 290 in triple negative breast cancer. Capitello 292 is in combination with Palbociclib and other CDK4-6 inhibitor potential as well as hormone and therapy backbone in the first line. So it's got Fasadex as the hormone therapy backbone in the first line in the Capitella 292. And then in prostate cancer, we have Capitella 281, where capivacetab is combined with abiraterone. And again, that's focused in P10 deficient hormone sensitive prostate cancer based on the phase two study there. But we also have a combination with docetaxel. And again, The AKT pathway limits the response to chemotherapy and limits the apoptotic response to chemotherapy. So that's also an important study. And based on the procade data set, there's activity, again, across the spectrum of patients, both with and without PTEN deficiency in that setting.

Anna?

So thanks for the question, obviously we won't give guidance for 2024 on this call will will have to wait for early next year for that we're actually going through our budget process right now. And as that concludes towards the year end and we present that to the board and and and then we'll we'll give our guidance next year um. Some of the things that obviously you need to take into account, some of the pushes and pulls in the 2024 and midterm, including currency movements. As you know, we've had very strong growth momentum with our underlying brands. But then we also have launches for Air Supra and Eplutursen that Ruud mentioned that we'll be investing behind. and then the Phase III opportunities, as well as some of these new BD opportunities, including the current product that we talked about on Ecogene. So lots of moving parts, and we look forward to talking to you about that in early 2024.

Maybe some quick addition to 2024, actually, going back to the question Andro asked about NCAP. You know, since the announcement of this new regulation, really come up with very modest price increases, always below inflation. So of course, the calculation goes back many years, but we still believe that we will have an impact that is substantially lower than many other companies. And as Ruth said, it can be certainly managed in the overall forecasting, budget forecasting for the company. So the next question is Tim Anderson at Valve.

Thank you. A couple questions. On Trigriso, Flora 2 was in the New England Journal last night, editorial fairly positive, based on PFS benefits. It really said it kind of comes down to how survival plays out. So the question for you is your view on whether it hits on survival in a clinically meaningful way. And then the second question is on obesity. Just further business development from here, it seems like if you're going to push into the space with external assets like today's announcement, maybe you go all in and do more external deals. There are other assets out there. Do you take a much broader portfolio approach? Or conversely, is this kind of one and done? This is going to be your main asset from the outside world. Thank you.

Thanks, Tim. So the first question, maybe we could start with Susan, and then Dave, I think you could also comment on the commercial relevance of FLORA2, which we believe is important for many patients. And then the second question, Sharon, you could take, and anything you want to add, or would also please jump in.

Percussion-free survival benefit that we've seen is very clinically meaningful with FLORA2. And, of course, the comparator is something that's already proven overall survival benefit in the first-line setting of lung cancer, which is monotherapy to GRYSTO. So I think what we're hoping to see is, you know, maintenance of that improvement in PFS being carried through to the PFS2 and a trend in OST. I think is very reasonable to expect. But, you know, obviously as the data mature, we'll continue to look at the OS endpoint.

And thanks, Susan. And Tim, I think maybe just to build off of this, I think there's also an important tangential question just in general around the importance of overall survival as there's consideration for choices. And I think that you referenced the editorial. I think you hear this in the editorial, but also we hear this from the community as well, that in selecting a treatment, the benefit risk profile inclusive, of course, of efficacy, the side effect profile, as well as the administration are all important factors that will come into this. So within that context, FLORA II is certainly something that we have heard very much as an option for those patients who would benefit from intensification, brain mets, LA58R. And on top of that, clinicians are pretty well versed in the side effects that are associated with chemo, and there's the ability to discontinue the chemo in Florida too, if approved, and continue on with the monotherapy. But we also hear and know that the monotherapy is an option that we anticipate will continue to be a really important option for the majority of patients, all oral, greater than three years overall survival demonstrated, proven, and understood in a tolerability profile that's well managed.

Thanks very much, David.

Charlotte? Sure, and thank you for the question about continuing to build our portfolio. You know, I hope that this morning I'm conveying a story that we continue to build a strong cardiovascular, renal, and metabolic portfolio with multiple medicines to treat obesity, type 2 diabetes, dyslipidemia, hypertension, chronic kidney disease, and heart failure. So where we see opportunities to further strengthen that portfolio, we will move forward with a sense of urgency. We never comment on business development deals that are in progress or future opportunities, but we continue to scan the landscape and understand what might fit best into this growing portfolio.

Thanks, Sharon. And maybe let me add that biopharma, cardiovascular in particular, remains very important to this company. And for the little internal friendly competition, we have road beat Dave by 100 million. in the first nine months of the year. So a very important part of the company. Anything you want to add on that?

No, no, just to reinforce that, of course, we are excited about our internal pipeline also in obesity. It was a long-acting amylin, the GOP1 glucagon dual agonist, But as Sharon said, we're always looking around for something that can add value, is making strategically sense. But all in all, I think we're very pleased with the progress we are making in our pipeline.

All right. Next question is Emily Field at Barclays. Emily, over to you.

Hi. Thanks for taking my question. I wanted to ask about Volrostimig, actually. I saw you started the phase three in cervical and lung, and you also had renal data at ESMO. Just, you know, how broad of a phase three program are you intending on running? How many tumor types? Secondly, when could we see the combination arm from the TLO4 study that combines volostomy with StatoDXT? And then my last one, just, you know, how much broader, in terms of addressable patients, would Laura add to the trugerso patient pool? Thank you.

Thank you, Emily. Suzanne, could you go over the first two volostomy questions? And Dave, you could address the Laura question.

Yes, so again, I would say that we see the positioning of both Volvostimic and Rilvogostimic as, you know, being appropriate in different segments of the patient population that are currently treated with checkpoint inhibitors. So I think Volvostimic has a place where CTLA-4 inhibition particularly adds value, and those are the areas that we will concentrate on. I also think that there's emerging data from Rilvogostimic, which we'll probably share at Congress next year, And again, please note that we have actually started our first phase three trial with Rilver-Gostomeg building on the great data that we saw with topaz in the biliary checked setting. So I think there's great potential for this. We are examining both Rilver and Volvostomeg combinations with our ADCs in different tumor types. And we will, again, probably share updates on those in the next 12 to 24 months.

Great. On Laura, Emily, just in terms of the opportunity here, let me start with the headline, which is I think this is a sizable opportunity and an important chance for us to, if positive and approved, be able to meaningfully catalyze the growth within the area. We know from the Pacific work that we've done that there's a significant number of patients that are diagnosed that are stage three unresectable. We also know that many of these patients are not getting, for very understandable reasons, treatment who are EGFR mutated with IO. And so there's a very good opportunity that's there. And I think that this will be probably the most significant to Grisso growth driver that I would see as incremental coming into the near term, and we look forward to next year's readout.

Important growth driver across the world, very much, of course, in Japan, where these EGFR mutations are common. And I think in China also, beyond the growth potential, also a very nice differentiation in a market that, as you know, is very, very competitive. The EGFR market is very competitive. So clearly an important addition from a differentiation viewpoint and promotional opportunity for the Chinese team. Next question is James Gordon, JP Morgan.

Hello, James Gordon, JP Morgan. Thanks for taking the questions. First question was on the oral GLP-1. And the question was, do you think the product's going to be competitive on weight loss versus other orals that are well ahead in terms of development? Or is the differentiation going to be much more about the combinability with other oral agents? And if so, which of the combos is it that you're most excited about? That's the first question, please. The second question was the IL-3. I think you started a new high-dose team in phase 3, the Miranda trial. So did you do this new high-dose trial because you've now seen phase 2? The first two studies, Oberon and Titania, are lower doses. I think we've got to wait for this third trial. And if I could just squeeze in the clarification on data, I think you mentioned potential launch next year. Is the expectation that that would be a launch in both lung and breast cancer, so that you file both of those by the end of this year and they can launch both of those simultaneously next year?

Thanks, James. I'm really so happy that I've delegated the task to Andy to ask people to ask only one question at a time. Maybe, Sharon, you could take the first one. And again, if you have anything you want to add. And then the second one also, actually. And then Susan will take the Dato question.

Yeah, thank you for the questions. So your first was, do we believe that this ECC5004 is competitive on weight loss? And yes, we do, based on the phase one data that we saw, it lines up very favorably with competitors in this class, which was very encouraging data that gave us confidence in our ability to drive forward this molecule and see a differentiated target product profile in the clinic. You also asked about which of the combinations we are most excited about, and that's a little bit like asking me to choose a favorite child because we have such a broad portfolio that has the potential to combine with this molecule. That said, thinking about farcega and our ability to manage hypertension driven by obesity is a very appealing combination. Thinking about our emerging oral PCSK9 with very encouraging data in phase one, we see an opportunity to limit dyslipidemia while managing obesity in overweight patients. And also thinking about how we're managing diabetes and the associated comorbidities gives us opportunities to also consider other mechanisms for managing heart failure and renal disease in combination with ECC5004. So we will be testing out this molecule both in preclinical and clinical studies moving forward and identifying the most favorable combinations for patients.

So nothing to add. Are you also going to take the question about Tozo, or do I need to comment on it? So, James, a good question. I think, of course, as always, time will tell and the data will tell which dose is the most effective one. But we truly believe that we have a drug which is effective. The 600 is now tested in the Miranda trial. Let me remind you that also the competition is testing different dosing regimens. And you see it also a little bit as an insurance premium. We think that the 300 will be effective, but, of course, we try to push the effectiveness to the highest level. So hopefully both doses will work. But time will tell when the data will react.

Maybe going back to the oral drip one, James, first of all, one of the two oral agents that maybe you have in mind is a twice-a-day agent. This one will be once a day. And as Sharon explained earlier, we believe that the tolerability profile would be good. But the important thing to keep in mind is obesity by itself is one thing, but I think the more sustainable part of that market is really obesity patients with complicating factors, people who have metabolic risk factors. And so in that scenario, really combinations are critical. I mean, if you look at kidney disease, the FASIGA results are really exciting. They're great, but patients still see their kidney function decline over time. So we talk a lot about combinations in cancer, but I also think that in many of those cardiovascular metabolic conditions, combination treatment will be the future. So a combination for kidney disease, combination for the control of hypertension, possibly combination for, well, actually combination for the management of hyperlipidemia. So that's where we believe that our pipeline also is best positioned and can play a role. So with that, maybe, Dave, do you want to, or Suzanne, maybe cover the DATO question?

Yes, sure. So in the United States, we don't have to wait for bundling the two charts together. So we all file those two separately. In Europe, it's better to bundle the two applications together. But I think we have a good opportunity for, depending on the review timelines, for the review to be completed during the course of next year.

Thanks, Suzanne. So the next one is Matthias Agblom at Handelsbanken. Matthias, over to you.

First, with regard to the RLG1, it makes great sense to wait for some attention as well as advice from these patients. Because I'm asking how long into 24, or perhaps even 25, depending on the duration of that trial. Will the outside world have to wait before we can judge today's comments around the differentiated profile? And then secondly, in the tutorial in part two, it's different from the patient survey made in China, where lung cancer patients and physicians were asked for their preference of a monotherapy or combination therapy survey, which showed a close to 80% preference for the monotherapy regimen, despite combination was set in the service for a long time to recurrence. So I would be curious to hear if the company has any similar patient or physician service based on other geographies. Again, trying to think of the mono versus combination trials in this setting. Thanks so much.

So thanks. Thanks much. As you were breaking up a little bit, the first question, did you get foolish on? Otherwise, maybe.

It sounds like it was around the timelines for the ECC 5004 clinical studies, but maybe if you could repeat the question one more time.

Can you repeat the question? The first one, actually. The second one was Florida II, China, and 80% preference for monotherapy. Is it true also in other geographies? But the first one, if you could repeat.

Sure. I have a question. How long phase 2 trials in obesity is reasonable to expect before the market could judge today's comments that you have a differentiated profile? We see phase 2 trials in obesity as short as five weeks up to 16 plus. So I'm just trying to frame the expectations for when we can get data in obese patients, which we have yet to see. Okay.

thanks thanks so dave do you want to take the floor to a question yeah i'd be happy to so um guys i i've spoken to the discussions that we've had uh with physicians uh both in the academic but also now uh especially with community setting post both wclc and esmo and i think that what you see in the editorial um is very consistent with what we are hearing across the globe. And I think that just maybe if I put into context within this, I mean, if you look at the U.S., you've got 70 plus percent of non small cell lung cancer patients who are with advanced disease being treated in the community. And I think that within that community context, the benefit risk that I had spoken to before of efficacy, oral convenience, Dr. Paul C. tolerability profile that's really well understood and considered to be one that's. Dr. Paul C. well able to be managed, this is something that really does result in the monotherapy being. Dr. Paul C. I think really kind of the first port of call that first you know real opportunity to look at, we do also know, and I think that this is something that. Dr. Paul C. comes through as well in the commentary that there are patients. who can benefit from a more intensified approach to it. And within that context, I think that the editorial and others comment on that within this context, we expect floor two, if approved, to be an option for certain patients that is going to be put on the table. But it's going to be put on the table in the context of multiple criteria for making the decision, not just based upon a single efficacy endpoint. Thanks, Doug. Sean?

Sure. So your question regarding timelines for clinical development for ECC5004, obviously front of mind for all of us. Thank you for the question. So as I mentioned earlier, we are in phase one now and we expect to have phase one data in hand by the end of this year. And so we'll be moving rapidly towards phase two. We expect to initiate two phase two studies, one in obesity and one in type two diabetes by the end of 2024. You are correct that these studies can vary in length, but we really want to be able to generate the outcome data that we think will add value to this program. So we are planning for studies that will span in the neighborhood of 18 months with an interim analysis that will give us an early look at the data and will give us some confidence in our differentiation strategy.

Thanks, Sharon. The next one is Mark Bursar of Morgan Stanley. Mark, over to you.

Thank you, Pascal. Two questions. The first one is on your bispecific T-cell engagers. You talked in the press release around the potential to replace first-generation checkpoint inhibitors. So how should we think about the magnitude of benefit you expect to see versus Keytruda, for example, in the Evolve Lung O2 trial? So what level of superiority are you seeking? And the second one is... smart chemotherapy platform, the organic platform AZ-0133. We should get some data sets, I guess, for assets such as the B7H4, maybe DGFR, CMA in 2024. So could you give an update in terms of when we should see these data and when you expect to potentially move into pivotal trials with these assets? Thank you very much.

Thanks, Mark. So I think the first question was the biospecific And the second one is also for you in terms of the B7H4.

So just to be clear, the bispecifics are bispecifics PD1, CTI4. You said T cell engagers. We do have T cell engagers in our portfolio, but I think we're talking about Volvostomig and Milvogostomig. For Volvastimeg in terms of the Evolvo2 study, you can imagine in the context of first-line non-small cell lung cancer that a clinically meaningful benefit, you know, is something where, you know, you're looking for some months of improvement on median PFS and often an improvement of the hazard ratio with that tail. And, of course, CTLA-4 inhibition is particularly potent at producing that tail inhibition. So I can't tell you what the design criteria for the study are, but you'll see the size of the study, and I'm sure you can work that out. But we're confident based on the data that we've seen we've got the potential to improve on it. In the patient population where checkpoint inhibitors don't currently work as well, which is clearly that lower end of the PD-L1 expression level. And then for B7H4, our lead ADC, this is an important molecule for us because, first of all, it's the first molecule that's come out of our proprietary ADC discovery platforms. We've got a proprietary linker and topo warhead on that compound. You saw some data presented for other B7H4-targeted ADCs at ASMO. So I think this is going to be an important target. It's overexpressed in parts of ovarian cancer, endometrial cancer, breast cancer, and some biliary tract cancer. We're exploring cohorts in multiple of those cancers, and we look forward to sharing some data next year on this. But we're excited by what we've seen so far, and we will, obviously, because there's a competitive landscape over there, we're going to move at pace. Thank you.

Thank you. Thank you. The next one is Eric Leberigo at Stifel. Eric, over to you.

Thank you, Pascal. Two questions, please. um first you're presenting the catalytic flow for 2024 and probably you pick just a few of those so just because serena 6 is not on it um just to confirm that it's still on schedule we're hearing from from physicians that it may come quite early and maybe as early as the turn of the year so just to get your level of excitement and and see that there is no decrease here The second question is about VNI. We're hearing a lot about the investment, significant investment to come in TVRM adding to oncology. And so you made a quick and pragmatic investment here around COVID vaccine and antibody. How much do Astra need VNI and how much is it distraction now to oncology, TVRM and rare disease in terms of resource allocation? Thank you.

Thank you, Eric. So maybe, Suzanne, you could take the first one.

So again, we don't guide on interims. The Serena 6 outcome is currently guided for beyond 2024. You know, I would just say that our CAMHS Estuarant trials overall are going really well, and we're pleased with the investigative feedback we've had from the investigators who are participating in these trials.

Thank you, Suzanne. So maybe the VNI, let me just make a couple of comments, and I could ask Kishra also to jump in. It is not a distraction. I mean, our focus really has been and continues to be on antibodies, in particular antibodies for patients who are immunocompromised. We work on 3152, and we do believe that there is an unmet need out there that is not addressed and needs to be addressed. The mortality rate In patients who are hematology patients, transplant patients, patients who are immunocompromised, it's very high, actually, 30%, 40% chance of dying if you have a blood cancer and you're infected with COVID. I'm not even talking about being hospitalized, the risk of dying if you're hospitalized. I'm talking about the risk of dying if you're infected. So this is very high, and there is a need for those patients. In fact, we know many countries are ready to order 3152 if it works. So, of course, as always, we cannot guarantee success in anything we do, but we believe there is an opportunity for Celi-152 if it does work. And we're working on other antibodies. And for vaccines, we have a very focused strategy on new technologies that for now we really haven't disclosed because we need more data. And the last thing I would say is that there is actually a synergy With our other activities, if you think of hematology cancer again, doctors, hematologists, they need, they want to protect their patients against COVID, especially during periods of increasing COVID infections. So for us, it's really a nice door opener if we have an antibody to offer, a door opener for the team that is promoting calcoins. And the same is true for immune diseases. So there's a clear commercial strategy. And from a resource viewpoint, you know, overall, it's a limited investment, certainly not a distraction. Ishkari, if you want to comment a little bit more on where we are and what we do?

Thanks, Pascal, for the comments. So just to add, I think, you know, looking beyond the immunocompromised, and I think you described the unmet need very clearly. I mean, you can also see an unprecedented demand we see with the BFORTOS that we are commercializing together with our partner Sanofi, and there is a clear unmet need with the RSV in the infant population. So I really believe that we can build and leverage on our So in-house know-how of how to building long-acting monoclonal antibodies definitely has a need across the different populations. And then also, I think, Pascal, as you mentioned, looking at what is next generation platform and how we can potentially contribute to bringing the new and differentiated vaccine is something that we are constantly focused on. And obviously, I will be very pleased to share more information with you in the due course.

Yeah, maybe last point is actually I was really a different story. It was really to help help the world deal with this terrible pandemic. But outside of this, what we focus on is products where we can actually be differentiated and addressing unmet needs. And of course, it's very true for these antibodies. And on the vaccine side, we would actually only go into large investments if we believe we have something that is totally differentiated. The next one is Richard Parks at BNP.

Hi, thanks for taking my questions. Hopefully you can hear me okay. I've got one for Radna and one for Susan. Firstly, Radna, just on R&D spend pressures as you go into that budgeting negotiation later this year, You've had an incredible number of new Phase 3 startups this year. You're also investing in new technology platforms, yet you managed to keep R&D spend growth to mid-single digits, I think, in the third quarter. So I'm just wondering if you could talk about the moving parts of how that growing pipeline can be funded, how much of it can be funded through reinvestment as you end previous Phase 3 trials versus need for a step up in that R&D spend growth trajectory into next year? And I ask the question partly because we've seen other companies with surprising investors negatively with a step up in R&D spend. So that's the first one. Then secondly for Susan, I can see you're starting a phase three of the part one selective inhibitor in prostate cancer. but obviously there's a huge potential for that drug if you could unlock potential for synergy with an ADC with a DNA damaging payload. So I just wondered if you could talk about your enthusiasm and optimism over that program and potential more broadly and what we might see, get some insight into that, your plan. Thank you.

So thanks for the question. In terms of R&D, you know, we obviously go through a very detailed process that is both bottoms up and top down. And I think we've obviously said in the past that we expect R&D to be somewhere in the low 20s percentage of revenue. And What that helps us with is actually provide some discipline in terms of which projects to prioritize and so forth. Also, I would say as we have started a number of phase three studies, but when you look at phase three studies, there's also been a number of studies that we have, you know, we're tapering down or we've read out. and so forth so it's a you know it's a constant phase and all the phase three expense doesn't come necessarily in one year right it's phased over the um the entire study period uh we start a number of uh of phase three studies for example this year but some of that expense You know, a lot of that expense also goes in study starts, in the site recruitment, in the clinical study supply, et cetera. So I think we manage that and we provide that, you know, the top-down discipline, but it is It's a tough situation. I think if you asked Mark or Susan or Sharon, they'll always tell me we don't have enough money for all the exciting projects that we have. So we try to maintain that balance.

Thanks, Radna. Maybe a couple of additional points. First of all, beyond the prioritization that Radna covered very well and the use of technology to make ourselves more productive, We also have launched and we are implementing a redeployment of our footprint. And so we are, for instance, leveraging Canada, Toronto in North America, Barcelona in Europe. So we are going through a... a process by which we locate in the strategic centers jobs that should be located there. And then we have a near-shore and a far-shore strategy. So we are leveraging our sites in Guadalajara and also in India for some roles. So we're doing all sorts of things that help us manage the cost of R&D. We've been internalizing the conduct of our clinical trials. First of all, we believe it will deliver a better execution of our trials. if we do it with our own clinical teams, but also it reduces our cost when we internalize. So ultimately, we stick to what we said before, which is low 20s, R&D on revenues. Some people have said, what does it mean if low 20s is low 20s? If we meant more than this, we probably would say mid 20s or something like this. So it's low 20s, and I just want to reconfirm this is our ongoing target. Part one, Suzanne?

Yeah, thanks for the question about seroparib. This is another program that I'm really excited about. I think we've learned a lot about the right patient populations to treat with PARP inhibitors during the development of Limpaza. But seroparib has this improved profile, which enables clear improvement and tolerability. It enables you to hit the target even harder. And I think that has the potential to lead to actually better efficacy than we see with elaparib. So it's great to see the first phase three trial starting. You'll see more coming. And I think one interesting area is the potential for this to have combinations. So seroparib in combination with ADCs is absolutely something that we're exploring and we're encouraged by the early data that we've got. But it's a little early to be sharing those externally at the moment. Probably it'll be another 12 months before we share those, I'd expect.

Thanks, Suzanne. Next question is from Christopher Wooder at SEB. Christopher, over to you. Christopher, we can't hear you.

Can you hear me now? Yes, perfect.

Go ahead.

All right, great. So my first question is for Sharon. Now that you've taken over, I think we have a pretty good idea of what the strategy is for CVRM, but perhaps you could talk a little bit about what the R&I sort of big picture strategy is overall. And in terms of, you know, yeah, so R&D strategy and integrating that with commercial strategy and how to execute it on it. And then my second question is on FARC SIGA. And maybe here, I'd like to start by congratulating Mene and his team, even though he's not here today on a successful readout for Zibitentin, I guess it's, his brainchild and arguably the zenith of his achievements at Paisley. But so small percentage of patients that are eligible for SGLT2 actually get it across each approved indication. Is the NRX split still even across the indicated patient groups and how much gas is left in the tank in the US and EU across those indications? We've got DAPA MI top lining positively, so how much impact can that have? And beyond it, are there any remaining steps you can take to convince prescribers or payers that a larger proportion of patients should be adding on SGLT2 on top of metformin or statin or BP meds or whatever before you start to bring Fartigo combos into the picture? like, are there specific patient subgroups, for example? And as a logical follow-through, when the SGLT2s lose exclusivity, do you anticipate any substantial step-up in breadth of use? What might that look like, and does that impact how you view the opportunity for the novel parxio-combo regimens like Xibitantin? Thank you.

Thank you.

Yeah, so, you know, I'm in a very lucky position of stepping into a very strong biopharma organization with a foundation that was built over many years by many, and I'm grateful for both the incredible portfolio that was established as well as the extraordinary team of scientific leaders that I have the privilege of working with. So as we look forward to how we're going to continue to grow and invest in R&I, let's think a little bit about the successes that are already beginning to drive value for the portfolio. So looking towards Cefnello, we have three phase three studies ready to initiate. In fact, the DAISY study in sclerosis just dosed, so that's a phase three study already initiated with two more, which we expect to launch early next year. So we're very proud of the potential of Cefnello, which was put in place through internal discovery and development programs, and we're beginning to see delivery of that promise. Also, a strong contender in our portfolio is tozobracumab. which, as we mentioned earlier, is differentiated for the competitors because it is able to inhibit both the SD2 and the RAGE-EGFR pathways And so we really see a wonderful opportunity there to target the breadth of respiratory disease and to be able to offer a better outcome for patients. So as we think about how we continue to build on our success and move forward, as we've mentioned, we're very interested in growing our footprint in treatments for immune-mediated diseases. And this is a continued build within the group as we expand both our capabilities, as well as our capacity. And we think about the new modalities that will best serve patients moving forward. So we continue to expand our pipeline and to think about what the treatments of the future may be. And for a hint of the way we are thinking, Susan told you earlier about investments in cell therapy and the promise that those have demonstrated in oncology. And we have seen early clinical data published by academic experts who have demonstrated the promise for cell therapy in patients with autoimmune disease. So we'll continue to explore these capabilities and evaluate the potential for that within our portfolio. I hope that gives you some color that will also help us share our excitement and growth in respiratory and immunology.

And let's not forget before I come to the Fasiga question that there's still a high medical need in our core indications in asthma and COPD, despite all the progress we have made in the last few decades. But many patients are still suffering from severe exacerbation, lung damage, so there's still a very big untapped opportunity in those diseases. Coming back to your question regarding the growth potential of Fasiga, it's still very substantial. Christopher, just to give you some numbers. Currently, almost one-third of the new prescriptions are going to type 2 diabetes, but more than two-thirds are going to CKD and heart failure. And the penetration in those two diseases is, at the moment, despite all our effort and also from the competition, is only 15% to 20%. And hence, there's still a very substantial upside moving forward. Very pleasing to see that most of the guidelines around the world have now adjusted their guidelines and the HDLT2 are now one of the fundamental pillars of the treatment of heart failure patients and the same is true for chronic kidney disease. So in that sense, the volume opportunity is very substantial. Then your question about LOE and let me reiterate again, we have a very, let's say, fragmented period of LOE service for SIGA, 2026, the United States, but only in 2028 in Europe. And beyond that, we see very strong growth in the emerging markets, where in some of those markets, roughly 10 markets, we have already lost LOE, but still the brand is still growing very fast. So I'm not going to say that there's no impact of LOE. Of course, there will be an impact of LOE, but clearly the combination products hopefully will compensate for that loss in the second part of the decade. And we remain very bullish about the growth potential of the products, let's say, in the next few years.

Thank you, Rod. And Mene is not with us in the room, but he's keeping an eye on us. So he reminded us that we still have a number of redarts, last cycle management opportunities in R&I with Taizé, with Fasenra, with Tozof, So still quite a lot to come in RNA, in particular respiratory. So we'll move to the next question, Simon Baker at Redburn. Can I ask, we only have a few minutes left, so can I ask everybody to ask one question, if you don't mind? Over to you, Simon.

Thanks, Pascal, and I'll behave myself. Returning to Emily's questions for you, Susan. The current use of CTLA-4 is really defined by acceptable levels of toxicity. And if your bispecific is better tolerated, that broadens the scope. And I was specifically thinking about lung cancer and PD-L1 greater than 50%. Evolve Lung 2 is focusing on less than 50%. Are you planning to look at PD-L1 high as well? Thanks so much. Thanks for the question.

In the PDL1 high group, this is the place where at the moment, based on the current data that we have, that the addition of TIGIT seems to make a particular difference in that setting. So, you know, we'll obviously look at the emerging data across our bispecific portfolio. But, you know, what we're doing in terms of the initial phase three trials that you're seeing is focusing on the area where we think we can get that added benefit from CTLA-4 and Ambition. It is better tolerated than just co-administration of the two antibodies separately rather than in one drug where you're only binding CTLA-4 in the presence of PD-1. However, if you compare, you are still getting some increase in toxicity. So I think we've got a much, much lower rate of the diarrhea and colitis that you see with CTLA-4 inhibition. but we have still seen some increases in liver enzyme elevation. And that's really what we try to optimize for when we're optimizing for the dose at 750. So we have an acceptable rate of drug discontinuation and the holidays based on that. So, you know, I think we still need to make sure that we're optimizing the patient population that we're choosing for the relevant checkpoint inhibition profile. And that's what we're aiming to do across our bispecific portfolio.

This is the beauty of this portfolio. Relvigostomic is a more logical option for PD-L1 high, Simon, and the CTLA-4 combination Volvostomic is a better option for PD-L1 low in lung cancer. So we move to the next one. Rajesh Kumar at HSBC. Rajesh, over to you.

Hi there. Just one question on the long-term financial target. You indicated that you want to achieve, you know, faster than the industry growth. Can you run us through how you're thinking about capital allocation today in terms of, for example, you highlighted, you know, the GLP-1 acquisition or you've just started trials on buy specific that will position you to be there. So what is the capital allocation algorithm you're following today? that gets you to an answer a whether there is you know you know you won't get success in everything but what gives you the confidence that you can deliver that industry leading growth thanks rajava had to step out for a minute so let me address your question first of all we don't give long-term guidance the only thing i will

fair, but the long term is what we've said before remains our goal, so there's not much change there. And in terms of a specific question about capital allocation, as Aradna said a bit earlier during her comments, the priorities for us are to invest in our pipeline, reduce debt, and pay our dividends. So there's no change there, and suddenly we want to continue building our pipeline. But you know, each time we build a pipeline through bid-de-deals like we've just announced this morning, it's additional growth. We believe that we can deliver industry-leading growth from 25 to 30 and beyond based on what we have today. So anything we add actually will help us grow even more during that period and beyond. So we're always looking at today, tomorrow, and the day after, the day after being you know, new technologies like cell therapy that we want to apply to oncology, but also immune diseases, as Shahad mentioned, T-cell engagers, gene therapy for rare diseases, and the midterm, of course, which is what I call tomorrow, is actually a large phase three pipeline. So, That's really what we try to do. The next question is Emmanuelle Papadakis. Sorry, I'm rushing a little bit from Deutsche Bank, but we only have a few minutes and I'd like to give everybody a chance to ask their question.

Emmanuelle, over to you.

It's not with the screen that I have in front of me.

Go ahead, Louise, and then we'll look back to Emmanuelle, if that's okay. So on DATO at ESMO, it became clear that

this drug is absolutely delivering on the promise of ADCs in the EGFR subgroup of lung cancer. I just wondered why you think this is and whether you need to see any more data before you could consider starting phase three in frontline EGFR in combination with Tegresso. Thank you.

Thanks. So it's a good question for Suzanne.

Yeah, sure. Thanks for the question. So yes, in the EGFR subgroup, we did see really good activity with a hazard ratio of 0.38 in that group in the randomized study of TL01. So we've also got data from the Orchard platform study looking at the combinability of data DXD with TIGRISO. So I think that's an important piece to also put in place. So I think it is encouraging. Obviously, as we've already said, we're going to be expanding the portfolio of phase three trials that we have for data DXC, and you'll see more of those trials in the coming months. But this is a place that, you know, obviously we can build on the great data that we've just seen with FLORA2, you know, by looking at the combination of Tigriso with chemo, and you have the potential then to improve on the chemo piece. So I think it's an interesting area and, you know, obviously we'll be posting more trials in the coming months.

Thanks, Suzanne. Emmanuel, over to you.

Thank you. So, yeah, a quick question on vermicompound, the discontinuation for lack of efficacy in PNH. What cross-reed does that have to the ongoing myasthenia gravis and renal studies and where does that leave your oral strategy and ability to defend against potentially newcomers like tacopan, etc.? ? And then if I could have very quick follow up for Rude, you didn't mention China BVP for fog season next year. You no longer expecting that to be a headwind for revenues. Thank you.

OK, Mark, do you want to cover the first one?

Yes.

Yes. So the first question on vimercopin in PNH. I mean, PNH, it's absolutely essential to have a very high control of the disease. And we, you know, we recommend in PNH the dual therapy between Danicopan and Ultimeris. Ultimeris has a very sustained and strong efficacy over time. So we believe it's going to remain the standard of care. Demircopan has shown efficacy, but not as high as we want it to be. Regarding the read across other indication, we are still continuing phase two studies in MG, as you mentioned, but also in several a real indication, and we are hopeful that this indication will be successful.

Before you do, maybe just one quick addition to what Mark said. I mean, at the ash, you probably saw heptacopan showed some sign of potential breakthrough IVH. So that's why we believe C5 potentially combined with nalicopan is really the best option here. Over to you, Manu.

So, Emmanuel, clearly FASIGA is not listed in so-called batch 9. It could go into the VVV batch 10, but that impact will be only seen then in mid-late 2024. So we simply need to wait until batch 10 is announced.

The last thing with China and FASIGA is we will... As we've said before, we will, what we call, consumerize it, just like we did with Cresta. I mean, the volume potential is still gigantic in China. The price is relatively low, so we can definitely consumerize it and operate in a private market and deliver it to patients at home for a very low cost. So we believe we should be able to transition. When we go VBP, and we don't know exactly when, because as Ruth said, it could be further delayed, But when we go to the VBP, we should have an initial drop, and like we saw with Crestor, our hope and belief is that it can, after that, grow in volume. We'll take the last one question from Peter Welford of Jefferies. Over to you, Peter.

Hi, thanks. Just coming back to the Oral GLP-1, I just wondered if, firstly, Ruud could perhaps comment on how important is it that this could potentially get to market at a time when you do have successful lifecycle management or other strategies for Foxesia in the US market, and overall a sort of presence, I guess, a significant presence in your CVRM portfolio in the US. And how does it leave the weekly amylin? Perhaps a question for Sharon. Is it actually possible to potentially reformulate the oral as well as an injectable for an amylin combination? Or is the amylin destined to remain a monotherapy at this point within your portfolio? And I apologize, I know I'm last, but if I'm down a step back again, could you just quickly, can you reiterate the mid to high 30% longer term margin target? Because that wasn't actually mentioned, but it's come up for a lot of people in the question. Thank you.

Okay, so Peter, let me do my best in order to answer your first question regarding the importance of this new asset. and the combination with Fasiga. It's fair to say that we are getting more and more excited about the other combinations in our portfolio as well. Sharon mentioned the combination with ibuprofen. We hope to show results with the Belze combination with Fasiga. And last but not least, of course, we have the Dextrostat combination. The phase three trial has already started for the mono component. And hopefully early next year, we will also start the phase three in the combination of Fasiga. So those three will enter the market earlier than the combination with the obesity. But of course, we will do everything in order to accelerate the development also of the combination of the EcoGene compound with Fasiga, if that makes sense. So that's what I can say at the moment. It's high speed. There's a lot ongoing in order to make sure that we will mitigate the potential effect of an LOE in the United States as much as possible.

And the last, your second question, which, sorry, go ahead, Sean, yes.

Yeah, I think we'll follow up. There was a question in there about how this fits into our portfolio in which we already have a long-acting amylin agonist. I think that's an excellent question. But let's just say that nobody thinks that the unmet medical need for diabetes has been fully met at this point. And so we have multiple opportunities to address both type 2 diabetes and obesity with the molecules in our portfolio as well as with this acquisition of ECC5004. So there is still a place for our long-acting amylin molecule. And it is a small molecule, so we anticipate that it would be combinable with a molecule like ECC5004. So we continue to build on our portfolio, not subtract from.

Thank you. And with Amelin, the idea is really to combine, not replace GLP-1, but combine and provide a product that is better tolerated at further, either further weight loss or enable reduction of GLP-1 and better tolerability of the combination and also more durable effect. But of course, you know, only time will tell whether we can deliver this. And that's why we do the clinical development. So the last question is, Operating margin remains certainly our key focus. But of course, you know, we will always consider the opportunities we have. As I said before, with what we have in our hands, we can deliver industry leading growth post 2025, which we've said before. And if we find other additional opportunities to grow even faster, suddenly we may consider adjusting operating margin target. But the one thing we will not do is compromise the profitability and the cash flow in absolute value. So we would only trade an adjustment in operating margin if we thought we can deliver faster, even faster growth and more profit and more cash flow. So that's sort of the bottom line. and we want to deliver for shareholders at the end of the day. So with this, maybe we want to call it a day, and thank you very much for all your great questions, and have a good day, everybody. Thank you.