GSK plc

Good afternoon, ladies and gentlemen, and welcome to the analyst call on the GSK second quarter 2020 results. I will now hand you over to Sarah Elton-Farr, Head of Investor Relations, who will introduce today's session.

Thank you. Good morning and good afternoon. Thank you for joining us for our Q2 2020 results, which were issued earlier today. You should have received our press release and can view the presentation on GSK's website. For those not able to view the webcast, slides that accompany today's call are located on the investor section of our website. Before we begin, please refer to slide two of our presentation for our cautionary statements. Our speakers today are Chief Executive Officer Emma Wormsley, Ian Mackay, Chief Financial Officer, and Dr. Hal Barron, Chief Scientific Officer. We have a broader team available for Q&A. We request that you ask only a maximum of two questions so that everyone has a chance to participate. And with that, I will hand the call over to Emma.

Thank you, Steph, and welcome, everybody, to today's call. I hope that you and those around you continue to be well. At this half-year mark, and in what have been extraordinary circumstances, I am pleased to report that we've mobilised across GSK to respond to the pandemic and have simultaneously advanced our long-term strategic goals at pace. Adjusting rapidly to the new ways of working, we've secured supply, strengthened the pipeline, progressed multiple solutions to the pandemic, and our integration and separation programs are all firmly on track. While we have seen some COVID disruption impact our performance this quarter, we're pleased with half-year delivery and our confidence in our business and its prospects remains high. Hal will give you an update on our innovation progress shortly. But particular highlights in the last few months include, in oncology, the U.S. approval for Zejula as a first-line monotherapy maintenance treatment for women with ovarian cancer. We were also pleased to see positive opinions from the FDA's ODAC and CHMMP on bilansumab methadotin, a medicine we believe will be very important for multiple myeloma patients. In infectious diseases, we made great progress in HIV with a presentation of truly groundbreaking data for long-acting cabotegravir in the PrEP setting, And in vaccines, we're poised to move into pivotal studies for very significant opportunities in RSV and meningitis, and have just announced our collaboration with CureVac targeting up to five infectious disease pathogens. Despite short-term pressures, our performance fundamentals continue to strengthen, with good momentum and strengthening commercial execution on our key growth drivers. We're winning share in respiratory, in oncology with Zedula, with two drug regimens in HIV, and in power brands in consumer, including a notable acceleration in VMS demand. We've seen strong acceleration of our digital capabilities as we've continued to increase our share of voice with HTPs, both virtually and face-to-face where possible, as well as winning share in an accelerating e-commerce channel in consumer. Our consumer integration and company separation programs both continue to progress well and undistracted, with over 90% of Pfizer revenues now successfully remotely switched over to GSK systems. And Ian will update you on this and broader cost discipline later. And we continue to progress our consumer divestments, including Horlicks, to set up the world's leading pure play consumer healthcare company with the most competitive portfolio possible. On trust, alongside others, we helped launch a billion-dollar AMR action fund to fight another major risk to global health. We were delighted to receive U.S. approval for a new pediatric formulation of dolutegravir. And finally, I was very pleased to see all-time record levels of employee engagement in the quarter, driven by pride in GSK's purpose, our people's sense of being valued, and the positive cultural changes we're making. We've taken a comprehensive approach to respond to COVID-19, using our science and technologies to develop adjuvanted vaccines and therapeutic solutions, while at the same time accelerating momentum on existing R&D projects and investing in our future capabilities and competitive advantage. We at GSK firmly believe multiple vaccines will be needed to fight COVID, and it's why we've deliberately taken a unique, collaborative approach with a proven technology. to develop adjuvanted vaccines. GSK's adjuvant is proven in a pandemic situation and alongside improved efficacy, it can help reduce the amount of antigen needed and get to scale faster. We can deliver more than a billion doses of adjuvant in 2021. We announced an agreement to supply the UK this morning and we're in late stage discussions with multiple other governments taking a global and access-led approach. We're also making good progress to start clinical development of promising therapeutic antibody options. which could be in market next year. We've moved to accelerate our access to new technology platforms through strategic collaborations that will advance our R&D in multiple disease areas and could be relevant in future pandemics. And we continue to accelerate momentum with existing projects, which remains important while so much attention is focused on COVID. Of course, as we expected, COVID has disrupted our performance this quarter. Pro forma group sales declined 10% in CER terms, with the greatest impact of the pandemic seen in our vaccines business as access to vaccinations was limited. We also saw some of the patient and consumer stock build in Q1 reverse as expected. Group adjusted operating margin for the quarter was 22.9%, particularly the performance in vaccines, together with increased investment in our pipeline and new products, partly offset by ongoing tight cost controls. On a total basis, earnings per share were up over 100%, 45.5 pence, and adjusted earnings per share decreased 38%, 19.2 pence. For the first half overall, sales were up 8% reported and flat on a pro forma basis, with continued progress on our performance in pharma and consumer, and despite the significant but short-term impact we saw from the pandemic in vaccines. Adjusted operating profits were down 7% pro forma as we continue to invest behind advancing our pipeline and new product launches. And the momentum here is encouraging in our key growth drivers. In vaccines, despite lockdown impacts on vaccination rates, we believe the underlying demand for our key vaccines, including shingles and meningitis, remains very strong. Guidance from government agencies, including the CDC, is emphasizing the importance of routine immunizations and catch-up for all age groups, including adults. We're seeing encouraging signs of recovery in selective geographies in Q3 and are investing to support it, though there remains some way to go to get back to pre-COVID levels for adult vaccinations, such as Shingrix. We expect to see vaccination rates recover in the second half of the year. We're confident it will come, though clearly there remains a degree of risk on the exact timing. We continue to work on expanding capacity for Shingrix to support recovery and demand and to enable further launches around the world for this important and much needed vaccine. Sales in our respiratory portfolio are performing strongly. With Trilogy, we continue to lead the market as a single inhaler triple therapy and also grow the market with sales up 58% in Q2. We're looking forward to the FDA's decision too on the asthma indication for Trilogy later this year. And for Nucala, we continue to see strong growth aided by strong uptake of at-home administration. We're retaining leadership in all key markets and expanding our label in other eosinophilic indications, which will further cement our leadership. In oncology, we've built a strong commercial platform from which to grow Zodula and also launch Belantamab on approval. For Zodula in the U.S., The latest Flatiron data, which was for May, already indicated a 50% increase in Zajula share in first-line maintenance to 21%. Although with the pandemic we've seen delays in initiation of chemotherapy and debulking surgery in recent months, which does add a near-term headwind, we remain confident in the long-term outlook for Zajula and there is a lot of opportunity with new guidelines and currently low levels of part penetration in first-line maintenance. We continue to believe that Julia is an important medicine with potentially unique properties. In HIV, as expected, we've seen the unwind of Q1 pull forward. And whilst the pandemic has reduced switching and new diagnosis, we nonetheless continue to see increases in Devata and Jaluka MBRX share to 9% this week in the US and are optimistic two drug regimens growth will accelerate when the situation normalizes. We also expect Devato to benefit from a broader U.S. label later this quarter with the anticipated inclusion of data from the Tango study. We continue to make great progress on innovation in HIV, and Hal will give more detail on this in a moment. I'm now going to hand over to Ian, who will take you through our financial performance and outlook.