GSK plc American Depositary Shares (Each representing two Ordinary Shares)

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.

Thanks, Emma. All the comments I'll make today will be on a constant, expansive basis, except where I specify otherwise, and I'll cover both total and adjusted results. On slide 10 is a summary of the group's results for Q2 and the half year. In the first half, turnover was up 8% in a reported basis and flat in a pro forma basis. Excluding the impact of disposals, revenues were up 1%. Adjusted operating profit was up 2% reported and down 7% pro forma. Adjusted earnings per share was 56.9 pence, down 6%. For Q2, turnover declined 3% in a reported basis and 10% in a pro forma basis. Excluding the impact of disposals, revenues were down 8%. As you've heard from Emma, we continue to see strong underlying performance of the business. However, during Q2, we saw turnover adversely impacted by the COVID-19 pandemic, with the most significant impact within vaccines. I'll go into the business drivers in a moment. Total operating profit was up 90%, with total EPS up over 100%, primarily reflecting the net profit on the disposal of Horlicks and consumer healthcare brands. On an adjusted basis, operating profit was down 21% reported and 27% pro forma, while adjusted EPS was down 38%. Earnings were impacted by lower turnover, continued investment in R&D, support of new product launches, an increased effective tax rate, and a higher non-controlling interest allocation of healthcare profits. These were partially offset by continued tight control of operating costs across the businesses. We delivered 2.5 billion sterling of free cash flow in the first half, reflecting favorable working capital, timing of RER payments, and proceeds from divestments of intangible assets. And on currency, in the quarter, there was a 1% tailwind on both sales and adjusted earnings per share. Slide 11 summarizes the reconciliation of our total to adjusted results. The main adjusting items in the quarter were major restructuring, which reflects continued progress in the consumer healthcare integration and separation preparation programs. Transaction-related, within which the main contributor was a charge relating to re-measurement of the contingent consideration relating to beam healthcare. And finally, the disposals column includes the disposal in the court of the Horlicks and other consumer healthcare brands. My comments from here onwards are an adjusted result, unless stated otherwise. Slide 12 summarizes the pharmaceuticals business, where revenues were down 5% in Q2, primarily resulting from the decline in established pharma. As expected, the COVID-19-related customer stock building in Q1, predominantly in Europe and the US, broadly reversed in Q2, with only a minor dolotegravir impact in Europe and the US remaining. We estimate that the impact of the stock reversal and growth in Q2 was approximately 4%. The quarter also saw lower levels of new patient prescriptions in the US and Europe, reduced market demand for allergy and antibiotics products international, and some pressure on net prices in the U.S., informed by a shift in channel mix. For the first six months, farmer revenues were flat CER, and adjusted operating margin was 25.4% CER. Emma's just taken you through the performance of some of our key products, so I will just point out a couple of important considerations with respect to the second quarter. Starting with respiratory, sales were up 16%, with strong growth from Trilogy and Nucala. In oncology, Zedula sales were at 77 million sterling in the quarter, up 32%. In HIV, revenues were down 3%, with the Doltegra franchise down 2% globally. Sales were impacted in the quarter by customer destocking, following the increased demand in Q1 due to COVID-19. We continue to see good uptake of the two drug regimens, however, giving us confidence in the longer-term growth outlook. Excluding the impact of customer stocking, we estimate that HIV sales would have increased slightly in the quarter, and we expect sales to be broadly flat for the full year. Our established pharmaceuticals portfolio declined 17% overall, impacted by Ventolin, which was down 39% as a result of generic substitution in the albuterol market, as well as pandemic-related destocking in Europe. Ceratide adverse sales were up 2%, with the US up 34%, reflecting higher demand in the ICS LABA class, offset by declines in Europe as a result of generic competition and pandemic-related destocking. Outside respiratory, established pharma portfolio declined by 20%, primarily reflecting lower demand for dermatology products and antibiotics during the pandemic. Overall in pharma, trends remain encouraging and our new products continue to perform well. We continue to expect pharma sales to decline slightly in 2020, excluding divestments. Turning to the pharma operating margin, as anticipated, we saw a decline in Q2, primarily reflecting sales performance, while we continue to invest in R&D behind priority assets and promotional activity for new launches. We have maintained a sharp focus on cost management across the business, with focus on increased efficiency in non-customer-facing activities, and more on this subject later. Slide 13 gives you an overview of vaccines performance, with sales down 29%. As expected, Q2 revenues were impacted by containment measures informing customers' ability and willingness to access immunization services across all regions. Shindricks declined 19% globally, primarily reflecting lower vaccination rates in the U.S., which was partially offset by favorable return and rebate movements. The meningitis portfolio declined 29%, impacted by lower demand across all regions. In the U.S., Vaxero maintained and Minveo grew market share. Hepatitis vaccines declined 62%, primarily reflecting travel restrictions. And DTBA-containing vaccines declined 43% as vaccination rates fell. Sales of Infanrix, PDRX were also impacted by unfavorable year-on-year U.S. stockpile movements and supply constraints in Europe. One should also note that divestments of the travel vaccines, Ravapur and Ensupur, resulted in a drag to vaccine sales in the quarter around 3%, and we'll have a similar drag on vaccine sales growth this year. The operating margin of 23.4% reflected the impact of reduced sales in the quarter. In the first half, vaccine revenue was around 6% CER, and adjusted operating margin was 38.2% CER. Turning to slide 14, revenues in consumer healthcare on a pro forma basis were flat, excluding brands either divested or under review, reflecting the unwind of increased COVID-19 demand we saw in Q1. Including those brands, turnover declined 6% pro forma. At a regional level, China returned to growth as mandated retailer shutdowns were lifted. However, this was more than offset by declines in Europe and the US as a result of the pantry loading unwind. The vitamins, minerals, and supplements category continued to grow strongly with sales growth in the high teens on a pro forma basis. This higher demand reflecting an increased customer focus on health and wellness. In pain relief, sales benefited from the continued strong performance of Panadol and the successful Rx to OTC switch and launch of Voltaren OTC in the US. This was offset by an adverse impact in Advil due to initial market misinformation relating to COVID-19 ibuprofen treatment which has since been corrected. We're also excited about the launch of Advil Dual Action. Sales also benefited from the increased retailer stocking ahead of a systems cutover in North America as part of Pfizer integration activities, which added two percentage points of growth in the quarter, largely in the digestive health and pain relief categories. This benefit is expected to reverse in Q3. We're close to fulfilling our commitment to divest one billion of non-core brands in order to refocus our portfolio as well as funding integration and restructuring activities within consumer healthcare. Operating margin for the quarter was down 120 basis points year on year. In the first six months, consumer revenues increased 2% CER pro forma and 7% excluding the impact of divested and brands under review. Pro forma adjusted operating margin was 24.5%. With the integration on track, we're delivering synergies as anticipated and continue to maintain strong cost control while investing behind our brands. On slide 15, we summarized the sales and adjusted operating margin for Q2. As I mentioned, our group operating margin was down 530 basis points in a pro forma basis and is informed primarily by the sales impact in the quarter while we continue to invest in R&D behind priority assets. SG&A for the quarter was down 5% in a pro forma basis, reflecting integration savings and reduced promotional and variable spending across all three businesses as a result of this pandemic. This is partially offset by targeted investment in customer-tasting activities focused on growing the top line. We continue to maintain a sharp focus on cost management and are on track to deliver, firstly, synergies from the consumer integration, achieving 500 million sterling savings between now and 22, Secondly, benefits from the separation preparation program across multiple activities, including the supply chain, development in R&D, commercial operations, and our global support functions, resulting in efficiencies which will deliver 800 million sterling of savings by 2023, and will contribute to meaningful margin expansion from 2022 onwards. And thirdly, savings from learnings over the past four months, with opportunities initially across travel and entertainment, conferences and meetings, commercial real estate, and through finding new ways of engaging with our customers, healthcare professionals, and our other stakeholders. We've included in the appendix this analysis covering the year-to-date information. Moving to the bottom half of the P&L, I would highlight that interest expense was 227 million sterling. The increase primarily reflects reduced swap interest income and foreign currency hedges and lower interest income and reduced overseas cash post the close of the investment of Horlicks and other consumer healthcare nutrition products in India. This was partly offset by favorable refinancing of term debt. The effective tax rate of 20.5% reflected delays in the settlement of open periods and updated forecast profit mix for the year. We now expect full year effective tax rate of around 16%. And non-controlling interest reflected Pfizer's share of profits over the consumer healthcare JV. We delivered cash flow of 2.5 billion pounds in the first half of the year. The increase primarily reflected a reduction in trade receivables as a result of collections following strong sales in Q1, beneficial timings of payments for returns and taxes, a lower seasonal increase of inventory, and disposals of intangible assets. These were partly offset by higher dividends to non-controlling interests. Recognizing the lower Q2 revenues and the H1 impact on timing of RER and tax payments, we anticipate lower free cash flow in the second half, Overall, we still expect cash flow to be a step down from 2019. As well as the positive cash flow we delivered in H1, we closed the quarter with strong cash balances, have an effective approach to working capital management, and maintain access to extensive undrawn committed facilities. Turning now to our outlook and guidance for this year. Maintaining our full year guidance of adjusted EPS down 1 to 4%. Our performance for farmer and consumer in the first half of the year is in line with where we expect it to be. We expect limited impact from COVID-19-related stopping patterns for the balance of the year in these two businesses. However, there remain notable risks to business performance over the balance of the year, primarily in vaccines. As evidenced in the second quarter, the pandemic's biggest impact has been here. The key variable in achieving adjusted EPS guidance in the full year is the timing of the recovery of vaccination rates. Underlying demand for a vaccine's portfolio remains strong, and we put in place a range of actions to support the recovery of vaccination rates, which we anticipate and are seeing take place so far in the third quarter. Should we experience a delay in recovery of vaccination rates of, say, three months, for example, this would adversely impact full year adjusted EPS by up to five percentage points. As we move into the second half of 2020, there's no change in our capital allocation priorities. These are investing in R&D behind priority pipeline assets and delivering returns to shareholders. And as noted in our earnings release, we've declared a 19P quarterly dividend in line with expectations we set out earlier this year. And with that, I'll hand over to Hal.

Thank you, Ian, and good afternoon, everyone. It's been two years since I shared our new approach to R&D, and I'm very pleased with the progress we are making. Today, I'll review this progress and then discuss several very exciting medicines and vaccines in our pipeline. And with that, I'll begin my presentation. Let me start with a brief reminder of our approach to R&D, which I outlined in 2018. That is to strengthen our pipeline through a focus on the science related to the immune system and to use human genetics and advanced technology, such as functional genomics and machine learning, to enable us to identify novel targets that have a higher probability for success and a robust lifecycle potential. To achieve this, we have focused on four key strategic levers. First, to drive organic growth by focusing our research organization on human genetics and on both the adaptive and innate immune system. In development, we have removed numerous projects from the portfolio to enable us to design and execute robust clinical trials on the more promising programs. to effectively leverage business development to augment our pipeline. Third, to improve how commercial and R&D work together to maximize the lifecycle of our medicines and vaccines. And lastly, to shift our culture in R&D to one that embraces innovation by focusing on smart risk-taking, single-point accountable decision-making, and hiring and developing outstanding people. I believe we have made significant progress over the past few years. Over 70% of the targets in research are now genetically validated, with nearly 30 therapeutic targets originating from the 23andMe collaboration. We have exceeded industry averages for success in proof-of-concept studies, enabling us to initiate nine potentially registrational studies. In addition, we've had 17 positive results from pivotal studies. Lastly, we're on track to achieve 14 approvals since July 2018, with potentially five new molecular entity approvals this year alone. The last three months have seen particularly strong pipeline delivery, including, first, the FDA approval for Zejula in first-line ovarian cancer based on the outstanding Prima data, which resulted in a uniquely broad label. Second, the first regulatory approval for Deprotostat in Japan, Third, terrific PrEP data with cabotegravir that could redefine the management of HIV. And most recently, receiving a 12 to 0 positive vote from the FDA's ODAC on belantamalmaphedotin that was further endorsed by last week's positive CHMP opinion in Europe. Turning now to slide 22. We now have a biofarm pipeline of 35 medicines and 15 vaccines. with 39 of these 50 assets having a direct effect on the immune system. I'd now like to discuss several of these programs in a little more detail. Starting with vaccines on slide 23, I am very pleased to be able to share some great news on three of our vaccine programs. First, RSV. Scientists have been pursuing RSV vaccines for more than 50 years, but have only recently gained a fundamental understanding of how to induce protective immune response. by immunizing with the pre-fusion protein. This was used in both our maternal and older adult vaccines. It is important to note that 50% of infants are infected with RSV before they are one year old, and virtually everyone gets an RSV infection by the time they are two. In children, RSV can cause an acute bronchiolitis, which can lead to respiratory distress, hospitalization, and even death. In addition, RSV is an important pathogen in the elderly and high-risk adults. Although pediatricians are keenly aware that RSV may cause serious illness in their patients, most internists are less familiar with the morbidity and even mortality associated with RSV in patients over 60. Given the lack of treatment options, this lack of awareness is understandable. In older adults, the infection can cause pneumonia, which can lead to hospitalization, and it has been observed that the one-year mortality in these patients may be as high as 25%. Our older adult vaccine not only capitalizes on the pre-fusion antigen, but it is also combined with our ASO1 adjuvant to optimize the immune response, as we did with Shingra. We hope that if successful, this vaccine will have a meaningful impact on people over the age of 60 who are at the greatest risk from this high disease burden infection. I'm excited to share that we have had positive readouts for both of these RSV vaccines, and we are moving both into phase three. We hope to share these data with you in more detail at a medical congress later this year. In addition, we're also moving our five-in-one meningococcal vaccine, combining serogroups A, C, W, Y, and B, into phase three trials this year. This will allow us to target the five serotypes that cause most cases of invasive meningococcal disease in one single vaccine. Now, moving on to HIV. For me personally, one of the most exciting pipeline data readouts this quarter was the cabotegravir PrEP study, which we announced had been stopped in early May. These impressive data were presented at the AIDS 2020 conference a few weeks ago and demonstrated that long-acting injectable cabotegravir administered every two months is 66% more effective than daily pills at preventing people from developing HIV. We look forward to discussing these data with regulators and are working with them on a path towards registration. In addition, Kabanuva, our first long-acting injectable, has been resubmitted to the FDA for approval, and we anticipate the response in early 2021. Lastly, Rucobia, our first-in-class attachment inhibitor, was approved at the beginning of the month for heavily treatment-experienced adults who are living with HIV. Now focusing on the pandemics. I am proud of GSK's contributions to developing solutions for COVID-19. The breadth of a response is summarized on slide 25. As already mentioned by Emma, we have progressed a number of adjuvant collaborations to support the development of vaccines for COVID. We believe that by improving the immune response, both cellular and humoral, our adjuvant will have a clinically meaningful impact on the COVID pandemic. In addition, by reducing the amount of protein needed for a vaccine, we will be able to increase the number of doses that can be delivered to those in need. I believe that our adjuvant may be underappreciated and may ultimately enable antigen-based vaccines to have a superior profile to other approaches. Two such programs have moved into the clinic and we expect preliminary data in August on the Clover project. Additionally, our collaboration with Sanofi is on track to move into the clinic in September. We're also working towards advancing therapeutic solutions for COVID via our collaboration with Veer Biotechnology, which we announced last quarter, to accelerate the development of monoclonal antibodies to directly neutralize the virus. We will be starting the first of these clinical studies with GSK136 next month. This quarter, we also started the proof-of-concept study, OSCAR, with Otilamab, our anti-GNCFS antibody, for the treatment of severe pulmonary COVID-related disease. GM-CFS can act as a pro-inflammatory cytokine that induces survival activation and polarization of monocytes and macrophages, which are thought to be implicated in the cytokine release syndrome, which occurs in severely ill COVID patients. We think this is an exciting program, and we anticipate receiving data in the first quarter of 2021. The next slide underscores that when looked at in totality, the medicines and vaccines we are developing to combat HIV, COVID, urinary tract infections, hepatitis B, and many other infectious disease, as a result of our focus on immunology, has resulted in a world-class ID portfolio with 24 medicines or vaccines in clinical testing, of which more than 80% are immune modulators. In fact, infectious disease now accounts for almost half our pipeline. This pipeline of 24 programs complements our existing marketed portfolio of more than 20 infectious disease therapies that together delivered almost $17 billion in revenue for GSK in 2019. Analogous to the declared war on cancer, which has resulted in a marked increase in investments by the pharma biotech sector on discovering and developing important medicines for cancer patients, we are optimistic that the world's experience with COVID may lead to an increased focus on the importance and value of developing new therapies to treat and prevent infectious diseases. With that, I'd like to turn to another key portfolio within the R&D pipeline that has benefited from our increased focus on the science of the immune system, that is, oncology. Slide 27 shows you how our focus on immunology has helped strengthen our oncology pipeline, where we now have 14 assets in development, 13 of which act by modulating the immune system. I'd like to briefly share some of the progress we have made over the last two years and flag key upcoming data we anticipate sharing with you over the next 18 months. We expect data in the second half of next year on TSR033, our LAG3 antagonist, which is currently being explored alone and in combination with the Starlumab in solid tumors. We also anticipate proof-of-concept data next year on our TIN3 antagonist, Cabolumab. GSK609, our ICUS agonist, is in a phase 2-3 gated study for head and neck squamous cell cancer patients in combination with Tembra, and we expect to see data in 2021. Interfused alpha, the TGF-beta trap slash PD-L1 bispecific we are co-developing with Merck-Sorano is on track to read out the pivotal study in second-line biliary tract cancer next year. In addition, the lung studies remain on track. Lastly, the Stoller map, our PD-1 inhibitor, has been submitted to the regulators for approval in second-line MSI-high endometrial cancer. In the next slide, I want to introduce you to the newest addition to our immuno-oncology pipeline. I'm excited to announce that our anti-CD96 antibody, our first molecule being co-developed with 23andMe, has started phase one this month. CD96 is an immune checkpoint receptor expressed on T cells and NK cells. It is part of the TIGIT CD155-CD226 co-stimulatory axis as shown on this slide. We're excited by this asset as blocking CD96 from binding to CD155 allows CD155 to interact with CD226 and, importantly, activate an immune response, analogous to how TIGID induces its effect. This mechanism of action is distinct from and possibly synergistic with PD1-PD1L1 inhibitors, as well as possibly synergistic with TIGID inhibitions. It is important to note that this access was genetically validated by 23andMe via proprietary algorithm using their unique data set. Turning to slide 29, we move from our newest to the most advanced asset that modulates the immune system, bilanthamide methadone, which, as you know, has four modes of action, blockade of the BCMA receptor, delivery of the cytotoxic MMAF conjugate, and importantly, enhancing antibody-dependent cellular cytotoxicity and phagocytosis. due to ASUC oscillation of the EFT domain, as well as inducing an immunogenic cell death. We remain confident in the positive benefit-risk profile of Belomav in relapsed refractory myeloma patients, and we are pleased with the outcome of the FDA's ODAC hearing earlier this month and last week's positive opinion issued by the EMEA's DHMP. We take patient safety very seriously and are focused on helping physicians and patients understand and manage the corneal events as well as aggressively looking at ways to reduce the ocular events, particularly in earlier lines of therapy. Earlier this quarter, we dosed the first patient in the DREAM-5 study with Belamas and our gamma secretase inhibitor that we enlicensed from Springworth. I want to take a minute to share why I'm so excited about this combination. As you can see on the right-hand side of the slide, the gamma secretase inhibitor is responsible for clipping BCMA off the surface of plasma cells. We believe soluble BCMA may act as a sink for our ADC, potentially compromising efficacy. As you can see in the panels at the bottom of the slide, the gamma secretase inhibitor blocks the shedding of BCMA, resulting in higher expressions of BCMA on the surface of the plasma cells. And as such, you see greater cytotoxicity and an increase in ADCC. If this effect translates into the clinic, we may be able to lower the dose of Belometh and still have strong clinical activity. In addition to the combination with the gamma secretase inhibitor, we're exploring lower doses and less frequent dosing in earlier lines where Belomav will be given with other effective therapies. We're cautiously optimistic that these approaches will enable us to successfully develop Belomav in earlier lines of treatment. I'd like to speak about the most advanced of all of our cancer medicines, that is, the Julep. Despite having no synthetic lethal drug targets in 2018, we committed to becoming a world leader in this exciting field. Our first step was to acquire Zejula based on the functional genomic studies that suggested PARP inhibitors should be effective beyond those women who have a BRCA mutation. We were pleased that the PREMA study bore out this hypothesis, showing that the treatment effect in HRD-positive patients was similar to that observed in women with the BRCA mutation. In addition, Because of its unique tumor-concentrating effect, the doula actually exceeded our expectations and demonstrated benefit in all comers, which has translated into a unique and differentiated label. As such, the Tesoro acquisition validated our belief that functional genomes can be used to identify exciting, underappreciated targets, and we hope to expand this technology to find novel targets for patients with specific alterations in their tumors. Slide 31 shows what has been achieved towards this vision since Prima has read out. Based on the Prima and other preclinical data, we are excited about the potential for Zizula to work in other tumor types, such as lung cancer. And given its unique PK properties, such as tumor accumulation and ability to cross the blood-brain barrier, we believe we have the best-in-class PARP inhibitor. We will start a Phase III study in first-line non-small-cell lung cancer later this year. Our confidence in the concept of synthetic lethality has led us to build out our pipeline in this key emerging area of science. We now have five new synthetic lethal assets, with one being our homegrown type 1 PRMP inhibitor, three coming from a partnership with IDEO that we just announced earlier this quarter, and of course, Jula. We have also established a new research unit in Boston with a new leader in place. And I'm pleased to share with you today that we have agreed to a five-year collaboration with one of the world's leading functional genomic centers, the Broad Institute, to help us advance our mission. Taken together, I believe we have made excellent progress on our goal to build an industry-leading pipeline in synthetic lethality. Not only has our focus on immunology resulted in strong infectious diseases and oncology pipelines, But we also have 10 other immune-modulatory drugs that are targeting diseases such as osteoarthritis, systemic lupus erythematosus, rheumatoid arthritis, Duchenne muscular dystrophy, ulcerative colitis, systemic sclerosis, asthma, and COPD. And I'm particularly proud of the team working on BenLista. We announced positive headline results from the BLIS study in lupus nephritis in December last year, and we expect these data will be published in a top-tier journal very soon. Furthermore, We anticipate approval of this indication early next year. In addition, the BLIS-BELIEF study has been listed in combination with TROXAN for SLE for readouts in a similar timeframe. We have also made excellent progress on NUCALA. We have recently generated positive pivotal data in nasal polyps, filed for approval for hyperreacinophilic syndrome, and resumed our pivotal study in COPD. We're also exploring a long-acting anti-LL5, which, if successful, will potentially transform the respiratory market in a manner similar to the way that cabotegravir may disrupt the treatment of HIV. Building on the previous slide, I want to briefly highlight the important impact that business development has had in supporting the transformation of R&D pipeline at GSK. The various deals outlined on slide 33 will deliver significant value to GSK, either by adding strategically targeted assets to our pipeline or We're providing access to world-leading technologies and outstanding scientists that will help us progress the next generation of transformative medicines and vaccines to patients. Lastly, before I close with our upcoming pipeline milestones, I wanted to discuss culture. Two years ago, I spoke about the importance of culture to an organization and how we were going to focus on creating the right culture within the R&D organization at GSK. I'm delighted to share with you some of the results from the most recent GSK employee survey that demonstrates the progress we are making across R&D. Most importantly, we had an 8% increase in the engagement scores for R&D employees and a 20% increase in employees' belief in our commitment to scientific expertise. We were also pleased to see our focus on innovation was acknowledged by Science Magazine, where we were ranked as one of the top 20 companies to work for for the first time. We've also worked to simplify the governance model across our pipeline to improve our agility. This improvement in our agility is best illustrated by VEER and the Otilamab Oscar study in COVID-19. The VEER deal took less than three weeks to pull together and announce. And the Phase II Oscar study took less than 10 weeks from the idea to the first patient being dosed. Another great example is the speed with which the team took Belomav from essentially 35 patients in Phase I to the 10 study dream development program, and hopefully approval in just over two years. As I mentioned earlier this year, I'm excited that we are combining our vaccines and pharma development organizations into one single group, as I believe the opportunity for increased exchange of scientific ideas and expertise will greatly benefit our pipeline. And finally, we're seeing much closer working between R&D and commercial to improve our focus on life cycle management. This has resulted in many expansion indications under investigation for Zedula, Belamaz, Benlista, and Eucala. Moving to my final slide, 35. I want to look forward over the next 18 months where we have a number of important milestones. We have a lot of work to do, but I would particularly like to highlight four areas as a priority. First, maximizing the patient impact of our marketed medicines, such as Zedula, Benlista, and Eucala. Second, bringing the transformational impact of cabotegravir to patients in and treat HIV. Third, advancing our oncology portfolio by achieving approvals for Belimab and Distarlimab while building a pipeline of future indication expansions, and of course delivering proof-of-concept studies for a number of exciting earlier assets. And lastly, delivering our robust Phase III pipeline, including three new pivotal studies I mentioned earlier with the RSV and meningitis vaccines. In closing, let me say I'm extremely pleased with the progress we've made over the last two years, and I'm confident that the approach we are taking is delivering. We will continue working to build a stronger, more productive, and more innovative R&D pipeline. With that, I will now hand it back to Emma.

Thanks, Hal. So, in summary, we're confident in the underlying demand for our portfolio despite short-term quarterly impact. GSK has been resilient and agile in its response to the pandemic, and we're successfully navigating the crisis and meaningfully contributing to solutions, while at the same time making sure we're delivering our long-term priorities of innovation, performance, and trust, and on our 2020 areas of focus. We're building on the significant progress Hal has spoken to and strengthening our pipeline further. We're driving improvements in our operating performance. We're progressing the consumer JV integration at pace, including the reshaping of our brand portfolio. And we've started our program to prepare the group for separation into two new companies with relevant and competitive purpose portfolios and strategies. One, a biopharma company focused on the science of the immune system and genetics. The other, dedicated to everyday consumer health. Ultimately, we remain confident in the resilience and sustainability of GSK's business and our ability to deliver very successfully on our strategic goals. So we're now joined for Q&A by Luke, Brian, David and Roger. And with that, operator, the team is ready to take questions.

Excellent. Thank you, everyone. We now have Matthew Weston from Credit Suisse. Thank you, Matthew.

Thank you. Two questions, please. Firstly for Emma. President Trump proposed a number of executive orders on U.S. drug pricing, including international best price. As one of the first CEOs who's able to comment immediately after those announcements, I'd be interested in what's GSK's view on the proposals and what you would expect to shake out as we approach the election. And then secondly, probably for Luke, given the need for a vaccine rebound in the second half, can you talk about this year's flu season? How many doses are GSK targeting to ship versus last year? And should we assume price improvements given, I presume, high government demand for immunization across the board? Thank you.

Right. So, Luke, in a second, but just a comment on the executive orders, which, as you said, have just come out. And we're reviewing that and monitoring how things evolve, obviously being conscious and thoughtful about what can actually happen ahead of the election. I mean, these are all full topics that have previously been raised, and our position, frankly, is maintained as the same, which is we very much support any shifts that continue to drive access and support innovation that the world has never seen more than now is required for all of the unmet needs. And we're very supportive of programs that lower out-of-pocket, particularly for patients that are under economic pressure. And likewise, due governance around access to 340B. We do, however, have concerns about international pricing indices and importation because there global systems are not comparable, and the focus should be on maintaining safety and quality of products and also incentivizing innovation. Nonetheless, our number one priority is continuing to focus on quality-needed, differentiated medicines. You all know that GSK has a strong track record in terms of responsible pricing. And actually, we have continued to innovate for access. And that's visible when you think about three-in-one respiratory with Trilogy, the fact that Zijula is a single treatment, or indeed, the whole growth we are seeing and investing in two drug regimens, and of course, our commitments to price responsibly for any COVID solutions. So, Luke, do you want to comment, please, in terms of the focus on the flu season, which we know is very important?

Sure. Thanks, Emma. Thanks, Matthew. So in the U.S., we expect to ship around 50 million doses the upcoming season. The manufacturing team has done a great job, and we expect those to be in the market shortly. This is a critical part of our acceleration program for Shingrix. And that's up from $46 million in 2019, which back then was about 19% of market share. And the U.S. is where we send two-thirds of our supply. Thanks.

Thank you. Next question, please.

Thanks very much. This is Louise Pearson from Redburn. Thanks, Louise. You're live.

Hello. Thanks for taking my questions. I've got a couple on the RSC program, please. Firstly, in terms of revenue opportunity in the older adults, do you see this as a vaccine that could potentially support a premium price point like a Shingrix? Should this program ultimately be successful? And secondly, specifically on the maternal vaccine, is there any reason to believe your vaccine will be differentiated from the Pfizer maternal vaccine, which also recently came through proof of concept? Thank you.

Thanks very much, Louise. And I'm going to turn to Roger. But absolutely, we do think that the RSV portfolio has tremendous potential, both in terms of unmet need and our competitive positioning. But Roger, perhaps you'd like, not least, by the way, with our differentiated adjuvant, which is proven to work on all the people. So, Roger, perhaps you would like to give a bit more details on that.

Fantastic. Louise, thank you. Yeah, we are completely delighted with the positive data that we saw in the two RSV assets that Hal mentioned. I suppose it's worth pointing out both have fast track designation from the FDA also. Just on RSV older adults, we really think we are likely to be uniquely positioned here because of the pre-AF antigen and the adjuvant that Emma referenced as well. This is the adjuvant system in Shingrix. This is the AF 01 adjuvant, which created greater than 90% efficacy in Shingrix. So again, that's creating a level of excitement where we really believe that that could offer potentially wider and longer protection. On your pricing point, I think if we do create that level of differentiation and protection, that level of pricing is appropriate, but obviously that has to be determined as we run through the trials. We're moving into phase three in early 21. We are excited about older adult. On the maternal side, just in terms of, it's the same antigen as the older adult vaccine. It moves into phase three in the second half of this year. Two points I'd really note here. Number one, This is likely to complement other CDC-recommended maternal vaccines that we've got in our portfolio as well. So we've got experience in terms of how we operate in this maternal vaccination space. That would be the first one. I do think a vaccine offers potentially also polyclonal coverage versus in the competition we know also that we'll be up against monoclonal coverage. competition. And I think that could offer broader strain protection, which protects us against, well, protects you against virus mutation or if viruses or strains actually escape the monoclonal. So, yeah, excitement in both of those. The good news is we'll share the data on this in Q4 later this year.

Thank you. Next question, please. Sorry, on to the next, yeah? Next question is Thank you. This is Kea Parekh from Goldman Sachs. Thank you, Kea.

Good afternoon. Thank you for taking my questions too, please. First, kind of just on the cost trend that we're seeing this quarter, Emma, I again would love your thoughts on how you see the sustainability of the growth and the cost as we go through the rest of the year. I think a lot of your peer groups seem to be reporting margins meaningfully better than expected. I would be keen to hear your perspectives on how long do you think the need for reinvestment continues to be? That's question number one. And then question number two on Zazula, I think kind of numbers a bit below expectations for the quarter. Clearly some stocking kind of moving from Q1 to Q2 or likewise. But Luke, would love your thoughts on how you think you're doing in the real marketplace, kind of if you can refer to some market share trends and when do we anticipate a real pickup that justifies the value you paid for Tesaro? Thank you.

Thanks, Kea. So let's go to Ian first and then over to Luke.

Okay. Thanks, Emma. Kea, thanks very much for the question. With costs, I think one of the differentiating aspects of our focus around capital allocation is investment behind R&D pipeline. Key assets in the pipeline is absolutely a key priority for us. And you continue to see a cost increase in that regard as we invest behind those priority assets. So in the second quarter, pharma R&D up 13%. and year-to-date overall for the company, up 11%. That will remain a focus for us. On the other hand, on the SG&A front, in the quarter, down 5%. Very, very strong focus on all non-customer-focused activities. So we continue to invest in terms of supporting new product launches and completion of the build-out in terms of specialty. But if you think about the programs that we are... delivering savings against integration of the consumer healthcare business. Brian, the team, beginning now to deliver savings from that integration, very much in line with the $500 million sterling we expect to deliver between now and 2022. The Future Ready program, separation preparation program by another name, beginning very, very early stages of delivery, but again, between now and 2023, $800 million of savings with the lion's share of that delivered by the end of 2022 with meaningful margin improvement. And then in addition to that, just the day-to-day tactical management of costs in the second quarter, we've managed T&E down to a very, very small number. As you would imagine, conferences and meetings down to a very small number. Found ways to continue activity with our customer, with our healthcare professionals through virtual means, that's been particularly noted in the U.S., which, again, takes costs out of the travel and entertaining, the fleet expenses for the sales force, for example. So there's a very strong focus across non-customer-facing activities, as well as just continuing to deliver productivity through the supply chain and the commercial organizations. So happy with the progress in terms of 5% down on SG&A in the quarter, continued focus in that area. but we'll continue to invest behind SG&A, sorry, SG&A, behind Priority Assets and R&D.

Thanks, Ian. Luke, the jeweler.

Sure. Yep. Thanks, Kaya. So, Kaya, I'll answer this in a few pieces. I mean, Ian's covered the inventory effect, which was plus five in quarter one, and then we had a change of wholesaler delivery from Monday and Thursday to Wednesday and Thursday, which was five million in Q2. So that's a 10 million swing there. But in terms of operational, I guess I'll split this into two parts, things that we can control and things that we can't. So in terms of things that we can control, I think we're doing well. So first line market share jumped 14% to 21%. And again, if you look at the class, it's up 100% or close to 100% in 12 months. And we still only have 15% of women in first line getting a part. We had the leading share of voice average at about 39% and actually got up to a peak of 49% because we rapidly changed our model when COVID hit. And then we also, as soon as we had state-level clearance and government clearance, we got straight back out there. If we look at message recall tracking, this is translating to strong and clear recall of our key messages, which again is encouraging. And then if we look at probably the most dynamic measure, which is the average new patient starts in the US, this is actually at an all-time high. So if you look at Q1 versus Q2, it's up 50%, 58%. And that's despite a big drop in late March and then most of April. And then finally on things we can control, we've seen just over the last month, we've seen more than 400 new unique riders since Prima. So they're the things which I think are within our gift, and I think we're competitive there. In terms of what we can't control, what is very clear when you look at the oncology market, there is a very dynamic trend here in terms of if you've got slower progressing tumors, then the referrals, the new patient starts, and in-office treatment rates are lower, and ovarian is in that category. So if we look at new patient diagnosis, they're down about 10% in April. Debulking surgeries are around 25% in the last data that I saw. So these are factors that are part of our control. But in the end, we launched Prima bang in the middle of COVID. And I think now our focus is to keep executing like we are, growing the class and making sure that we're getting our fair share.

Thanks, Luke. Next question, please. Thank you. This is now Tim Anderson from Wolf Research. Thank you, Tim.

Hi. This is Richard Wagner with Wolf Research for Tim Anderson. Question on the COVID vaccine. It's commonly understood that there are three major diversified vaccines players, GSK, Sanofi, and Merck, yet all of the leading, the vanguard COVID-19 vaccine initiatives are by none of the three biggies. Instead, they're led by companies that don't at all have the same level of experience in the space. How did we end up in this place? I appreciate that GSK has multiple vaccine collaborations underway, but these are not commonly described as one of the leading programs. Was it because of the traditional vaccine companies feeling like vaccine development would be on the usual protracted timeline or something like that? That's the first question. On belantamab, I know GSK doesn't give single product guidance, but can you at least tell us whether you think this product has the potential to achieve blockbuster levels of sales, meaning crossing the $1 billion pound or $1 billion threshold at some point? Thank you very much.

Well, thanks, Richard. And I can just say yes to your second question, subject to the program of work that Hal outlined. And maybe I'll ask Luke in a moment to just comment a bit further as we prepare for the launch on that. In terms of vaccine, I think it's interesting that you describe the leading programs as being from, and I understand why, from not the, I suppose, the largest vaccine manufacturers today. I actually think I would qualify a bit by saying the first. All of us, I'd say across the industry, large and small, believe that more than one vaccine will be required to address this. And that's exactly why our decision right from the beginning was, A, that a vaccine is the priority exit here, but B, treatments will still be required because, as you know, the FDA has also said they will consider approving vaccines with 50% efficacy. And even an extraordinary vaccine means that we're still going to require treatments, not just in the near term, but for the long term, which is why we're invested in the areas that Hal talked about and excited, actually, about our prospects there. But it's also why the choice that we made in terms of technology play was to bring an adjuvant. And that is important because it's proven at scale, it's safe, and we know it can add both efficacy and antigen-sparing benefits, as well as allowing us to have multiple shots on goal, if I can call it that. And you can see that evidence by the way governments are engaging in contracting now is there's still a lot of uncertainty about what is going to play out in terms of results. We should all be encouraged by the early readouts, but these are often on totally new technologies that haven't ever been licensed yet. They are encouraging, but there's still a lot to see on duration of response and particularly on efficacy on different cohorts. And one of the big outstanding questions is what's going to happen with the older cohorts and the readouts there. We, alongside others across the industry, are still very much engaged in the programs we're in. As Hal said, we've got two already in the clinic, another just about to start. And we're very confident in being able to supply subject to, you know, positive results, a billion doses of the adjuvant, importantly, while still continuing and accelerating our existing pipeline, and indeed investing in the exciting new technologies that are becoming more visible, be that in-house or with our CureVac deal. So I think a lot more to come on in terms of where the vaccine solutions will conclude. But, Luke, is there anything else you'd like to add in terms of how you think about the upcoming commercial execution and prospects of Bella?

So, I mean, look, I think the key thing to anchor on here is that, I mean, there is striking single agent activity. And we believe that the side effect profile is manageable and it's an attractive infusion regimen. I think we can execute a good plan in terms of managing, optimally managing corneal events. And I think also just when we talk to physicians that use the drug, again, the efficacy is attractive. In terms of managing the tox profile, let's see how that evolves and whether that's consistent with what we see with investigators once they get the drug in their hands and and use it in patients and understand how it works. I think also you can see with programs that house high levels like DRIN5, we're also being open-minded in terms of the pathways to this drug and earlier lines. So short answer is we remain very confident about the ethics.

Thanks, Luke. Next question, please.

Thank you very much. This is Andrew Baum from Citi. Thank you, Andrew.

Thank you. A couple of questions. COVID-19 is obviously going to have lots of impacts on the industry, but one that seems obvious to us is the importance of the government as a stakeholder is going to be materially greater going forward than it's been historically. With that in mind, to what extent does that influence your capital allocation? I'm obviously thinking of areas that you're already in, such as vaccines, but in addition, areas where you have been in historically, namely thinking antimicrobials and anti-infectors more broadly. Is this a driver for you to increase your investment there? And then second, on the announced deal in relation to vaccines, thinking about your pricing strategy for your COVID-19, there's obviously a divergence between the AstraZeneca approach being pro bono during the pandemic period and obviously Pfizer and BioNTech going for profit. How are you thinking about pricing your vaccine for the pandemic period, should there be safety and efficacy to meet approval? Thank you.

Well, thanks, Andrew. And I would definitely concur that the world and many governments have recognized the strategic importance of our industry and innovation within that. And, you know, all in the context of the geopolitics that we know. I think in terms of how it's influencing our capital allocation and choices, Hal laid out very clearly in his presentation the mix of the portfolio of our pipeline, but also it's worth underpinning GSK's strength in infectious diseases. Be that prevention, which frankly is, you know, if there's one thing despite any quarterly impact that we should all believe, it's that fundamentally we should be absolutely confident in the strategic relevance and prospects of vaccination which is an area that GSK has tremendous strength, a growing pipeline, and increasing competitive capabilities. But we also do have a broad infectious disease portfolio continuing to pioneer in HIV innovation. And I think it's really important to underline the opportunity we see with CAB both in prevention and treatment, but also there's growing focus on antimicrobial resistance and we have again as Hal mentioned an asset in Jefferson there as well which we believe does have appealing economic returns so I think that's been clear in terms of the pricing of vaccines this is a business that we have long led in and understood both the responsibility to drive access and the necessity to drive profitable returns and therefore to keep funding innovation. And our position, and there's no publication from the government in terms of the specific detailed terms of that, is that any short-term profit generated during the pandemic period would be reinvested into pandemic preparedness and those donations for access. And pandemic preparedness is a combination of technology, support for new pathogen work, but also the funding of ever-warm capacity, very much with thoughtfulness. So your first comment of the global footprint in terms of manufacturing and supply. Next question, please.

Thank you. It's Laura Sutcliffe from UBS. Thank you, Laura.

Hello. Thank you. I've got two questions on RSV vaccines. Firstly, what sort of timeline do you think you might be looking at for phase three readouts for both of your assets that you're taking forward? And secondly, your older adult vaccine is obviously adjuvanted. I think previously the evidence has suggested there was little to no benefit from adding an adjuvant to vaccines that are going into this setting. Should we assume that since you're going forward, you have seen something remarkably different here? I know that the data will be presented later this year, but any colour you can offer us would be very helpful. Thank you.

I'm not sure you're going to get a huge amount of preview of data that's later to be presented, but Roger, would you like to follow up for Laura, please, on those questions?

Yeah, Laura, thank you. I'd say just on the older, I won't share the data. We will publish and present later on in the year. However, what I would say is that we have seen AS01 obviously in Shingrix performing incredibly well in the older adult population where we know the age-related decline in the immune system is critical. So that's all I would say on that. In terms of timing, we are going to take RSV older adults into the clinic early in 21. Maternal will be going into phase 3 in the second half of this year. And these are going to be quite large trials. We'd expect them to take a few years to complete. with regulatory approval to follow up on from that if it's positive. What I would say is that certainly in the COVID environment, we're looking at clinical trial execution approach, regulatory engagement, and we'll be taking any learning in terms of how we do this effectively and efficiently into these priority programs.

Thanks. Next question, please. Thank you. This is now James Gordon from J.P. Morgan. Thank you, James.

Hello. Thanks for taking the questions. Two questions. The first one was just that 2020 guidance is now caveated around recovery and vaccination rates. And we are, depending on what we see in Q3, we're a month into the quarter. So can you talk about how much better things are looking for July and maybe even what the exit rate is towards the end of this month? Is Shingwix, for instance, a good proxy for what's going on overall vaccines or do we need to be careful reading through from that? And then the second question was just the consumer spinoff. I think when the spinoff was first announced, there was a plan for three and a half times or four times levered, and the base case was that you dividend the whole company to GSK and Pfizer shareholders in 2022. Is that still the concrete plan or the default plan, or might you do some other creative stuff like IPO and part of the business? Might you consider not putting quite so much debt in the business? Are there any other sort of things being considered there?

So thanks, James. I'll ask Ian to unpack the guidance and assumptions a bit more for you, but just say there's no change in terms of our position on consumer separation, be that former leverage or timing. So Ian, any?

Yeah, thanks, Emma. And maybe Luke can add some color on this. But I think as Emma mentioned, James, what we are seeing through July is a significant recovery of pediatric vaccinations back to pretty much to pre-COVID-19 levels. Certainly in the adult and adolescent vaccination, we're seeing encouraging activity. It's not back to the levels that it was pre-COVID. But as we've pointed out in our guidance, that is the recovery that we are beginning to see. And we need to see that happen in the third quarter with a very strong performance coming through in the fourth quarter. So we're encouraged by what we see so far. And our very strong view is it's not a question of if this demand comes back, but when the demand comes back. And certainly what we've seen through the 24th of July, which is the most recent, 25th of July, 24th of July is the data that we've seen most recently, certainly encouraged by what we see.

Thanks. Luke, do you want to talk a bit more about the activity that's ongoing? Thanks.

Yeah. Yeah, just to build on Ian's point, I mean, there's a clear difference when you look at the U.S. and Europe, and Europe is, you know, the bulk of our business is pediatric vaccines, and that was it rebounded relatively quickly. In the U.S. pediatrics, if you look at the industry as a whole, in February it was about 500,000 a week, and that dropped by 60% for four weeks in March and April. And then it rebounded pretty quickly, so it was a V-shaped recovery, so it was about minus 40% in late April and minus 10% in June. So it came back quickly, whereas adults, it dropped the same way, but it's been slower to recover. And so in early May, it was still around minus 50% plus overall for adult vaccinations, whereas PEDS at that point was minus 30. So it's just a longer area under the curve. In terms of just wellness visits as well, we've seen the same path, a very strong rebound amongst pediatrics and 11 to 12-year-olds and 13 to 18-year-olds. It's a slower recovery for older people. I think also when older people are going back into their physician, there's going to be a hierarchy that the physician is going to focus on initially. So blood pressure, et cetera, more acute dimensions. In terms of what we're doing about it, again, we've not sat and been passive. So there's a series of things we've done. We've initiated some, well, firstly, we've linked it to the early flu doses I mentioned earlier because people come in for the flu shot. That's a prime opportunity for the pharmacist to bring up Shingrix. We've also, the field activity with our retail customers is back to the pre-COVID levels. And with retailers, we've got a lot of signage, volume goals, and some other things that I don't want to disclose. And we've also been chasing people for their second dose and getting them back there, and that's holding up quite well. We're also doing DTC at point of sale, and there's some other things, again, that I won't cover, but we're doing everything we can, including targeted TV and some branded digital and print-based media as well. And as Ian said, I think we now need to see how that goes with the dynamics in the West.

Thanks, Luke. Next question, please. Thank you. This is Geoffrey Porge from Nearing. Thank you, Geoffrey.

Thank you very much, and apologies for jumping on the call late. I may ask the question you've already answered. But first, on flu, could you just give us a sense of your timing for shipping to the U.S. market, the volume change you expect compared to last year, and most importantly, whether you see any net positive price due to mix or contract? And then just to follow up on the COVID program, when can we expect publication of your preclinical data, particularly primate data, And could you comment on the mix of CD8 and CD4 responses that you've seen with ASO in your other studies relevant to COVID?

Thanks. Thanks. So, Luke, I mean, we had the question on flu before. Perhaps you can just repeat what we're aiming for in terms of volumes, roughly. And then, Roger, I don't know if there's any further disclosure you want to bring on the – or Hal on the COVID program.

I can make a very quick comment, Emma, if you come to me.

Yeah.

Okay. So, Jeffrey, shipping in July, linking and lining it up with the Shingrix acceleration program. We're targeting 50 million doses and also getting them in earlier, which is something I didn't say earlier, it's very important. It reduces the return rate that you see later in the year because physicians tend to over-order. And that's up from 46 million in 2019, which is just under 20% of the market. And we sell two-thirds in the U.S. In terms of pricing flexibility, no, it's very limited for this year in the U.S.

Okay.

Roger, anything?

Yeah, I'm not going to go into any of the detail in terms of the data that we have seen. I'd make more of a generic comment around, I do think one of the things that is to play out in COVID is 19 is this idea of immune response and T cell contribution to the performance of the vaccine then having potentially an impact on the population and the reaction of the vaccine in the population. What I would say is that adjuvanted vaccines have got that historic delivery and track record of delivering both humoral and cellular immune response, which we think could be very important for COVID. Too soon to tell, though, and that will all play out over the coming months as more data on our vaccines and on the other vaccines comes to light.

Hal, anything else to add from your point of view on that?

No, just maybe to highlight something Roger said, which is I think that the cellular response It could very well be important in the success of vaccines. And I think in addition to measuring some of the classic markers that you referred to, I think GSK's vaccine research organization has put a lot of effort and I think a lot of innovation in actually what to measure, what is actually predictive in the clinic as to what you want to look for for surrogates for that. So I think it's not only when, but the quality of what you might see is going, I think, to be interesting.

Great. Thanks, Alice. So one more question maybe quickly if we've got time and then that's it for today.

Certainly. So Kerry Holford from Berenberg. Thank you, Kerry.

Thank you very much. A couple of questions just quickly on the flu vaccine. I'm just interested to know whether there's any upside to your ability to deliver more than 50 million doses into the U.S. market. Sanofi is committed to ship, I think, 80 million. Just interested to see whether there's any upside to capacity for you. And then just more broadly on the pipeline refresh, is this something we should now expect to continue to see from you on a six-monthly basis going forward? And I wonder if you can talk to the reasons why you elected to deprioritize certain assets in the portfolio, the DLL for PI3 kinase and the HIV entry. Thank you.

Thanks very much, Kerry. And so, Roger, just quickly from you in terms of capacity on flu, and then Hal to conclude, please.

Yeah, thanks, Kerry. I think 50 million is going to end up being one of our highest volumes, the highest volume in the US as well. We are very close to maximum capacity here. So there's limited upside going forward in terms of this egg-based technology, because it's not somewhere, as you know, as we've allocated lots of are capital too. So you're not going to see much more in terms of upside above the 50 million number within the U.S. supply.

Thanks. So Hal.

Yeah, thanks, Gary. I think, yes, the answer is we will continue to focus our efforts in R&D on the most promising assets. And sometimes, you know, the science will translate out nicely and we'll double down and be aggressive about developing assets. And sometimes, the data will emerge to suggest that we should abandon projects. And, you know, of course, the risk is very high in the industry. Ten percent of projects that enter the clinic will ultimately succeed, and we think the most important thing is to follow the science and rigorously evaluate what the data in the clinic tells us. We think by this focus on human genetics, functional genomics, machine learning, and particularly a focus on immunology will allow us to develop a portfolio that has a higher probability of success And, of course, by focusing, we have the opportunity to be developing and designing robust clinical trials to give us insight so we're not faced with deep uncertainty that sometimes plagues the industry at the end of phase two. So I think the refresh is just our attempt to be rigorous scientifically and focus on the most promising assets.

Thanks, Al. And thank you to all of you for dialing in. We'll look forward to talking to you soon. Thank you very much.

Everyone, all the speakers, thank you. That concludes your conference call for today. Thank you for joining and all take care.