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

Good afternoon, ladies and gentlemen, and welcome to the Analyst Call on the GSK Fourth Quarter 2020 results. I will now hand you over to Ian McKay, Chief Financial Officer, who will introduce today's session.

Good morning and good afternoon. Thank you for joining us for our full year 2020 results, which were issued earlier today. Normally, Sarah Elton Fodd, our Director of IR, would lead this call, but unfortunately, Sarah has been out of jail for a couple of weeks, and this is literally her first day back, so she's in listening mode only today. You should have received our press release and can view presentation on the GSK website. For those not able to view the webcast slides that accompany today's call are located on the Investor section of the GSK website. Before we begin, please refer to slide two of our presentation for our cautionary statements. Our speakers today are Emma Walmsley, myself, Ian McKay, Luke Miles, David Redfern, Ryan McNamara, Dr. Hal Barron, with Roger Conner, joining us for the Q&A portion of the call. We request that you ask a maximum of two questions that everyone has a chance to participate. Our presentation will last for approximately 45 minutes, slightly longer than usual, to allow time for Hal's extended fourth quarter R&D update. And with that, I'll hand the call over to Emma.

Thanks, Ian. So 2020 was an extraordinary year for all of us, another year of strong progress for GSK, and we're very confident in building on it 2021 for successful separation into two new companies with strong performance trajectories in 22 and beyond. 2020 was always planned to be a year of investment in our pipeline and new launches and in preparing to be two companies, but we also had to respond rapidly to mobilize through the pandemic. And I'm extremely proud of the agility and resilience our teams have shown in the face this challenge. We remain firmly on track with all our strategic goals. We delivered strong performance in our growth drivers and disciplined cost control to offset the unexpected impact in vaccines and so delivered our guidance for the year, which was set before the pandemic, with reported sales up 3% CER and earnings down 4 to 115.9 pence. I'm especially pleased by the 9.7 billion pounds, now more than half of our pharma business and up 12%, which reflects the impact of the changes we've been making to compete more effectively and generate greater share of voice across our growth drivers. And you're going to hear more about this from Luke shortly. Consumer JV integration is substantially complete and separation preparation is progressing very well, delivering efficiency in our support functions, simplifying our site network, and further building world class brands. We also achieved an important milestone with the launch of our one development organization in R&D. This is already approving agility, decision making, and scientific collaboration between pharma and vaccines as well as the cost base. We're transforming the pace and delivery on innovation as Hal will talk to. We have nine major approvals in 2020 and it was great to see the FDA recently approve our long acting HIV treatment, Kavanuvra. We now have over 20 assets in late stage development, many of which could be transformational for patients and deliver significant commercial value. These products could all launch before 2026 and we believe more than 10, if successful, have the potential to be blockbusters. And across R&D, we completed over 20 business development deals during the year, strengthening our capabilities with the acquisition of new antibody, mRNA, and genetic platforms and technologies amongst others. We continue to contribute to COVID response on multiple fronts. I am delighted that this morning we announced the deepening of our strategic partnership with CureVax with a new exclusive agreement to research and develop next generation mRNA COVID vaccines, which have the potential to address multiple emerging variants. In addition, 100 million doses of CureVax current COVID vaccine candidate. This is alongside our work with our other partners on adjuvanted vaccines and we're looking forward to more progress here in the coming months and to data coming very soon on our therapeutics, as well as longer term opportunities for further strengthening of our global leadership in infectious diseases. Building trust with all our stakeholders remains of critical importance and in November we set ambitious industry-leading environmental targets to have a net zero impact on climate and net positive impact on nature by 2030. I was also delighted that last week, for the seventh time in a row, when global health has never been higher on the agenda, that GSK topped the access to medicine index for the industry once again. For 2021, we have been clear this would be the second of a two-year transition period with further investment in our pipeline and that we expect a meaningful improvement in operating performance from 2022 onwards. This remains the case, although the short-term disruption from the pandemic to our vaccines business, as COVID immunization is now prioritized, has impacted our guidance for 2021. Assuming that healthcare systems and consumer trends return to more normal conditions later in this year, we'd expect to see the strength of each of our businesses come to the supporting our high confidence that we'll deliver improved growth and margin expansion from 2022. Looking at our priorities ahead of separation, this year will be focused on continued investment in innovation to support sustained long-term growth from 2022 onwards. We expect to deliver further progress in R&D and I'll update you in June on our plans to advance and commercialize our high potential late-stage assets and the significant value creation we now see as we develop a pipeline based on the science of the immune system, the use of genetics and advanced technologies. Our performance focus is on growth driver execution and completing our future ready program to set competitive operations for both companies. In June, alongside our R&D update, we'll set out the positive growth outlook we see for this new biopharma company from 2022 onwards together with our expected capital allocation priorities and a new distribution policy that supports investment in sustainable growth and attractive shareholder return. On trust, we're committed to retaining our leadership in ESG, in global health and to being a modern employer to attract and retain the very best talent. Never has being a purpose and performance driven company mattered more and ESG will also be a part of the biopharma investor update and we'll provide news on progress here alongside that of innovation and performance throughout the year. An investor update for the new consumer company is also expected in the first half of 2022. So I'll now hand over to Ian to take you through the detail of this year's results.

Thanks Emma. All the comments I make today will be on a constant currency basis except for I specify otherwise and I'll cover both total and adjusted results. On slide eight is a summary of the group's results for 2020 showing that we delivered within our guidance range. 2020's performance demonstrated continued execution and our strategic objectives. Before the turnover growth was 3% down 2% on a pro-forma basis. Total operating profit was up 15% with total earnings per share of 26%. On an adjusted basis operating profit was up 2% and declined 3% pro-forma while adjusted DPS was down 4%. I'll go through the drivers behind these in more detail in a moment. We delivered another good year with regards to free cash flow generating 5.4 billion sterling. On currency the strengthening of sterling against the US dollar and weakness in emerging market currencies relative to 2019 resulted in a headwind of 2% in both sales and adjusted earnings per share. Slide nine summarizes the reconciliation of our total to adjusted results. The main adjusting items in the year were in disposals which reflected the disposal of Horlicks and other consumer health care plans. In major restructuring which reflected continued progress on the consumer health care integration and separation preparation programs. And in transaction related within which the main contributor was a charge relating the remeasurement of the contingent consideration liability for VEEP healthcare including increased forecasts related to strong capotech of your prep data. My comments from here onwards are an adjusted results unless stated otherwise. Slide 10 summarizes the pharmaceuticals business where overall revenues were in line with expectations of a slight decline down 1% in 2020. Excluding established pharma revenue grew 12% in the year reflecting strong commercial delivery of our new and specialty medicines. Respiratory was up 23% with strong growth mainly from Trilogy and Nucala with favorable Ariadre adjustments benefiting Relvar Brio. You should note that we will in future be reporting Relvar along with the smaller Incruz and Arniti within the established pharmaceuticals and we'll give you the statement information ahead of Q1 so that you can update models. Moving to Benelista sales were up 19% with subcutaneous formulation up 33%. In oncology sales were 372 million sterling up 62%. The Jula sales were 339 million pounds in the year up 48% and Glen Rep which was approved in August had sales of 33 million pounds. HIV revenues were up 1%. The dollar tegavere franchise grew 2% with the combined performance of Dvato and Jaluca more than offsetting the decline in the three drug regimens. Luke and David will provide more details and commercial performance shortly. The established pharma portfolio declined 15%. Within this respiratory was down 15% reflecting generic competition for adverse seratide and bentolin plus price pressure for flow bent in the US. The rest of the established pharma portfolio was down 14% with COVID-19 impacting performance particularly in antibiotics. Additionally we've seen increased government mandated use of generics in certain markets. We continue to review opportunities for divestments in this portfolio. The pharma operating margin was .5% in 2020 and the 150 base points decrease primarily reflected increased investment in the R&D pipeline and with the impact of lower revenues largely offset by the continued benefit of restructuring and tight control of ongoing costs. Slide 11 gives you an overview of vaccines performance with sales down 1% in 2020. Generic sales grew 11% driven by good growth in Germany and China and a stronger performance in the US in Q4. Influenza sales grew 37% and primarily reflected robust demand across all regions resulting from the strong government recommendations that prioritize flu vaccination during COVID-19 pandemic conditions together with the reverse of a prior year returns provision in the US. Meningitis sales grew 3% and in the US both Bexero and Menveo grew market share. However the meningitis market share was impacted by the disrupted back to school season in the US which results in Bexero sales declining 2%. This was more than offset by growth in Menveo and Menjagate. Established vaccines were most impacted by the pandemic environment and declined 14%. Notably in hepatitis where the impact of lower demand in old rattled populations and travel restrictions was further impacted by the return of a competitor to the market. Our DTPa containing vaccines and Stenflorix were also significantly affected. Partly offsetting this, Stervrix more than doubled to 90 million pounds in China. The operating margin was .9% in 2020. The 190 basis points decreased reflected negative operating leverage from the COVID-19 related sales decline and increased investment behind key brands. Turning to slide 12, 2020 revenues and consumer health care on a pro forma basis grew more than 4% excluding brands either divested or under review. Including those brands turnover declined 2% pro forma. Reported growth was 14%. Auto health grew 6% at CER including growing double digit reflecting underlying brand strength and innovation. Vitamins, minerals and supplements grew high teams driven by increased consumer focus on personal health and wellness and strong commercial execution. There was continued growth in pain relief driven by the successful Rx to OTC switch for Voltaren in the US and Advil returning to growth. However, this growth was partially offset by weaker performance and respiratory health with a weak cough and cold season in Q4. Operating margin for the year was 22.1%, .3% at CER up 30 basis points benefiting from integration synergies which more than offset the expected significant impact on the margin from divestments in the year. There is no change to our previous guidance for consumer margins of mid to high 20s from 2022. On slide 13, we summarize sales and adjusted operating margin for 2020. Our group operating margin was 26.1%, down 40 basis points in a pro forma basis at CER. Increased investment in R&D up 6% of the group and up 9% in pharma along with negative sales operating leverage was partially offset by ongoing tight control of cost across the group and the continuing. Looking at margins on a pre R&D basis, the increase was 50 basis points in a pro forma basis at CER which underscores the progress we're making in efficiencies across the group. Moving to bottom half of the P&L, I'd highlight that interest expense is £944 million, slightly below our expected range, and we expect interest expense to be in the range of £850 to £900 million sterling in 2021, similar to 2020. The effective tax rate of 16% was in line with expectations. We expect the 2021 tax rate to increase to around 18% in line with what we've previously indicated and continue to expect the effective tax rate to step up again over the medium term, excluding any potential impact from changes to US tax policy. And finally, non-controlling interest reflected Pfizer's share of profits of the consumer healthcare JV. We had a good year of positive cash flow performance, delivering free cash flow of £5.4 billion in 2020 up from £5.1 billion in 2019. Key drivers of this year over year improvement are set out in this slide. Q4 performance was mainly informed by strong working capital performance. Improving cash flow is a constant focus for our team. We do, however, anticipate lower free cash flow in 2021, informed by less cash from asset divestments, which was particularly strong in 2020. Less favourable RR timing compared to last year, along with continued investment in &D-focused business development and higher outflows from restructuring, which we will largely complete this year. In 2021, the group will continue the strong progress made during 2020 in delivering our strategic objectives and readying for separation. With regards to turnover for 2021, there is no change to expectations we previously set out for pharma and consumer, with 2020 performance reinforcing our confidence in their outlook. Across the group, our turnover comments assume the healthcare systems and consumer trends approach normality in the second half of the year. For the full year, we expect flat to low single-digit percentage growth in pharma revenues, excluding divestments, which will be a balance of continued strong momentum from our new and specialty medicines, largely offset by decreasing revenues in established pharma. In consumer, excluding brands divested or under review, we expect low to -single-digit growth outperforming the market. In vaccines, the 2021 in-year COVID-19 impact on our portfolio is uncertain, the pace of mass vaccination programs being a key factor, notably in the U.S. Overall, for this business, we expect flat to low single-digit percentage revenue growth. With respect specifically to Shinrakes, Luke will provide more details shortly, but broadly we anticipate deferral of strong growth and revenues into the second half of the year and increasing contributions from markets outside the U.S. Across the rest of the vaccine's portfolio, we expect to deliver a similar volume of flu doses, but for sales to be under pressure due to favorable RAR in 2020. We expect meningitis to be broadly flat, informed by the continued impact of the pandemic, including COVID-19 vaccination programs. And our established vaccine's portfolio will experience similar pressures in 2020, again largely informed by pandemic dynamics. The key factors that will influence our 2021 outturn in vaccines, in addition to the pace of deployment of COVID-19 immunization programs, include the trend of infection rates, the extent of recovery in international travel and back to school patterns, particularly in the U.S. And how health systems around the world prioritize resources between COVID-19 response and other infectious diseases. Across the three businesses, it's worth noting that comparisons in the prior year will be influenced by stocking patterns experienced in 2020, notably in 1Q when turnover grew 10% pro forma and adjusted EPS was up 26% in the prior year. This volatility in comparisons is amplified in consumer with a weak cough and cold season continuing into the start of 2021. To assist analysis, we've included an appendix showing 2020 quarter by quarter performance. We'll continue to grow R&D investment in low double-digit percentage terms and expect an effective tax rate of around 18% for the full year. Taking these factors together, we expect a decline of mid to high single-digit percent in adjusted EPS. For 2021, we expect to pay a full year. Importantly, our operating performance outlook for 2022 and beyond remains unchanged. Our focus on delivering our strategic objectives in 2020 and 2021 lays the foundation for a meaningful step up from 2022 onwards with an advancing pipeline, further growth in new and specialty pharma, normalization in vaccines following the short-term impact and ongoing consumer sales growth and margin expansion. Savings from largely complete restructuring programs and resulting synergies will underpin our improved group operating performance. Our Biofarm Investor Update in June will set out details of programs, R&D pipeline and key growth drivers, medium-term financial outlooks and capital allocation priorities. We intend to implement a new distribution policy for dividends from 2022, the year of separation into two new companies. The new policy will ensure we have the right capital structure for each business and the capacity to invest so that we can deliver growth and long-term shareholder value. We expect to implement the new policy from Q1 2022 and that the distribution will be lower than the 80 pence per share currently paid. The new policy will target a progressive dividend informed by appropriate earnings payout ratios through the investment cycle and will be well covered by free cash flow. And with that, I'll hand over to Luke.

Thank you, Ian. And hi, everyone. 2020 was a transformative year for GSK in terms of our commercial execution capabilities. And despite the challenges brought about by the pandemic, during the year, we benefited from a number of important changes to our HCP engagement policies and Salesforce incentives. In addition, we invested in expanded digital capabilities to complement our traditional detailing approach. The result of these changes was that we were able to compete more effectively in our key markets and to win greater share of voice across key drivers in our portfolio. The momentum we now see behind our new and specialty products is really encouraging. And I just wanted to spend a few minutes highlighting some of the important examples. So starting with key respiratory drivers, which we'll find on slide 18, Trilogy had a tremendous year with sales up nearly 60% to over 800 million in just its third year on the market. Trilogy continues to lead the in-house triple category, the COPD in the US, Europe and Japan and is growing their overall market. In the US, the FDA approval in Asmar in September had a hugely galvanizing effect with two-thirds of HCPs recognizing the uniqueness of our dual indication. And we've seen the prescribing by Allergy saw. As a consequence, Trilogy's market share has continued to build and in fact is now more than double the share of its nearest rival and closing on at 50%. While we expect Aspen to help drive momentum in the US, it's also important to stress that we still have a major opportunity for growth in COPD. There's little more than a quarter of patients receive triple therapy despite an addressable patient population in which up to two-thirds of sufferers are at risk of exacerbation. If I moved to New Carla, we had another strong year delivering close to one billion in sales and growth of 30%. New Carla has maintained its category leadership in the US and other key markets based on its precision targeting of IL-5 to reduce eosinophils to normal levels which differentiates it from other biologics. Looking ahead, we continue to see significant growth opportunities in asthma given that only 28% of eligible patients in the US currently receive a biologic. In addition, we're confident of extending New Carla's leadership through expansion into other eosinophilic related conditions including EGPA, HES, and potentially nasal polyps and COPD. Last but not least, we want to capitalize on our learnings with New Carla and deliver a new level of patient convenience through our novel long-acting IL-5 GSK-294. This potentially transformational asset will be dosed as a convenient subcut injection once every six months and we are moving into phase three this month. With positive in-house data and a validated negative action, we believe it has a high probability of success and the potential to deliver blockbuster sales. Switching on to slide 19 to Ben Lister, we've now seen nine successive years of double-digit growth and this is a testament to the unique value this product brings to lupus patients. In 2020, growth of the product was driven by convenient at-home administration with the subcut which has brought in new patients and by the success of our IV launch in China. At the end of the year, Ben Lister received FDA approval for use in lupus nephritis which affects around 40% of patients with SLE and can lead to end-stage kidney disease and in doing so, Ben Lister became the first and only drug to be indicated for biophysication. The slide shows that the lupus market is a substantial upside potential as more 80% of eligible patients remain untreated with Ben Lister in the US and of course even more around the world. The number of untreated patients has increased further with the lupus nephritis indication so we remain very optimistic that this is a major growth opportunity ahead to help these patients. I would also highlight the expanding market opportunity in China where we filed for the subcut formulation and the lupus nephritis indication. Taken together, we expect Ben Lister will continue to surprise forecasts on the upside. On slide 20, we continue to make great progress in building our oncology business. With Zajula, we were able to drive a substantial increase in market share. In particular, we've been very successful in using the FDA approval of Prima which resulted in Zajula having the best in class label as the only path inhibitor for all comers in the first line maintenance setting. As a consequence, our overall share in population, we are up to a 27% share. But the real uplift has come in the wild type population where we've overtaken Lompaga as the category leader and we now have over 50% share. Again, a direct result of execution on the Prima study. Looking ahead, we know there's a significant opportunity to penetrate the market given that watch and wait is still unfortunately being used majority of women in the first line maintenance setting in the US. And only one quarter of patients receive a part. We're addressing this through carefully targeted medical education programs and through DTC. Beyond first line ovarian maintenance, we have a reverse development plan in different settings and other cancer types including non-small cell lung. In the short term, though, we need to navigate the impact of COVID lockdowns which continues to materially disrupt debulking surgeries and treatment rates. We remain confident on the potential of Zidula. I want to now turn to BlendRap which we launched in the second half of 2020 for heavily pre-treated multiple myeloma patients in the US and Germany. It's still early days but we are pleased with the solid demand we're seeing which reflects the high unmet need in later lines of disease. The response from physicians, patients and advocacy groups has continued to be excellent based on the potent efficacy of the drug in the approved setting and on positive clinical updates in other settings such as we saw at Ash. To date, more than 1,100 ACPs and 700 patients have enrolled in our US REMS program. We're supporting the launch with a highly experienced staff force and our share of voice is almost at the level of Dyslex. We're also focused on the continued development of this practice changing medicine through alternative doses, scheduling and combinations to improve the safety profile and to potentially extend approval into earlier lines of therapy. Later in the presentation, Howell will discuss the significant potential for BlendRap in the earlier lines of therapy highlighted at Ash. Consequently, we're optimistic that BlendRap, like Zidula, has the potential to deliver blockbuster type sales and to be a cornerstone of our fast expanding oncology business. Shifting to Shingrix on slide 21. We saw a strong recovery in sales growth to more than 20% in Q4. This was driven by increased wellness visits in the US, higher demand in Germany and the phased launch in China. For the year as a whole, Shingrix moved back into the double digits. Critically for the long term output for this key growth driver, we made good progress on our plan capacity expansion. Inventory on hand and our improved production plans for 2021 and beyond should allow us to fully meet demand until our new facility comes online in 2024. At that point, we'll benefit from a further step up in capacity amounting to tens of millions of doses over time supporting our multi-billion sales expectations. In the near term, however, we expect to continue with some further disruption in the US. The resurgence of the pandemic is already resulting in double digit reduction in well visits in January, which is impacting our vaccines business more broadly. In addition, the prioritization of vaccine resources towards COVID-19 immunization is likely to have a significant impact on older adult vaccinations, including Shingrix, especially given the recommended 14 day window either side of the mRNA vaccine shots. The slide you can see shows a couple of scenarios on how the phasing of Shingrix could be impacted for several months in patients who are receiving COVID vaccines. And of course, we could see similar disruption in other key markets, including Germany and China. I do want to stress that to the extent that Shingrix is impacted. The fact is this is a timing issue as the underlying demand remains strong. Hence, we're expecting sales to be deferred, not lost. So what does this mean for the 2021 outlook? Well, taken together, we are anticipating broadly similar volumes in the US Shingrix with growth weighted to half two and increasing contributions to markets outside the US. Assuming progress towards more normal operating conditions, we expect a significant step up in Shingrix sales in 2022. And with that, let me now hand over to David.

Thank you, Luke. And hello, everyone. The HIV business grew 2% in Q4 and 1% for the year. Within this, we achieved a noticeable acceleration in our dollar to go regimen with growth reaching 4% in the US and 8% in Europe. In the fourth quarter, this growing momentum is the result of strong execution from commercial execution behind our two drug regimens and the barter in particular. We now have the leading share of voice in the US and Europe. And this helps sales of the barter and the liquor more than double in 2020, over a billion dollars. The key driver for the barter has been the inclusion in 2020 of the tango switch data in the US. This has helped to drive Donatello's share of the MBRX switch market in the US to approximately 31.5%, well above our TRX share at just over 25%, therefore supporting our growth expectations over the coming year. We have also seen a positive start for recobia with more than 300 patients now on this potentially life-saving therapy. Turning to our injectable portfolio, on January 21st, we received FDA approval for Cabinuvra, the world's first long-acting injectable for the treatment of HIV. This followed European approval in December. Cabinuvra is the first and only once monthly regimen shown to have non-imperial efficacy and comparable safety to a daily oral free drug regimen. For many people infected with HIV, stigma is a daily reminder of their HIV status. As a result, up to two-thirds expressed strong interest in the long-acting therapy, and in our pivotal studies nearly all patients preferred Cabinuvra. We also see a significant opportunity for Cabotegravir in the PrEP setting, and we'll be presenting the detailed superiority data versus daily oral PrEP at CROI next month. We intend to file this product with global regulators in the first half of this year. We believe Cabinuvra and Cabotegravir for PrEP will both provide significant benefits to patients, as well as having blockbuster commercial potential. In summary, we are very confident in the outlook for these. We expect a progressive acceleration and growth, underpinned by the continued expansion of the two drug regimens, notably to DeVaso and the launch of Cabinuvra, and in due course Cabotegravir in the PrEP setting. And with that, I will hand you over to Brian to talk about consumers.

Thanks, David. In a year where consumer health has been more relevant than ever, our results today reflect the strength of our portfolio, the benefits from successful integration to date, and our investments in digital and innovation paying off. This has been despite the challenges of the pandemic and the need for more agility than ever in managing through the crisis. I'd like to start by sharing an update on integration. The positive momentum I shared at Q3 results has continued, with the number of milestones achieved to date. The commercial integration is now largely complete, with the manufacturing integration underway. 97% of Pfizer consumer health care revenue is now on our system, with 74 markets having transitioned since the start of the pandemic. And 100% of co-locations are now complete. At the time of the transaction, we provided synergy and financial guidance for 2022. That remains unchanged. On divestments, we completed transactions in 2020, delivering on our £1 billion proceeds target. The divestment of more than 50 growth-diluted brands has helped strengthen our portfolio. Our separation program is also on track with work around the future organizational structure and system separation underway. In 2020, pro-former revenue cost and exchange rates, excluding brands divested and under review, grew over 4%, supported by healthy brand growth and overall share growth. Our business continued to benefit from the consumer focus on health and wellness, the strength of our brand portfolio, and successful execution. Vitamins, minerals, and supplements remained a standout performer, with Centrum, Emergency, and CalTrade all up double digits and our category performed ahead of the market. We also saw double-digit growth in the final quarter in China and in our retained business in India. E-commerce was strong across categories, growing around 70% for the year and now at around 6% of sales, up a few percentage points on last year. In key markets such as US, China, and the UK, where our e-commerce shares are ahead of this level, we outperformed. Importantly, we grew significantly ahead of the market, gaining overall share. Turning to our power brand, we saw six of the nine power brands in growth, four of these brands growing double digit and with seven of nine gaining or holding share. We saw strong performance from our innovation and examples during the year include Sensodyne, Sensitivity, and Gum, which is now in over 50 markets and continues to help drive overall brand share. In the US, the Volterra and RX to OTC switch was a key growth driver and the brand accounted for 79% of pain relief category growth in the adult pain segment. Finally, our Advil dual action launch in the third quarter, the first ever ibuprofen acetaminophen combination, helped Advil return to full year growth. Looking ahead, we have a strong pipeline of exciting innovations for 2021. So in 2020, our portfolio strength helped us deliver over 4% revenue growth, constant exchange rates, excluding brands that I invested in under review for the full year. Finally, it's important to note that on the back of all the integration, great integration work to date, we start 2021 with a fantastic portfolio of category leading brands with a strong geographic footprint positioned in the sector, which is now more relevant than ever. With that, I'll hand it over to Hal.

Hal Boucher, MD Thanks, Brian, and good afternoon to everyone. Today I'll spend the next 10 minutes or so summarizing an update I shared at the JP Morgan Health Care Conference last month and highlighting some of the assets we believe have the potential to be transformational medicines and vaccines. Let me start by reminding you that in July of 2018, I introduced our new R&D approach focused on science, technology, and culture. Our goal was and still is to build a high value, sustainable pipeline through a focus on the science related to immune system and to use human genetics and advanced technologies such as functional genomics and machinery to help us identify novel targets with a higher probability of success and a robust lifecycle potential. Two and a half years into this new approach, I believe we've made significant progress. Across our pipeline, we have seen the benefits of our commitment to immunology and genetics. In oncology, our focus on immunology has resulted in numerous novel immuno-oncology medicines and several innovative cell therapies being added to our pipeline. Our focus on human genetics and functional genomics has led to the acquisition of Tissaro, the formation of a synthetic lethal research unit, and through business development, a growing portfolio of programs and important collaboration. In infectious disease, this has led to a significant number of opportunities across both vaccines and pharmaceuticals, including solutions for the COVID-19 pandemic. Our focus on human genetics and functional genomics has resulted in more than 70% of the targets and research now being genetically validated. We're also delivering value from our commitment to lifecycle innovation due to closer collaborations between the commercial and R&D organizations. A good example of this is the number of new launches from the call that Luke discussed and most recently with the advancement of our long acting IL-5 program that we plan to move into pivotal studies this month. Next slide. This slide summarizes the significant achievements R&D delivered in 2020. During the year, we received nine major approvals, including the approval of four new molecular entities. We delivered positive data on multiple high value programs leading to the initiation of nine pivotal studies. We continued to augment the pipeline through business development with more than 20 deals executed in 2020, including important new collaborations with both VIR and CureVac. The next slide shows a snapshot of our current pipeline of 57 vaccines and medicines, which are focused predominantly on infectious disease, oncology, and other immune mediated diseases. 23 of these assets are in phase one, 12 in phase two, and 22 in potentially pivotal studies with the vast majority of these assets likely being either first for best in class. Based on our current projections, by 2026, we have the potential to launch numerous new vaccines and medicines as well as new indications for existing assets. Given the probabilities of success associated with drug development, we don't expect all of these assets to succeed and reach patients. However, if all were successful, we believe that more than 10 vaccines in our medicines and our late stage portfolio could significantly change medical practice and thus peak annual sales potential in excess of $1 billion. And a number of these assets, such as our RSV vaccine in older adults, could have multibillion dollar potential. Given time constraints, I cannot discuss all these programs today, but we will have an opportunity to provide more information in June. The next slide shows the significant progress we've made in oncology, where we now have a development portfolio of 15 potential medicines. We took a smart bet with the acquisition of Tesaro, and this was validated by the pre-med data. As you heard earlier from Luke, we're pleased with the position response we are seeing to the dual as we continue to grow market share for this potentially best in class part-manipulator. I'd like to take a moment to talk to you about Benchifus Alpha, the -Beta-TRAP PD-L1 antagonist, and the recent news about the 037 lung study. Given an industry average success rate of about 25% for phase two studies, the high-risk nature of IO studies, and the high bar we set with the -to-head study against Pembroke, Merck's announcement that the study has been discontinued is disappointing, but not completely unexpected. And I still believe this is a smart, though risky bet to have taken. Another IO program where we made substantial progress is Blunrub, which I'll cover on the next slide. Blunrub is the first approved ECMA-targeted therapeutic in our most advanced immune modulating asset. In addition to blocking BCMA and delivering a potent drug toxin, it has enhanced ADCC activity and induces an energetic cell death, both of which we believe are important for its impressive efficacy. As many of you are aware, keratopathy is a side effect that some patients experience when receiving Blunrub, and we are focused on reducing the risk of this occurring. One of the approaches I'm particularly excited about is the novel combination of Blunrub with Springwork's GamSeqRTase inhibitor, which inhibits the cleaving of BCMA from the cell membrane. This could result in higher expression of BCMA on plasma cells, which could enable a lower dose to be used and still preserve the impressive efficacy. We should have some preliminary data on this combination from the ongoing DREAM5 study by the end of this year. There is significant potential for Blunrub in earlier lines of therapy, and this was highlighted in the ASCH in December, where compelling data from the Phase I to Algonquin study and the second line study were reported. The key message from this study was that deep responses are being seen with Blunrub when given in combination with POMDEX. Across two different dose regimens, the combined overall response rate was 88%, and there was 100% response rate in patients who were refractory to an IMID, PI, and deratumim. Additionally, the overall incidence of corneal events was reduced in the lower dose regimen. These data give us increased confidence in our ongoing second line, pivotal DREAM7 and DREAM8 studies. I'd like now to highlight another potential medicine in our IO oncology portfolio, our unique first in class ICOS agonist antibody called Celadillamab. ICOS is a receptor in T cells that stimulates T cell expansion. Celadillamab is an IgG4 antibody designed to stimulate and grow cytotoxic T cells without the depleting of vaccine with other antibodies. We're developing our antibody in combination with PEMBREL for patients with the first line relapsed or metastatic head and neck sclerin cell cancer in two ongoing Phase II studies, INDUCE3 and INDUCE4, both of which, if the interim data is encouraging, will ungate the Phase III component of these studies. INDUCE3 is enrolling well, we expect to have data to enable this first in terminals in the first half of this year. Entrez Lung is our other randomized Phase II study looking at overall survival in non-small cell lung cancer patients. It should also read out in the first half of this year. We also intend to share new data from the INDUCE1 study in various different tumor types by the end of the year. So as you can see, there are a number of upcoming data readouts which will clarify the path forward this potentially transformative medicine. Now, switching from oncology to infectious disease, where we have a world-class pipeline of 30 vaccines and medicines and a market portfolio of 22 vaccines and medicines, which had revenue of approximately $16 billion in 2020. A number of these programs have the potential to transform patients' lives, and we plan to cover these in more detail at the June event. These include our antisense compound GSK836, which may provide the first functional care for patients with chronic hep B, and Jepotitisin, which could be an important new treatment option to combat antimicrobial resistance and potentially be the first new antibiotic in 20 years to treat patients with uncomplicated urinary tract infections and urogenitobonorrhea. And as David mentioned, an impressive HIV pipeline. Lastly, given recent advances in vaccines made during the pandemic, it's important to highlight our exciting early-stage vaccine pipeline that leverages our extensive portfolio of platform technologies, such as mRNA, both non-replicating and self-amplifying, as well as viral vectors and adjuvants. Several of these scans are actually expected to move into the clinic over the next 18 months. Additionally, as Emma mentioned, we announced today a new agreement with CureVac to develop a next-generation mRNA COVID vaccine, which complements our previously announced collaboration with CureVac on mRNA technology more broadly. Today, however, I want to focus on two programs that I'm particularly excited about, our RSV vaccine candidate for older adults and the highly promising COVID-19 antibody, VIR7831. One of the highlights of 2020 was the exciting phase two data we shared on our RSV vaccine candidate for older adults and mothers at the ID week in October. Both vaccines are based on our common subunit pre-fusion RSV antigen, which is believed to trigger the required immune response. For older adults, we combined this with our proven ASO1 adjuvant to enhance the immune response. Phase two data in older adults showed our vaccine induced a near tenfold increase of protective antibodies. Importantly, T cells were boosted to a similar range that observed in younger adults given non-adjuvanted vaccines. And importantly, vaccine was well tolerated. Clearly, this is highly encouraging data and we expect to move into phase three this month and anticipate receiving initial pivotal data in the second half of 2022. Vaccinating the elderly against RSV represents a major unmedical need, with RSV infection resulting in over 170,000 hospitalizations and unfortunately 14,000 deaths a year in people over 65 in the U.S. alone. Not only could this vaccine have profound clinical benefit, but we also believe it represents a significant commercial opportunity. We've also been active in the search for solutions to the COVID global pandemic and I want to focus today on the VIR7831, which we, along with our partners at VIR, believe has the potential to be a -in-class antibody for COVID. This is due to three unique characteristics. First, this is a very potent neutralizing antibody and by binding to a unique and highly conserved epitope, it is expected to confer a high barrier to resistance. Two recent publications have supported this hypothesis, which we believe could become extremely important given some of the recent reports of emerging mutant strain. Second, this antibody was designed to have increased effector potency, potentially allowing for greater efficacy. And this is in part why the CHOSA for the active 3 in-hospital study. And finally, VIR7831 has been engineered to have an extended half-life with the so-called LS mutation, which should enable us to observe efficacy at a lower dose, possibly enabling intramuscular dosing. We have a number of ongoing and planned studies with VIR7831, including the recently announced BLAZE-4 study in combination with Lilly's CoV555 antibody, which we expect data from in the first half of this year. Before I move on to my last slide, I would like to make a comment about a randomized phase two study called OFSCAR, a trial evaluating otillumab, our anti-GMCSS antibody, as a potential treatment for patients with severe COVID-related pulmonary disease. The pathophysiology that neutralizes severe COVID is only just now being unraveled. The emerging science supports a maladaptive innate immune response associated with actually increased GMCFF expression, particularly in older patients where COVID-19 is particularly severe. We remain cautiously optimistic that our phase two study, which we'll read out this quarter, could demonstrate a benefit in patients whose disease is driven by GMCFF, enabling us to move to phase three with this potentially important medicine. Now moving to my final slide and our key catalyst for 2021. This year, we've already received U.S. approval for Cabinuva for the treatment of patients with HIV. Later in Q1, we could have data on the pivotal study of the year 7831 and the phase two data with otillumab. In Q2, we should have the teledilumab data I referenced earlier, and in the second half of the year, more data on blemarep as well as data on deprotestat. I'll close by reiterating that I believe we have made significant progress over the last two and a half years in building a high value, sustainable R&D pipeline, and we expect to strengthen this further with continued delivery in 2021. So with that, I'll hand it back over to Adam.

Thanks Hal. So to summarize, 2020 was a year of great progress as we approached separation into two new companies, and we remain fundamentally on track to deliver all our strategic priorities. Our pipeline is stronger, our commercial is sharper, our cost base leaner, and our confidence higher in our ability to deliver sustainable long-term growth post-separation into two companies. In terms of our priorities for the year, we will retain our execution focus on innovation and performance and expect another year of investment behind our pipeline and launches. We'll continue to work on optimizing our cost base across the group and setting up the consumer business as a standalone entity. And with our long-term focus on trust, we'll work to deliver on our public commitment and maintain our sector-leading ESG performance. All of this aims to support future and the significant value creation we expect to deliver with the formation of two new leading companies, each with the opportunity to improve the health of hundreds of millions of people. Finally, and very importantly, I'd like to recognize the enormous contribution of our people and all the partners we've worked with in 2020 under extraordinary circumstances. Without them, we wouldn't succeed, and we count on them now as we prepare for our very exciting future. With that, operator, the team on the line is ready to

take questions. Thank you, Emma. So your first question comes from James Gordon of JP Morgan. Please go ahead. You're live in the call.

Hello. Thanks a lot for taking the questions. James Gordon from JP Morgan. Two questions, please. The first question was about vaccines and the CureVac deal and mRNA vaccine. So the release says, as well as looking at COVID-19, you're always going to look at other respiratory vaccines. So could that include something like RSV, for instance? And maybe more generally, how are you thinking about vaccines in terms of the mRNA space? Could you see a lot more competition coming in there? I know at our conference last month, Moderna and BioNTech were talking about going after flu amongst other diseases. So could mRNA vaccines be a serious threat to GSK's existing sort of protein-based vaccine business? And is it also a big opportunity for GSK? So that would be the first question, please. The second question was about the EPS growth rebound in 2022. So I've seen you've got it's a meaningful improvement in revenues and margins. But the question is, how meaningful could the rebound be in 2022? So if vaccines rebound and there's some catch-up and the rest of the business is doing better and OPEX growth slows, could 2022 be a year of double-digit EPS growth? Or could 2022 earnings be above 2020 earnings power? How should we think about that,

please? Thank you very much, James. So look, in terms of the CureVac deal, I'm going to ask Roger to comment a bit on how strategically this impacts our portfolio and the enormous opportunity that we see here and why we think that GSK is very, very well-placed. Because obviously, we would delight to make the announcement this morning because it allows us to contribute to which we are all learning continues to evolve. And I think it's becoming increasingly clear that there's opportunities both in vaccines endemically, but also as Hal alluded to, in terms of our therapeutic treatments. So it's very important for that. But it's also additive to the very exciting platforms we're taking. And we do see this as a second generation RNA, but that can be combined with some of our other platforms. But Roger, I think it would be great to hear from you just a bit about how this fits in more broadly. And then we'll come back to your guidance question, as you said.

Yeah, James, thanks very much for the question. Just specifically on combinations, I think we'll share more later in the year in terms of our overall pipeline. But it's obvious that getting access to the COVID second generation is a big opportunity for us. And we'd be looking at combinations and certainly looking at the flu acid that you referenced as well. Is there a potential for combination in the future? So more on that coming. I think when you step back and you look at the the CureVac relationship, we're delighted. We're delighted to add what we've just announced today to a very strong strategic relationship already. Bringing together two companies, CureVac with their platform and us with the technical expertise scale we have got really that we think is going to make a difference. And specifically on the COVID-19 vaccine in this particular deal, this idea of getting multivalent protection we think is going to be critical because you've seen that data from recent clinical trials certainly shows that the level of protection from some of the licensed vaccines, this could potentially fall as these new variants evolve. So mRNA is a proven platform now and it is one that we see as a real strategic strength of ours. And applying it to COVID brings breadth of coverage we think through the multivalent approach, speed of reaction because of the very nature of reprogramming an mRNA vaccine. And we're also going to be working with CureVac on how we store, distribute this in an optimal way. Just on your broader strategic question around the opportunity threat of the technology, my headline here is it's an exciting time to be a global leader in vaccines. We feel very well positioned, particularly on mRNA, two programs which Hal referenced internally, self-amplifying and then also the relationship with CureVac which is a non-replicating mRNA. So we've got very strong optionality here as well. We see far more opportunity than risk. Now we'd never be complacent but from an mRNA perspective it can't be applied to all disease areas. So when we add this we think it really complements our technology portfolio. When you add it to viral vectors, add it to adjuvant, you add an mRNA play, we've got a portfolio, a deck of cards here that we can select from to make sure that we get the best vaccine for each disease that we're developing. And you just have to look at our pipeline. You look at our therapeutic hepatitis B vaccine. It's an example of combo of technology where we think we'll be able to plug and play some of these for the best vaccines going forward. But we'll share more of that as we go through the year. But I think headline is I think we're very well placed.

Thanks very much. And James, in terms of your guidance question, obviously we're really pleased with the progress we're making and said several times and reiterated several times today that despite the impact of the pandemic which we see as short term, there's absolutely no change to our ambitions and confidence in 2022. We're going to give you more precision about that in our update for the Biofarmers Group more broadly in terms of growth outlook and the medium term. But Ian, I don't know whether you want to add any more kind of details.

No, I think we'll certainly provide lots more detail in terms of what supports our optimism around the outlook for for 2022 and James. I think importantly building blocks here, right? 2020 tough year but delivered in our guidance range. And as you know, that was informed well before we all started living with the pandemic. 2021, the in-year impact is very much about vaccines. We see the progress in our pharma business and our consumer health care business again very much in line with what we saw at this time last year and make great progress in 2020. That will continue through 2021. The work that we're doing around the cost base, the restructuring the group, the readiness for separating the group all gives me a great deal of confidence around that progress in terms of meaningful growth in terms of both top line but expanding growth in adjusted EPS from 2022 onwards.

The only thing, because I think Luke cut out from Australia at exactly the moment when he was on the list, but I think we're really seeing the impact on the outlook. I just repeat what was said that we really do see the impact on Shingrix being about a deferral of sales and we've done made great progress in manufacturing capacity. Our expectations is broadly similar volumes in the US, recognizing the uncertainty that in issues that broadly similar volumes in the US with growth weighted more to the second half and more of a contribution from other countries ex-US before we then see assuming a return to normal health care operating system, some good growth in a good strong growth in 2022. Next question please while the phone gets switched off at this end. Next question please.

Thank you and your next question comes from James Quigley from Morgan Stanley. Please go ahead, you're live in the call.

James Quigley from Morgan Stanley, thanks for taking my questions. For the first question I'd love to get your thoughts on any of the other levers or mechanisms in order to recognize the cash flow to be able to invest in innovation. Clearly the dividend cut is going to unlock some cash to invest in and you're guided for the farmer and farmer business excluding any divestment. Should we expect some more divestment and some cash realization this year to invest in other areas or this year or in 2021 or that sort of a beyond strategy? And then you're now at the cure vaccine collaboration or the extended collaboration this morning and you've got lots of collaborations as Roger highlighted in other areas. What about mRNA more broadly? How are you sort of taking the learning from your vaccines work and you're looking to apply that into immunology, immunocollegy and sort of use mRNA in the broader sense as a therapeutic? Great,

well in terms of divestment the short answer is yes. I'll ask Ian to comment quickly on the broad, you know, constantly looking at portfolio and do have further plans this year but ask Ian to comment on that and the broader cash flow discipline. I'm very pleased with the progress we're making overall on operating delivery there and then I'm going to come to Hal. I mean this is really the great strategic benefits of the new Biofarm company being focused on driving strength in vaccines and specialty and all around the science of immunology and we are seeing this great convergence and we now have one development organization. So after Ian let's come to Hal to talk a bit about how we're thinking about that with the vaccines and farmers R&D team.

Yeah thanks Hannah. Yeah James look really strong performance from the team this year in terms of free cash flow. Obviously that was a year that was supported by really really good work by Brian and the team across the tail brands within the consumer health care portfolio reaching surpassing that for a factor but their billion sterling net revenues in that in that regard, net proceeds rather. What continues as I mentioned in the script on the established pharma portfolio where David Redfern and his team continue to work very closely with Luke and where the opportunities are in the right inflection points for divestment from that portfolio. There's a number of targets that we are working on presently and we'll keep you informed in that as we make progress. I think it'd be fair to say that in the pharma space for divestment 2020 was a somewhat more difficult year from a valuations perspective and our focus on divestment is doing it for the right reasons at the right valuations but there's a good focus around that and we would certainly expect to see proceeds supporting free cash flow as we work through 2021 in that regard and then beyond that it just continues to be a really sharp focus on improving our our management of working capital in which we've really done a lot of good work over the course the last two years but as ever more to be done in that area and then when you look forward it's very much and we'll provide a lot more information about this at our biofarm update in June it's very much about establishing the right capital structure for each of these two new companies going forward and you will recall from earlier conversations that there is a significant deleveraging opportunity for GSK on the separation out of the consumer health care business which clearly continues to support our ability to do business development and invest in the strength of our pipeline. Yeah

Hal over to you on the scientific images and in immunology.

Yeah thanks you know we're very excited about the advances that mRNA have provided as it relates to COVID but as you see the collaboration with CureVac is not only focused on that but potentially broader and we think there's opportunities for mRNA to provide benefit to patients in other infectious diseases and possibly even beyond infectious diseases. It's also important to note that our focus on immunology really helps us understand what kinds of immune responses are needed for every different type of infection allowing us to leverage mRNA in some instances self-amplifying and others you know the other platforms that I mentioned. So I think that our focus on immunology will fit very nicely with our deep successes we've had in vaccines to allow us really bring all of this to patients in a much more effective way.

Thank you next question please.

Thank you and your next question comes from Laura Sutcliffe from UBS please go ahead you're live in the call.

Hello thank you first question is on your existing flu sales line I think you've indicated that the your volumes in the US will be pretty flat this year should we take that as a sign that you have gone as far as you can with your existing flu set up or is there any scope to grow again beyond this year and then secondly on Cabinuvr are you going for a full US launch immediately or are you thinking of waiting until later in the year when the environment for launching a drug like this is maybe a bit easier and perhaps you could give us a sort of picture of what market access is looking like over there as well thanks.

Okay well let's come to David about Cabinuvr because this really you know is a very important pioneering method leading the way for patients living with HIV and you know can be a foundation in many ways for the pathway forward for as David said accelerating growth so we're you know really looking forward to that but as you've said it is a new kind of paradigm in behaviors in a not simple environment. On flu I mean I think Roger alluded to this as well which is well Ian covered it in terms of the forecast which you picked up you know it was a tremendous year in 20 we're expecting volumes but some pricing pressure for 21 just due phasing of RAR but I think that if your question underliner is old technology versus new and I don't think we should walk away thinking RNA is going to be the solution to all vaccines as Roger said it really is important there are some disease areas it's not relevant there are others it's going to be very important to bring combinations it is probably highly relevant for flu and indeed potentially with you know combinations of respiratory infectious diseases so this is somewhere an area where we'd be looking at new technology platforms in terms of any other future plans but more of that later. Let's come to David on Cabinuvr plans and access questions.

Okay thanks Laura I think the short answer is yes we're going for a full launch of Cabinuvr in fact we're shipping this week in the US the first oral lead-ins and then the injectable will be shipped in the very near future and the reason we're doing that is this is the first long-acting therapy for HIV and there's definitely hence up demand for it as I said in my remark two-thirds of HIV patients have expressed interest in long-acting treatment we saw from the clinical trials recruitment went very fast and patients wanted to adherence was very high and patients wanted to remain on the medicine and so there's definitely a pent-up demand and a very sort of passionate group of patients but for all sorts of different reasons compliance but often stigma and the emotional burden of taking daily oral pills want access to Cabinuvr so we are launching it as always it will be a build I mean there are there are some set up for physicians who have to get used to giving injections but we've been working with practices across the US set that up but there will always be earlier doctors we have to go through reimbursement as always with the different formularies and so forth that normally takes a quarter or so but nothing particularly unusual here versus any other launch so we will be launching it will build momentum and in the very near future or in the next few weeks we will also file in the US for the eight week data for every two months based on the eight week data that we've already got and that will go in so we're really excited to get going with Cabinuvr and we know patients are waiting for it.

Thanks David next question please.

Thank you and your next question comes from Jeffrey Porgez from Lear Inc. Please go ahead you're live in the call.

Thank you very much and appreciate the answer the question here so I'd like to ask a question about the future and and COVID and it's nice to see GSK really getting engaged with the response to COVID now and normally I'd ask Luke to answer what the future looks like in a COVID free world but perhaps I'll direct my question to Hal. So Hal I'm getting mixed signals from GSK on the one hand your financial commentary suggests that you expect medical activity and particularly shingwix to return towards normal by the end of the year and then be more or less normalized with catch up next year but you're still committing to developing a COVID vaccine and more engaged in developing a COVID antibody despite that outlook so could you help reconcile those signals and particularly the vaccine? You've mentioned these variants and I think there's near panic about them now. Do you think that the so-called South Africa variant with the triple mutation at the receptor binding domain is a terminal adaptation of the virus or do you think that this is going to be a -a-mole every six to 12 months the virus is going to mutate to a immune escape variant that we'll have to continue to iterate again?

So Luke we'll come to Hal in just a second but just to repeat the assumptions in the outlet that we've given and that that Ian laid out is that we would expect and this is really in our large developing markets that healthcare operating systems return to kind of surging on normal in the second half of the year this is because we are assuming you know successful in this scenario successful deployment of the vaccination of COVID as Ian said very clearly you know the variance in that will depend on the pace of that the infection rate at the same time and Hal should certainly comment on this scientifically and epidemiologically that the way it is clear that this virus is continuing to mutate and we do expect some kind of endemic market although as you've all seen the data is showing in different degrees under different vaccines the degree of protection on certain mutants today but Hal I just want to clarify what the assumptions are and what we've laid out and then Hal perhaps can comment on the ongoing opportunity for COVID not least with the hesitancy rates in some countries of vaccination anyway. Hal?

Yeah thanks yeah I think it's pretty clear despite the robust reduction in symptomatic disease with the vaccines that we've seen that we're really just beginning there there's already evidence from as Roger mentioned from vaccine trials that the protective immunity from some vaccines is you know lower in certain patients with the virus that is mutated and these variants of concern that are emerging are probably not going to end you know there'll probably be more variants I think that our approach is very consistent with that from the very beginning we were worried about mutations and and hence did the deal with Veer for monoclonal that was binding to an epitope that we believe was very unlikely to mutate because of how it was discovered through being both observed and effective in -CoV-1 patients but also highly neutralizing in the current COVID-19 epidemic so we were from the beginning imagining these variants coming out and developing this monoclonal which we think will have significant benefit for those patients unfortunately enough to to contract the virus we're also not resting on that we do have as I mentioned the combinations with the Lilly antibody should mutations emerge even more robustly than we expect and of course from the vaccine perspective given these mutations whether it becomes another pandemic or more likely an endemic sort of state with the multivalent mRNA vaccine potential that we have a cure VAP I think our strategy from the beginning has been very consistent that that is likely an outcome and now we're moving forward I should also say that in addition to being able to prevent the hospitalizations with the Veer 7831 we do have a trial with the NIH looking to see even if you can reduce the morbidity of patients being treated within the hospital as well as our tele-mab therapy as I mentioned which I think leverages our really deep understanding of the immune system and evolving understanding of how the COVID pulmonary syndrome evolves and or you know cautiously optimistic that that could potentially be a treatment option for those patients who severe pulmonary COVID symptoms are GMC-SF mediated so it's a bit of a three-prong maybe even four-pronged approach and I think it's been relatively consistent from the beginning.

Great thank you.

Thanks next

question please. Thank you and your next question comes from Graham Parry from Bank of America please go ahead you're live in the call.

Thanks for taking my question so first one's just going back to follow up from James Gordon's question at the beginning just about the recovery rate into 2022 so you're flagging the 21 hit from COVID as temporary and then strong recovery in 2022 if you look at the consensus EPS at the moment it's about 120p so that'd be about 20% EPS growth in 2022 over what your guide is implying for 2021 so could you help us with your level of comfort with where that is or perhaps which variables consensus should be thinking about for their 2022 forecast and then secondly you talked about giving dividend policy for the biopharm business well as an outlook over the midterm in June do you expect to give a range for payout ratio or cover or even declare a very specific what the 2022 dividend would be as a base early to give the market some sort of certainty and when you're saying about factors that go into also when you're saying about having an appropriate dividend through the cycle can you just help us understand what factors go into that so are you benchmarking against other companies and which ones would you consider to have an appropriate dividend policy thank you

yeah okay two important questions in do you want to pick up both on outlook and and and clarity of what's coming on dividend or distribution policy versus dividend value

absolutely so as you might imagine graham thanks for the question as you might imagine we're not providing 2022 guidance today but what we are doing is re-express that we expressed at this last year around attractive revenue growth and adjusted dps growth from 2022 onwards with the exception of the in-year impact that we saw that we see for 2021 in our vaccines business we've you know fairly clearly our assumptions and some of the some of the factors that will influence that outcome the progress that we're seeing in our consumer health care business and our pharmaceuticals business remains very much in track and i think probably a key key signal in that the pharma business is that the growth that we see coming through from the new and specialty medicines in in 2021 which we well we saw in 20 and we very much expect to see continue in 21 and into 2022 so so without confirming or denying any of the guidance we are very confident the progress we're making across the businesses we're very confident in in the in the in the prospects for the vaccines business beyond the impact of covid-19 for all the reasons that em and roger set out and we'll prove what we will do in june we'll set out in considerable detail that those medium-term financial outlooks that inform the top line our margins our adjusted eps balance sheet structure and the like and what we will also do in june is set out the key factors that inform the dividend policy and the dividend policy for that new gsk the new pharma business you obviously already have a range a possible payout range probable payout range for the consumer health care company post separation but what we will do are set out those factors which clearly is and i think you answered the question yourself that the comparison to our peer group so what are appropriate through the investment cycle and by that i mean we obviously have variability in earnings per share an ongoing basis but just looking at the appropriate payout ratios through the investment cycle appropriate robust coverage from a free cash flow perspective and importantly the propensity to grow from the point at which we reset it in 2022 so i think what we've been clear today is that we would expect the aggregate distributions for the biopharma business and the consumer health care business standalone to be less than they presently are today but that importantly they have the propensity to grow and be progressive dividends from from from that point onwards so we will provide the information that helps everybody to model this through and think about the investment case in the round not just in the very specific context of a dividend policy which is principally why we're not giving you the full detail in that policy today yeah

fantastic hopefully clear for everybody next question please

thank you and your next question comes from joe walton from credit suites please go ahead you're live in the corn

thank you i have two questions if we look at the guidance for 2021 at the sales level at the divisions they're you know flat to to growth at the group level for earnings it's mid to high single digit decline there's clearly an increase in costs coming through here i think we understand that r&d is rising as one of the main elements of that but i wonder if you could take us through you some of the other aspects of the cost structure that we should be expecting for the group for 2021 my second question is just looking at the older established products so they were down 15 percent on a constant currency basis for the full year 18 percent in the fourth quarter do you have any help on how we should be looking at that block going forward because you haven't any disposals from it yet should that decay rate be easing as we begin to see the impact of ad fair generics and the price erosion in the respiratory market which is obviously a big part of that beginning to ease or with a new entrant coming in for generic advert could that whole respiratory price still reset further in that three billion plus portfolio that you have many thanks

okay great thanks joe and in ian will add more color to this and i think particularly on the established products dynamic although i would repeat we are looking continually at the portfolio there and that's obviously where we do target sort of selective divestments too and the the headline is and again ian alluded to it with pre r&d we've already made progress we expect to continue to make progress there there's also an element of tax and revenue mix as well in the eps outlook and the only difference on where we were previously is the vaccines contribution to total growth is just quite different than we might previously have expected although as just to keep reiterating that is a short term if you ever needed to believe that having the kind of strength in vaccines and infectious diseases was relevant important and created significant long-term growth opportunities and resilience for the new gsk you know now is definitely you know a time to have conviction but ian do you want to just i don't know there's anything i missed on the on the guidance yeah i think

that revenue mix is important i think you you know joey you certainly got the you know dynamic on the top line right but the mix of those revenues clearly with some some coven 19 pressure on the vaccines business has a little mixed through effect on margin as as you can well imagine and then the continued double digit investment in r&d and strengthen the pipeline a key focus and then an effective tax rate of around 18 percent being a step up to two percentage points from this year are the key factors that translate from for the top line outlook through to the adjusted earnings per share outlook reflecting your question on the established pharma and as i mentioned earlier david and the team are focused and active on a number of transactions in the established pharma portfolio we obviously aren't going to comment in the detail on on either which parts of that portfolio but it is an area where with luke and david we spend a good deal of time looking for when the right time and the right value is to exit certain medicines within that portfolio are reaching frankly an npv inflection point from a gsk valuation perspective so particularly when we get to the point where luke and the team are no longer investing behind a particular product in terms of promoting a product we start to think very actively about the opportunity to exit those portfolios but it is very disciplined in terms of what how that balances out from an economic perspective and npv more specifically around the pricing dynamics particularly in ics lab a class we you know we've seen certainly through 2019 continuing in 20 and and frankly no reason to expect that it wouldn't further continue to some degree although probably a little bit more muted than than than than 2019 pressure in that class and very much driven in our experience by the generalization in in adverse seratide if anything we saw that that influence a little bit muted in 2020 where we saw those medicines being possibly prescribed either in larger prescriptions or more so in terms of response to respiratory health in a coven 19 setting but in terms of the the trajectory for that medicine over time our our outlook on that has not changed from when we first announced generic competition in that space but but i think what we have seen and we've been clear about is the pricing pressure in the ics lab a class and that we would expect you know it it has been pretty severe the discounting in that space is is very marked and we wouldn't necessarily expect to that debate but nor would we necessarily expect to see it exacerbate much further

thank you next question please

thank you and your next question comes from louise pearson from redburn please go ahead you're live in the call

hi thanks for taking my questions firstly for luke on that we do start with data due later in the year i'm just giving some recent developments in the space could you remind us of how you're thinking about that asset the options you might have on the table the trials read out favorably and then one for roger on the rsv older adult program does this read design assume a pre-covid incidence of rsv next winter i.e. is there a risk to the program that social distancing affects the system degree meaning that there's less rsv going around and maybe a signal might not be seen thanks very much

okay so straight to luke and then roger that sure

thanks louise so increasingly positive about death reduce that for a couple of reasons she'll go through now so just just as background for everyone we've got five studies it's about nine thousand patients two of them are mace studies and they're fully recruited the the patient population in the u.s is about 2.7 million or us and eu in non-dialysis about 2.7 million patients so sizable population i think what's changed if you go back say this is 24 months ago even 12 12 months ago our assumption always was that you would have seen rocks reduce that on the market relatively early followed by but adjust that both of them having non-dialysis and dialysis indications i think the increased likelihood we know that roxas producer is on the 19th of march this year our assumption is that they get non-dialysis and dialysis but adjust that using q321 with the different our assumption is that they only get dialysis if approved so with our time frame towards the end of the year we expect to get non-dialysis dialysis so a competitive profile and i think the third thing is we've seen the class in in japan launch different labels but our partner has actually got 42 percent market share in a very very so roughly the same as the nearest competitor in a very very heated market so yeah i think we're more optimistic about deprecation than we were even a few months ago

thanks lou and then over to roger on rsv where i know we're targeting a reader in the second half of 22 anything to add and then we'll come up with the last question

yeah exactly i think just we're we're obviously watching this very carefully in the in the trial design just to reiterate we we think there's a major opportunity in rsv older adult just because of our ability to be the first and best in in class one element of modeling that we're doing obviously and i won't go into the detail of the trial design is looking at the population geographies and numbers that we want to make sure that we that we select that's very critical in the in the in the trial piece one important assumption is that we really see the bulk of the population of the affected population here being vaccinated in the first sort of six to nine months of this year which i think is important because then you have that vaccinated population that's the at-risk group that will be studying through the study so we think that as we get through that mass vaccination we'll see less impact in terms of overall risk of covid circulation as well

thanks roger last question then please thank you and your last question comes from the name of andrew bound from city please go ahead you're live in the call

yeah thank you hi hi and the question won't come as much as the prize given our research but you've outlined the separation as most likely taking place as a demerger given the um demand from gsk farmers the future proof their outlook specifically being aware of the dollar tag of their capital their loss of exclusivity why not a partial ipo in order to increase your firepower for mma is it because the tax considerations are so onerous that it makes it less attractive so if you and ian could comment on that that would be interesting and then a second how perhaps you could update this for the durability of response that's seen with your icross agonist in induce one i think the last update you gave was six months all patients who had a response of maintaining their response maybe you've updated since then but if you could update further that would be helpful in just thinking about whether we're seeing um that next second thank you

thanks andrew so we'll come to hal in a second i mean you you set the mechanism for separation in the contract in the context of of of dollar tag review i mean we're all more than familiar with the requirement for replacement rates in the face of patents and i just really want to emphasize our confidence in the progress under house leadership and ever so in the prospects of our vaccines portfolio on developing a strong pipeline including in long-acting in hiv and all of that will bring you know more visibility of you know over coming months and years but it's very important that we reiterate the confidence there and as ian also referred to one of the benefits of this separation does allow for the deleveraging of the biofarm business which in all worlds is going to continue to prioritize from a capital allocation point of view the pipeline including business development we remain we hope strategic selective and disciplined on the way that we pursue that but we are thoughtful about continuing to create capacity and that's also where we want to give a holistic view of this new company it's a correct uh capital structure the ability to support investment in all the growth opportunities we see inside and outside the company and competitive appropriate returns the technical mechanism of the separation will be confirmed later this year you will imagine that we are with the board and in you know ongoing dialogue with our partners are really thoughtful about the best interest of shareholders and we'll you know confirm the specifics of that later in the year in before i hand to how on icos anything that you would add to that

no that's it okay

uh how so over to you uh the last response today on icos until tomorrow's

discussion thanks andrew um you know we're we have a lot of catalyst catalyst events for the icos program in the next six months as i mentioned that the induced three interim analysis um the the entree lung uh randomized phase two data and also some updates from induced one um i'm hoping that we'll have more updated data on duration of response from the induced one studies when we when we provide that which we hope will be somewhere around mid-year so i don't want to comment on any numbers yet but as i mentioned we're we're um excited about the data regions that what we'll have for those three programs and we'll share more of that data with you soon

thanks al and a big thank you to everybody for the slightly extended uh discussion today we look forward to further conversations actually some today and tomorrow and in the in the weeks and months ahead for a very exciting uh next 18 months um for gsk and future two new companies thank you have a good day

thank you emma everyone that does conclude your conference call for today you may now disconnect thank you for joining and enjoy the rest of your day