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

Good afternoon, ladies and gentlemen, and welcome to the analyst call on the GSK first quarter 2021 results. I will now hand you over to Ian McKay, CFO, who will introduce today's session. Thank you.

Good morning, good afternoon. Thank you for joining us for our first quarter 2021 results, which were issued earlier today. You should have received our press release and can view 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 the GSK website. Before we begin, please refer to slide two of our presentation for our cautionary statement. Speakers today are Emma Walmsley, Luke Miles, David Redfern, Brian McNamara, and myself, Ian McKay. Joining us for the Q&A portion of the call will be Dr. Hal Barron and Roger Connor. We request that you ask a maximum of two questions, but everyone has a chance to participate. Our presentation will last for approximately 30 minutes in order to maximize the opportunity for questions. With that, I'll hand the call over to Emma.

Thanks, Ian, and a very warm welcome to you all. We continue to deliver on our strategic priorities and remain very focused on creating significant value for shareholders with the launch of two new global companies next year. Both companies have the opportunity to improve the health of billions of people, and we're confident that both will offer strong performance in 2022 and beyond. For 2021, our focus is on execution and delivering this very significant change for GSK. I'm pleased to report that we're on track both on plans to separate and to deliver financial guidance for the year. Turning to the quarter, our financial results were impacted by comparisons related to stocking in Q1 2020 and disruption from the pandemic. First quarter sales and adjusted EPS were down 15 and 33% respectively at CER. We expected a challenging start to the year, but with these pandemic impacts starting to reverse in the current quarter, we're confident we'll deliver a very different performance in the second half of the year, and Ian is going to go through this shortly. Turning to our strategic priorities, we continue to see progress on each of innovation, performance, and trust. In innovation, we've strengthened our growth outlook on several fronts. Firstly, we're reshaping the landscape of HIV treatment with the launch of Cabanuvra, the world's first and only long-term treatment. We achieved important regulatory milestones with the approvals of Rokobia and Dostalimab, which are named after Jim Purley, and a positive CHMP opinion on Ben Lister. And we started phase three programs for two major pipeline assets, our RSV vaccine for older adults and 294, our long-acting IL-5 antibody, which builds on our new carless success. We also made progress in our COVID contributions, including reporting strong data for antibody VIA7831. Of course, it's never all progress in drug development, and the news received this quarter for the ICOS agonist was disappointing. But it should be seen in the context of GSK developing more than 10 novel oncology pipeline assets, as well as the broader pipeline progression, a significant shift from where we were just a few years ago. In performance, the underlying momentum of our growth drivers is strong, albeit overshadowed short-term by the COVID-driven impacts on the wider portfolio. This reflects transformed commercial capabilities, as you're going to hear shortly from Luke, David, and Brian. Shingrix is an outstanding product and continues to have a very large opportunity ahead of it. This quarter, prescription trends were heavily impacted by the rollout of government COVID vaccination programs. Looking ahead, we continue to expect and will be driving a recovery for Shingrix and our wider vaccine business in the second half of the year, given the encouraging pace of deployment of COVID vaccines in the US. Alongside commercial delivery, we've made excellent progress on our future REDI program. The commercial integration of consumer health is now broadly complete. We've generated more than a billion in net proceeds through tail brand divestment, and separation activities are advancing well. We also continue to streamline our pharma portfolio, and this quarter we announced an agreement to divest our capitalists for in business. And lastly, on trust, our focus remains on maintaining leadership across all areas of ESG, and this is evident again this quarter with actions taken on environment, global health, and diversity representation. We look forward to driving momentum on all three core priorities and to delivering a significant improvement in financial performance as the year progresses. Before I hand on to Luke, I want to highlight what we will share with you at our investor update on June 23rd. We'll provide you with a clear view of the strategy for new GST, its outlook for growth, and the opportunities we see for shareholder value creation. As part of our strategy, we'll give clarity on our target therapeutic areas for investment. We'll give revenue outlooks for the next 10 years with greater outlook detail for the first five years. We'll set out how we expect to deliver competitive performance. This will include deep dives into new growth drivers, including key R&D pipeline assets, as well as deeper visibility of new GSK's key capabilities of technology platforms. We'll also outline our capital allocation priorities and provide you with details on our expected dividend policy. And lastly, we'll set out in more detail the timing and approach of separation. We're very aware that GSK shares have underperformed and we'll demonstrate how we're building shareholder value in new GSK. With the foundation of deep change and progress made in the last few years, we believe we've developed a compelling vision and outlook to share with you. And we hope as many of you as possible will join us on the day. With that, I'll hand on to Luke.

Thanks, Emma. We continue to make great progress on commercial execution and competitiveness in the quarter with strong share performance across our key and new growth drivers. As expected, the performance across our vaccine business was disrupted heavily by the pandemic. And let me start first with an update on Shingrix for which we remain confident over recovery in the second half. Shingrix sales declined by close to 50% in the quarter, reflecting the expected headwinds we highlighted in our last quarterly earnings fall. Prioritization of the public health systems to focus on pandemic vaccination deployment has led to significant disruption in Shingrix prescription. This has been most in evidence in the US where the CDC has recommended a 14-day window either side of receiving COVID vaccine, effectively creating a two-month no-go period for administration of other vaccines. We're seeing similar disruption in other key markets, including Germany and China. The encouraging news is that the pace of administration of pandemic vaccines among US adults is being rapid, especially those in the target age group for Shingrix. By the end of the second quarter, we expect the majority of the 50-plus age group will have been fully vaccinated. Further, with two-thirds of those 65 years and over in the US fully vaccinated for COVID, we're seeing a weekly rolling four-week NBRX increase of 27% in this population versus the prior period, attributed to an increasing proportion of Shingrix eligible consumers who have progressed beyond the COVID vaccine series. This backdrop supports a confidence in the second half recovery in Shingrix, and we've been enacting strategies to drive this recovery. For example, we've been partnering with US retailers to roll out reminder programs to eligible adults to come and encourage them returning to their pharmacies two weeks following their final COVID vaccine, and we've been encouraging market research data suggesting that eligible adults are intending to return for Shingrix vaccine within one to three months. On a global basis, we've been working hard to ensure that we have a strong supply position to leverage the expected upswing in demand as we're in the process of doubling our number of launch markets in 2021. So to summarize, we continue to believe the disruption to Shingrix is a timing issue, with strong underlying demand, we continue to expect Shingrix growth to be weighted to half two, and assuming we progress towards more normal operating conditions in our key markets, we expect a significant step up in Shingrix styles in 2022. Moving on to the medicines portfolio, our recent product launches and life cycle innovation again delivered as key drivers of growth in the quarter. Starting with oncology, we continue to make inroads with LEMREP in its second full quarter on the market. LEMREP is the only anti-BCMA therapy administered through an -the-shelf infusion, and we've had positive feedback from HCPs as they gained increasing familiarity and confidence in the management of corneal events. We've now more than 1,200 healthcare sites set up with more than 1,000 patients enrolled in the REMS program in the U.S. and more than 1,200 patients treated globally. Early uptake has been driven by myeloma experts and academic medical centers, and we're now expanding our reach into the community setting. We also continue to expand LEMREP globally with launches gathering patients in Europe. On the Jula, significant market share gains were offset in revenue terms by the suppressed ovarian cancer market, and this is one of the many tragic consequences of course of COVID as patients remain undiagnosed. Since Q3, the bulking surgeries are down 20%, which has impacted the number of patients initiating chemotherapy. You can refer to this in our backup slide. In terms of new patient share, we're up to 51%, and our share of voice among HCPs is the highest in the class, now 52%. We've worked hard to drive awareness, and we're pleased to see that watch and the rate in the U.S. has decreased to 60%. Patient awareness of maintenance therapy has increased from 29% this time last year to 45% in early 2021. These are indications of positive progress. Outside the U.S., we're seeing growth, launches in Germany and the U.K. Looking ahead, the impact of reduced surgeries will likely continue in the short term, but as the pandemic stabilizes, we see a significant increase in patient care and patient care, and a consequent return of sequential to dual growth. Moving to respiratory, trilogy performed very strongly, with cells up 35% in the U.S., led by the U.S. Less than four years from launch, cells are now annualizing at about a billion pounds. We continue to lead the total triple market, which share three times higher than the number two, and our dual indication in the U.S. is proving to be a key differentiator. Since the increase in asthma, patient share, and in Q1, new to brand prescriptions from allergists quadrupled. Outside the U.S., the NIDL listing in China started to take effect in March, and in Japan, our second largest market, we are now the leader with 76% market share. We're also excited about the continued growth opportunities with Nutella, and we are now the leading IL-5 across the broadest range of eosinophil-driven diseases in all major markets. First quarter sales grew 26%, and like trilogy, are now annualizing at about a billion pounds. A life cycle innovation for Nucala, with indications now at HES, EGPA, and SEA, and expected approval in nasal polyps later this year, has been a key success driver in helping more patients receive therapy. In addition, we believe the categories in which we compete still very underpenetrated, with only 28% eligible SEA patients currently receiving a biologic in the U.S. and less in other major markets. While not on the slide, I also wanted to highlight the fantastic performance we've seen from Ben Lister, where we again drove double digit growth after 10 years on the market. Let me now hand over to David to talk about the great performance of Devito and the major potential of cavitegraphy.

Thank you, Luke, and hello everyone. First quarter HIV sales declined 11%, reflecting a strong Q1 2020 comparator, which benefited from around 100 million pounds in stock build and the timing of an international tender. Adjusting for these factors, Q1 sales would have been broadly flat versus the prior year. Looking ahead, we expect these phasing impacts to reverse in Q2, and we remain confident of delivering our full year growth objectives. On a strategic level, our HIV business has been a first mover in the development of two drug regimens and long acting regimens. In recent months, we've seen a validation of this strategy by our competitors, who are now shifting their focus in both of these directions. In long acting injectables, we have at least a five year head start versus the competition, a market which we believe will grow significantly in the coming years. Importantly, our new products, Devito, Jaluca, Cabanuba, and Recobia, now make up 25% of our HIV portfolio. Turning to Devito, sales more than doubled in the quarter, this key driver on track towards a billion dollars in sales. Our leading share of voice in the U.S. and Europe and the U.S. label inclusion of the Tango switch data has helped to drive Devito's share of the switch market to approaching 20%. The growing momentum behind Devito in Europe has also been reflected in strong and increasing market shares across the EU5. Moving to our injectable portfolio, we have a rich stable of long acting assets centered around Cabotegravir. This is a foundational medicine with incredible potential and pattern protection beyond 2030. In February, we launched Cabanuba in the U.S. as the first and only every four week treatment for patients living with HIV, and we have submitted a supplemental NDA for every eight week dosing. Early indications from HCPs and KOLs are positive as it fulfills a real unmet patient need, replicating the market research and clinical trial findings. We were particularly pleased at the very high level of prescriber attendance at the recent national Cabanuba launch broadcast with strong levels of engagement and positive sentiment. The European launch with every eight week dosing will be under way in the coming weeks under the brand names for Cabrio and Recambus. Turning to prevention, the 08.3 and 08.4 studies strikingly demonstrated that Cabotegravir every eight weeks was superior to Trivada in preventing HIV acquisition in men and women, and we are on track to submit the file to the FDA in the first half of 2021. In summary, we remain confident in the outlook for a progressive acceleration in the growth in HIV underpinned by the momentum of Devato, the launch of Cabanuba, and the expected launch of Cabotegravir in the prep setting. With that, now let me hand over to Brian to talk about consumer. Thanks, David.

We remain on track to create the world's leading consumer health care company. Updating on progress to date, our divestment program generating 1.1 billion pounds net proceeds is complete, resulting in a strong focused portfolio well placed for sustainable growth. On integration, the commercial integration is largely complete and manufacturing work is underway. Separation activities are progressing well. Importantly, all of our guidance for fiscal 2022, including margin and synergies, remain unchanged. Turning to Q1, the quarter was impacted by tough comparators given pantry loading across all categories last year and a record weak cold and flu season, resulting in Q1 continuing sales, excluding brands divested and under review, down 9% in exchange rates. Recognizing the unusual -over-year comparator, two-year CAGRs are more indicative of the underlying category trends. On this basis, all categories are up apart from respiratory. Oral health sales declined slightly in the quarter, with a two-year CAGR up mid-single digit. Q1 saw a continued outperformance of gum health and sensitine, with denture care still under pressure. Pain relief saw Q1 sales down high single digits, with a two-year CAGR up mid-single digits. In Q1, the continued success of the Volterra RxOTC switch in the U.S. last year was offset by Advil and Panadol weakness, given pantry load comparators. In vitamins, minerals, and supplements, sales declined slightly in the quarter, with a two-year CAGR up high single digits. Digestive health and other sales were flat in the quarter, with a two-year CAGR up slightly. In respiratory sales declined 42% in the quarter, with a two-year CAGR down in the team. Cold and flu remains under pressure due to continued social distancing. For example, in the U.S., IRI data showed a category decline of over 60% in the 12-weeks ending March 27th. However, we expect more normal consumer trends in the second half of the year. E-commerce grew over 30% and is now around 7% of sales, up 2% on last year. Our continuing investment in digital capabilities positions us well for growth in this channel. Innovation remains a key focus and an important growth driver. The success of the Volterra RxOTC switch was coupled with other successful innovations, such as Sensodyne, Sensitivity, and Gum, and new launches including Pronamel enamel repair. Turning to our power brands, seven of the nine brands gained their held share. In addition, we saw a double-digit growth in the quarter from our continuing business in emerging markets. Our fiscal year sales outlet remains unchanged. With separation activities well underway, we are well placed, and I remain excited and optimistic about our journey to create the world's leading consumer healthcare company. With that, I'll hand it over to Ian.

Thanks, Brian. All the comments I make today will be on a constant currency basis except for assessed by otherwise, and I'll cover both total and adjusted results. On slide 14 is a summary of the group's results for Q1 2021. We stated our full year 2020 results that we expected Q1 performance to be challenging given the strong comparator from 2020, and that's been the case, as you've already heard from the team. As such, I'll focus on key numbers informing Q1, important considerations for Q2, and the shape of 2021 overall. Reported turnover was down 15% at constant exchange rates. Total delivering profit was down 8%, with total EPS down 25%. On an adjusted basis, operating profit was down 23%, while adjusted earnings per share was down 33%. On free cash flow, in line with our expectations, we had an outflow of three million pounds in quarter one. As noted at full year 20 results, we expect free cash flow to be lower in 2021 compared to 2020. On currency, the strengthening of sterling against the US dollar and weakness in emerging market currencies relative to Q1 2020 results in a headwind of 3% on sales and 6% on adjusted EPS. Slide 15 summarizes the reconciliation of our total to adjusted results. The adjusted items of note for the quarter were in disposals, which largely reflected the profit on disposal of rights to the Cabezantinib, the royalty stream, and major restructuring, which reflected continued progress on the separation preparation programs and consumer healthcare integration. Please also note that as referenced in our annual report, the 2021 UK finance bill is passed and results in an increase in the UK corporation tax rate from 19% to 25%. There will be a significant positive revaluation of deferred tax assets in the UK later in the year, which will be treated as an adjusting item. My comments from here onwards are adjusted results unless stated otherwise. On this slide, let me cover the key drivers of revenues and profits for the group in Q1 compared to the prior year. As the team has explained, the sales decline was informed by unfavorable -in-year comparisons due to stocking and pantry loading, the ongoing pandemic impact on vaccines, and the very weak cold and flu season and consumer. I'll comment shortly on the drivers by business for the second quarter and for the full year. The negative impact of sales and operating profit and margin for the group was mitigated by continued robust cost control across the business, with increased investment to now indeed contributing 215 of the total 290 basis points margin reduction, resulting in an operating margin of 25.4%. R&D growth of 3% reflected continued investment in progressing our pipeline and was driven by significant increase in investment in specialty medicines related to our two key COVID-19 treatment programs, VIR7831 and Attilumab. There was further incremental investment from progression of a number of key programs, including Zajula, Jim Pearley, and 294, -Aidl-5, and Pharma, as well as RSV and meningitis A, B, C, W, Y in vaccines. We were partly offset by phasing and spend on Blenreb, efficiency savings from the implementation of our one development program, and reduced variable spending as a result of COVID-19 lockdowns. We continue to expect R&D growth for the group to be low double digits in the full year. Lower SG&A, down 15% in line with sales, reflected ongoing tight control of costs across the group, the continued benefit of restructuring, a reduction in variable spending, as well as -on-year favorability with regards to legal costs, which contributed around a third of this decline. We have a strong focus on cost management, and as Emma mentioned, we're making excellent progress with our Future Ready program, and can confirm we're on track to deliver the plan to 800 million sterling savings. Following the disposal of the Cabozantinib, the royalty stream, we now expect royalties to be between 300 and 350 million sterling in 2021. Moving to the bottom half of the P&L, I'd highlight that interest expense was 190 million sterling, similar to last year, and there's no change to our full year expectations of between 850 and 900 million sterling. The effective tax rate of .6% was in line with expectations and reflected the timing of settlements with various tax authorities. We still expect a full year rate of around 18%, excluding the impact from any possible U.S. or UK corporation tax changes. And finally, lower non-controlling interest reflected Pfizer's share of profits of the consumer healthcare joint venture. Next, I'll cover free cash flow for the quarter before going on into more detail on how each of the overarching revenue and profit drivers influenced each business. In Q1, free cash flow has stepped down versus the same period last year as expected, with a small cash outflow of three million pounds in the quarter. This was informed by reduced operating profit, including adverse exchange impacts, adverse timing of returns and rebates, and increased dividends to non-controlling interest. These factors were partly offset by a reduction in trade receivables from lower sales compared to an increase in Q1 2020, as well as an increased proceeds from disposal of intangible assets and lower tax payments. Improving cash flow continues to be a constant focus for the team, so it's worth noting Q2 will be much lower versus last year, which saw a step up related to higher Q1 2021 sales, which were collected in Q2, IR timing, and lower tax payments. Moving on to performance in the pharma business. Slide 19 summarizes the pharmaceuticals business, where overall revenues declined to 8% This was broadly as expected. Approximately half of the decline was due to prior period stocking, other half due to pandemic pressures and antibiotics and generics in Japan. UN's specialty pharmaceuticals revenue grew 3% for the quarter, reflecting continued strong commercial delivery across our portfolio, partially offset by phasing in HIV as David described. The established pharma portfolio declined 17%. Within this, established respiratory was down to reflecting ongoing generic competition for adverse seratide in Ventolin, as well as ISIL in Japan. The rest of the established pharma portfolio was down 24%, with COVID-19 continuing to affect demand, particularly in antibiotics. The farm operating margin was 28.8%. The 280 basis point increase of constant exchange rates, despite the revenue decline, primarily reflected the dynamics I referred to earlier. Tide control of ongoing costs, reduced variable spending as a result of COVID-19, where Q1 2020 reflected pre-COVID patterns. A favorable legal settlement in the quarter compared to increased legal costs in Q1 2020 and the continuing benefit of structuring activities. Pharma R&D spend grew 2%, which partially offset those margin benefits. However, underlying R&D growth was higher, reflecting phasing in spend on Glenrep in Q1 2020 and efficiency savings. With regards to Q2 considerations for pharma revenues, in addition to a favorable comparator due to de-stocking, we expect new and specialty sales to continue to grow, including the HIV Q1 phasing traverse. Partially offsetting this will be continued pressure in established pharma. Looking at the full year for pharma, there is no change to overall expectations. We continue to expect flat to low single digit percentage growth in pharma revenues, excluding investments and including high single digit decline in established pharma. In Q1, we announced the agreed sale of the Keflis-Borne business and we continue to review our portfolio for further opportunities to sharpen focus and optimism. We've either completed or signed deals representing approximately three quarters of the expected cash cost of the separation preparation. Trendy gives you an overview of vaccines performance with sales down 30%. Q1 performance was largely performed by the rapid pace of deployment of COVID-19 immunizations in the U.S. as Luke has referenced. As a result, Singers sales declined 47%, declined 13% and established vaccines declined 23%. The operating margin was 25%. The reduction in operating profit and margin primarily reflected the negative operating leverage from the COVID-19 related sales decline, as well as higher supply chain costs resulting from lower demand and recoveries in the current period and adverse mix due to lower Cindrick sales. As noted earlier, there was also increased R&D investment behind our RSV and meningitis development programs. These factors were partly offset by higher royalty income in the quarter. To reiterate what we've said previously, progress in mass immunization programs and easing of pandemic conditions are the key factors in forming pace and scale of recovery in vaccines revenues. The advances to date this year are encouraging, particularly in markets such as the U.S. and U.K. Accordingly, and in line with Luke's earlier comments, we expect to see progress in recovery of vaccines revenues in the remainder of the year with growth weighted to the second half. In the full year for vaccines, we continue to expect flat to low single digit percentage revenue growth. Turning to slide 21, Q1 revenues in consumer health care decreased 9%, excluding brands that are divested under review and including those brands turnover declined 16%. As Brian mentioned, we've completed the tail brands divesting program on consumer. Consumer health care performance was largely as expected given pantry loading experience in Q1 2020 when continuing sales were 15% and the very weak cold and flu season. Operating margin for Q1 was 23.1%, down 290 basis points to conscious exchange rates versus last year. Notably, margin last year benefited from pantry loading and high continuing sales growth. As a reminder, the full year 2020 margin was 22.3%. In Q1, there was also 220 basis points adverse operating margin impact from divestments. Importantly, integration synergies continue to be delivered by this business. With regards to Q2 considerations for consumer, there'll be a favorable comparator in Q2 for the continuing business as a result of last year's pantry unloading. In Q2 2020, there were sales of 116 million sterling for brands divested and under review. There'll be further impact from those brands and consumer sales growth. It's also worth noting that there was a 2% point sales benefit in Q2 2020 as a result of the North American system's cut over and I will not repeat. As in the other businesses, for consumer, there's no change to expectations for the full year. Excluding brands divested or under review, we expect low to mid single digit percentage revenue growth outperforming the market. Turning now to our group 2021 outlook, we're reconfirming our EPS guidance range, which assumes the red line at full year 2020 results that healthcare systems and consumer trends approach normality in the second half of the year in our key markets. Our full year revenue expectations for each business also remain unchanged, but other important considerations that will influence Q2 performance as I've already mentioned. Results through the remainder of 2021 will reflect the phasing and the comparator periods as well as the progress of immunization programs and the extent to which pandemic conditions ease. Taking each of the unit factors for Q2 that I've mentioned into account, we expect sales in Q2 to grow mid to high single digits for the group. With regards to P and L considerations for Q2, we anticipate that SG&A will increase broadly in line with sales and our investment in R&D will increase mid single digits. Overall, the pandemic disruption to our portfolio during H1 this year will result in H121 performance being below that of H120. Despite the short-term impact, we remain confident in demand for our products and expect strong recovery and contribution to growth, in particular from Shinrook in the second half of the year. As mentioned by Emma earlier, that our new GSK Investor update on 23rd June will provide more detail on our mid to long-term financial outlook, capital allocation priorities and dividends. With that operator, we're ready for Q&A.

David, could you help us understand the path to market for CAB400 and how we should think about the timing and dose frequency of that subcut backbone asset? Is it every month or are you going for every three months? Could you discuss the importance of this, given that I believe your competitors, Merck and Gilead, do not have anything like CAB400 in their pipelines in terms of how important is an integrase inhibitor when it comes to long-acting combination treatment and the second question is on mRNA vaccines more broadly. Could you help us understand which parts of your vaccine franchise you believe might be vulnerable to mRNA disruption? Is it just a flu business to you guys? When you're thinking about prioritizing your own mRNA vaccine efforts, what are the key targets and will you be running parallel programs with a non-mRNA vaccine technology? Thank you very much.

Thanks. We'll come to Roger and perhaps Hal might want to add something as well overall on our mRNA platform approach. Obviously something we mobilized aggressively behind both with our in-house platform but also with our deal with Qubit last year. But David, over to you first.

Yeah, okay. Thanks, Mark. Well, firstly, we're very pleased to bring the world's first long-acting injectable to the market with Cabinuvra in the US in February. And as I said in my remarks, we've seen a lot of interest in that from physicians and patients. Obviously that will build over time. But we do think the long-acting market has the potential to really be quite significant over time. And so as you say, we're investing significantly into it in R&D in next generation. CAB400 will really be at the heart of that. We are looking at it in subcut as you say and other formulations. Too early to say exactly what the dating frequency will be. We're looking at different intervals, one month, two months, three months and so forth. We are in clinical trials in that. We shall have some data in the second half of the year, some early data. And of course, we have lots of things that we are potentially going to combine that with, whether it's our maturation inhibitor programs, or BNAB, NLTI, CAPSIS and so forth. So a lot going on. In terms of competition, we'll have to see. I mean, they've got a lot of scientific hurdles to get over. Of course, they're not integrated inhibitors, so resistance will be very important if they demonstrate that. And we'll see where they go with formulation and so forth. But I'm very excited by the program we've got. We will certainly outline more of that in June.

Thank you. Roger?

Yeah, thanks, Mark. I think MRNA is going to form a critical part and does form a critical part of our GSK vaccine pipeline. The benefits of the technology have really been accelerated and shown recently in terms of speed to clinic and the efficacy in the manufacturer or the efficiency in the manufacturing process. We've been investing for some time. We've got two real plays going on here, which will bring to life more in June when we share more of the pipeline. But just to give you a feeling for it, in terms of our CureVac partnership, this infectious disease partnership, we've got five potential MRNA pathogens to develop and our COVID next generation play with CureVac as well. And also Emma mentioned our in-house self-amplifying technology and MRNA as well, which will be going into the clinic. So we see a number of assets moving forward in the next 18 months, which we'll share in June. We are investing and allocating capital to this. So we're already looking at how we create world-class GMP manufacturing capability as well. Just answer your question directly and where do we think MRNA will play? There are certain challenges or certain areas in vaccines where it may struggle in terms of technically being applied, meningitis, bacterial infections as well, other complex pathogens. But I don't think you can be complacent. We do believe that this is going to be a very important platform for the future. It's going to be an addition to some platforms that we already have that we believe are world-class and like adjuvant, bioconjugation, viral vectors. All of these will be a very important portfolio of technologies that we're going to apply to the future in the pipeline. Hal, anything you'd add?

No, very comprehensive. I agree. Did you feel Shingrix, Roger, just to the point you made, is Shingles an area where you feel MRNA could be disruptive or do you feel that the benchmark you've set with Shingrix is just too high?

We think the benchmark on the efficacy is really very, very high and going to be difficult to match, to be honest, given the impact of the adjuvant. So again, we can't be complacent. I think life cycle management of Shingrix, making sure that we continue to expand geographically, we've got all the indications that we're working on is going to be important. But I think that's a very high bar for MRNA to come after.

High bar on efficacy and a decade of safety. Next question, please.

Thank you very much. Your next question on the line comes from the line of Tim Anderson. You are live on the call. Please go ahead.

Thank you. I wanted to go back to HIV, if I can, and just the future competition from Merck and Gilead. So, you know, Merck's NRTTI looks very good by itself. Gilaad's Capsidin Hebride looks very good. Combine the drugs. You might very well have a very strong drug that offers once weekly oral dosage. And, you know, they're kind of capitalizing on this two-drug regiment, and I know that you've been a big proponent of two-drug regiments. What does Glaxo have in the pipeline that makes you comfortable that you've got a competitive offering in the future where you might have something like a once weekly oral regimen as well? Because it seems like your franchise longer term could be at risk by these two products that are now being combined. And then second question just on Shingarix. Manufacturing capacity, where you are in terms of having that expanded, and what percent of capacity is currently being used? Thank you.

Thank you. Well, look, Roger, perhaps you can pick up the Shingarix manufacturing, where I know there's been a lot of work going on in terms of progress there, and then we'll come to David.

Yeah, listen, thanks very much for the question. We're making great progress on the manufacturing expansion, and also, whilst we've seen some demand disruption, as we've mentioned on Shingarix, we've kept making in terms of putting inventory into the system. So, I think the long and the long term demand that we've received for the next number of years. We have the new facility coming on in 2024, but we are, as I mentioned earlier, we're geographically expanding. We should be in 16 countries by the end of 2021, and manufacturing over the next number of years is not going to be a problem for us.

Thanks for the question, Tim. So, in terms of weekly oral, my understanding from Gilead and Merck is they expect to produce their combination, I think, the mid-20s. What I would say on that is I think it will predominantly compete against the daily oral, and of course, in our case, Devato. And the bar there has, I think, been set incredibly high with all the data we now have, both on efficacy, safety, and of course, most importantly, resistance, and integrators have really become the standard of care. And I certainly had enough questions around resistance as we went through the clinical studies. So, I think we'll see where the data comes out in the next few years, but there's a high hurdle to beat, and resistance will be critical. Also, in a lot of market research we've done, it's actually not clear that patients or physicians really prefer weekly oral versus daily oral, and you start to run into more adherence issues and so forth. So, I think there's quite a lot to play through there. In terms of the injectable, the long-acting injectable, where I think they've said it's a longer time frame, probably 2027, again, you know, resistance will be important. And just remember, this program is at a very, very early stage. I think Latrevir in injectable form is only in phase one, so there's a lot to go and a lot to prove, and as I said in the answer to Mark, meanwhile, we're investing a lot in second generation with CAB 400 and so forth.

Next question, please.

Thank you very much. Your next question on the line comes from the line of Simon Mathur. You are live on the call. Please go ahead.

Afternoon, everybody. Thank you for taking my questions. I've got two, one on Shingrix and then one more of a strategic question. So, just on Shingrix, I think if you listen to Moderna, they talk about, and I think it's widespread, not concerned, but views that potentially we're going to need a booster vaccine for COVID-19 as we go towards the end of the year. I'm just thinking how that might play into your views on the recovery of Shingrix. Do you think there'll be potential space to vaccinate people with the Shingrix vaccine? And just generally your overall thoughts on if we do have a requirement for a booster vaccine, how that could potentially impact the recovery of Shingrix in the second half. That's the first question. And the second one is more of a bigger strategic thing obviously, catalyzed maybe last week by the news or the revelations that Elliot was building at stake. I think the reason for the question is, Emma, obviously when you announced the deal with Pfizer initially, you had views of hopefully spinning off, splitting this company into three years post-close. Obviously, you've got a bit of space until five years post-close. You have choice what to do. And that depended on the current positioning and the standalone strength of the biopharma as it stands now. Obviously, we've had a few disappointments in the pipeline. We've had COVID. There's been a lot of headwinds that we could never have seen. I mean, is there a rationale for delaying the spin of consumer? And maybe if you could maybe comment if you can on the involvement of Elliot and if you have any views on that, that would be great. Thank you.

Great, Simon. Thanks. Well, we'll come to Luke in a moment to give more content to our confidence in the reaffirmation of the outlook of Shingrix related to your booster question. I'm sure you won't be surprised that I'm not going to make any comment on specifics regarding individual shareholder engagement. But just to reiterate that we remain very committed to the pathway that we laid out at the time of the announcement of the Pfizer deal. And as I said today, we're intending to give more specifics around the specific mechanism of separation when we come with a new GSK update in June. We're absolutely on track in the progress both on the scale of the consumer successful integration and the separation plans, which are complex but absolutely well underway, as well as the future ready plan, which is about setting up for two competitive cost bases and operating models for two companies. All of that has continued undeterred by COVID with tremendous amounts of work and focus from the organization. The key underneath all that is for us to bring transparency and commitment around the growth prospects. And again, that's something that we intend to do in June with a lot of confidence underneath a good improvement in performance from 22 and beyond. So all very much on track. Luke, do you want to comment on the question around boosters and Shingrix, please?

Yep. Thanks, Simon. I look short term, no impact, medium term opportunity. So what I mean by that is our current assumption is that countries including the US will concentrate on mass vaccinating. So younger people, people who are hesitant to get a vaccine, rather than vaccinating large cohorts of variants with vaccine in the absence, based on what we know now, of no waning immunity or viral escape in 2021. Plus, if you look at the timelines of companies working on the new COVID-19 vaccines, including us, there'll only be readouts towards the end of 2021. And I think in terms of opportunity, if there is a role for boosters in 2022, we are very busy working on co-administration studies with the aim of having this data available in 2021. And I think if we have this data, along with some other experiments and studies we're looking at and data collecting from claims databases, in terms of relationships and correlations between COVID-19 and shingles, and COVID-19 vaccines and shingles, this could actually create an opportunity in terms of co-administration, similar to the way we see with flu. There's a clear relationship between flu vaccines and people receiving shingles. So short term, not much of a challenge, midterm opportunity.

Thanks, Luke. Next question, please.

Thank you very much. Your next question on the line comes from the line of Matthew Weston. You are live in the call. Please go ahead. Oh, go ahead, Joe. Sorry, Matthew, you go ahead. Go

ahead.

So

we'll

hear

you

next. Matthew.

They'll be the same questions, I'm sure. So first on RSV, clearly an increasingly competitive area and one that GSK has flagged is strategically important in the midterm. I'm not going to ask you for comments on the competitor drug that's recently come out, but for me it's a question around RSV rates being at such a low over the course of the last 12 to 18 months, and whether or not that has any impact on the timing of your expected readouts in RSV. And then secondly, another vaccine question around pediatric vaccines. There seems to be a very big disconnect in the trends between Sanofi's pediatric vaccine revenue in 1Q and GSK pediatric vaccine revenue. Sanofi talking aggressively about the benefits they will have of hexavalent in the US. Can you give us an outlook as to where you see your pediatric vaccine trends going over the course of the next 12, 24 months?

Sure. So first I'll come to Luke perhaps in a moment on the pediatric vaccine. But first of all, Hal, do you want to comment on the development programs around RSV more broadly?

Yeah, thanks. Well, your question is quite broad, but as it relates to RSV and the older adult program we're very excited about given the huge unmet medical need, our phase three programs for both maternal and adult are currently progressing pretty much as planned. We indicated that when we first outlined the RSV program set the ID week last year that we expect a pivotal date in the second half of 2022. And although there's a risk that the timing could be affected by the RSV disease circulation given the pandemic, we've been monitoring this. Our clinical trials groups are looking for areas in the world in which there's a reopening of the economies and where there's more individual contact person risk so that the RSV might be more common there. So we're no changes to our current timelines and as I mentioned, we continue to monitor this. I think as it relates to the maternal vaccine, of course, our aim is to protect infants from birth up to six months of life through transfer of the maternal antibodies. And I won't comment on the competitor information, of course, but the news is encouraging in that if a model clonal can be protective when given to an infant, then we're very excited that a pre-fusion antigen given to the mother as a vaccine with a polyclonal response would be effective. In fact, we've shown that when using that antigen that you can neutralizing antibodies up to 15 fold to deliver high levels of protective polyclonal responses, which is both important because of potential resistance relative to monoclonal, but also the benefit of immunizing a mother versus infusing a monoclonal into an infant. Maternal immunization is becoming an established methodology to protect very young infants as well as, of course, the mother. So we continue to be very optimistic about both the older adults and the maternal program.

Thanks, pal. Luke?

Sure. So, Matthew, I think there's two parts to this. Firstly, with hepatitis, we saw CDC stocking, they essentially used their stockpile. And also we've seen the reentry of Recombivax in the pediatric market, which put a bit of pressure on hepatitis. With DTPA, similar trend in terms of CDC purchasing in the US, and they actually signaled to us that they would do that, that they would run down the inventory with Q1 and reverse that in Q2. And we've already seen that now, so they're putting in orders already in April. So we expect that to even out over two quarters. I think if you look at market share versus Sanofi, there's actually no movement, no material movement in market share in the DTPA market. But we do know they're out there pre-booking with Vaxallix. We do expect the level of competitive intensity in the US and pressure on the pediatric DTPA business to increase over the timeframe that you described.

Thank you. Next question, please.

Thank you very much. Your next question. Oh, Jo, do you have a question to add? No problem. Next question on the line comes from K.O. Parikh. You are live on the call. Please go ahead.

Good afternoon. Thank you for taking my questions. Two, please, if I may. One for Hal and one for you, Emma. Hal, we have kind of seen two of your riskier kind of oncology compounds have disappointing phase two readouts recently. Kind of without sharing obviously the data or anything, but can you just tell us what that means from your perspective as it relates to broader oncology R&D plans? What do you think kind of if anything needs to change on that end, where might it be different as we look towards June? And then separately, Emma, I think you alluded to the Glaxo kind of underperformance from a stock price perspective. When you became CEO, you laid down a very clear path for kind of the Glaxo combined company as you saw it. And despite that, the stock's underperformed. So my question is, as we look towards June, what are you hoping to tell us that can excite investors and the market about the opportunities that you see forward and that drives your excitement today? Thank you.

Thanks, K.O. So let's come to Hal first, although I think the answers are probably linked and then I'll follow up on your second question.

Okay. Well, thanks, Kara, for the thoughtful question. Let me first by just reminding everybody of the R&D focus as we outlined it in 2018, which is really to focus on specialty medicines and vaccines, particularly focusing on immunology and human genetics to drive new both medicines and vaccines. And within immunology, we said one of the most exciting areas is modulating the immune system to help patients with cancer based on the profound benefits that PD-1 blockade has had. We believed strongly that the checkpoint blockade area, as well as cell therapy, to be honest, that those two areas would be ripe for really leveraging our deep expertise in immunology and potentially being leaders in the IO space, sort of IO version 2.0, if you will, after the PD-1 blockade. You're right, we've had two disappointing phase two studies and I certainly was disappointed by them, but one has to remember that they were both phase two where industry success rates are typically %-ish across many companies and in the IO space that number is typically lower. We're very excited about the potential of immunology in oncology and continue to believe that's going to be a promising area. And the one pathway that we think is particularly exciting is the whole polio virus receptor, the CV226 pathway, which we have the first in class, the anti-CV96. We've struck a deal to have the anti-PV rig, of course, with the STALIMAB approval that allows us to have some interesting combinations. And given the cityscape data from Roche and some data from Merck, we think the TGIT sort of also confirms that this pathway is very exciting. As it relates to human genetics, we still think that's very important in oncology where we've built a synthetic lethal research unit. We've bought the dual essentially and demonstrated with the PREMA study that that's best in class PARP. And we're very excited about the pipeline emerging, which is starting in phase one with the MAT2A inhibitor. If we've moved into clinic with our collaboration with Andea, we see several other synthetic lethal opportunities moving forward as we expand our relationships with the Laboratory for Genomics Research with Jennifer Doudna and Jonathan Weisman, as well as the Broad to uncover really novel biology to allow us to see other opportunities in that space. So we continue to be focused in immunology and human genetics with synthetic lethal and believe that should result in a robust pipeline. I should say that we've had a number of clinical trials in the last four years. We've had a number of clinical trials in the last four years. I think it was eight molecules in the clinic. The most advanced was in phase one. Now we have 12 predominantly in the IO and synthetic lethal space. And importantly, over the past four years, we've had 10 new vaccines or medicines approved, five of which have been in the last 12 months. And if you include life cycle innovation, we've had 19 approvals in the last four years, 10 coming in actually in the last 12 months, as well as nine, I think nine phase three trials succeed in the past 18 months. So I think the pipeline is progressing in a reasonably solid way. And today in our pipeline, we have 22 ongoing phase three programs, twice as many as we had when I started. So I think we're making good progress there as well. Hopefully that answers your question, Claire.

Thank you, Hal. And, Claire, in terms of your second question, I mean, big picture, we have been extremely focused over the last few years on shareholder value creation, recognizing that it's been some time when you look back over since the formation of GSK, that we have opportunity to make big moves here. We've been tackling really quite deep historic challenges, the first priority being R&D performance and productivity. And by the way, prioritizing that in terms of capital allocation, investment, and transformation of the team, including the leadership. Hal has just given you with his smallest approach, some of the headlines on the enormous progress that has already been made, there's always more progress to make. But underneath all of that, and the reason we do it, is so that we can commit to competitive and sustainable growth delivery, seeing us through whatever LOE patents that we have to digest. So historic challenges being addressed of R&D productivity, real transformation of the competitiveness of our commercial execution, which I think can be clearly evidenced when you look at some of the big launches, even just over the last few years, that we committed to driving significant growth on, be that Shingrix, be that 2D, be that Trellegy. We also, sorry, so that would be in terms of the pipeline transformation, the commercial execution transformation. We've gone off the group structure at a major level with preparing for the separation into two new companies, which is absolutely on track for next year. Capital allocation priorities being clarified, significant refreshing of talent, not just in R&D, but across all of the leadership team and culture transformation underway too. All of this takes some time, but there is major change being delivered in all areas. And our goal in June is to make sure that we bring clarity and specificity to the translation into growth outlooks and a step change in performance from 22 and beyond, but also answer any other key questions that investors may have. We've been clear that we expect to update on the specificity of the separation mechanism as well as distribution policy and target payout ratios. So hopefully that will be a useful session for everybody. And certainly if investors have feedback on what we will bring then, then we're very interested to hear it. So I think it's three o'clock now, but we're very happy to run a bit longer if that would be helpful for people and follow on with some of the more questions that are waiting. Thank you. Next question, please.

Thank you very much. Your next question on the line comes from the line of Kerry Holford, who are live on the call. Please go ahead.

Thank you. Two questions, please. Firstly, to Ian, just on the legal settlement, the quarter and the guidance for the full year. So could you qualify that item in absolute terms and confirm what it relates to? And once that positive item is assumed within your guidance for the year, because if it was not, then it effectively implies something has worsened since you provided the guidance. And is that fair or not? I noted that, I think you mentioned that your expectation for royalty income is now lower. I didn't catch why, but perhaps that is part of the offer there. So just some clarity around those items would be helpful. And then secondly, on trilogy, I wonder if you can give any more detail as to why the EMA issued a negative opinion, the ultimate indication. Do you intend to pursue that line extension in this region? And if so, what additional work do you think will be required? Thank you.

So Ian, why don't you go first and then Luke on prospects and plans on trilogy.

Right. So Kerry, on legal, in the first quarter of last year, there was a provision for ongoing litigation and that was approximately 60 million sterling. In the first quarter of 2021, we were successful in terms of a judgment on that litigation and the provision was reversed. And broadly in terms of that, that was the outcomes that we were expecting for this year. So that was factored into how we saw the overall guidance playing through. So the effect year over was an aggregate a bit more than 100 million on that one. In terms of royalty income, as I mentioned in our comments, we sold one of the portfolio focusing elements that Dave's and the team have been very successful at working on was the sale of a stream of royalty income where we saw that particular product is no longer being of strategic relevance to the group. And we saw an attractive economic opportunity to do that. And that is what informs slightly lower royalty income for the year. I think we moved it from 350 to 400 million sterling to 300 to 350 million sterling royalty income for the year. So those are the details on the financial points. I think probably somebody else would be better suited to answer the question.

I mean,

essentially, Kerry, we didn't meet the in the European context. In the US, right now, asthma patients represent about 5% of our business, obviously growing incredibly quickly, and around 12% of revenue because of the size of the dose. We don't intend to try and resurrect that indication in Europe. We were disappointed, but we're moving on and concentrating on the OPD.

Thanks, Luke. Next question, please.

Your next question on the line comes from the line of Steve Scala. You are live in the call. Please go ahead.

Thank you. A couple of questions. The release says that at the June meeting, we will get an update on the timing and approach to consumer separation. I'm curious, what is there to update us on relative to timing since the timing seems unchanged? So are you referring to fine tuning within mid 2022? Or is a very different course within the range of possibility? Secondly, a little bigger picture question. Emma, you took over as CEO of GSK four years ago this month. As was just said, you provided the plan for the path forward at that time. I imagine that things have not gone according to your original plan, particularly relative to the cut to the dividend, pressure to spend consumer, and the pipeline setbacks. So things seem to have been tougher than expected. Now, you did just say that these are all formidable tasks and take some time. But would you attribute the inability to achieve the initial goals as more external obstacles or internal deficiencies? Thank you.

Thanks, Steve. So the short one of your questions in terms of June, it's, you're right, more a confirmation and update on timing rather than any surprises. What we do want to do is answer questions that have been emerging on the mechanism. In terms of big picture, I think one thing I can categorically tell you that we did not anticipate in 2017 was a global pandemic. And if you just look at the trajectory ahead of that, and frankly, where we were headed, particularly on our Shingrix vaccine, which let's face it has taken a slightly unique, and we believe for all the reasons that Luke laid out, short term hit, as well as the rest of our vaccine business. But I think fundamentally, it's hard to conclude from what happened in the last 18 months, that being a world leader in vaccines, well placed with new technology platforms with good growth, opportunity and momentum in approved assets, such as Shingrix, but also a late stage pipeline that's coming through in big adult vaccination opportunities, such as RSV, as well as the new technologies and strategy that's focused on immunology with half the pipeline or two thirds of the pipeline in infectious diseases and immuno-oncology. I think we are well placed with that. I would certainly not characterize our progress as due to unexpected pressure, as you said, to separate consumer. That was a very active choice that we made and announced at the time of the deal with Pfizer, and we're really pleased that that's remained firmly on track and with the plans initially announced well in place. Now, in terms of the pipeline progress, I think again, I would succeed in pipeline development. Actually, and Hal alluded to it, the positive readouts that we've had over the last few years have been very encouraging in terms of our growth prospects. We have twice as many late stage pipeline assets as we had just a few years ago. Last year alone, we had nine approvals and nine late stage. This quarter, we announced the third of three approvals in oncology. We have an exciting vaccines pipeline coming through, but all of that is just so that we can bring visibility to what the growth of new GSK is going to look like, and that's something we feel confident in sharing in June. Thanks very much. Next question, please.

Your next question on the line comes from the line of Andrew Baum. You are live in the call. Please go ahead.

Thank you. A couple of strategic questions, please. First to David, how long would it take to separate your established products business? We've proposed the JV with someone like the asterisk to create an exit and take away the drag. Is this potentially ready to go, or is it going to be similar to consumer with a 24-month lead time in order to separate the business units from the innovative pharma parts? And then second for Ian, under the 100% demurger scenario, which I think investors are taking default, do you believe that GSK's balance sheet is strong enough to optimally address the future challenges, particularly associated with dollar tegra virginerics as well as competitive HIV drugs like his Latrofit?

So Ian, do you want to pick up on balance sheet? And David, I'm not sure if there is a technical question to answer on something that I'll

take the general measures to

establish pharma

portfolio as well. Established pharma, Andrew, that's a revenue stream in excess of $7 billion, but attractive margins for a lot of cash generation. And frankly, the prospect of JVing it with somebody else to dilute the opportunity of the earnings and the cash from that portfolio, recognizing that the downward top line dynamics are driven by loss of exclusivity on a couple of important medicines that will work its way out over the course of the next 24 months. I'm not sure economically that is necessarily the best step forward in terms of supporting both profits, cash, and going on to your second question around strengthening the balance sheet of GSK. So no, it's not something that's been contemplated, but there continues to be, as I mentioned earlier, a very strong focus from Luke, David, and the team in terms of how we just continue to refine that portfolio, both in terms of our geographic presence, in terms of where we distribute those medicines, again, driven both by access to medicines, but also the economics of that making sense, and also just in terms of being able to sharpen the focus through how that portfolio is supported through supply chain, commercial operations, and to the patient. From a separation perspective, I think going back to Steve's question, we'll confirm the timing in June, but what we will do is talk more about the mechanism that we would intend to pursue for the separation of the consumer healthcare company, and through that, I think we'll give greater line of sight as to what that then represents in terms of capital restructuring for the new GSK balance sheet. I think we'll provide a lot more detail on that, but other than to say that now, I will savour fire until that

time.

Thanks. Next question, please.

Thank you very much. Your next question on the line comes from the line of Graham Parry. You are live on the call. Please go ahead. Great. Thanks for

taking my questions. Two more strategic ones, actually. Firstly, the consumer separation has brought more attention to some of the parts valuation of GSK, and that also includes differences between vaccines and pharma dynamics and outlook. Could you perhaps just talk through the rationale for having those two businesses in the same organisation and potential synergies from having them in the same business? Secondly, do the recent R&D failures accentuate the need to accelerate external business development licensing or M&A, and will change the focus in the minds of management on the balance of internal versus external R&D sourcing for GSK? Would GSK consider cutting dividend earlier than the consumer spend to facilitate debt-financed M&A to bolster the pipeline? Thank you.

Well, I think, Graham, we've confirmed the dividend for this year, and we've confirmed that we will be implementing new policies that we will update on from 2022. So I think that's already been stated and committed to. I will let Hal cover anything further he wants on our ongoing view that R&D should continually be supplemented by BD. But let me first cover quickly your points on vaccines. Absolutely core to new GSK, not least because scientifically, we are focused on the science of immunology. These business are operationally, geographically, completely integrated. So Luke leads the commercial operations for our vaccines in all countries in the world in an integrated way across the rest of the portfolio. Scientifically, we have one development organization, which is not only helpful from an operating and a capital allocation judgment point of view across the different assets, it's also increasingly relevant when you have such a big portfolio of infectious diseases and when we all know that the, as evidenced most recently through COVID, that reviewing from a patient-backed point of view, we're looking at the prevention and treatment. And we think about that whether it's in flu or hep B, even in HIV, if you think we're looking at the prep world as well as the treatment world, COVID too, and we see increasing opportunities in that direction, not least when you think long-term of the new technology platforms. And then of course, as we've been working on the future ready program towards separation and getting a -for-purpose cost base, we've been very thoughtful about making sure that we have distinct capabilities where they're necessary, but we absolutely simplify and reduce duplication in terms of an integrated operation model in that term. And both the specialty business and the vaccines business where we're investing for growth are expected to contribute to the growth outlook meaningfully for new GSK. So that was that. Hal, anything to add on ongoing business development focus as part of the pipeline and how it is continuing reviews?

No, thanks, Graham. Of course, strengthening the pipeline is certainly my number one priority, our company's number one priority in terms of allocating capital to do this. We obviously have invested significantly in our own internal efforts and that's resulted in, as I mentioned earlier, five new medicines in the past 12 months and twice that in terms of number of approvals if you include life cycle innovation. But business development plays a critical role in this. We've been very active in this space. We've, as you know, done deals with Veer and CureVac recently and we'll continue to focus our efforts to find really interesting things in the external world. Obviously, we're not going to come out and tell you precisely what those assets are in companies, but we are exploring opportunities across vaccines and specialty medicines with a focus on leveraging our expertise in immunology and human genetics to find novel targets and medicines that we believe could be transformative for patients in our pipeline.

Thanks, Hal. Next question, please.

Thank you very much. Your next question on the line comes from the line of Jeff Poaches. You are live on the call. Please go ahead.

Thank you very much. A few quick questions. Luke, you said recovery in Singrix in the second half of the year, but could you give us a sense of whether you expect that to be the same as 2019, below 2019, still, or above 2019, which would presumably be real growth? And then perhaps you could also comment on your average pricing effect in Q1 on the major brands. What was net price? And then lastly, related to that, forecasting is the best of times in art, another sign. And what assumptions about US long-term pricing are you incorporating in the five and 10-year forecast that you're providing? Can you grow regardless of what happens to the pricing environment in the US?

So, Luke, you might want to talk about some of the near-term stuff. And then Ian, you might want to, well, maybe Ian, you kick off first in terms of overall outlook.

Yeah, Luke, I think when you certainly start looking at the ability to incorporate the possible impact of US reform on pricing in the long term, it's frankly a bit of a fool's errand. But certainly the way that we have approached that is recognizing the risks to the long-term view, is assessing what the possible outcomes are of various reform approaches set out by the administration or pre this administration. Clearly one of the things that we do and will continue to is engage with the administration, not only in the US, but in other countries around reform. And I'm sure frankly that any reform allows us to continue to support innovation, but also access to medicines and hopefully reduce -of-pocket expenses for patients. But what we do is evaluate that, and then with that evaluation in hand, which is supported by our US team with a lot of detailed analysis, is then frankly incorporate that into an overall risk assessment of our ability to deliver the top-line growth projections that we will share with you on the 23rd of June. So more detail about that then.

Thanks Ian. Luke, anything to comment?

Yeah, Jeff, I mean I think Shingridge broadly is similar to 2020, so obviously a good comparison with 2019. I don't know if you meant 2020 or 2019, any question. I mean the logic behind that we've covered through the call, maybe just a little bit more color around why we're confident of second-half recovery. I mentioned before around potential patients saying after the COVID series completion they would like to go back in about 50% of the cases for a COVID vaccine within one to three months. I think there's patients being relatively conservative waiting for side effects from that second dose before electing to go in and re-discuss their Shingridge vaccine. When we look at physicians, the physicians I think are more, I mean the evidence is not what I think, it's what the evidence is, they are more confident. So around half physicians are advising their patients to wait two weeks before going back and talking about another vaccine like Shingrichs and about a third of saying four weeks. In terms of pricing, it was very much as expected. There were some ups and downs. So we had some pressure on pricing as you'd imagine in parts of the portfolio like Adver, but good strong pricing trends with an oral trilogy. There was some pressure in the market in the IL-5, but still good pricing dynamics relatively speaking to the rest of the portfolio. So nothing major on that front. I think looking forward to Ian's just giving color around that.

Thank you. So I think we have one final question now and I'm sure we'll look forward to more incoming days, but let's go to the last question now please.

And your last question today is from the line of Peter Welford. You are live on the call. Please go ahead.

Oh thanks for hitting me in. So just returning to the growth outlook first of all for the next 10 years and five years. Just to be clear, is this planned to be growth outlooks for both the top line and margins and or also EPS? Or how should we think about that and what degree of flexibility do you want to build into that outlook given obviously a 10-year time frame and what could potentially happen over there with regards to your ability to execute on future strategic decisions? And then just on vaccines, can you confirm any of the pathogens that you're working on with CureVac? And can you also talk a little bit about perhaps any pre-orders you're seeing for flu vaccines and how that's evolving after obviously what was a bumpy year last year? And then just finally on BlendRep, curious if you could give us any visibility on the type of patients that you're getting in the US going on that drug. And if you could just update us on the timing of the data with the GSI this year. Thank you.

Right, so Luke, could you give a quick response on BlendRep please? Hal on GSI readout? And then we're not going to give any more details on CureVac today. We'll bring more of that later in the year and then we'll finish with Ian please just to give a little bit more colour on the outlook or what we mean by outlooks. Not for that. Okay, so Luke, then Hal please.

Thanks, Emory. And just on flu, look the pre-book's almost complete. It's around 54 million doses to similar 2020. Just one flag to say Ian's work in the future. There was a reversal of a returns provision because we had a lot of demand last year so the comparator will be challenging and the southern hemisphere is looking good. In terms of BlendRep, look I think it's off to a good start. I think if you look at in the post-Dara era, you know strong performance at the same point versus Expovio and Sarcliffa. You asked about a typical patient. There's a broad spectrum. If you average it out, it's a fifth line plus male who's previously been on a TI and IMED and a CD38 and a couple of other combos. It's interesting when you dig into that a little bit further. If you look at shares overall, we're getting about 5% of patients in fourth line, 18% in seventh line plus. So we're actually the leading agent in the seventh line plus, which is about what we'd expect to see at this point. Dose range is good. The dose range is about 185 to 90 mgs per patient. So we're not seeing a lot of evidence around dose splitting, which is good. In terms of dose frequency, we're seeing subjects receiving 60% of the time it's Q3 weekly, 20% it's Q3 to Q4 and only 20% longer than Q4, which again is a good signal in terms of tolerability. And as we move up to earlier lines of treatment, of course, we'll see more patients receiving infusions. About one in two oncologists, hematologists in the US have tried BlendRep and their primary reason for driving using the agent is the efficacy and the mechanism of action. And the main things to navigate, which are actually much lower in terms of percentages, is the eye exam and the logistics around the REM. So I hope that that's useful, Peter, but an encouraging start when we look at the uptake of the product so far.

Do we have anything on GSA timing?

Yeah, no, we should have further data on the BlendRep data with the GSA combination from the DreamFlight study before year end. There will be early data, but we potentially could have some data before year end.

Yep,

Peter. So on growth outlooks that we'll share in June, on the top line, a view for 10 years, more detail around profits for the five year. So I've got no intention of falling into the trap of doing a growth outlook, that's a dodgy one, but certainly more detail around the coming five years on operating profits margins and our outlooks for cash, for example. And obviously, we will provide the detail around, as we've said, around our dividend policy for new GSK at that time also. So those are some of the things that we will cover from a financial outlooks perspective on the 23rd of June.

And with that, we shall all very much look forward to sharing more with you at that event. I hope as many of you can join as possible. And in the meantime, take care and thanks for being with us today.

Thanks very much, everybody. Bye. Thanks to all our speakers. That concludes your conference call for today. You may disconnect. Thank you for joining and enjoy the rest of your day.