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

Thank you, Operator. Hello, everyone.

This is Nick, obviously, as the Operator has just mentioned. Welcome to our full year in Q4 2021 conference call and webcast for investors and analysts. The presentation was posted to gfk.com and it was also sent out by email to our distribution list earlier today. Please turn to slide two. This is the usual safe harbour statement and we'll be making comments on constant exchange rates or CR unless otherwise stated. Please turn to slide three. This is today's schedule. We'll plan to cover all aspects of our four-year results. The presentation will last around 35 minutes to maximise the opportunity for questions. For those on the phone, please join the queue by pressing star one, and we request in the first instance if you could ask one question so that everyone has the chance to participate in today's call. Today our speakers are Emma Walmsley, Luke Miles, Deborah Waterhouse, Brian McNamara, Ian Mackay, and Hal Barron. The Q&A portion of the call will be joined by Roger Connor and David Redford. And with that, I will now hand the call over to Emma. Please turn to slide four.

Thanks, Nick, and a very warm welcome to everyone. I am delighted to announce our 2021 full year results. They demonstrate strong financial performance and continued progress against our strategic priorities. For the full year, sales increased 5% and adjusted EPS increased 9%. Excluding the contribution from COVID solutions, we exceeded our raised guidance with adjusted EPS stable for the full year. Sales growth was driven by first-class commercial execution and strong uptake of new products. Pharma delivered 10% growth, new and specialty medicines growing 26%. Double-digit sales in immunoinflammation, respiratory and oncology, together with sales from Zabudi for COVID-19, all drove this performance. Vaccine sales increased 2%, and consumer healthcare finished the year with 4% growth overall, notably accelerating again in the fourth quarter, with sales up 11%. Alongside this, We increased investment for key R&D pipeline programs, expanded support for new and ongoing launches, and maintained a strong focus on cost optimization. This is also reflected in adjusted operating profit growth, which increased 9% for the full year. We see these results as very encouraging and a demonstration of the accelerating momentum we now have at GSK. As we've said, 2022 marks a step change in growth for the company and is underscored by the guidance for New GSK, the biopharma business we're giving today, of 5% to 7% sales growth and 12% to 14% adjusted operating profit growth at CER. This includes the anticipated benefit of Victavi-related royalties, but excludes any contribution from pandemic solutions. And Ian will provide more detail on this and our overall financial performance in his section. Turning to slide six. 2021 was a year of excellent progress across all three of our long-term strategic priorities. In innovation, we delivered three major product approvals, Gemperli for endometrial cancer, Zavudi for COVID-19, and Apertude, our new long-acting medicine for HIV prevention. We also presented positive phase 3 data for Daproducta, a potential best-in-class medicine for treating anemia of chronic kidney disease, And we expect to file this new and exciting medicine with regulators in the first half of 2022. These new medicines are at the forefront of an exciting high-value pipeline we continue to build across prevention and treatment of disease through organic and inorganic delivery. We now have a pipeline of 21 vaccines and 43 medicines, 22 of which are in pivotal studies. And this year, we anticipate data readouts on up to seven of the 11 new vaccines and medicines we've identified as key future growth drivers. This includes our RSV vaccine for older adults in the first half of 2022 and several new potential specialty treatments, including those for rheumatoid arthritis, cancer, and hepatitis B. In performance, our decision to prioritize investment and commercial execution to specialty medicines and vaccines is evident in our improving sales growth. SINGRIX sales clearly reflected the adverse impact of COVID-19 last year, particularly in the US. But we exceeded our expectations highlighted at Q3 to deliver sales of £1.7 billion. And this year, we do expect to see strong recovery growth and loophole through the detail in a moment. And lastly, on trust. We continue to maintain sector leadership in ESG, with our number one ranking in the Dow Jones Sustainability Index and our longstanding leadership in the Access to Medicines Index. Looking ahead, we also aim to deliver ambitious environmental commitments with targets of net zero on carbon and net positive on nature by 2030, and we're also making good progress on diversity and inclusion. ESG will continue to be an integral part of new GSK strategy and investment cases. And turning to slide seven, 2022 sees the biggest change in GSK's recent corporate history with the creation of a new, unique world leader dedicated to consumer health care expected in the middle of this year. This will be the culmination of a series of progressive strategic moves successfully executed over the last few years to build significant value and a new consumer health care company. We're now in full countdown mode to demerger, and by doing so, our aim is to unlock the potential of both GSK and Consumer Health, to strengthen GSK's balance sheet, and to maximize value for all our shareholders. As a new standalone company, the consumer healthcare business is a compelling prospect. It has an outstanding brand portfolio and will be a world leader in consumer health. For prospective investors, it'll offer a highly attractive financial profile of above-category sales growth, sustainable margin expansion and high stable cash generation. It will have a fantastic leadership team led by CEO designate Brian McNamara and a board with best in class international consumer sector experience as is already evident with the recent appointment of Sir Dave Lewis as chairman designate. We're going to provide a lot more detail on this business at our capital markets event later this month and Brian will give you more on this shortly. For New GSK, as we've previously shared, we've set a new purpose and new ambitions for growth. Our purpose is to unite science, talent, and technology to get ahead of disease together, to deliver scaled human health impact, improved returns for shareholders, and to be a company where outstanding people thrive. This is reflected in the growth commitments and ambition we set out in our investor update in June last year. These represent a significant step change in delivery for GSK. And as I said earlier, start now and are reflected in the guidance we're giving today and the exciting R&D catalysts ahead. Before closing, I would like to say a very big thank you to the more than 94,000 GSK people who helped to deliver our 2021 performance. and the momentum they have built as we head into this landmark year. So let me now hand over to this team who will take you through more of the details. Luke, first of all, over to you.

Thanks, Emma. Please turn to slide nine. Let me start with new and specialty where we made remarkable progress driven by excellent commercial execution. Excluding Zavudi, we delivered 14% sales growth for the year and 10% in Q4, maintaining our double-digit track record. I'm incredibly proud to report that two of our assets exceeded one billion pounds in sales for the first time, Trilogy and Nucala. And, as you've seen, we were able to respond quickly to the strong demand for Zazuti, delivering close to one billion in sales of this crucial kind of treatment. Trilogy had a fantastic year despite growing competition, and our unique dual indication in COPD and asthma continues to drive high demand in the US and Japan. We've also seen very positive trends for our launch in China, where the single inhaler therapy class is growing rapidly, and we are winning share in Tier 1 and Tier 2 cities. For Nucala, sales are up 22%, and it remains the leading IL-5 for EOS-driven diseases across key markets. We're pleased to see that our robust approach to lifecycle innovation is driving incremental growth opportunities with the launch of three new indications, eGPA, HES, and nasal polyps in Europe. Ben Lister also benefits from label expansion, with sales up 29% as we reach more new patients with lupus nephritis. And against the backdrop of COVID, we continue to see the importance of having a subcut formulation available for at-home use. And as expected, with competitors entering the market, we've seen an overall increase in biologic use, benefiting Ben Lister as the leader. In oncology, we continue to make steady progress. Blen remains the only office shop for anti-B-CMA therapy, and we've expanded our presence for 13 markets. In the US, we're driving use in the community setting where most multiple myeloma patients are treated. And we're working to reach new physicians as prescribing experience improves perceptions of corneal adverse events management. Closing with Sejula, COVID continues to impact the ovarian cancer market with diagnosis and debulking surgeries still below pre-pandemic level. Despite the constrained market, Sejula deserves its strongest quarter of sales today. And we continue to perform exceptionally well in market share terms with one and two new patients receiving a PARP being prescribed Sejula. So a very strong year for new and specialty, and we expect to grow specialty sales by around 10% in 2022, even with Trilogy moving into the new general medicines area. And this is before we include the expected contribution from Zazidi. Please turn to slide 10. Moving to vaccines, full-year sales increased by 2%, but decreased by 5%, excluding pandemic sales. the overall performance demonstrated the impact on several of our vaccines of COVID. Most impacted was Shingrix, where sales were down 9% of the year, which was slightly better than the outlook we indicated at the nine-month stage. Based on the encouraging early momentum we're seeing, we continue to anticipate a strong sales recovery in 2022. Since Q2 2021, Shingrix has delivered strong sequential growth reflecting improvement in trends in the U.S. including solid demand in the non-retail channel, as well as contributions from new European launches and recovery of demand in Germany. We expect this momentum to continue in 2022 to strike Omicron's short-term impact. We continue to launch in new markets supported by our unconstrained supply position, and we believe there is a significant pent-up demand in the US. Consequently, we continue to expect Shingrix to deliver strong double-digit sales growth in 2022 with record annual sales. This will be a crucial driver of the expected low teen sales growth of vaccines here, including pandemic solutions. Looking further ahead by 2024, we expect Shingrix to be available in 35 markets, representing nearly 90% of the global vaccine market, underscoring our ambition to double Shingrix revenues by 2026. Let me now hand over to Deborah on slide 11.

Thank you, Luke. Our goal is to remain innovation leaders in HIV, achieve a mid-single-digit sales CAGR to 2026, and digest the loss of exclusivity of dollar tag revere at the end of the decade through the changing mix of our portfolio and the success of our pipeline. Our Q4 and four-year results demonstrate positive momentum towards delivering on these objectives. Sales grew 3%, both for Q4 and for the year. Within this, we achieved a noticeable acceleration in our innovation sales, which now stand at 34% of our portfolio, and all regions reported growth. This acceleration in growth results from strong commercial execution behind our two drug regimens, and Dovato in particular. Sales of Dovato more than doubled to 787 million pounds, and are fast approaching 20% of the total HIV sales. Zolotegravir based regimens now hold the number one position in the share of the switch market across the US and Europe. Based on this strong momentum, we believe Devato is on track to deliver £1 billion of sales in 2022 with further significant growth potential beyond. Please turn to slide 12. Turning to our injectable portfolio, Cabinuva is our first-in-class long-acting regimen for the treatment of HIV, for which we received FDA approval last week for every two-month dosing. As with any new class of medicine, cells of Cabinuva will take time to build, and the COVID environment is constraining switch activity, particularly where a patient needs to visit a physician's office. Nevertheless, over 4,500 people living with HIV are already taking Cabinuva slash Bacabria recambis, And the outlook for this important new medicine is strong brand recognition and market access exceeding 80%. Moving on to prevention, we ended 2021 on a high with the FDA approval of Apertude, the world's first long-acting injectable for the prevention of HIV, dosed every two months. HIV prevention is a huge unmet need as current medical options are associated with stigma and adherence issues. Apertude not only addresses these concerns, but it has demonstrated superior efficacy over daily oral tablets. As a new paradigm, we need to educate physicians, patients, and payers, so this year our focus is on building awareness and access for Apertude. The early signs are encouraging with positive feedback from patients and prescribers, and with political will supportive of HIV prevention. Consequently, we remain confident that Apertude will deliver significant benefits to patients in the years ahead, as well as significant commercial values beginning in 2023. And with that, I will hand over to Brian, and we will move on to slide 13.

Thanks, Deborah. Now turning to consumer health care. Sales for the full year, excluding brands divested under review, increased by 4% at constant exchange rates. despite a negative 1% impact of COVID on cold and flu sales, building on the 4% growth we delivered in 2020. International grew 9%, with emerging markets performing particularly well, including China and East Africa growing double digits. U.S. sales increased 2%, and Europe was broadly stable, with both regions building momentum through the year. Q4 growth was strong, up 11% at constant exchange rates, albeit against a weaker comparator of 1% growth in 2020, with all categories performing well. Cold and flu sales rebounded in Q4, with European sales above 2019 and U.S. sales only slightly below. From a category perspective for the full year, oral health sales increased 5%, with broad-based growth in key markets, reflecting brand strength, strong execution, and successful innovation. Pain relief grew high single digits. This was primarily driven by Panadol, which benefited from seasonal demand in the second half of the year. Voltaren delivered mid-single-digit growth despite the expected introduction of U.S. private label earlier in the year. Vitamins, minerals, and supplements grew 4%, continuing the momentum on a very strong year-over-year comparator. Centrum growth in the second half was particularly strong due to increased capacity and retailer stocking. Respiratory declined 1%, with strong growth in allergy offset by a mid-single-digit decline of our cold and flu products. Q4 rebounded, delivering 40% growth due to a return of a more typical cold and flu demand, although it felt just short of offsetting the unprecedented market declines in Q1. Digestive health and other sales are up mid-single digits, with broad-based growth across skin, digestive health, and smoker's health. On e-commerce, year-to-date sales grew in the high 20% range and is now 8% of sales, with good growth in key regions such as China. Our ongoing investment in digital capabilities continue to position us well for growth in this vital channel. We've also delivered strong margin progression for the year of 200 basis points at constant exchange rates, while at the same time increasing investment in our brand. Operational efficiencies on top of synergies, along with pricing, have more than offset the impact of divestments and inflation in the year. Overall, looking at sales growth over the last two years, we've delivered a CAGR of over 4% despite net COVID headwinds. We were able to successfully capitalize on tailwinds created by increased vitamin mineral supplement demand. However, these were more than offset by the decline in respiratory as a result of the historically low cold and flu season. This clearly demonstrates the strength and breadth of our portfolio and the capabilities we built through the two most significant transactions in the industry, coupled with extensive portfolio rationalization. This positions us to deliver sustained market outperformance, with a 4% to 6% medium-term annual sales outlook. Please turn to slide 14. With regards to the upcoming separation, I'm delighted that Dave Lewis was recently appointed as chair designate, and my executive leadership team has now been announced. I hope you will join us at our Capital Markets Day, which will take place virtually on February 28th. We will lay out our strategic priorities, key growth drivers, and detailed financial information. The team and I will share both a global and regional overview, including our innovation, digital and operational capabilities, as well as our capital allocation priorities as a newly listed company. Most importantly, we will set out how we will deliver the growth, category outperformance, and attractive sustainable returns that we are confident this business can achieve in the medium term. With that, I'll hand it over to Ian. Please turn to page slide 15.

Thanks, Brian. As I cover the financials, references to growth are constant exchange rates and less data. On slide 16, there's a summary of the group's results for the full year 2021, and I'll focus my comments on the full year performance. Turnover was £34.1 billion, up 5%, and adjusted operating profit was £8.8 billion, up 9%. Total earnings per share were 87.6 pence, down 13%, while adjusted earnings per share was 113.2 pence, up 9%. Pandemic solutions contributed approximately nine points of growth in adjusted earnings per share. On currency, there was a headwind of 5% in sales and 11% in adjusted earnings per share, in particular due to the strengthening of sterling against the US dollar relative to 2020. Turning to the next slide. This slide summarises the reconciliation of our total to adjusted results. The main adjusting items of note for the year were in disposals and other, which primarily reflected profits across several divestments, including the gain on disposal of rights to the royalty stream for Cabozantinib in Q1, the gain on disposal of the Kefla's Warrants business in Q4, and the significant positive revaluation of deferred tax assets in the UK, resulting from the Q2 enactment of the 2021 UK Finance Bill. And finally, in transaction-related, the main factor was the movement on the Veeb CCL, which included the impact of the settlement with Gilead. My comments from here onwards from adjusted results, unless stated otherwise. Turning to slide 18. Key drivers of revenues and profits for the group in 2021 compared to 2020 are set out here. Revenues grew 5% overall. Revenues from our COVID solutions contributed around 4 percentage points of that growth. Positive operating leverage from higher sales in the year was supported by continued focus on cost control and the benefits and synergies resulting from restructuring across the group, with SG&A down 1%. This included favourable legal settlements compared to increased legal costs in 2020, which primarily impacted Q1, and one-off benefits in pensions and insurance in Q4. Alongside these benefits, we continued to prioritize investing in our pipeline, and R&D expenditures increased by 8%. This resulted in an adjusted operating profit increase of 9%, with pandemic solutions contributing 7 percentage points of that growth. The full year margin was 25.8%, and 90 basis points higher than 2020 at constant exchange rates. Turning to slide 19. Moving to the bottom half of the P&L, I'd highlight that the effective tax rate of 17.5% was aligned with expectations, and that interest expense of £753 million was slightly lower than expected, primarily due to favourable foreign exchange. Next, I'll briefly cover free cash flow for the year before going into more detail on the financials of each business. On slide 20, In 2021, we generated 4.4 billion pounds of free cash flow. This was a step down versus 2020 and consistent with our outlook given in February last year. The positive factors of increased adjusted operating profit at CER and lower dividends to non-controlling interests were more than offset by increased purchases of intangible assets, including our collaborations with Elector and Iteus from Q3, reduced proceeds following completion of the consumer brands disposal program, adverse timing of returns and rebates compared to 2020, and adverse exchange impacts. Net cash generated from operations for the group was 8 billion pounds. We expect to share comparators for new GSK cash flow later in the first half. In 2022, we expect cash generated from operations for new GSK on a like-for-like basis to be higher than 2021 as a result of the Gilead settlement and increased adjusted operating profit. This will be partly offset by lower cash generated from lower margin COVID solutions and RAR headwinds related to the phasing of payments in 2021 and continued generics impact on the U.S. respiratory portfolio. Turning to performance of the pharma business on slide 21. Overall, pharmaceutical revenues grew 10%, driven by strong growth in new and specialty medicines, favorable U.S. return on rebate adjustments, and sales of Zavudi, which contributed 6% in points of growth. Within this 10% growth, established pharma sales decreased 6% in 2021, which was slightly better than expected. The pharma operating margin was 26.4% for 2021. The increase in profit margin primarily reflected the positive operating leverage from the increased sales, including favorable pricing in RER, continued tight cost control and restructuring benefits. This was partly offset by continued investment in R&D and HIV product launches. Turning to slide 22, overall vaccine sales grew. Excluding pandemic adjuvant revenue, sales decreased 5%, primarily driven by Shunrich's dynamics, which Lucas described. We continue to be very confident in the demand for vaccines. Notably, during 2022, we expect Shunrich's to deliver record sales with strong double-digit growth. The operating margin was 33.3%. The decrease in operating profit and margin primarily reflected higher supply chain costs resulting from lower demand. This was accompanied by an increased R&D investment of 34% as we progressed our RSV and meningitis development programs and invested in our MR&A platform. Higher royalty income and beneficial mix from pandemic adjuvant sales partly offset these factors. In Q4, sales were down 7%, reflecting the tough comparison in 2020 and huge strong Shindrick's sales. Turning to slide 23, revenues in consumer healthcare increased 4%, excluding brands either divested or under review. Including those brands, turnover was flat. Brian outlined the main drivers earlier. The operating margin was 23.3%, up 200 basis points at CER versus last year due to sales growth, including favourable pricing and mix, and strong synergy delivery. This was partially offset by 120 basis point impact from divested brands. in addition to commodity and freight cost pressures. The strong 11% sales growth, excluding brands divested around review in Q4, is encouraging sign of momentum as the business moves into 2022. Turning to slide 24, I'll close with our guidance for new GSK in 2022, all of which excludes the commercial impact of our COVID solutions. Our guidance is predicated on the consumer healthcare business being demerged in mid-2022 We expect the formal criteria for treating consumer healthcare as a discontinued operation to be satisfied in Q2. GSK will continue to consolidate the business for reporting purposes until the planned merger. As Brian mentioned earlier, the Consumer Healthcare Capital Markets Day will set out the strategic priorities, key growth drivers, and detailed financial information that underpin our confidence in compelling medium-term outlooks for that company. For new GSK, 2022 will see a step change in growth. We expect new GSK sales growth to be between 5% and 7% in 2022. Investment in the business for growth will continue in a focused and controlled fashion, and so we expect SG&A and R&D to increase their rates similar to sales, whilst we expect cost of goods sold to increase the slower rate than sales. As a result, our guidance for adjusted operating profit is for between 12% and 14% growth. This includes the anticipated benefit of the related royalties, contributing around 2 percentage points of adjusted operating profit growth. On the outlook for COVID solutions in 2022, based on known binding agreements with governments, we expect that COVID solutions will contribute a similar sales level to 2021, but a substantially reduced profit contribution due to the increased proportion of lower margins of OD sales. We expect this to reduce new GSK adjusted operating profit growth, including COVID solutions in both years, by between 5% to 7%. We'll provide quarterly updates as future contracting and binding agreements progresses. With regards to dividend policy in 2022, the total expected cash distribution and the respective dividend payout ratios for each company are unchanged from what we communicated at our investor update last June. GSK expects to pay 49 pence per share, comprising 44 pence per share for new GSK, and 5 pence per share representing consumer health care, while still part of the group. Consumer health care's dividend in the second half of 2022 is subject to review and approval by the Consumer Health Care Board. This is expected to be around 3 pence per share, and has been adjusted to reflect the total number of consumer shares that are expected to be an issue upon demerger. In more detail, we will provide an appendix. Given the complexities associated with demerging a significant operating segment of the company, we'll provide adjusted earnings per share guidance at our Q2 results following the demerger. To help with modeling new GSK, a reconciliation of the 2021 results to reflect new reporting format is expected to become available later in the first half. As a reminder, we'll be presenting a single new GSK operating margin in the future. In summary, we believe the business momentum built from the excellent work for our teams in 2021 sets us up for a step change and growth for new GSK platform 22. And with that, I'll hand over to Hal.

Thanks, Ian. I'll provide a short update on our progress in R&D over the past year and highlight some of the key upcoming pipeline milestones. Please turn to slide 26. As we set out last June, the transformation of our R&D approach in 2018 has resulted in a significantly stronger pipeline and improved productivity across multiple metrics. And in 2021, we continue to build on this momentum. In terms of late-stage pipeline achievements, advancements, we achieved the first regulatory approval for three new medicines in 2021, Apertude, Zavudi, and Gemperli, as well as seven regulatory submissions. And as Luke mentioned earlier, our approach to lifecycle innovation is also delivering with five additional approvals in 2021 for Nucala and Benlista. We also reported positive pivotal data on three assets, including Deportstat, which I'll cover in more detail in a moment, and started eight new phase three trials. In total, we have delivered 13 major regulatory reports in 2017, which is top core, top performance for the industry. And four of these assets have already achieved so-called blockbuster status. As a reminder, We expect the medicines and vaccines approved between 2017 and 2021 to contribute around 60% of UTSK's 21 to 26 sales growth, with the anticipated pipeline approvals contributing another 40%. We're also bringing forward the next generation of innovative assets into our pipeline, driven by our focus on the science of the immune system, human genetics, and advanced technologies. In 2021, we moved 19 assets into phase one or phase two trials, which are the direct result of our focus on human genetics and functional genomics with our overarching vision to use the human as the model organism. An excellent example of this is our anti-IL-18 neutralizing antibody, so-called GSK806, which is being developed to treat patients with atopic dermatitis where there is strong genetic rationale for this target. The second example is GSK130, a monoclonal antibody that just entered Phase I and targets IL-7, which is genetically associated with developing multiple sclerosis. In oncology, our internal work on functional genomics identified more than 10 target candidates in research for evaluation in the field of synthetic lethality. Our collaboration with IDEA has three synthetic lethal targets. The most advanced is our MAT2A inhibitor, which is in phase one for patients with tumor where MTAF is deleted, which is common in solid tumors. Overall, I'm very excited about the potential of this next wave of medicines and vaccines in our pipeline. Please turn to slide 27. This slide highlights two major pipeline achievements delivered towards the end of 2021. I've previously spoken before about the protostat, our HIF-prolyl hydroxylase inhibitor, a target we chose to pursue because, again, genetics strongly suggested a role in stimulating urethropoiesis. The ASCEND Phase III program recruited over 8,000 patients in well-designed studies using active controls and delivered very consistent efficacy and safety results in both dialysis and non-dialysis patients. The results uniquely demonstrated that diprotestat met the primary endpoint of non-inferiority to an ethropoiesin-stimulating agent in terms of cardiovascular safety and was shown to be as effective as standard care in treating to a target hemoglobin range. We believe these data position Deporteset as the best-in-class oral agent for treating patients with anemia of chronic kidney disease and are on track to submit these data in the first half of this year. The second key pipeline achievement was the approval of Apertude for the prevention of HIV based on extremely impressive efficacy results. This exciting milestone was well covered by Deborah earlier, so let's turn to slide 28. Looking to the year ahead, this slide focuses on the important pipeline milestones we anticipate in the first half of 2022. RSV disease represents a significant unmet medical need with RSV infections accounting for around 180,000 hospitalizations each year and about 14,000 deaths in the over 65 population in the United States alone. The unique design of our antigen slash adjuvant combination induces a strong neutralizing antibody titers and T cell responses against both RSV A and B in the phase two trials, which is critical to protect an older adult population for increased risk for RSV disease. From the literature and our trial data, we know that older adults typically have a lower T cell response when compared to younger populations. And our RSV older adult vaccine utilizes our AS01 adjuvant to overcome this deficiency. Our RSV older adult trial is expected to read out ahead of our original timelines with headline data expected during the first half of 2022. And filing is anticipated before year end, potentially putting us on a path for inclusion in the June 2023 ACIP meeting. Please turn to slide 29. The next two years, we'll see R&D continue to deliver important news flow on several potential new medicines and vaccines within our late-stage pipeline. In 2022, we anticipate late-stage milestones from up to seven of the 11 new vaccines and medicines we highlighted at the investor update in June last year, including those I've already mentioned. I'll take two minutes to highlight some of the other readouts that I'm most excited about. I'll start with the telomere, where we have three Phase III trials reading out in 2022, contrast 1, 2, and 3. These data will define the efficacy and safety of our anti-GM-CSF antibody, which has the potential to deliver an entirely new mechanism of action for patients with rheumatoid arthritis. Data from the Phase IIb trials suggested a unique reduction in pain, which we believe could be driven by CCL17, the most overexpressed protein by monocytes when stimulated by GM-CSF. Based on this finding, we moved GSK279, a CCL17 monoclonal antibody, into development to treat patients with osteoarthritic pain, and we expect initial data to be available later. In addition, we expect data on Blenrep with pivotal DREAM3 trial readout in patients with third-line multiple myeloma. This is an important study as it will give us the first progression-free survival and overall survival data on Blenrep in a randomized setting. We also anticipate presenting data around the middle of this year on blemurep in combination with a gamma secretase measure. These data will also help inform our strategy for treating patients in the frontline setting. I also want to briefly mention BepiReversin, our HBV ASO, which we plan to present data on in the middle of the year from our Phase IIb trial investigating the treatment of patients with chronic hep B. There's a significant medical need for these patients, with over around 300 million patients living with hep B, and the disease is responsible for over 900,000 deaths each year. In addition to these late-stage results, we plan at least three major regulatory submissions in 22, including Deprotestat, RSV for older adults, and BlendRep in the third-line setting. We have recently announced several impressive leadership appointments, including Phil Dormitzer as the head of Vaccines R&D, who joined us from Pfizer, and Hesham Abdullah, who was promoted to the head of Clinical Oncology. In January, we also announced that Tony Wood would be our new chief scientific officer from the first of August, and I'm delighted about his appointment. Tony is a person and scientist of the highest quality. It was integral to building our new approach to R&D, And his appointment and expertise deepened our commitment to this strategy, and I'm positive that Tony will be an outstanding leader for GSK R&D. I'm also pleased to remain part of GSK Beyond August as I transition to a non-executive board member and support Tony and the team to deliver on the promise of our exciting pipeline. So in summary, 2022 will be an exciting year for our high-quality pipeline, and I remain very confident that we'll continue to advance the standards of care for patients and deliver value to shareholders. With that, I'll hand it back to Emma to take the rest of the call.

Thank you. So let's move to Q&A, please. Operator. Thank you. The first question is coming from the line of James Gordon from JPM. Please go ahead.

Hello, James Gordon, JPMorgan. Thanks for taking the questions. If I just have one question, I'll ask a question about specialty pharma. So I saw specialty pharma sales were a little bit light versus consensus expectations today. And our growth is going to be approximately 10% in 2022. which sounds a little bit more cautious than the double-digit medium-term outlook that you issued in June last year. So have things got any toughness to these assets? Is it going to be a bit of a back-end weighted CAGF or specialty pharma? And what could drive an inflection, particularly in oncology? Do we need more data or is it really about just COVID diagnoses or COVID going better and then more diagnoses for these conditions? And if I could, not another question, just a clarification. If I look at the guidance, the 5% to 7% core EBIT headwinds for COVID-19 product contribution, it looks like it's effectively assuming that you sell the 1 million doses of Zabudi that you've already got an order for, but there's no more sales at all for the rest of the year. So just a clarification, is that right? The assumption is that beyond the orders you've already got, you won't sell any more Zabudi this year?

Well, I'm going to ask Ian, thanks, James, for that one question and then clarification. And I'll ask Ian to pick up exactly first on the forecast forward for COVID solutions, just remembering it's not in any of our guidance either for this year or for the year ahead. And obviously, there's still some uncertainty about how that market will play out. We'll come to Ian first. And then Just more broadly on the total outlook, obviously, we've guided more than five top line on a five year outlook. And as you said, double digit for specialty and high single digit for vaccines. We're very clear that that isn't, at an overall level, something that we're expecting anyone to wait for, which is why we're starting strong and starting now in 22 with five to seven. But clearly, the mix of that is dependent on some of the pipeline both coming and recent launches maturing into more scale contributions and specialty. But I'm going to ask Luke to comment a bit more on some of the shape of that, and then perhaps Hal, we can come back to you to talk about some of the pipeline catalysts further out in specialty medicines more broadly.

First of all, Ian, on... Yeah, easy answer, James. Pretty much exactly what we wrote in our earnings release, which we expect pandemic sales were around 1.4 billion from Zuby. That reflects binding agreements that we have in place at this point in time. And to the extent there are any further binding agreements that would inform any updates, we'll provide those on a quarterly basis. Okay?

So, Luke, in terms of momentum and outlook on specialty?

Yeah, thanks, James. Look, I think the momentum, for example, on trilogy is very strong. We're getting five scripts for every one that ResTree gets. Ben Lister is very healthy. I think the primary challenge is, and we've placed this in the backup, in the appendix, is just the continued slow recovery of ovarian cancer diagnosis, which is still down by 22%. And debulking surgeries are down by 17%. So that's taking longer to resolve than we were expected, which is obviously very sad. And we expect that when those women present, the disease is going to be more advanced. And so that is having an impact. There was also some pricing pressure emerging in the IL-5 class in Q4.

Thank you. And perhaps, Deborah, but before we go to Hal, obviously one of the areas that's going to continue to build in contribution is the innovation in HIV. So, Deborah, to you first.

Yes, so I think at the Business Investor Update at the end of November, we committed to mid-single-digit CAGR between now and 2026, and that's an acceleration of growth where we've been over the last few years, where if you remember, we've had kind of over the last three, 1%, 1%, and then obviously in 2021, we were at 3%. So you can see that progressive growth acceleration. And we feel very positive about our ability to deliver that mid-single-digit CAGR on the back of the tremendous... you know, progress that we've made with Dabato, but also the fact that you'll get more material contribution from Cabinuva, certainly 2022 and beyond, and Apertude 2023 and beyond. So I'm feeling really, you know, excited and confident about the future in the HIV part of specialty.

Thank you. Hal, anything to add on catalysts to follow?

Yeah, you know, there's been a lot of catalysts in the last 12 months, as I've pointed out, with the three regulatory approvals and the seven major filings, three pivotal data readouts, you know, the eight phase three starts. I think it's also important now that we have 64 medicines and vaccines in the pipeline, 22 of which are in late stage pivotal studies, so you're going to be seeing a lot of readouts. Most importantly, in 2022, we've talked about the 11 key assets, and in 2022, we're hoping that up to seven of those will actually have readouts, including RSV-OA in the first half, Otilamab, as I mentioned, in the second half, Blenrep, Trim3 in the second half, RSV maternal, which we should get data on the second half, the meninge, pentavalent, ABCWY in the second half. Jim Purley will have a readout both in the conversion of the Garnet study as well as data in Ruby. And as I mentioned a little earlier, Phase 2B, Bepi-Riverson for the B-Clear study in HBV. And that, of course, complements the wonderful data that we received earlier with Apertude and the recent approval. So really quite a lot of catalysts.

I think fundamentally, James, it's just worth reminding ourselves that in new and specialty, our growth last year was 26%, and even excluding the contribution from Zabudi, it's 14%. So there's a lot of reason for confidence in strong executional performance of growth, and then, of course, all the pipeline to add to that. Next question, please.

The next question is coming from the line of Clay Parekh from Goldman Sachs. Please go ahead.

Hi, thank you. Hopefully you can hear me okay. Two questions, please. The first one for Debra, just following up on your comments about the HIV, and I see that you're guiding to about 2 billion sterling in kind of revenue contribution from the long-acting regimens by 2026. But what I would be interested in, Debra, is your perspectives on how you see that long-acting market developing beyond 2026, into the kind of the 2030s, given the news flow we've had from Slap Reveal and kind of just the early feedback you've had on the prep launch. So just kind of how are you framing that longer term outlook for that business? And then secondly, Hal, many congratulations on all your successes and kind of best of luck in your new role. But as you sit here today and look at the progress Glaxo have made from an R&D perspective over the last few years, how much of what you set out to do at the start have you achieved so far? How much more do you think Glaxo as a company needs to achieve? And what role do you think you might be playing in that from a non-executive perspective? Thank you.

Thanks very much, Carol. Well, directly to Deborah and then Hartley.

Yeah, so thanks for the question. So, I mean, we see the long-acting market from a treatment perspective to be about £4 million to £5 million in value by the end of the 2030s. And actually, by the end of the 2020s, we see £4 billion to £5 billion in value for the prep market. So both the same kind of value from a long-acting perspective by the end of the 2020s decade. I think despite the fact that we've seen Ice Black Travia have some challenges, we've seen that Gilead are also extremely committed to long-acting themselves with Lenacapavia, and they outlined in their results, obviously, all the partners that they're looking at for Lenacapavia. So I think what you're hearing from both of the big players in the market is that there is a big opportunity to serve the needs of patients. by delivering innovative new medicines into both the prevention and the treatment part of the market. The other thing that I find encouraging, so obviously Merck will continue to look isolated, but the piece that I think is really encouraging is the real energy around the evolution of the PrEP market in the United States. So if you remember, ending the epidemic is a commitment that there will be significantly less new infections as the decade progresses to the point at which there is a 90% reduction by 2030. And the government in the US is extremely energized at the moment around how they're going to deliver against that target. There's a lot of dialogue occurring and there's a lot of encouraging, you know, sounds about how we could see that PrEP market evolve, given that only 23% of those that could benefit from PrEP are actually getting a medicine today. So I think the numbers that we talked about at the BIU in June and again in November are still what we're expecting in terms of long-acting treatment market, long-acting PrEP market, both each being around £4 billion to £5 billion by the end of the 2020s.

The other thing is, I mean, and maybe worth mentioning, is the very exciting next-gen pipeline that's coming through in longer acting that you and Kim covered off in November. When we get into longer acting, longer acting is beyond the near term.

Yeah, we're really excited about that. So we have, if you remember, three areas where we're really focusing, an at-home treatment, an ultra-long-acting treatment, which will be clinic-delivered, and then obviously we're focusing on cures. And so where we are today with, you know, with Apertude and Cabinuva, we're absolutely not stopping there. That's why we're so confident about our ability to move past the Dolotegravir loss of exclusivity and still, you know, replace a lot of that revenue that is lost and have a very vibrant HIV business at the end of the decade and beyond. So, you know, obviously we've got integrated at the core, both with Cabotegravir and then the next generations that we've integrated you know, that we've agreed to in-license from Shinogi. And then we've got the partner options that we're looking at, and we should be able to pick a partner for Cabotegravir for at-home and long-acting in 2024 as data reads out and informs our choices. So really excited about the pathway, which is very clear before us, and the choice points and when data will be available are also very clear, and we'll keep you all updated. Thank you. Hal?

Thanks for this. Comment, question, care. First let me say I'm actually very proud of what we've, in the R&D organization, have accomplished over the past four years. There's so many different metrics one could use to highlight that. Today the pipeline has 64 medicines and vaccines, 22 of which are in pivotal studies. We have 13 novel assets in phase three. As Emma mentioned earlier, we've doubled the number of phase three assets over the last couple years. Probably the most important metric that I look at is how much of the R&D success and the pipeline are driving the CAGRs that we are proposing, which are top quartile relative to our peers. And when you look back, there's been 13 new medicines and vaccines approved over the last four and a quarter years or so, and that's driving about 60% of the really terrific performance that we've committed to. And importantly, on a risk-adjusted basis, late-stage pipeline. And this, again, excludes all of phase one and phase two is expected on an adjusted basis to drive another 40% of that growth. So I think those are really important metrics. There's quite a lot of other metrics, but I think we've made quite a bit of progress. You asked what's not finished. Well, I think if you think about being the head of R&D at any pharma company or biotech company, you never leave the job finished. The job There's always more assets you can progress. There's more programs. There's more lifecycle innovation. As long as the success rate is where it is, there's still an enormous opportunity to transform how targets are discovered. And I'm very excited about how much progress we've made on using the human as the model organism, using human genetics, functional genomics, and machine learning to evolve our strategy. In fact, if you think about what's coming, we have around 40 collaboration projects with 23andMe on human genetically validated targets. We have 10 synthetically lethal programs that were internally developed. We have three with IDEA. We have programs with the Broad. We have programs with Andristia. A number of collaboration programs, the anti-sortalin program. So a number of genetically validated targets that over the next five to 10 years are going to evolve. I'm looking forward to my transition from being the CSO to the board member to help Tony Wood, who is an outstanding leader, an outstanding scientist, an outstanding person, and I'm hoping that I can play some role in helping him evolve our strategy to be able to accomplish all these things that we're hoping to do.

And I would just reiterate that what matters most in these transitions is extremely well planned and strategic and thoughtful succession. We are all very confident we're going to accelerate the momentum of the execution of this strategy that objectively and quantitatively can really be seen to be bearing results already. And we're absolutely thrilled that Hal is still going to be part of that adventure as a board member, as a science committee member, and with some additional commitments that I know he's more than happily made to support the R&D organization, its advisory boards, some connectivity in his part of the world. And we are Obviously, very proud of him for his next steps, too, and excited for the path ahead.

Next question, please. Hello? The next question is coming from the line of Graham Perry from Bank of America. Please go ahead.

Great. Thanks for taking my question. So, firstly, on the RSV vaccine, it looks like Pfizer's on track to publish RSC older adults vaccine data Q1 or Q2, possibly ahead of GSK. Are you seeing that the hurdle rate for both their vaccine and yours is the same level of protection you saw in J&J's Cyprus Phase 2 trial? And how confident are you that your vaccine can match those levels? And do you see that by not waiting for a full RSV season that Pfizer could gain any sort of time advantage to the market to you? Or is it just a seasonal issue? And then secondly, on COGS, that was negatively impacted by both Savudi and right now it's in the quarter. Just wonder if you could quantify how much for each in basis points and just the right sort of longer term COGS ratio ex-pandemic we should be thinking about.

Right. So briefly, Ian, could you comment on COGS and then Hal on RSVP?

Well, Graham, again, we provide a little bit of a steer in terms of the impact of Zavudi in terms of operating margin. We participate in about 27.3% of the economics from sales in Zavudi. So when you sort of translate that through to the overall profitability, we provide some steer in our earnings release in terms of what that means. There is within the team a very strong focus on continuing to drive productivity and efficiency across companies. the supply chain through COGS, and as we talked about in the investor update in June, that focus remains consistent and is part of what informs our progress in operating profit growth in 2022 and beyond.

Paul? Yeah, thanks, Graham. You know, our RSV program is actually ahead of schedule, as I mentioned. Enrollment is completed, and we expect the data for the trial to read out this half, H-122. In terms of, it's important to keep in mind that we have a pretty unique vaccine because we, as you know, have the protein with the AS01 adjuvant. And we think this is a very important component because, as I mentioned earlier, the elderly, who are obviously at risk for the complications of this infection, over time lose their both adaptive and innate sense of being able about this infection, and particularly you see an abnormality in their T cell response. So we're, you know, optimistic that the combination of the right protein, the RSVA, which neutralizes both the RSVA and the isoforms of the virus, as well as having the T cell modulatory component with the adjuvant, will give us the highest chance of success in this, for this vaccine.

Thanks. Next question, please. question is coming from the line of Simon Baker, Gladburn. Please go ahead.

Thank you for taking my question. And just going back to Graham's question on COGS, Ian, you pointed out the impact of Zavudi, but also in the press release, you discussed other headwinds on the gross margin in 2021. Presumably, in light of the comments you made on R&D, SG&A, and the guidance for operating profit, they will fall away in their entirety in 2022. But I just wonder if you could give us any other non-Zavudi tailwinds and headwinds we should be thinking about for COGS in 2022. Thanks so much.

Well, what I was referring to in 2021 was specifically some higher inventory costs within COGS and lower demand, particularly within the vaccines business. That was one key driver. Another factor, which was possibly more noticeable within our consumer business, but as well as it was managed there, equally managed within the biopharma business was around input costs. So freight, as an example, where I think the team was incredibly successful in driving productivity to offset some of that inflationary pressures. That focus, and we believe capability continues through 2022. So there are a couple of factors that were unique to 2021 that I've mentioned that we do not see at this point in time, recurring in 2022. And then just that overall focus and driving efficiency productivity through the commercial cycle across our businesses in managing cost of goods sold overall, where we've built a good track record over the course of the last couple of years, we expect to be able to sustain over the coming years. So it's good old-fashioned productivity through the supply chain, the procurement channels, good linkage with commercial cycle in terms of understanding demand and market and managing inventory accordingly.

Thank you. Next question, please. My question is, could you please just limit your question to one question due to the time remaining? Thank you. And the next one is coming from Tim Anderson .

Oh, thank you. I have a question, just a pipeline question. Atilamab, you call out the Phase III readout in RA in the second half as an important 2022 catalyst. To me, that Phase II data always looked a little questionable. And I know Glaxo is the only company chasing this mechanism. Sometimes that's a red flag because most of the time other companies crowd into new and exciting areas. So my question is your confidence in that readout and in this being a commercially meaningful asset, I'm trying to figure out how much this sort of thing is in your kind of longer-term forecast and how much risk adjusting you do on this particular asset.

Thank you. Yeah, you know, Tim, thanks for the question. Otilamab's a pretty interesting pathway. It's very novel. So typically when you have such a novel pathway, you don't see the so-called crowding until, of course, the data reads out positively, which then results in crowding. I'm pretty optimistic this trial will hit, to be honest. You have to remember that there's a design where it's against placebo for the first 12 weeks and then active comparator against IL-6 in one study and the JAK class in the other. The signal for efficacy I think was pretty clear, but your point is well taken that not every endpoint in the Phase IIb was positive, but quite a few were. I think the area that is a little more speculative, but again, I'm cautiously optimistic, is where we saw signals to a more significant reduction in the clinical pain scores than one would expect for the reduction in things like SED rate and CRP levels that are biochemistry measures of the disease severity. We looked at that data carefully and overlaid it with the preclinical data where we had mouse data with the CCL17 knockout, which, as I mentioned earlier, is the most overexpressed protein when GM-CSF is applied to monocytes. And in that CCL17 knockout mouse study in an osteoarthritic neuropathic pain model, there was a dramatic reduction in pain with the knockout. And so that gave us more credibility that that signal, if you will, in Phase IIb might be real. And again, we're going to have readout from the CCL17 MAB data, this actually probably in Q2, maybe Q3. And I think that will give us further confidence in the program. But again, just to highlight, I'm reasonably optimistic that this will actually benefit patients. It'll be a novel class. And hopefully, we'll see some important reductions in pain. Maybe I can just turn it over to Luke. to comment on his interest in the commercial component and how he sees this being in the landscape of RA patients.

Sure. Thanks, Al. I mean, thanks, Tim, for the question. I mean, the numbers of patients here are enormous, right? I mean, there's about a million in the U.S. on biologics from JAKS. Many of them are cycling, as we know. What's interesting, if you look at the new data with JAKS, we have market research that indicates about 65% of doctors want to reduce their usage of JAKS. and that there could be an opportunity for alternative non-JAC, non-TNF mechanisms for about 40%. So there's clearly a demand for patients. I think the genericization and biosimilars are also going to move patients onto targeted therapies earlier and therefore will cycle earlier. I think for the other programs, you know, there's been TMCSFs in the past, and, you know, a number of them have had some issues previously. in preclinical non-human primate models, et cetera. So, again, hopefully we can thread the needle here. As Hal said, Contrast 3, I think, is really interesting against the IL-6, which is naturally a primary competitor. And then, of course, we've got Contrast 1 and 2 against TOFA and methotrexate by itself. So I think an interesting program.

Thanks. Next question, please. Next question is coming from the line of Emmanuel Topodakis from DB. Please go ahead.

Thank you for taking the question. Maybe I'll take a question on vaccines, please. Flu market outlook has been pretty topical of late. We've heard market leaders talk at length about reasons to believe in a resilient outlook for egg-based, quadrivalent vaccines. I would love to hear your perspective on the room for mRNA-based vaccines to improve upon both the production aspects and risk-benefit of current egg-based vaccines over the coming years, given you have some involvement on both sides of that equation. Perhaps you could also take the opportunity to give us a quick update and cue of that partnership on both the second-gen COVID and sleepover. Thank you.

Sure. Well, why don't we hear from Roger just on the more strategic outlook for flu, because I know we also covered that at the capital markets update briefly, and then I'll come back to you in terms of the mRNA approach.

Thanks very much for the question. I think, as we covered last year, the update, well, we see flu as a real opportunity area, to be honest. There's significant disease burden, as you well know. But also, when you look at a plot of vaccine efficacy, it's the one area that stands out that's crying out for innovation to move an on-average efficacy level of 50%. some way higher. I think mRNA is a very exciting technology. It's one that we are investing in significantly. It's one that we think could potentially differentiate us as well. I think the opportunity is that differentiation. And in our CureVac partnership with Hal, which I will go into, we're looking at both flu and also looking at a universal flu option. as well. I wouldn't forget egg. Egg is something that's going to be around as a technology for a number of years, and we'll continue to maximize that. But we're allocating significant capital into the mRNA play to ensure that we look to differentiate. Obviously, the challenge with mRNA and a multivalent vaccine, which flu is, is trying to solve this reactogenicity ceiling issue that you can hit with mRNA and I think it's going to take a little bit of time to optimize any mRNA platform to be able to deliver that as well. But our strategy is clear. Continue to maximize flu in the egg base and develop at pace an mRNA platform that can get us a flu solution to deliver a higher performing flu efficacy.

Yeah, thanks, Roger. Thanks, Manuel, for the question. I think it's pretty clear to the world now that mRNA is a disruptive technology that's really going to to some extent how we think about vaccines, both because of its advantage in terms of speed from sequence of a virus or the knowledge of what virus is going to be endemic at that phase, like in flu, where the longer you have to figure that out, the more likely you are to get the right valence in your vaccine. And so that'll be a unique opportunity. And as alluded to by Roger, the other thing is that if you can have a polyvalent vaccine, the efficacy is likely to go up relative to a monovalent vaccine. So mRNA has a significant potential in flu, and we should be in the clinic with a multivalent mRNA vaccine in 2022. We're very proud of that with CureVac. I think the key thing with multivalent vaccines and mRNA is, of course, the more transcript you put into a patient, the risk is higher reactogenicity. Some of that's somewhat solved by modifying the bases, but even with that, as we saw from some of the Moderna data, we're going to have to continue to work on that. And one of the strategies that we're pursuing that we're excited about is whether we can lower the dose of the transcript by optimizing its stability and how effectively it's translated. In fact, more protein for a given amount of mRNA. And we think that the proprietary technology developed by CureVac with this optimization of the codon's flanking the transcript, the five prime and three prime regions that were done through some pretty sophisticated machine learning. We think this will allow us to lower the dose, or if you could think of it as keeping the same dose, but with a larger number of valence and have a both immunogenic and well-tolerated, you know, limited reactogenicity to be able to develop a best-in-class flu vaccine. Thanks, Bill. I should also mention just for completeness, we'll have two other mRNA vaccines in the in the clinic this year as well for COVID. So at least three mRNA vaccines in 2020.

Yeah, and great under new vaccines leadership. Yes, yes. We're confident in that.

Thank you. Next question, please. Next one is coming from Joe Walker from Credit Suisse. Please go ahead.

Thank you. I'm afraid I'm going to go back to the margin question. On page 24, you tell us you're going to have 5% to 7% top line growth, 12% to 14%. adjusted growth, all excluding COVID, and we know that that includes two points from Gilead. On page 36, you tell us that SG&A and R&D are going to go up in line with sales, and it's the COGS that's going to go up less than sales. So there's a very big COGS improvement that we should expect in 2022. So my question is, if we were, and we obviously don't have this data, to look at just the COGS of new GSK, How far adrift of your peer group do you think you are so that we can get some guide as to whether the majority of the margin gains that we're expecting, not just in 2022, but in 23, 24, etc., are going to come from COGS? And how much are going to be able to come from a winding down of SG&A? I'm assuming that R&D will continue to grow strongly. Thank you.

Yes, what we've said, and we say again, Joe, is that we'd expect to grow SG&A, and this is very much customer-facing SG&A, so it's focused on supporting top-line growth and engagement with patients and customers. So if you like, the component that is orientated around functional support still has a trajectory that is flat to down. SG&A we'd expect to be similar levels, but slightly below revenue growth. And the same is true from an R&D perspective, although it will continue to grow. It's going to be similar to but possibly slightly below revenue growth. In terms of productivity coming through cost of goods sold, part of this is driven by top line. So we're seeing a change in the mix in the portfolio over the period 2022 to 26, moving to about 75% of the revenues coming from specialty and vaccines, moving to 25% coming from the general medicine portfolio. And that mixed change is an important part of the change overall. Now, when you talk about geographic mix, we remain broadly stable to where we are. So we've got about 40% of our revenues in the U.S. now. By 26, we'd expect about 40% of our revenues to be U.S. as well from a biopharma perspective. But that change in mix of new, especially medicines and vaccines, to 75% versus 25% is an important component of the overall gross margin story, notwithstanding the continued delivery of productivity and synergies coming through the supply chain. So those are key dynamics that are coming through there.

We're also having a bit of a one-year recovery of COVID T&A. I know we're keeping costs very much under control on that, but we are expecting to go back a little bit.

Absolutely, but very much within the guidance that we provided today, Emma.

Okay, next question, please. Next one is coming from the line of Steve Scala from Calvin. Please go ahead.

Oh, thank you very much. It looks as though the contrast 1, 2, and 3 trials of Otilamab are well past their primary completions. They have conventional endpoints, so there's no events to wait for. So is the data in-house? And Hal, I have to say you do sound more confident today than you've been in the past. Or is there a delay? And why won't the filing be earlier than 2023? Thank you.

Thanks, Steve. No, I have not seen the data. I'd love to see the data, but I have not. And the reason is, and you're absolutely right, that it's a 12-week endpoint. It's not event-driven, so that shouldn't be the problem. The issue is the data remains blinded with all these studies for the 52-week follow-up because of the interest in secondary endpoints of having the active converter phase of the program. So, in order to maintain the integrity of the trial, it's blinded for a longer period of time.

Next question, please. Next question is coming from the line of Andrew Simon-Bohm from CT. Please go ahead.

Andrew. Thank you. A question on BCMA, two parts. Yep, can you hear me?

Yeah, we can hear you. PSI, yeah.

Hello.

Right, and we can hear you. Yep.

Hello. Hello. Terrific. Yeah, okay, so... Go on. Terrific, I can hear you too. So, here we go. The questions on BCMA and DREAM-5 with the gamma secretase, and you recently expanded that cohort It's an open-label trial. GSK has, of late, talked more about scheduling, dose fractionation, and less focus on the benefits of GSI. Given that it's open-label, given you've expanded the cohort, perhaps you could share what you're seeing. And then, secondly, also on BCMA, there's been some recent data published with a CAR-T suggesting that BCMA CAR T's were associated with Parkinson's type syndrome, BCMA expression on substantia nigra. So the question is, do you have any evidence that belantamab crosses the blood-brain barrier? I'll stop there. Thank you.

All right, Dr. Hill.

Well, thank you, Andrew. Let me try to address that really interesting question about the Parkinson's. We have no evidence to suggest that. and I'm reasonably confident that it doesn't, the antibody crosses the blood-brain barrier. So to the extent that it is a non-target effect, we're not observing that clinically, and I wouldn't expect us to. I can look into a little bit more detail about that later, but I'm pretty confident it's not crossing the blood-brain barrier. That's an interesting point you make about the CARs. As you know, the rationale for the combination of the GSI with Blundrap was that it should be able to increase the density of BCMA on the plasma cells, or maybe any cell, but the plasma cell is of interest, and therefore be able to obtain responses at lower doses. And we hope that at lower doses there'd be less ocular toxicity. It's one of the four levers that we're using to try to improve the benefit-risk ratio, and I'll go into the other three in a second. We have seen some open label data, and as we said, it is encouraging. It's small numbers, and I think we've all seen examples where small numbers of encouraging data doesn't always translate. But the data was definitely encouraging enough that we moved into a randomized setting. So using the Dream 5 platform to begin a more robust program where we both have larger number of patients, but also a control arm to make sure that it's not confounded by baseline covariance that can occasionally happen. But I can say that our optimism was based on seeing data. And we, as you know, we're using doses at the 0.9 2 milligrams per kilogram level, which at least in the DREAM 1 and 2 studies was inactive. So we think that that's a reasonable way of assessing our level of optimism. But maybe this year we should have a much more robust data set, hopefully with some control patients and be able to be clear with the value that this could provide to move into frontline. As you know, the other three levers that we're looking at to optimize this program are are to see if the combination of Blenrep with standard of care, whether it be with pomalidomide or Darzalex or Velcade or various other standard of care reagents would allow us to be able to reduce the dose to further maximize its benefit risk. We're also looking at something relatively simple, which is in the phase pivotal DREAM2 study, the protocol had dose holding when grade 3 ocular tox was identified for the ability to reduce grade 3 and above ocular toxicity is limited if that's when you hold the dose. Given the profound efficacy that we're observing in multiple different trials now, we've decided to hold the dose when we're seeing grade 2 ocular tox, which in theory and actually observed data from ASH suggests that the ocular tox is going down further. And maybe even the most important of all these, who knows, is going to be that we're altering and exploring different schedules. So, as you know, in DREAM-2 and the approved dose and later line therapy, we're using 2.5 mgs per kip Q3 weeks. We're looking at Q4, Q6, and even Q8 dosing at doses of 2.5, 1.9, and even lower, and seeing if C-max versus trough is going to have an impact on both efficacy and hopefully reduce ocular time. So, Those four levers, if you will, all being studied independently and the ability to use them as modules and combine them to move us into third, second, which we're reasonably confident in, and maybe even frontline, we'll have data mid-year to help you understand that.

Thanks, Al. Next question, please.

Next one is coming from Laura Sutcliffe from UBS. Please go ahead. Hello. Thank you.

Could we go back to HIV, please? There's been some commentary in recent days from Gilead talking about a tougher first quarter 2022 than 2021 based on copay scheme resets in the US and other growth to net dynamics. Is there anything we should be thinking about along those lines for your portfolio in terms of it being more aggressive this year than it was last year? And then just related, given the wider importance of the access to medicines piece at group level, Is there anything you see changing on your ESG profile or external rankings, whichever ones you consider to be most meaningful, when Consumer leaves the group later this year?

Thanks. Thanks. Well, on the broader ESG, and then we'll come to... You will see us continuing to seek to make leadership in ESG a priority for GSK, and we will be updating our reporting on that, frankly, to make it... ever simpler, more transparent, and easier for us to be held to account across the six key areas we've identified as priority for ESG, whether that be in access, in environment, in diversity and inclusion. And so we're really looking forward to discussing that with you. You'll also be familiar with the fact that it's a I would say a focused level it's included in the accountabilities for an incentive point of view as well. It really is something that has long been at the core of who we are as a company. It never replaces TSR, but I'm hoping that we are able to continue to get the recognition for our very much leading rankings we have, but also transparency and simplicity of reporting in a way that is course validated by third parties as opposed to us just marking our own homework. But maybe come back to Deborah, please, for the HIV question.

Thanks, Laura. So if I think about the PrEP market and treatment, two separate markets. So in the treatment market, it continues to be guideline-driven. Choice and access are absolutely crucial. And we see that market as continuing to be relatively stable. Obviously, the Build Back Better bill continues you know, will affect the whole industry. So let's see how that plays out. But in terms of what, you know, if you assume that's taken to one side, the treatment market looks, you know, fairly stable and continues to be guideline-driven with choice and access at the core. In the PrEP market, it's a little bit different to that. So obviously you've got a generic of Truvada in the market. Gilead have moved quite a lot of the market away from Truvada into Descovy. But I think that's taken, you know, obviously... some negotiation with payers to make that happen. And we're in dialogue with payers at the moment over ensuring that we can get broad access to Apertude at a price that rewards our innovation. So I think you should look at treatment and prep as a little bit separate. But in the main, you know, the treatment market is 5%. five times bigger than the PrEP market, so the core of where our revenue and our profit comes from remains stable.

And the other core is having truly differentiated medicines, and medicines that get approved and stopped in their trials for being so significantly better than existing standard of care deliver a value that is worth paying for. Absolutely. Next question, please.

Next one is coming from the line of Seamus Fernandez from Guggenheim. Please go ahead.

Oh, thanks very much. So my question is actually on HPV. Just wanted how, if you could give us your thoughts on the HPV ASO versus antibody-based approaches, as well as just your general thoughts on how we're likely to ultimately see a real break in HPV cures. Is that going to require a combination of a treatment-based approach followed by a vaccine, in your view? Or when we see these data later this year, do you think that either an ASO or perhaps RNAi-based approach will really be viewed as the preferred way to then pursue cures? Thanks.

Yeah, thanks for the question. It's a really good question. You know, it's really hard to predict the future on this, but it is likely that what we'll see with the ASOs is a couple things. First, I think it's pretty clear that not all ASOs are behaving the same way. So I think over the next six to 12 months, we'll get more clarity on the value of the various approaches of ASOs, GalNac, or unmodified. I think we'll get a good sense, and I'm optimistic from our 2A data, that the ASO approach will deliver efficacy as it relates to lowering the surface antigen. And one of the hypotheses is that this, you know, this virus makes a massive amount of surface antigen, and one compelling hypothesis that's pretty well supported from preclinical data is that that overwhelms the T cells and it results in T cell exhaustion, and that by lowering the HPV surface antigen levels, the immune system may be able to kick in. My guess is that that will work in some people, but probably a very small minority, and what's going to be needed is combination, whether that's a combination with a Nuc and a Fearon or possibly even something like a checkpoint blockade like PD-1 or maybe even a sting agonist, things that are going to increase the interferon production from the Kupfer cells and other cells responsible for the immune. I do think, though, that in the end, after we figure all this out, and hopefully we'll have some compelling data mid-year with the BeClear study, that we'll be able to embark on these combination studies in a thoughtful manner and ultimately reduce The really enormous burden, 250 million people living with chronic FBM, as I mentioned, 900,000 people dying from it annually, and if we can make a dent in the functional cure rate, which is a very high bar, that will be one of the more significant advances in medicine.

Thanks. Next question, please. Next one is coming from the line of Carrie Holford from . Please go ahead.

Thank you. Just a follow-up on RST of older adults, please. Hal, you mentioned targeting the June ACID meeting. So I guess you're working on the assumption of a launch next year. And I would just like to understand what gives you the confidence that the regulators will accept a data package from one RSVC only, given your and competitors' studies will continue further. Is there a risk that the regulators want to see more data across more seasons before moving to approve a vaccine here? And do you think that decision will ultimately be influenced by the clinical efficacy you and your peers deliver? Thank you.

Thanks, Carrie. I think we're pretty confident in our strategy. But of course, any approval and any recommendation for use is going to depend on the risk benefit. We're, you know, expecting a reasonably high success rate and effectiveness rate for this vaccine. And being able to show it works well in the various subgroups of interest, as well as determining whether this is going to be effective in an equally significant way across the season. In other words, how effective the duration of efficacy relates. So when we have all that data, I think we'll be able to have a better sense, but we're pretty confident in our strategy of the trial design, the sample size, the effect rate, and the risk benefit that that would endure. I should also mention that, of course, that the ASO is something that we have an enormous amount of experience with and a very, very large safety database with. So it's really going to be driven by the efficacy and probably viewed by ACIP in aggregate all the data as well as how the regulators will view each individual company.

Thanks.

Next question, please. The question is coming from the line of Mark Purcell from Morgan Stanley. Please go ahead.

Yes, thank you for taking my questions. Just again on RSV older adults and getting a bit more perspective, I wonder if you could sort of help us understand how we can assess whether the AS01 adjuvant will provide a potential durability advantage from the initial data sets, your own data sets, Renoir and Evergreen. What should we be looking out for which suggests you might have a sort of T cell restoration benefit? And then just a related question, are there any IP considerations around the pre-fusion F subunit target? Clearly, you were a first mover when it came to HPV, and you secured a royalty stream. Is there something such that we should think that that situation could occur with RSV?

Yeah, thanks, Mark. Why don't I tackle the first part? And I don't think there's any IP issues that we're unaware of, but I'll let Roger jump in if he knows something I don't. I think it's going to be challenging to figure out the impact of the adjuvant on duration as it relates to multi-year, because, of course, we won't have multi-year. And, in fact, when you look at Shingrix, it obviously took eight years to figure out that it worked so well for eight years. I do think there is going to be hints, potentially, one could look for that would be underpowered for these, but I think they might be directionally useful. First of all, is the point estimate of benefit greater than other trials? I think that's one thing to look for. that would suggest that the adjuvant is doing something unique. It could also be that in subgroups, particularly the older 75 and particularly immunosuppressed patients, one might see a signal that looks more prominent than nonadjuvanted. That might give you a signal. And as I said a few minutes ago, there is a way of looking at the duration of efficacy as of the season. So if the efficacy with a nonadjuvanted vaccine, for instance, is pretty significant in the beginning of the season but wanes during the end of the season, And for instance, ours would have a treatment effect that's impressive and constant over that period of time. One might be more confident that there could be a duration effect when one looks longer. But at the end of the day, we're going to have to look for a longer-term follow-up. And we have studies already underway that I'll explore that. Roger, did you want to add anything?

Yeah, just on the IP. There's no IP restrictions on the pre-EF, nor is there any IP direct ownership from our perspective that would generate income. So that's not something that we should be thinking or worrying about. Yeah, that's right.

Okay, I'm not sure if we've got time to go through one more question. And we have one more question. So I'm sure maybe Brian.

Our last question for today's call comes from Peter Valford from Jefferies. Please proceed.

Oh, hi. Thanks for squeezing my in. Just a question just on RSV vaccine again in the older adults. Can I just ask, when we think about the COVID data, have we all been spoiled with hospitalization and decreases that we saw there of 90% plus in some cases? And perhaps, could you give us some sort of idea of what we should be thinking about for the RSV phase three? with regards to what is a reasonable reduction in hospitalization. You know, is the Nacebimab 80% or so reduction a sensible sort of ballpark that we should regard as clinically meaningful? And perhaps just a comment, I think you probably should put an award for sort of the matters of understatement. From my calculations, it seems as though your strong double-digit growth is probably over 40% for Shingrix. Can you just remind us if the 2.5 billion, if that's roughly where I get to from your guidance, is entirely can be met with existing manufacturing. And should we then consider future growth from that? Again, are you confident that you can sustain that level of growth and that level of demand with your existing capacity that you have without the new facility?

Yeah, so let me be extremely clear. Well, utterly unequivocal. We are not supply constrained and we're very confident on doubling non-singric sales from their 2020 levels in terms of the outlook that we gave at the update last year. We feel very good about getting a bounce back. Obviously, there's been a bit of COVID disruption, but as Luke outlined, the momentum is very good. I don't know how if there's anything further we want to add.

No, I'll just say that, you know, of course it's very hard to predict the efficacy, but as we look at our own immunogenicity data and the aggregate packages that have been presented, I think we've, and in discussions with clinicians, we're pretty confident that any effect more than 50% is clinically meaningful. An effect greater than 70% is a very good response and it will be a very successful vaccine. And should we get efficacy above 80, you know, that's outstanding.

Great. Well, with that, thank you very much, everybody. We shall look forward to gathering with some of you over the next few days. And we're really looking forward to an extremely exciting year ahead for GSK, whether that's doing everything that we said we were going to do, the delivery of the step change in growth. Reading out on some of these very exciting pipeline milestones, continuing to accelerate the execution of all that we already have in hand and plan for very competitive execution of what's to come. And, of course, the tremendous unlock of value that's going to come with the creation of a completely unique, FTSE leading, world leader dedicated to consumer health care. And I know Brian is enormously looking forward to the long Q&A session on that at the end of this month. Thanks, everybody. Catch up soon.