GSK plc

Hello everyone, it's Nick as mentioned. Welcome to our first half in Q2 2022 conference call and welcome to our investors and analysts. This is our first quarter as a new biopharma company and earlier today the presentation was posted to gfk.com. It was also sent by email to our distribution list. Please turn to slide two. This is the usual safe harbour statement and we'll be making comments on our performance using constant exchange rates or CR unless otherwise stated. As a reminder, GSK satisfied the formal criteria according to IFRS 5 for treating consumer healthcare as a discontinued operation effective from 30th of June 2022. The consumer healthcare business was demerged on 18th of July to form Halion, and as a result, we're presenting continuing operations for GSK. Earlier today, Halion also published a trading update and will be announcing its Q2 results in September. Please turn to slide three. This is today's agenda, where we plan to cover all aspects of a half year in Q2 2022 results. The presentation will last at least 35 minutes, with a further 40 minutes for questions. For those on the phone, please join the queue by pressing star one, and we request that you ask a maximum of one question so that everyone has a chance to participate. We can always come back for a second round. Today, our speakers are Emma Wormsley, Hal Barron, Luke Miles, Deborah Waterhouse, and Dean McKay. The Q&A portion of the call will be joined by Roger Connor and David Redfern. Turning to slide four, I'll now hand the call over to Emma.

Thanks, Nick. And a warm hello to everybody joining our half-year and Q2 conference call today. Please turn to the next slide. I'm pleased with the momentum. We're delivering a landmark year, the most significant corporate change for GSK in 20 years, and a new chapter of competitive and profitable growth. GSK is now a focused global biopharma company with the ambition and purpose to unite science, technology, and talent to get ahead of disease together. It's a company focused on the science of the immune system, human genetics, and advanced technologies. with world-leading capabilities in vaccines and medicines development across four therapeutic areas. In delivering our strategy, we have made and will continue to make significant improvements in both R&D productivity and operating performance, unlocking the potential of GSK. Our bold ambitions are reflected in commitments to growth and a significant step change in delivery. Through the demerger, we've also strengthened our balance sheet, creating new flexibility to invest in sustaining growth and innovation. These bold strategic steps enable us to deliver for patients, shareholders, and our people on our five-year ambitions and beyond. I'm delighted by today's first half results. They demonstrate that our strategy is delivering the step change in performance we committed to, with double digit sales growth of 25%, adjusted operating profit growth of 26%, and adjusted EPS growth of 27%. This performance supports my strong confidence in our medium term outlooks. The first half sales growth was driven by strong commercial execution across the whole portfolio. And alongside this excellent performance, we continue to invest in R&D with further strategic business development to support our pipeline momentum. Given our momentum and these very encouraging results, we're increasing our full year guidance, excluding COVID solutions, to between 6% to 8% sales growth and 13% to 15% adjusted operating profit growth. Please turn to slide seven. Q2 was another strong quarter of growth. Sales increased 13% to £6.9 billion, adjusted operating profit grew 7% to more than £2 billion, an increase of 21% excluding COVID solutions, and adjusted EPS grew 6% to 34.7 pence. Specialty medicines grew 35% to £2.7 billion, benefiting from strong demand for Devato and Cabinuva in HIV. Excluding Zavudi, sales increased 13%. Vaccine sales grew 3% to 1.7 billion pounds, driven primarily by Shingrix, which delivered another quarter of record growth, with sales more than doubling to 731 million pounds. And excluding pandemic vaccines, sales grew 24%. And general medicines also increased 2% to 2.5 billion pounds, reflecting the strong growth of Trilogy in respiratory. In SG&A, we continued disciplined cost control while prioritizing investments in growth to support launches in specialty medicines and vaccines, particularly Shingrix, as we accelerate international expansion and invest for further growth. In R&D, we increased investment in specialty medicines to support our early-stage HIV portfolio while also investing in our late-stage vaccine portfolio and mRNA tech platforms. You'll hear more about our commercial and financial performance from Luke, Deborah and Ian in just a moment. Turning to slide eight and our pipeline headlines. Our focus on the science of the immune system, human genetics and advanced technologies is reflected in the excellent progress and strength of our late stage pipeline. We were the first to announce positive phase three results with our RSV vaccine candidate in older adults, demonstrating statistically significant and clinically meaningful efficacy and exceptional protection. We also announced encouraging Phase IIb data for bepiriviracin and chronic hep B. This is a disease with a very significant unmet medical need and is responsible for over 900,000 deaths each year. In a moment, I will provide more details on these and our broader pipeline momentum. This quarter, we also completed the acquisition of Sierra Oncology and announced the proposed acquisition of Afinovax. Both of these transactions are excellent examples of strategic business development to develop a strong portfolio of innovative vaccines and specialty medicines that will deliver sustained growth through the decade and beyond. So this is an exciting year with strong momentum. I'm pleased with the progress we're delivering. And now, over to the team. Hal, first to you on slide nine.

Thank you, Emma. Next slide, please. I will take the next few minutes to review the recent progress in our pipeline and key expected news flows over the next 12 to 18 months. This slide updates one that we presented in June 2021. At this event, we highlighted that based on assets launched between 2017 and 2021, our R&D performance was top quartile relative to industry peers. Furthermore, these launches are expected to contribute over 60% of the 2021 to 2026 sales category for GSK. In addition, the balance of the sales growth on a risk-adjusted basis is expected to come from anticipated approvals for medicines and vaccines in the pipeline. As you can see here, I'm pleased to say we've made tremendous progress against these commitments. Based on the robust results of the Ascend Phase 3 program, we completed both U.S. and EU regulatory submissions for Deprotostat in the first half of 2022, and we now look forward to a decision from the FDA by February 2023. During the first half of this year, we also received approval for Aperture, the first the world's first long-acting injectable for the prevention of HIV. The biggest news from our pipeline, of course, was the exceptional phase three data we announced last month from our RSV vaccine trial for older adults, which Emma just mentioned. We also presented impressive data for bepi reversin, which I'm going to call bepi from now on, in the treatment of hep B. I'll touch on both of these assets later. Looking ahead, we remain on track to report pivotal data for several assets on this list with several potentially important readouts in the second half of this year. Importantly, as you know, we've been very active on the business development front, augmenting our pipeline with two important deals. First, the acquisition of Sierra Oncology, which includes Momolatinib, a potential new treatment for symptomatic myelofibrosis patients with anemia. Our proposed acquisition of Affinovax will provide us with a next-generation 24-valent pneumococcal vaccine candidate, as well as access to an innovative MAPS technology, which may generate vaccine candidates with higher valency and higher immunogenicity compared to existing options. Finally, I wanted to mention our early-stage pipeline activity. We've initiated 10 phase 1 slash 2 studies in the first half of 2022 alone, including our PV rig antibody in oncology and a capsid inhibitors in HIV. Importantly, I'm also pleased to report that interim data from our phase 1B randomized control study of anti-CCL17 and osteoarthritis was positive, demonstrating reduction in knee pain intensity compared to placebo at the end of the eight-week dosing period. We're proceeding with discussions with regulators to inform our future development of these Now please turn to slide 11. In June we were excited to announce positive pivotal phase three data for our RSV vaccine candidate for older adults. RSV remains one of the few major infectious diseases without a vaccine and RSV infections are associated with around 360,000 hospitalizations and over 24,000 deaths worldwide each year. Our vaccine candidate contains a pre-fusion RSVF glycoprotein antigen combined with our proprietary ASL1 adjuvant. The adjuvant was designed to address the natural decline in the immune system linked with aging, and the vaccine is the first to report statistically significant and clinically meaningful efficacy in a Phase III trial. Importantly, the magnitude of effect observed in this trial was consistent across both RSV-A and RSV-B strains and across key secondary endpoints, including people aged over 70, in patients with comorbidities, and in the prevention of severe respiratory disease. The trial will continue to generate data for three years following a single and annual revaccination schedule. We look forward to sharing these exceptional data with regulators in the second half of this year. We believe this puts our RSV older adult vaccine candidate on track to be considered at the June 2023 ACIP meeting. Slide 12, please. Last month, we were also excited to present interim end-of-treatment data from the 457-patient BEPI monotherapy trial, Be Clear, at the Easel International Liver Congress. The current standard of care for hep B patients includes antiviral plus interferon therapy, Existing treatments rarely result in a functional cure, and as a result, hepatitis B remains a significant unmet medical need with 300 million people worldwide living with hep B, which is responsible for approximately 900,000 deaths each year. Our ambition is to develop a functional cure for patients with hep B, eliminating the need for prolonged therapy, and by doing so, reducing the long-term risk of developing cirrhosis and liver cancer. The data presented at EASL demonstrated that BEPI was effective in lowering hepatitis B surface antigen below the lowered limit of quantification. This is the first time that any monotherapy agent has been shown to reduce hep B surface antigen below the lower limit of quantification in more than a handful of patients. What appears to be driving this unique effect is BEPI's novel mechanism of action. As described in a poster at EASL, in addition to lowering HPV surface antigen, VEPI appears to uniquely activate the TLRA pathway in the liver. This activation appears to stimulate an immune response which helps clear the virus, which we hope will result in functional cure for some of these patients. We will continue to monitor the patients in the Be Clear study to assess the durability of this remarkable response, and we expect to present these data later in the year. However, based on the strength of the Be Clear data set to date, we plan to initiate a phase three monotherapy program in 2023. Additionally, we expect to report the data on the B-Together trial, which looks at BEPI followed by PEG interferon. While interferon has a well-known tolerability burden, we are cautiously optimistic that this study will augment the data seen in the monotherapy setting. Turning to slide 13, this year's ASCO meeting saw an increased cadence of presentations on our growing oncology pipeline, including data from six potential new medicines within our portfolio. In particular, I want to highlight the pivotal data momentum from mamelotinib, the groundbreaking data from gemperlian rectal cancer, and the first publication of data from our BlendRep plus GSA combination study, DREAM-5. I want to briefly review the latter two data sets on the next slide. While BlendRep continues to deliver strong activity as a single agent, we're investigating how to advance this important medicine into earlier lines of therapy using different dosing schedules and scans. The GSI combination is one potential solution because it may allow a marked reduction in Blender-up dose while maintaining a similar efficacy rate. This in turn brings the potential for reduced ocular toxicity. We were therefore pleased to share the preliminary data from the GSI combination cohort of the DREAM-5 sub-study at ASCO. This showed encouraging signs of activity with an overall response rate of 38%, similar to that of the DREAM-2 study, but with lower rates of ocular adverse events and only 7% of patients reporting a grade 3 ERWERS ocular event. Subsequently, at IHA, data were presented by Terpos et al. in the frontline setting using an eight-week dosing schedule with lower doses of Blenrep. This regimen resulted in a very high response rate with much lower rates of ocular side effects than has been seen with a standard three-week dosing schedule. I also wanted to briefly mention the extraordinary trial with gemperli or distalimab. and patients with DMMR locally advanced rectal cancer in the neoadjuvant setting. This trial, which is awarded the coveted best of ASCO data, showed an unparalleled response rate with each of the first 14 trial participants who completed six months of therapy reporting a clinical complete response. These data suggest the potential for a chemotherapy-free treatment with curative intent for this difficult-to-treat population, and we look forward to working with regulars to identify a path forward for registrations. Please turn to slide 15. My final slide lists a number of the key clinical and regulatory events expected over the next 12 to 18 months. As I noted, we'll see data from across the portfolio with pivotal results anticipated for Otilamab and our vaccine candidate, MEN-ABCWY. In addition, we hope to see data from Blenrep in third-line multiple myeloma patients and potentially an interim analysis for Gepatitis N for the treatment of patients with uncomplicated urinary tract infections. We also anticipate data from the head-to-head PERLA study, which looks at gemperli plus chemo versus pembrolizumab plus chemo in the treatment of patients with non-small cell lung cancer. The PERLA study is not intended for registration, but will inform future development plans for our PD-1 antagonist. Finally, this is my last quarter presenting our R&D progress, so let me close by saying how delighted and proud I am of the achievements of the R&D organization since I joined in 2018. We've made considerable progress against our objectives to improve productivity in the pipeline and embed significant cultural change across R&D. Assets within our development pipeline are now supported by genetic data, which we believe will increase the probability of success. And we expect to accelerate the cadence of new product introductions. I'm also incredibly proud of and confident that my successor, Tony Wood, will build on these achievements and further accelerate our R&D delivery. Tony is an outstanding scientist and an inspiring leader, and I look forward to contributing to the next chapter of growth for GSK as a non-executive director. With that, I'll now hand it over to Luke.