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

thank you operator hello everyone it's nick as just mentioned welcome to our year-to-date and q3 2022 conference call and webcast for investors and analysts earlier today the presentation was posted to gsk.com and it was also sent by email to our distribution list please turn to slide two this is the usual safe harbor statement and we'll be making comments on our performance using constant exchange rates or cr unless stated otherwise As a reminder, the consumer healthcare business was demerged on the 18th of July to form Halium, and as a result, we are today presenting continuing operations to GSK. Turning to slide three. This is today's agenda, where we plan to cover all aspects of our year-crediting Q3 2022 results. The presentation will last approximately 35 minutes, with around 40 minutes for questions. For those on the phone, please join the queue by pressing star one, and we will request that you ask one question so that everyone has a chance to participate. We can always come back for a second round. Today our speakers are Emma Walmsley, Tony Wood on the phone, Luke Miles, Deborah Waterhouse, and Ian McKay. The Q&A portion of the call will also be joined by David Redfern. Turning to slide four, I'll now hand the call over to Emma.

Thanks, Nick, and hello to everyone joining our Q3 conference call today. Please turn to the next slide. I'm very pleased with today's results, which demonstrate that our strategy is driving the step change in performance and landmark year we committed to. Year to date, we've delivered double digit sales growth of 19%, adjusted operating profit growth of 16%, adjusted EPS growth of 20%, and strong free cash flow of two and a half billion pounds. This broad-based momentum and our continued pipeline progress support my strong confidence heading into 2023 and in our medium-term outlook and growth through the decade. Based on these encouraging results and our excellent momentum, we're again increasing our full-year guidance, which excludes COVID solutions. We now expect sales to increase by between 8% to 10%, with improving outlooks in all three product areas. Adjusted operating profit growth between 15% to 17%, and adjusted EPS growth around 1% below adjusted operating profit. Please turn to slide six. In Q3, we delivered another quarter of growth with sales increasing 9% to 7.8 billion pounds, adjusted operating profit growing 4% to 2.6 billion pounds, an increase of 2% excluding COVID solutions, and adjusted EPS growth of 11% to 46.9 pence. This performance was driven by consistently strong commercial execution all across our business, as we build our broad portfolio of scale medicines and vaccines, with specialty medicines growing 24% to 2.7 billion pounds, and by 11% excluding Zabudi. Here we continue to benefit from demand for our HIV medicines, particularly Dovato and Cabinuba, as well as Nucala in respiratory and Ben Lister in immunology. Vaccine sales grew by 5% to 2.5 billion pounds, and by 9% excluding pandemic vaccines. This strong performance reflected another record quarter for Shingrix, with sales exceeding £750 million. And lastly, general medicine sales grew 1% to £2.6 billion, driven by the strong growth of Trilogy in respiratory. And we continue to invest in commercial growth and our R&D pipeline. In SG&A, we continued our discipline cost control while prioritizing effective investments behind launches, particularly Shingrix, as we accelerated international expansion, and in HIV to drive the growth of our innovation. In R&D, we continued to increase investment in vaccines clinical development, including in mRNA technology and the newly acquired Afinovax MAPS platform, as well as in late-stage specialty meds, particularly the Phase III program for Depimocumab in severe asthma. We also continued our investment behind several earlier stage research projects. Turning to slide seven and our pipeline headline. This quarter, we took significant steps to progress our pipeline and platform capabilities. And of course, we're now delighted to have Tony as chief scientific officer, and you'll hear more from him in a moment. It was great to present to IDWeek the phase three results of our RSV older adults vaccine, which demonstrated more than 90% efficacy against severe disease. And wonderful to have received U.S. priority review as well as regulatory submission of acceptances in Europe and Japan all over the last couple of weeks. Overall, we believe our RSV vaccine has a potential best-in-class profile, and we're very excited about the potential benefits it can bring to older adults. And of course, it's a tremendous commercial opportunity for GSK. During the quarter, we also received several important regulatory approvals in our vaccines business. And as we close out this landmark year, we look forward to further news flow across the portfolio. I do want to reiterate, there are no changes in our capital allocation priorities. As a company, we continue to focus on making significant improvements in R&D productivity and performing competitively in the field, with our pipeline remaining our top priority. We'll continue to focus investment across four therapeutic areas while adding complementary and strategic business development to bring additional optionality. This quarter, we completed the important acquisition of Afinovax and gained access to a Phase II next-generation 24-valent vaccine. We also signed an exclusive license agreement with Spera Therapeutics for tebepenem, a novel oral antibiotic in late-stage development for UTIs. Importantly, we are consistently driving pipeline momentum. This remains our priority, and alongside our strong commercial performance, makes a stronger and better position to achieve our ambitions than we were even a year ago. And now, Tony, first to you on slide eight.

Thank you, Eva. Next slide, please. Our shared purpose within GSK is to unite science, technology, and talent to get ahead of disease together. I want to spend the next few minutes explaining how R&D will support this objective and how I expect the organization to evolve under my leadership. First, it's essential to recognize that GSK has changed. We have developed a unique operating model based on the science of the immune system, human genetics, and advanced technologies. With this, we've delivered a much more competitive performance in new drug approvals. This is encouraging and something our organization can be proud of, but there's more to be done. I'm confident we can further strengthen our pipeline of innovative and practice-changing new vaccines and medicines to deliver long-term competitive growth. To achieve this, we'll rigorously prioritize R&D capital allocation in our four therapeutic areas. To achieve these objectives, I have three key priorities for R&D. My first priority is to execute flawlessly on our pipeline, today consisting of 23 vaccines and 42 medicines. Flawless execution means prosecuting the development of our late-stage pipeline, bringing new vaccines and medicines to patients as quickly as possible, organically and through business development. It also means accelerating our development of our most promising preclinical and early stage research projects. Our guiding question will be, can this meaningfully improve patient outcomes and deliver a new standard of care? My second key priority is exploiting new and existing platform and data technology to identify and accelerate clinical development opportunities. We already have a broad set of platform technologies, including an unrivaled suite within vaccines. We'll continue to add to this, augmenting our capabilities. To illustrate this, we leveraged our world-leading protein adjuvant capabilities to deliver a best-in-class RSD vaccine candidate for older adults. Likewise, through complementary strategic development, we acquired Afinovax, and the disruptive maps technology mentioned by Emma. This allows us to develop multivalent vaccines for complex bacterial infections. In data technology, we have access to the richest and largest dataset, thanks to our data-focused collaborations, including our recent agreement with Tempus, which provides access to one of the world's largest sources of de-identified patient data to accelerate drug discovery. My third priority relates to R&D culture. A key element of my job is to create an environment in which we are ambitious for patients and where our people are empowered to take smart risks and make the right decision at the right time. But taking smart risks is not solely a scientific endeavor. Luke and I chair a portfolio review board with cross-functional teams providing input into all key R&D decisions. My partnership with Luke and Deborah is key and has never been more important as we allocate capital towards those new vaccines and medicines that has the greatest potential to raise the bar for patients.

Please turn to slide 10.

We will continue focusing on developing innovative vaccines and specialty medicines. Infectious diseases and HIV now represent about two-thirds of our pipeline and are the primary focus for R&D. We have an opportunity to build on our leading position in vaccines and complement the extraordinary success with Shingrix with new vaccine candidates for RSV in older adults, meningitis, and pneumococcal disease. In HIV, we are true innovation pioneers. We've led the way with two drug regimens and long-acting injectable medicines. will strengthen our leading position with longer-acting and more convenient treatments for people living with HIV and alternative options in pre-exposure prophylaxis. At the intersection of infectious disease and immunology, we're developing Bipiravircin, a potentially transformative treatment for people living with chronic hepatitis B, which is responsible for around 900,000 deaths annually. BEPI also represents a foundational asset of a new oligonucleotide platform that will increase our scope to prosecute promising new research targets from our leading position in genetics. We will prioritize immunology, respiratory, and oncology programs using human genetics, functional genomics, and AIML to support smart risk-taking. Within oncology, our primary focus is GenPerly and the CD226 access. And outside of IO, we'll take a pragmatic approach within synthetic lethality and tumor cell targeting. In business development, we will remain agile and ambitious, looking for opportunities that address high unmet medical needs and complement our R&D strategy. We'll also target opportunities with genetic evidence that suggests a higher probability of success. Let me now review some of the recent highlights within our pipeline.

Please turn to slide 11.

This quarter's highlight was the exceptional phase three data for our novel RSC vaccine in older adults presented at ID week. RSC is a common contagious respiratory virus responsible for around 420,000 hospitalizations and 29,000 deaths annually in developed countries. RSV disease is a significant burden on the elderly, with almost half of all US cases observed in the over 65s. Our data demonstrated unprecedented efficacy in older adults, with 94% protection against severe RSV disease. The vaccine showed consistent and sustained high efficacy against RSV A and B strains in people in the 70s and those with comorbidities. The latter group is significant, with over 90% of adults hospitalized with RS disease, RSV disease, having underlying medical conditions. These patients suffer the most and have the greatest impact on healthcare costs. We submitted these data as part of a comprehensive package, which includes data demonstrating that the RSV vaccine can be co-administered with an influenza vaccine safely and without diminishing the immune response against either vaccine, an important consideration for the target population. To date, we've received regulatory acceptance of our submissions by the European Medicines Agency and in Japan. And yesterday, we received U.S. regulatory acceptance and priority review with a goal date of the 3rd of May, 2023, putting us firmly on track for June ASIC. Now, moving to significant pipeline events which occurred in 3Q, please turn to slide 12. Earlier this quarter, we presented 10-year data for Shingrix also at IDWeek. This demonstrated a persistent immune response and illustrated that the duration of protection against shingles extends to 10 years after vaccination. These data underscore the advantages of our proprietary adjuvant technology, and set a new gold standard that will be very difficult to beat. In HIV, we presented data from the Phase IIa proof of concept BAMIS study for N6LS, our broadly neutralizing antibody. These early data show that a single infusion demonstrates strong antiviral activity. The decline in viral load, duration of response, and good tolerability observed at two doses suggest a potential best-in-class antibody treatment. Next week, at the American Association for the Study of Liver Diseases Conference, we'll present the B-CLEAR end of study data for Bipirivircin, a potential new treatment for people living with hepatitis B. This is an important trial because it demonstrates for the first time that Bepi alone or in combination with antiviral nucleotides or nucleosides can deliver a sustained reduction in both viral DNA and HBV surface antigen, which together are key measures of efficacy. BeClear also identified a clear predictor of response that will guide future development. We are currently in discussion with the regulators about the design of phase three studies, and I look forward to providing an update at our full year results in February. In oncology, we announced positive headline results for the PERLA phase two trial. the largest head-to-head trial of PD-1 inhibitors in non-squamous, non-small-cell lung cancer. Perler evaluated GenPerli versus Pembrolizumab in combination with chemotherapy, but was not designed to demonstrate superiority. These data will be used to support future clinical development of novel combinations. We also announced that both arms of the COSTAR lung trial would progress into phase three. This three-arm trial compares cobolimab, dostalimab, and chemotherapy in patients with advanced non-small cell lung cancer who have progressed on prior PD-L1 therapy and chemotherapy. Last week, the U.S. FDA Cardiorenal and Renal Drugs Advisory Committee reviewed our application for the protostat. We are pleased the committee recognized the potential for the protostat to help certain patients living with anemia of chronic kidney disease, given their limited treatment options. We look forward to working with the FDA as they complete their review of our new drug application. A PDUFA action date has been set for the 1st of February, 2023. Finally, we decided we would not progress a tilumab. Although the pivotal contrast trials met their primary endpoints, the efficacy demonstrated is unlikely to transform care for this difficult-to-treat population.

Please turn to slide 13.

Looking ahead, we anticipate several significant late-stage readouts and regulatory decisions over the next 12 months. I won't attempt to go through everything on this slide, but I want to highlight a few key events. In particular, before year-end, we expect to report data from our pentavalent meningococcal vaccine, MEN-ABCWY, as well as data from the RUBI trial in first-line endometrial cancer for Gemperli. For Blenrep, we're on track to provide an update for DREAM-3 before the end of the year. And we anticipate data from DREAM-7 and DREAM-8 in the second line setting in 2023. We also expect FDA regulatory decisions for the Progestat and Momolitinib in the first half of 2023. With that, I'll now turn the call over to Luke. Please turn to slide 14.

Thanks, Tony. Please turn to slide 15. So in Q3, we saw strong execution across commercial operations, total sales growth of 9% in the quarter, and increasing demand from all product groups. Two percentage points of growth came from Zavudi, so the ex-pandemic overall sales growth was 7%. Based on this good performance and our ongoing momentum, we've increased our full-year sales for specialty medicines to low double digits, excluding Zavudi. As usual, Deborah will comment on HIV while I highlight a few key dynamics. In immunology, Ben Lister continues to be the leader in lupus, with sustained growth across major markets, including the US, where we're getting 80% of new starts. We're also making good progress with the lupus nephritis indication, now reaching around 15% of patients in the US, with plenty of room to grow. For Nucala, we continue to be the first and only biologic approved for four EOS-driven diseases, and are leading the IL-5 class across all major markets. In the US, we now have more than 50% market share for all our approved indications, and we're on track to potentially add a fifth with our phase three COPD trial due to complete in the first half of 2024. In oncology, our inline and launch brands delivered double-digit growth, achieving 164 million pounds in the quarter, including Zedula, which was up 11%, and Blenrup up 32%. In general medicines, we continue to lead the single inhaler therapy class with Trelogy, and saw an increase in demand for augmentin due to the post-pandemic rebound of the antibiotic market. As a result of this performance in the quarter and year to date, we now expect full year sales for GenMes to be broadly flat, which compares to the slight decrease that was previously signalled. Turning to our vaccines performance on slide 16. Our vaccines performance was very strong, with sales growth of 9%, excluding the impact of prior year pandemic vaccine sales. This growth is driven by the continued recovery of Shingrix, where we delivered another record quarter of turnover. In the US, Shingrix sales benefited from high demand in both retail and non-retail channels, which was partly offset by expected unfavorable wholesaler inventory movements. Outside the US, we are seeing the growing impact of new launches and strong commercial execution in Europe and international, with nearly 40% of Shingrix Q3 sales now coming from markets outside of the US. Shingrix is now available in 25 countries with two new launches during Q3, and we remain on track to expand our geographic footprint. In 2024, we plan to be in 35 countries representing nearly 90% of the global vaccines market. And we continue to expect Shingrix to deliver record year performance with strong double digit sales growth this year. We now expect fourth quarter growth to be lower than in previous quarter due to expected inventory burn in the US reflecting the drawdown in inventory channel build from earlier this year. For vaccines overall, excluding pandemic solutions, we expect sales growth for the full year in the mid to high teens up from our low to mid-teens expectation in Q2. This reflects strong commercial execution across the portfolio and increased contributions from Bexera in the U.S. due to higher CDC purchases and increased market share versus Pfizer. Let me now hand over to Deborah on slide 17.

Thanks, Luke. We delivered another good quarter with HIV sales of £1.5 billion at 7%, taking year-to-date growth to 9%. Performance benefited from strong patient demand for our innovation portfolio, which comprises of Arto, Cabinuva, Chaluka, Recobia, and Aperture, and now accounts for 44% of our sales. Strong growth of 11% in each of the US and Europe was the result of excellent commercial execution behind our two drug regimens and Dovato in particular. For the first time in a quarter, Dovato sales exceeded those of Tivoke, with Dovato accounting for almost 25% of our total HIV business. Turning to our injectable portfolio, Cavanuva, also known as the Cabriera Cambus in Europe, is our first in class long-acting treatment regimen for HIV. Sales for the quarter were £101 million, reflecting strong patient demand. At AIDS 2022, we were pleased to present new data from the Carousel study, demonstrating successful implementation of the Cabrio or Canvas across a range of European healthcare settings. More than 80% of study participants reported that the complete long-acting regimen was less stigmatising than daily oral treatment. the outlook for this innovative medicine is compelling with strong brand recognition and high levels of market access and reimbursement across the US and Europe. Moving on to prevention. Aptitude is the world's first long-acting injectable for the prevention of HIV, close to every two months. Launched in the US in January, Aptitude delivered 10 million pounds of sales in the quarter. HIV prevention is an area of huge unmet need as current medical options are associated with stigma and adherence issues. Apertude addresses these issues and has demonstrated superior efficacy over daily oral tablets. In the last week, the European Medicines Agency has accepted our application to make Apertude available to people who benefit from PrEP in Europe. This is an important step forward in offering expanded options for HIV prevention. And finally, we were pleased to present more than 50 abstracts across the recent scientific congresses by Z-Week, NHL and Glasgow. The highlight, as Tony mentioned earlier, was the positive proof of concept data from the Banner study of N6LS, our investigational, broadly neutralising antibody. In conclusion, our Q3 results demonstrate continued positive momentum towards delivering our 2026 outlook and successfully evolving our product mix to the end of the decade. I will now hand over to Ian. Next slide, please.

Thanks, Deborah. As I cover the financials, references to growth are at constant exchange rates unless stated otherwise. As Luke has covered the main revenue drivers, I'll focus my comments on the income statement, including margins, cash flow, capital allocation and guidance. Please turn to slide 19. Whilst my comments will focus on continuing operations, I will start by covering the effect of the demerger and total results. Total earnings per share were 255 pence, of which earnings per share from discontinued operations were 237.1 pence in the quarter. This reflected £9.6 billion profit after taxation for the gain arising in the demerger of consumer healthcare. This was comprised of a £7.2 billion gain on demerger and a £2.4 billion gain on the retained stake in Halian. Turning now to continuing operations. For the third quarter of 2022, commercial operations turnover was £7.8 billion, up 9%, and adjusted operating profit was £2.6 billion, up 4%. Total earnings per share were £18.8, down 35%, while adjusted earnings per share were £46.9, up 11%. The main adjusting items of note between total and adjusted results for continuing operations in Q3... were in transaction-related, which primarily reflected Veeve contingent consideration and liability movements, the majority of which related to foreign exchange, and in divestments, significant legal and other, which reflected a fair value mark-to-market loss on retained stake in Haley. Pandemic solutions increased growth of adjusted operating profit by approximately two percentage points and growth of adjusted earnings per share by around three points. The Q3 currency impact was a favourable 9% on sales, and 14% in adjusted earnings per share. Turning to next slide. The Q3 margin of 33.3% was stable and aligned with 2021's delivery. The positive margin dynamics reflected the sales growth with a favorable mix excluding Zabudi, higher royalty income, and favorable currency movements, which were a 1.6 percentage point benefit in the third quarter. These factors were offset by the impact of lower margin sales of Zavudi and continued commercial investment behind launches and key products. COVID solutions increased adjusted operating profit growth by approximately two percentage points, and the adjusted operating margin, excluding COVID solutions, was approximately 1.3 percentage points lower at constant exchange rates. Within cost of goods sold, increased primarily related to sales of lower margin Zavudi, which increased the cost of sales margin by around two percentage points mainly reflecting the profit share pay away to Veer Biotechnology. Excluding Zabudi, costs of goods sold benefited from a favourable business mix, with specialty medicines and vaccines comprising 65% of commercial operations sales ex-pandemic. So this mixed benefit was offset by increased supply chain costs, including commodity prices and freight, which we continue to manage closely. SG&A increased at a higher rate than sales in the quarter, which reflected launch investment in specialty medicines and vaccines, that this was particularly focused on HIV and to drive post-pandemic demand recovery and support market expansion. Freight and distribution costs also contributed to the increase. These factors were partly offset by continued delivery of restructuring benefits and gains on the VR by technology collaboration . R&D spend grew 8% in the quarter with increased investment across several programs, particularly in vaccines clinical development, including in our mRNA technology platforms, and MAPs following the Phenomax acquisition, in specialty medicines with assets like Dipimocumab and Momolizumab, and in early-stage research programs. These increases were partly offset by the lapping of now-completed late-stage clinical programs and ongoing efficiencies. Loyalties benefited from Victarvy contribution and higher sales of Gardasil. In the year to date, adjusted operating profit grew 16% to £6.6 billion, with an operating margin of 29.9%, reflecting the strong business performance. The commercial solutions and operating profit was neutral. Turn to slide 21. Moving to the bottom half of the panel, I'd highlight that net finance expense was slightly lower, reflecting increased interest income due to higher interest rates and larger cast balances following the demerger. And that the effective tax rate of 16.6% reflected the timing of settlements with various tax authorities. On the next slide, I'll cover cash flow. In the year to date, we generated £2.5 billion of free cash flow from continuing operations. The main driver of higher free cash flow this year has been higher cash generated from operations, which has grown 49% to £5.8 billion. And this has primarily benefited from increased operating profit, including the upfront income from the Gilead settlement in February, a favourable foreign exchange impact, and favourable timing of collections. And these factors were partly offset by unfavourable timing of profit share payments for sales of Zabudi, increased contingent consideration payments reflecting the Gilead settlement, and increased cash contributions to pensions in the third quarter. Below cash generated from operations, there were higher tax payments and reduced purchase of intangibles, partly offset by lower proceeds from disposals and increased capital investments. We continue to have a keen focus on cash generation and we're pleased with our progress this year. I'll take the opportunity to reiterate our capital allocation framework, which supports continuing investment in the business for future growth. Through R&D, both organic and inorganic, as evidenced by the CRN College and FinFax deals, through commercial excellence, new product launches and effective capital projects, as well as delivering growing and sustainable shareholder returns, including through our dividend policy. Our strength and balance sheet provides the basis from which we can execute this policy, with net debt standing at around £18 billion after the recent acquisitions. This provides greater flexibility and supports our maintenance of a strong investment grade rating. Turning now to slide 23. Moving on to guidance, Q3 performance was again slightly better than our expectations, and our year-to-date delivery has been strong. Taking that momentum and the positive fundamentals into account, we're again raising our guidance for full year 2022. We now expect sales excluding COVID solutions to increase between 8 and 10% of constant exchange rates and for adjusted operating profit to increase between 15 and 17%. We expect the year-on-year impact from COVID solutions to reduce adjusted operating profit growth by around 4% for the full year. In the fourth quarter, we anticipate a relatively higher rate of R&D spend reflecting prior year comparisons and in-year phasing as well as continued targeted investment. In the round for the full year, we also expect adjusted earnings per share to be 1% lower than adjusted operating profit growth, reflecting the balance of adjustments to the expected effective tax rate and interest expense charges. For the third quarter, we've declared a dividend of 13.75 pence per share in line with expectations. Before closing, let me touch on Zantac, given the impact it has had on the stock price over recent months. We set out the facts in the press releases on the 11th and 16th of August, and today's results release provides the latest information on the U.S. cases. GSK's position on the scientific validity of these cases has not changed and will continue to defend all claims vigorously. As you will have seen, we await the outcome of the Daubert hearings over the coming weeks, and we will, of course, continue to update the market as things evolve. We continue to be highly confident in the performance of the business and are optimistic that the step change in delivery that we've seen in 2022 to date will continue in Q4 and will set up GSK for another year of success in 2023. And with that, I'll hand it back to Emma.

Thanks, Ian. And turning lastly to slide 25. We continue to be guided by our purpose to unite science, technology, and talent to get ahead of disease together. Integral to this is running a responsible business which builds trust and reduces risk, sustainable health impact, shareholder returns, and supporting our people to thrive. This quarter, we advanced our environmental leadership by launching our sustainable procurement program at Climate Week in New York. The recently announced S&P Corporate Sustainability Assessment also recognized our sustainability leadership. And we were also delighted to gain World Health Organization pre-qualification for our malaria vaccine, a key step in making this groundbreaking vaccine available to more children. In closing, I want to thank our people for delivering this tremendous performance momentum. I'm deeply committed to GSK being a company that helps our talented people thrive. And we recognize the significant pressures many are experiencing due to the unprecedented context and the practicalities of rising cost of living in many parts of the world. And this quarter, we invested in supporting those most affected. as well as in company-wide enhanced benefits and well-being support. Together, we are delivering our landmark year, also with another quarter of strong performance, upgraded guidance, and excellent momentum as we look to the years ahead as a focused global biopharma company. We are well on track to meet our bold ambitions for patients and our commitments to competitive growth for the decade ahead. With that, operator, can we please move to the Q&A?

Absolutely. Thank you. Allow me to kindly remind our audience, if you wish to ask a question, please press star 1 on your device, and please kindly keep it to one question at a time so that everyone can participate. Thank you. And with that, our first question comes from James Gordon from JPM. James, please go ahead.

Hello. James Gordon from JPMorgan. Thanks for taking the questions. First question was on older adult RSV vaccine. So we now have the GSK and the Pfizer data in the public domain. what can we say on the comparative efficacy and tolerability and are you still seeing gsk taking the dominant market share or could these end up being similar products with the same asic recommendation because maybe you've got better efficacy but not so good on tolerability and and what could a product like this uh what might the ramp look like is shingrix a proxy and if i could also just squeeze in a follow-up question which is a more general one in the pipeline so a question for tony which would be, how are you thinking about peak sales potential for the pipeline? It seems like oncology is a bit less of a focus than before, and there were some quite plenty of targets set before, so Blenrepsidula, Timperley being multi-billion dollar products. Forecasts, or might those be under review? And are there other areas, maybe outside oncology, where you see higher peak sales potential?

Thanks, James. Well, two quite chunky questions there. I'll come to Tony... First, and let's deal with the RSV question, but then I think, Tony, you can talk about the data, both on efficacy and tolerability, and Luke, perhaps you can pick up on the RAM. And then we'll come back on your question on overall pipeline strength and prospects. I just want to reiterate, James, what I said in my comments, which is compared to where we were just a year ago when we presented both our outlooks for growth on the five-year horizon and a snapshot in that moment of time of the risk-adjusted pipeline, we are in a better and stronger position when we look across those three periods on a net basis. Obviously, some things go away. Other things have matured. And as you know, we've added business development and maturing early pipeline in a fairly material way as well. So we would always expect that to keep adjusting. But first of all, let's deal with RSV in the round. And then we'll come back, Tony, if you want to comment on building on your presentation on some of the pipeline assets. But RSV first, please.

Yes. Thank you, Emma. And James, thank you for the question. The first thing I would stress is that we're confident that our vaccine has a best-in-class profile. And that really is anchored on the consistent high vaccine efficacy, particularly against RSC, lower respiratory tract disease, in the 70 to 79 population, and in those with comorbidities. And we know from the CDC that 94% of adults hospitalized with RSV disease are in those comorbid populations. And just to remind you, there we have consistent 94% vaccine efficacy across the board. I'd also highlight the data that we have with flu co-admin, which shows, which serves to show no impact on efficacy of either vaccine. Again, important in that population. And the fact that we have high vaccine efficacy against both A and B strains with an overall vaccine efficacy of 82.6%. So we're confident in our best-in-class efficacy profile. As far as tolerability is concerned, then the data we have shows that reactogenicity is mild to moderate. It resolves within two days, and it's entirely consistent with the level of reactogenicity that is seen for a majority of adult vaccines. Emma, I'll leave it there in terms of the RSV answer.

Sure. And I think just to build on Tony's points, I mean, I would expect at this point that ACIP would take a relatively conservative position, but we have until June of next year. And as they get more evidence and more reflection, benefit from, obviously, the exchange that occurred with both companies, let's see how that position evolves. We've done early market research now on the files presented by both companies. So that has actually enabled us to do some depth in terms of tracking. What's interesting is in terms of ACPs, you only see one in four of their 60 plus patients is actually healthy. So I guess three quarters are perceived to be unhealthy. And it's in that population that you actually see the difference start to emerge in terms of the perception of these two products for the reasons that Tony has said. when you look at the efficacy. But I think also critically, again, these are scientifically fluent individuals, they're practicing doctors, they understand confidence intervals, they understand consistency, and they understand and see which of their patients go to hospital each year. So I think that's something we can build on, and we're certainly looking forward to that scientific debate. In terms of the ramp, again, there's low levels of awareness amongst potential subjects to be vaccinated. But that will change with two companies obviously vigorously explaining that. I think some of the press coverage around the results is a good indication of that. Physicians obviously are aware, but there's been no solution beyond antibodies in kids. So we expect this understanding will grow. But the ramp will be more consistent and steady over time. I think the Inflation Reduction Act will also help in terms of copay reductions in terms of a single-digit effect in terms of willingness to get vaccinated. You know, there's a build over time, but I think it's exciting and I can imagine this is a class of vaccines that's going to grow over the next 15 years consistently year on year globally.

Great. Thanks, Lou. And then I don't know, Tony, whether you just want to give a very quick view to Jen's second part of the question on the sort of shift in the portfolio and your priorities there. Then we'll move on because we've got a long queue of questions.

Yeah, so look, Emma, this is really for me about a focus on allocation of capital, where we see data driving the potential for meaningfully different contribution to standard of care. And I would point to the RSC results we've just been discussing, the emerging profile we have for Bepi, and of course, the exciting opportunity we have within the pneumococcal vaccine opportunity based on the Finovax acquisition. I expect momentum to continue. in that part of the portfolio, and that's why you see that two-thirds of our development portfolio is now coming from infectious disease and vaccines.

Thanks, Tony. Next question, please.

Our second question comes from Simon Baker from Redburn. Simon, please proceed.

Thank you for taking my question. On COVID in two parts, if I may, please, firstly, One for Deborah and for Luke, if you could just give us an update on where we are in terms of treatment and diagnosis rates across the key therapeutic areas at this stage in the endemic phase. And then on Zavudi, it was a very strong performance in the third quarter in contrast to a number of other antibodies in the space. So I just wonder, Tony, if you could update us on the data on efficacy that you have for the latest data. circulating variants of the Omicron variant. And set against that, you appear to be indicating Q4 sales for Zavudi of close to nothing. I just wondered if you could explain what that was, whether there were orders for Q4 that essentially came into Q3. Just a little bit of color on that would be very helpful. Thank you very much.

I will come to Luke first to give you a shape of the Zavudi business, what's happened and what we don't expect ahead. And I think you were asking for commentary from Deborah also, maybe you can add to that, what's happening in the overall market in the context of COVID and We know that that's hit a few areas, and Debbie, you might give a sentence on HIV. And then if there's anything further to add, Tony, on variant switches as this becomes more endemic, then we can add that at the end. But Luke, first to you, then.

Sure, thanks, Emma. I mean, Tony will cover the debate about in vitro versus in vivo activity, but our feedback from physicians actually using the infusion is they still see activity. And so we are still seeing volumes employed, and in some markets actually higher than practically Now, in terms of extra orders, we're not expecting any in Q4 because governments have stockpiles. The shelf life is two years. We're working to extend it to four years. So we see it essentially as a saturated market at this point, unless there's evolution of the ovarian. In terms of impact on other areas, I mean, the primary area of suppression remains the ovarian cancer diagnosis, surgery, and treatment. It's still down by about 9%. and some signs of recovery, but still suppressed. The rest of the markets, with the exception of China, are essentially starting to revert to the mean, which is encouraging and gives us confidence in terms of the outlook.

Thanks, Luke. Deborah, any? Yeah, so in terms of the HIV market, so the overall TRX market in both Europe and the EU has returned to pre-pandemic levels and is growing between 1% and 2% overall. If we look at the dynamic part of the market in Europe, you can see that the dynamic part of the market is pretty much back to where it was pre-COVID. In the US, the MBRXs weekly were around 5,500 to 6,000 pre-pandemic. They seem to have settled now at about 4,500. per week. So suppressed versus where we were before the COVID pandemic. But I do think this is probably where they've settled. So a slightly less dynamic market. And obviously, we work very hard to create that dynamism with our new portfolio of medicines, which, as you can see, are being very well accepted and have a rapid uptake, both in Europe and in the US. Great. Thanks.

Tony, anything to add? Just

Yeah, again, just a quick one. The latest real-world evidence from an independent group demonstrates clinical effect in this visibility through the BA.2 wave, which we believe can be extrapolated to BA.5, which is the currently dominant global subvariant. It's all I have to add.

Okay, well, I mean, I think just to remind everybody, I think everyone knows that COVID Solutions is completely excluded from our guidance in this year and in our five-year outlook. We've been very proud to contribute billions, but mainly the impact for healthcare through and primarily through the pandemic. We're still watching to see what happens endemically. You know, we've got our platform in mRNA, including potentially there, but the world has plenty of COVID vaccines. So, you know, this is not at the core of our development plans going forward. All right, next question, please.

Our next question comes from Richard Parks from BNP Paribas XA. Richard, please go ahead.

Hi, thanks for taking my question. I've got a question for Tony. Just wondered if he could discuss his thoughts on R&D capital allocation in oncology R&D going forward. There's been quite a lot of focus on rebuilding GlaxoGSK's presence there over recent years, but it sounds like investment is going to be a bit more selective going forward. I don't know whether I'm interpreting that correctly, but maybe you could just discuss what you think GSK needs in order to compete effectively in oncology, whether it be in terms of technology or capabilities and how you'd achieve that over time rather than just fully de-investing. Thank you.

Great, thanks. And just as a reminder, and we'll come to Tony and then Maybe you might want to add something commercially, but our priority has consistently been to grow GSK through innovation in vaccines and specialty medicines. As Tony did say, two-thirds of the pipeline are in infectious diseases and in HIV, but we see oncology as part of what will drive growth at the end of the decade. But I'll let him comment more specifically within oncology, and then Luke, you might want to add on that in terms of commercial, as I know we're excited about what more melatonin might bring next year. So, Tony, first to you.

Thanks, Emma. So, we're committed to oncology because of, you know, persisting medical need and scientific opportunities. And for us, really oncology is an emerging therapeutic area. So you can expect in terms of capital allocation, our approach to be a pragmatic one through careful business development, such as exemplified by the Sierra oncology deal. And as I mentioned earlier, a focus on assets in the portfolio where we see an opportunity for meaningful contribution to standard of care. For example, our focus on immuno-oncology in the case of distalimab, where we have a number of interesting datasets starting to emerge, and in the CD226 axis, where access to CD96, PVRIG, TIGIT, and other members gives us an opportunity for full blockade of that axis. So, you know, we'll continue then to deploy our capital into oncology driven in a data set, driven by data, which suggests that we could expect to see meaningfully different clinical contributions. As far as the later stage pipeline is concerned, we're continuing to evaluate blend reps potential. and to make a difference in the treatment of patients with multiple myeloma. And as I mentioned, we expect to be able to report data from D3 before the end of the year and in DREAM7 and DREAM8 in second line in 2023. Perhaps I'll pause there and pass over to Luke to make any additional comments.

Sure. Thanks, Tony. I mean, I think this theme of discipline in terms of competitive profile is something that we spend a lot of time on. I think to build on Tony's point, I would direct you all to the ESMO IO Perla publication for Dostalimab at the end of this year. I think it's got a very intriguing read across for the COSTAR study where there is a chemo Dostalimab arm. And then Momolathneb, if you look at the awareness and early market research that we've got, it's very high. There's clearly a lot of enthusiasm around this product. And so we're excited about the filing involved with that product and the potential uptake.

Thank you. Next question, please.

The following question comes from Steven Scala from Cohen. Steven, please proceed.

Thank you. This is a big picture question for Tony, since I believe this is your first quarterly call. But over the past 25 years, GSK has tried many different R&D structures and programs to infuse energy, accountability, creativity. But other than in vaccines and HIV, none have been particularly successful. when compared to leading competitors. Hal made some positive steps, but still outcomes such as Otilamab have been far too frequent. So why do you think this has been the case at GSK? Without identifying the root cause, it would seem very difficult to fix. Thank you.

Thanks, Steve. Well, I'll let, perhaps, Tony, we go straight to you on that. I just would remind everybody, again, that on a net basis, When we look at our outlook for growth, we're in a much better position than we were five years ago. We did overall in terms of number approvals, I think we got to 13. We've doubled our number of late stage assets and our current momentum as well as our prospects of growth haven't looked stronger. Obviously, we have failures because that is the nature of the industry, and I'm really pleased that we call when we don't think we can bring meaningful differentiation. But in terms of your core big picture questions on operating models, Tony, it'd be great to have your reflections at this stage on that, and I'm sure the conversation will continue on the quarters ahead.

Yes, thank you, Emma. So let me start by just reiterating that together with HAL, I was a co-architect of the strategy that focuses on science and technology and culture in terms of transforming our business performance. And as Emma has mentioned, we have substantial momentum in that context, particularly our performance with regards to our late stage portfolio, our performance of the past year is better than our past, and it's in line with our peers. So what you can expect to see from me and the priorities that I've delineated is a continuing of that focus. I might pick in particular on an aspect of culture associated with decision making and in particular improving late stage governance. And there the focus that you will see on investing capital into assets which have a meaningful opportunity to change standard of care and that is going to continue to shape our late stage development portfolio in the way that you can see it evolving today with this greater than 60% of our assets now focused on vaccines and infectious disease. So, we will continue to focus there. My priorities again, in terms of technology then, building in additional capabilities and platform technologies, I would remind you that we already have a substantial suite of powerful platform technologies in vaccines. Our adjuvant technology recently added technology for maps. And in our medicines portfolio, the growth and effectiveness of a build-out in capability in biologics, underscored, for example, by the performance that we demonstrated for Zevudi in bringing that monoclonal quickly to the market. NUCALA is an example of a monoclonal leading in the IL-5 class. And a growing focus now on oligonucleotides exemplified through the periversum and other cases in our portfolio. So I'm confident that based on our focus on science, technology, and culture, and a build out in technologies, both in platform technology and data technology, you should continue to see the momentum that was built under how continue and accelerate.

Great. Thanks, Tony. We're going to move to the next questions, and we'll try and speak through as many as we can.

Our next question comes from Graham Perry from Bank of America. Graham, please proceed.

Great. Thanks for taking the question. So just you give some interesting details on the Zantac litigation and the number of cases. So just wanted to clarify because I think there might be a bit of confusion out there. that you essentially have over 110,000 claimants now. And so the 33,000 in the MDL, those are the unfiled claims, and the 77,000, those are filed claims. And can you give us a feel for exactly what the proportion of those that are the five cancers are outside the MDL? And then secondly, on the Progestat post, the data, is that something which you would consider as worth launching in dialysis-dependent only, or is that an out-licensing candidate, given that GSK doesn't really have a cardiorenal franchise? And do you think that is something on which you would be able to make an economic return on the R&D that is invested in it through an out-licensing deal? Thank you.

Great. Thanks, Graham. So I'm going to ask Ian, who alongside our general counsel, both from a governance and a disclosure point of view, is on point for the Zantac work, just to reiterate, we are always prioritised patient safety. The scientific consensus on this is clear. We're vigorously defending our point and we're focusing very much on delivering the fundamentals whilst keeping you updated. But Ian will comment on that and then we'll ask Luke. I know we were pleased with the latest feedback in the adcom, but Luke, comment on plans for DAPRA.

Yeah, Graham, thanks for the question. So overall, if you look at where we are presently, we've got just over 4,000 cases filed across state and federal. The federal cases are consolidated within that multi-district litigation in the Southern District of Florida. At a state level, what we have seen develop over the course of the last few weeks is about 70,000 claims filed in the state of Delaware. And based on the data available, a couple of things. One, the vast majority of those claims have not been vetted at this point in time, so we don't really know much about the claimants. Circumstances, whether it's RXOTC or anything else actually about the claimants, But what seems to be quite clear is that a significant amount, if not the majority of those, are transfers from the MDL case on the actions of the plaintiff's lawyers to pursue five as opposed to 10 cancers. Now clearly what is quite important in terms of the MDL case are the Daubert hearings, which took place at the end of September and beginning of October. We are hopeful of hearing Judge Rosenberg's decision either later this month or into the month of December. And I think that's quite important in terms of informing how this case then proceeds, certainly in the multi-district litigation at a federal level, but certainly would also to some degree inform what might happen at a state level, most notably within the state of Delaware, which is where the majority of the state cases are now filed. In terms of the 33,000 cases sitting within the MDL, Those address multiple defendants, including GS case. There are other co-defendants within that case. And again, in terms of the numbers of claimants within that class, again, that will be informed by Judge Rosenberg's decision on the Daubert hearings that we'll hopefully hear a little bit later. I think the underpinning on this, Graham, is we still haven't had a single trial on this. The first trial we expect to be in California kicking off in the middle of February. That addresses a single claimant's case. And then we would expect MDL to kick off around the middle of the year. And exactly how that plays out will, to a significant degree, be informed by Judge Rosenberg's decision, which we'll hopefully hear reasonably shortly. So look, where we are, absolutely no change in sort of the consensus of scientific opinion in terms of no clear evidence and consistency around the connectivity or the causality, rather, of rinicidine in the form of cancer. And grounded in that and the strength and confidence that gives us, we'll continue to defend each case vigorously. I think all I would add here is that as matters evolve in this case, we'll continue to provide timely and transparent disclosure, both in terms of the numbers and other developments. So certainly, you know, keep your eyes peeled for any R&Ss that we might issue and obviously our quarterly disclosures and annual reporting accounts. But Graham, hopefully that's helpful.

Great, thanks. Luke?

Thanks, Emma.

Graham, so the short answer is yes and yes. So if we do it ourselves, it's financially attractive. We can also do it with a partner and I think make that work. I think our preference is to do it ourselves because of the synergies with Ben Lister. and various other . I mean, in the US, if we do get dialysis and assuming we don't have an onerous REMS program, I think you're gonna see the product evolve in three phases. The first phase, which is about nine months, based on CMS cycles, is pre-Tdapa. I don't think you'll see much volume at that point because you're competing with EPOs which are embedded in the bundle. Then the Tdapa period, which will run for about two years, And that is essentially where the cost, of course, of the medicine is removed from the bundle. And so there's a strong incentive deliberately created by CMS for the large dialysis organizations, which dominate about 80% of the market in the U.S., to utilize this drug because, of course, the allowance that they have for EPO will be removed from the bundle. The amount they receive for the bundle will not change. So there's a heavy volume incentive for them. That period will run from, based on our timelines, October the 1st, 2023 to September the 31st, 2025. After that, when it goes back into the bundle, it's very much going to become a volume contracting game in direct competition with EPO by a similar EPO. So a tougher game. Now, all of these elements with dialysis don't require large field forces. This is going to be a very concentrated group of people that I could probably count on two hands, maybe take one of my shoes off So a very small infrastructure involved there for what is, from a P&L point of view, quite an attractive asset. For Europe, we expect to get the broader label. And of course, that's more of a classical non-dialysis build profile. But again, we can embed that with the Ben Lister team. And I just direct you towards the performance of Dapro in Japan. where there's five HIFs. It was not the first to launch, but it's captured 60% and growing market share. So we think we've got a very competitive profile versus Roxodustat in Europe.

Great. Thanks, Lou. Next question, please.

Our next question comes from Andrew Baum from Citi. Andrew, please go ahead.

Thank you. First question to Ian. Ian, you and I have spoken previously about the potential for the MDL to exclude multiple expert witnesses, leading to up and to including the MDL being shut down in its entirety if all the experts are excluded. Could you tell us from the background knowledge, which I'm sure your chief legal counsel is aware of, any significant prior cases in drug liability litigation where the MDL has been closed that have resulted in significant settlements, including to address the plaintiffs in the state courts? That's the first question. And the second question to Tony. You've taken your TIM-3 Cobolimab into phase three development on the basis of pre-specified hurdles for the expansion criteria per protocol. Could you just tell us what those expansion criteria were? And when you reference the per protocol analysis, is this relation to toxin or is this just patients advancing and therefore not being able to take their drugs? Many thanks.

Thanks, Ian.

Yeah, thanks, Andrew. Look, I think, you know, as we've talked recently on this topic, there is a range of possible outcomes that Judge Rosenberg will inform in her decision. But the likelihood of it being, you know, all evidence being excluded and the MDL effectively stopped, we think is probably, you know, very, very low to zero probability. and frankly, probably unwise of us to try and guess, rather much more wise to sit and actually await Judge Rosenberg's opinion. In terms of precedent, there are clearly instances in other product liability cases where Daubert hearings and other forms of hearings like the Sargon hearings in California narrow the scope of the possible prosecution and evidence that can be submitted both, interestingly, by by plaintiffs and defendants lawyers. So there is a range of practice in this. I don't think we have any expectation that the MDL, all evidence will be excluded and the MDL suppressed. I think that would be unlikely, but we are going to save our counsel and wait to hear from Judge Rosenberg. I think that's the best approach here.

Back then. Tony on 10-3.

Yeah. Thank you, Andrew. First of all, I would say I'm happy with the progression of COSTAR into Phase 3 on the basis of the IDMC. recommendation. I don't want to disclose the details of our clinical trial. I'm looking forward to waiting to see what the data is.

Next question, please.

The following question comes from Kaer Parekh from Goldman Sachs. Please proceed.

Hi. Thank you for taking my questions, too, if I may, please. The first one, just on the kind of ramp for the RSV vaccine and how you anticipate kind of launching it U.S. and ex-U.S. We saw kind of a staggered launch, the supply constraints. Just wondering kind of when you see this, how do you see the trajectory of launch and what should we be anticipating as regards to kind of the length of time it takes before you get to kind of your peak sales outlook for the molecule. And then separately Tony kind of big picture for you again kind of coming back to R&D and culture and organization. What are some of the things we should expect from you that might be different to what prior GSK management have done from an R&D perspective? And what's kind of your broader picture for how you would define success for GSK R&D over the next 12 to 24 months? Thank you.

Right. So, Luke, I should recognize you as a competitive situation. Over to you first on R&D.

Sure. Thanks, Kelly. We have no supply constraints within reason. So unlike Shingwix, where a deliberate decision was made to impair launches to direct supply to the US and earlier launch markets, we will go for a full global launch. There is some gating, of course, just from a resource point of view. The ramp, I would expect to be quite steady. The peak for the U.S. is after five years. Globally, it's going to be closer to 10 years just because of building the market. But as I said, I would expect that this product grows throughout its lifecycle. It should just continue building and building as we see penetration in markets across the globe.

Yeah, and the last point on this one is, of course, we will still see the data prove out how long the duration of efficacy is and the frequency of re-protection. Tony.

Yes, thank you. So two points on that one. First of all, I would point again to portfolio decisiveness and decision making. In particular, you should expect to continue to see a focus on those assets whose profile is consistent with material contribution to standard of care, an acceleration of early stage assets based on data, and the continued focus on business development. As far as impact on the broader R&D culture is concerned, it's doubling down on technology in particular to drive performance within R&D, and you should expect to see examples of how that technology deployment, be it against platform or data, is improving the overall characteristics of the portfolio.

Thanks, Tony. And the measures of success, let's be clear, are the strength of the pipeline and the prospects for growth, profitable growth it generates. So, right, next question, please. And by the way, our proposal is for anyone that's worried about not getting through all the questions that we will extend the call by an extra 10 minutes so we can get to everybody. So next one, please.

Thank you. Our next question comes from Joe Walton from Credit Suisse. Joe, you may proceed.

Thank you. I'll respect the one question rule here. and ask a little bit more on Shingrix. Could you give us an idea of the level of inventory at the end of the third quarter in the US? I believe it was 1.9 million doses in the second quarter. And if you can tell us a little bit about the penetration in other markets. You've talked in the past about Germany and Canada as being the main two markets, but you're in more than 30. So can you talk about where you've got good penetration? What sort of level of annual cohort you might expect to be able to be getting to in some of these other non-US markets. Thank you. Great, Jo. Thanks.

Over to you, Luke. Sure, Jo. So, I mean, yeah, 1.8 in Q3, which compares to 1 in Q3 last year. But you would have seen the latest TRXs. We just hit 200,000 last week, so good in market demand. And Q3 in actual doses, about 6.3 million sold. So consistent demand, which is very deliberate. We wanted to smooth the the process over the year and not have it aggressively concentrated around the flu season. I think we're proving to do that because if you look, Q1 was 6.6, Q2 was 6.5, Q3 was 6.3. In terms of outside, you saw on the slide that I presented that you've got this growing European and international presence. And a critical point to make here is if you look at price variance globally, it's around 5% from the U.S., on average. So we've been able to preserve this pricing power so far at this point in the life cycle. So German demand remains very strong. We're starting now in Spain, Italy. We're about to announce a major contract in one of the key European markets for full reimbursement. And so, yeah, we continue to see very positive signs. And of course, is to have this market completely treated with a 10-year plus and evolving efficacy before anyone else gets close to launching. Now, I spent time in emerging markets in August. It's quite encouraging what we see early days with Brazil. You know, obviously we don't expect to see levels of penetration that we may reach in the U.S. over the next couple of years, but we also have the flexibility to adjust that price down in the back end of the life cycle to catch those patients who may not be seeking vaccination at this point in the out-of-pocket markets in emerging So, there's plenty of flexibility in terms of the structure and how we're positioning this vaccine for multiple year growth.

Fantastic. Thanks, Lou. Next question, please.

Up next is Tim Anderson from Wolf Research. Tim, please go ahead.

Thank you. My question is kind of cash flows and business development. So, one of the challenges Glaxo is facing in the past is weak cash flow, limited business development activity. that improved after spinning out consumer and cutting the dividend. But I'm wondering if business development in the form of acquisition specifically could get put on hold again given uncertainty around Zantac because it's not inconceivable that at some point you have to take financial reserves seeing as the drug was pulled off the market. So if the answer to my question is there's no change, it's business as usual, maybe you can bracket the upper end of deal sizes you'll continue to look at.

Right, well, first of all, I want to be absolutely categorically clear. We will, as always planned, continue to pursue business development with agility, ambition and appropriate aggression and due discipline from a financial point of view. There is absolutely no change to our intentions there, as articulated also by Tony and from a capital allocation point of view from Ian. This is, as you rightly acknowledge, exactly why we went through significant structural research set of the balance sheet of GSK. But I'd also point us to the improving operating performance generation of cash flow, as well as continually competitive distributions, but also some of the pay down of debt. And of course, in brackets, we are helped by currencies. And it's really important that this is understood, that we are absolutely focused with full support to keep prioritising BD as part of our pipeline development, mainly for continued profitable growth in the end of the decade. We're very confident in our outlooks. We'll stay disciplined on it, but that is the very clear intent and plan forward.

I'm not sure there's much to actually add, Emma. You know, a stronger balance sheet. We've got strong cash flow. We did a reset on the dividend with good cover of that dividend from 23 onwards. Strong focus on cash generation, cash management across the business. And to Emma's point around business development and M&A, you know, continued focus around, you know, those bolt-on acquisitions of the genre that we've done over the course of the last few years. So absolutely no change. And, you know, there is not a Zantac overlay at this stage for the obvious reason that we believe there's a very strong consensus of scientific evidence supporting our position. And we're going to defend our claims very vigorously in that front. So, look, absolutely no change in capital allocation priorities. None.

Thanks, Ian. Next question, please.

Moving to Peter Belford from Jefferies.

Peter, please proceed. Hi, thanks for the question.

Just a point of clarification really on Zantac before, which is just given the commentary you made with regards to the MDL and how the Dalbert decision will inform how it proceeds. Just curious, is that an event that the auditors or I guess Ian consider then the time to consider a provision or will that likely wait for the bellwether? And then if I could just ask just on RSV, coming back to what Luke was saying with regards to competitive positioning, obviously we've also seen data from Pfizer now on their maternal vaccine. I guess curious any view on that and particularly how that potentially could impact your positioning of the product in the retail segment in the U.S., which I think you said is very important on the prior call, given obviously that now has two populations potentially that could be addressed in the U.S. with that vaccine. Thank you.

Okay. I suspect we can beyond the press release on Zantac, but Ian might want to add to that. And then, you know, on other people's vaccines, but Luke may want to talk about the commercial prospects there.

Yeah. On Daubert, Peter, it informs what testimony can be submitted in evidence both by plaintiffs and defendant's counsel. and possibly the scope of the MDL that will take place in the middle of next year. It doesn't inform anything else. And therefore, you know, viewing that as definitive or it absolutely isn't definitive. We have to go to court to try the case and we'll defend ourselves vigorously in that matter. Depending on the outcome of it, then we'll consider whether or not Any provisioning may be appropriate at that time, but no, I don't think Daubert is an inflection point in that regard at all.

Yeah, I think these two populations are going to be separated. Again, it's going to come back to the efficacy in the groups most at risk. And I think the numbers are quite illustrative. There's about 80 million people who are 60 plus who are either comorbid or 65 plus. versus a birth cohort of about 4 million in the U.S. each year. So I think it's quite manageable, and that's assuming that it's approved, of course.

Next question, please.

Our next question comes from Kelly Holford from Barenburg. Kerry, please proceed.

My question is on your meningitis vaccine franchise. So your competitive Pfizer has announced positive face-to-face headlines for its site, Valent, vaccine and aims to file before the end of the year. You're confirming today that your phase three data is due by year end. If that is positive, how quickly can you move to file? Arguably, you have more to lose in this market and Pfizer has more to gain. So how comfortable are you that you can protect and indeed grow your position beyond Bexsero and Renfeo? And slightly

different but related question perhaps you can also remind me of the difference between your generation one and two pipeline candidates in this area thanks thanks well Tony perhaps you can comment on timing to file and gen one and two and then Luke will come to you on I know you're very strong ambitions and prospects there

Yes, so thank you, Emily. As I mentioned earlier, we're confident the program is on track with regards to data, and we're preparing to move to file post that as quickly as possible.

Yeah, and I just built, in terms of the first generation asset, I think the important component is, and we've published on this, is the 110 strain coverage, which is, we believe, strongly in terms of provides better protection. The generation one is really a U.S. targeted vaccine. We don't see the, because in Europe it's largely an infant population, we see Bexsero being preserved and used in a mono setting. The pentavalent is very much targeting U.S. adolescents, college-age kids. And the penetration of Bexsero in there is still relatively early days. So we think the shift to the pentavalent And the better B embedded there will be a very competitive opportunity. So it's not cannibalistic. It's an opportunity to grow the aggregate business there in the US. And then the generation two has the potential to be utilized more broadly. And then the final thing I would direct you to, which we need to build the evidence for this and ultimately find a pathway for a label, is the activity around gonorrhea. And I think there's an excellent analog with Merck's excellent work with Cervarix around HPV and genital warts. And again, when you look at gonorrhea, I think it's about 85, 83 million new cases in the U.S. every year. College-age kids, of course, by nature of the lifestyle, point of age, at high risk. So we think these elements combined are very compelling. And that last activity around gonorrhea we don't believe is accessible to the Pfizer-managed vaccine.

Great. Thanks, Luke. Next question, please.

The following question comes from Michael Loyton from UBS. Michael, please go ahead.

Thank you for squeezing me in. Just a quick follow-up, just going back to Shingrix and the stocking levels. I think in Q2, you're pointing out that inventory levels were running quite high. It sounds like they still are, but you're comfortable with that going forward, or should we expect there to be a workdown as we go into the flu season? Thank you.

Yeah, Michael, comfortable. I mean, they kept ordering, and I've said this in the past, and it remains true. They order it because they're confident in using it, and the script trends are certainly pointing that way. And actually, we've seen a strong jump in non-retail utilization, which is not as visible to you guys. So the volume growths are very encouraging. So not concerned with the Q3 inventory level. Thank you.

All right, we've got two more questions. So next one, please.

Our next question comes from Emmanuel Papadakis from Deutsche Bank. Please proceed.

Thank you for taking the question. Perhaps a question on mRNA. You've highlighted several times in the Q3 release the priority investment in mRNA, and I assume that would be principally into the flu partnership and COVID partnership with CureVac, but perhaps you can correct us if that's otherwise. Are we still expecting phase one data for both modified and unmodified flu assets by the end of this year, and what's your degree of confidence both in our seeing an improved risk-benefit profile relative to competitive data sets we've seen over the last 12, 18 months, particularly as regards reactogenicity, and your confidence that you've got the right external technology partner for that platform. And then a very quick follow-up on royalties, if I may. Big step up this quarter. Apologies if I missed it earlier. Is that the kind of run? You didn't seem to call out any one off. Is that the kind of run rate we should be thinking about going forward? Thank you.

Right, well, Ian, can you just pick up the royalties one, and then Tony will come to you on MRNA.

The royalties is the principal combination of Gardasil and Biktarvy settlement. Those are the two key elements, and obviously the Biktarvy settlement took effect in February of this year, so we're probably hitting an appropriate run rate, but it's informed by sales of Biktarvy.

Tony? Yeah, thanks. Thank you, Emma. So in flu, our studies remain on track. I would remind you, So we have a suite of clinical studies aimed at assessing optimization of sequence and incorporation of modified bases in both the context of COVID and in the context of blue, as well as an internal build, which is continuing at pace. So I'm confident that when you put all three of those together, we are well-placed to be able to solve the equation associated with getting to an appropriate reactogenicity versus efficacy proposition for a multivalent blue. vaccine will know clearer how that stands, certainly by the end of the second half of next year. Sorry, the end of the first half of next year.

Thanks, Tony. Okay, last question please.

Our final question comes from Emily Fields from Barclays. Emily, please go ahead.

Hi, thank you so much for taking my questions and fitting me in. Hopefully first just a very quick clarification on Zantac and the impact with Daubert. You mentioned that a number of these cases in Delaware were plaintiffs moving jurisdiction from the MDL to Delaware. I was just wondering, whatever comes out of Daubert, will that have any impact on any other jurisdictions, such as these state courts, i.e., if a cancer is reduced in the MDL via Daubert, would that then have any impact on state cases? And then I actually just wanted to ask a question on the recent, looks like recent decision to move the anti-tigit asset into phase two. If you could just comment sort of on the thinking behind that sort of as we're all awaiting the Tierra Lagoon Lab updated OS data, and it does look like an interesting trial design given that you also have a PEMBRO arm in there, you know, sort of in the context of the PERLA study. So just any color or commentary around that would be helpful. Thank you. Right.

Thanks. So Ian Swiftley on Daubert again, and then Tony to finish up, please.

Sure, Emily, thanks for the question. At a state level, they're not bound by decisions at the federal COFREP level, and Daubert is informing the scope and testmate in the multi-district litigation in the Southern District of Florida. So the states can take a different view. What is interesting based on history is that Delaware has tended to follow precedents set by federal courts. So it is possible that the Daubert hearings would have specifically related to multi-district litigation in the Southern District of Florida in federal court. It is possible that the output of Daubert could also have a read across to state cases, and at state level, probably notably in Delaware, where we currently have about 70,000 claims filed, of which the vast majority are as yet unvetted, so we know little about them, other than the fact that they probably relate to five cancers that the plaintiff's lawyer and the NBL decided not to pursue. So that's probably all I can add on that point at the moment, Emily. Hopefully that's helpful.

So, Tony, Tidgett.

Yeah, thanks, Emily. Obviously, the TIGIT is an incredibly competitive class with more than 20 assets in development. And for that reason, it's going to be important for us to move at pace with the change that you see. It's likely that certain assets are going to have dominant positions in certain indications, given combination partners and others. I don't really want to disclose where we may compete. But the movement that you see is consistent with that. And also building out a phase two platform capability to be able to evaluate not only doublets in the PD-1 digit access, but other alternatives in combination, as I mentioned earlier, like PD-96 and PV rig. Great.

Thank you, Tony. Well, a big thank you to everybody. I hope you got to most people's questions. We'll certainly be following up in coming days. We are delivering our landmark year with this Another quarter of strong performance, upgraded guidance, and great momentum, including on the pipeline. So we're very much on track to meet our bold ambitions for this year, for our five-year outlook, and indeed for the decade ahead. Thank you very much, everyone. Speak to you soon.