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

Good afternoon, ladies and gentlemen, and welcome to the analyst call of QSK fourth quarter 2022 results. I will now hand you over to Nick Stone, head of global investor relations, who will introduce today's session.

Thank you, operator. Hello, everyone. Welcome to our full year in Q4 2022 conference call and webcast for investors and analysts. The presentation was sent to our distribution list by email earlier today, and you can also find details on Q4 2022. This is the usual safe harbour statements. We'll comment on our performance using constant exchange rates or CR unless stated otherwise. As a reminder, the consumer healthcare business was demurred on 18th of July 2022 to form Halian. So today we're presenting continuing operations for GSK. Please turn to slide three. Today's management presentation will last approximately 30 minutes with the remaining 30 minutes for your questions. And this is to ensure that we get you to your next call given it's such a busy day for those on the street. For those on the phone, please join the queue by pressing star one, and we request that you ask one to two questions so that everyone has a chance to participate. Our speakers are Emma Walters, Tony Woods, Luke Miles, Deborah Waterhouse, and Ian McKay. With David Redfern joining the rest of the team for Q&A. Please turn to slide four, and I'll now hand the call over to Emma.

Thanks, Nick, and welcome to everyone. Please turn to the next slide. 2022 was a landmark year for GSK. We successfully delivered the most significant corporate change in 20 years and began a new chapter of competitive and profitable growth. GSK is a global biopharma company with the ambition and purpose to unite science, technology and talent to get ahead of disease together. We are a world leader in the prevention and treatment of infectious diseases with an industry-leading vaccines franchise that continues to strengthen, an expertise in HIV that is pioneering in innovation, and we have an exciting emerging pipeline based on the science of the immune system. Through ongoing focus on R&D productivity and operating performance, we're unlocking the potential of this company. We are realizing our bold ambitions reflected in our commitment to attractive growth and a significant step change in delivery. And through the demerger of Halion, a world healthcare business in its own right, we've strengthened our balance sheet, creating additional flexibility to invest in continuing growth and innovation. Turning to slide six. I'm delighted with today's results, which demonstrate that our strategy is driving the step change in financial performance we committed to, with continued strong momentum as we enter 2023. In 2022, we delivered double-digit sales growth of 13%, 10% if you exclude COVID solutions, including the more than £2 billion sales of Zabudi, adjusted operating profit growth of 14%, 17% excluding COVID solutions, Adjusted EPS growth of 15% and strong free cash flow of 3.3 billion pounds, further strengthening our financial flexibility. This outstanding performance was driven by strong sales growth across both specialty medicines and vaccines, alongside continued pipeline progress and underpins our guidance today. In 2023, excluding COVID solutions, we expect sales to increase between 6% and 8%, adjusted operating profit to increase between 10% and 12%, and adjusted EPS growth between 12% and 15%. Please turn to slide 7. This strong delivery in 2022 and commitment to do so again this year support our increased confidence in all dimensions of these 26 outlooks and demonstrate the continuing successful momentum in our transformation of GSK. Our portfolio mix has meaningfully shifted to vaccines and specialty medicines, now approaching two-thirds of our sales in 2022 compared to 46% in 2017. This evolving portfolio shape and our prioritized investment in innovation and product launches with good cost discipline are reflected in our continuing margin expansion. Please turn to slide eight. Before handing over to Tony for more detail, I'd like to share a couple of headlines on our progress in reshaping and advancing our pipeline, our number one priority. We've built a pipeline of 69 vaccines and medicines, many with the potential to be first or best in class. We've also had over 20 new approvals in the last five years, now representing nearly a third of our 2022 sales, including COVID solutions, and we anticipate more regulatory decisions this year. Our 2020 achievements include the launch of Aptitude, the first and only long-acting injectable for HIV prevention, alongside Cabinetta, the first and only long-acting HIV treatment regimen. We intend to continue to lead in changing the landscape for people living with HIV around the world over the coming years. In vaccines, the key highlight was our exceptional RSV older adult data that led to a prompt regulatory submission and priority review acceptance by the US FDA. Our vaccine candidate has a potential best-in-class profile and represents a significant commercial opportunity with multi-billion Shingrix-like potential. We also made some important advances in the clinical development of two late-stage assets, jeptitidazine, a new novel antibiotic for uncomplicated UTIs, and beprovercin, which has the potential to provide a first-in-class functional cure for chronic hep B. Strategic business development also played an important role in reshaping our pipeline. The acquisitions of Sierra Oncology and Afinovax complement our portfolio, and in the case of Afinovax, give us access to not only a phase two next-gen 24-valent pneumococcal vaccine, but also the novel MAPS platform technology to target complex pathogens that have multiple serotypes. We have a world-leading profile in infectious diseases and an exciting portfolio and pipeline based on the science of the immune system that we're confident will sustain growth through this decade and beyond. I'll now hand it over to Tony for more details.

Thank you, Emma. Next slide, please. Today, I will talk about recent R&D developments and preview important events that will shape our pipeline. In 2022, nearly a third of our sales came from assets launched in the prior five years, and we are confident that our early-stage pipeline is well-positioned to continue strong commercial execution to deliver our 2031 ambitions. This slide illustrates our focus in four key therapeutic areas, shaped by our world-leading capabilities in infectious diseases, our understanding of the science of the immune system and human genetics. In 2022, we progressed 16 novel candidates into the clinic, added nine to phase two, and started five phase three programs, which reflected our core therapeutic focus, including the initiation of phase three life cycle innovation trials for deprimocomab in eosinophilic disease and cobolimab for the treatment of non-small cell lung cancer. Today, our pipeline comprises 22 vaccines and 47 medicines, many of which are potential first or best in class. These novel programs will form the basis for our next wave of pipeline innovation and growth. I'm pleased with our continued progress, and the next slide shows some highlights from last year. In 2022, our highest profile result was the publication of the Phase 3 data for our RSV older adult vaccine candidate. This demonstrated 94% protection against severe disease with consistent and sustained high efficacy against both RSV-A and E strains in people in their 70s and in those with comorbidities. Our global regulatory submissions include data showing that the vaccine can be safely co-administered with a flu vaccine without diminishing the effect of either. Following regulatory submission, we received a priority review from the US FDA, and we anticipate a regulatory decision in early May. Our ongoing phase three trial continues to collect data and will determine if protection extends beyond one season. We anticipate generating second season data in time for the June ACIP meeting. Additionally, we're also recruiting a phase three trial examining effectiveness in protecting adults aged 50 and above who are at higher risk of developing severe disease. It's important that I mention the ongoing development of Shingrix. We presented data last year showing that Shingrix provides overall efficacy of greater than 80%, over a follow-up period of six to 10 years after the initial vaccination. These 10-year data are generated as part of our ongoing lifecycle innovation, and we regularly review Shingrix's duration of protection and the potential need for a booster. These data will inform the next steps in clinical development, and I'll keep you updated with progress. In HIV, we are committed to improving the existing treatment options for people living with HIV. We have an exciting pipeline, including options for self-administration and ultra-long-acting medicines. We're also investigating new approaches to HIV treatment. Last year, we presented proof-of-concept data from the Phase 2 Banner Trial for N6LS, our broadly neutralizing antibody. This has won several exciting opportunities within our HIV portfolio, and we remain on track to move these into Phase 3 development in 2024. Oncology is an emerging therapeutic area. We reported positive high-level results for Jen Purley's Phase III Ruby trial, which met its primary endpoint, the first trial to show a PFS benefit for an IO agent in the treatment of women with primary advanced or recurrent endometrial cancer. These data may support the use of Jen Purley in the first-line setting. We also decided to progress all arms of the COSTAR lung trial into Phase III. This compares cabolumab and dystalumab combinations in treating patients with advanced non-small cell lung cancer, a large patient population with significant unmet medical need. And we expect to see data from this trial in 2024. In 2022, we progressed several phase one programs and reported positive proof of concept data. Readouts last year included data from our randomized phase 1B trial of CCL17 in osteoarthritis, demonstrating evidence of efficacy at the end of the eight-week dosing period. We plan to progress development and will share more later this year. Our partner, QVAC, also announced interim phase 1 data for flu and COVID mRNA vaccines. These preliminary data provide promising evidence of activity, which included a monovalent flu vaccine that successfully boosted antibody titers against a matching flu strain, even at the lowest dose. Based on these promising data, we believe there is a significant opportunity to accelerate the development of vaccines based on this technology. We're excited about the potential of doublet vaccines, and we're pleased with the progress we're making on both the COVID and influenza projects. As Emma mentioned, we also completed several business development deals in 2022, enhancing our portfolio and platform technology. These deals supplement our late-stage pipeline, support further growth and deliver our R&D strategy. BD and capital allocation will be a strong focus in 2023 and beyond. We also announced a collaboration with Wave Life Sciences to enhance our discovery and development capabilities using novel oligonucleotides. Now, I'd like to provide a brief of our most advanced oligonucleotide, beteraversin. Next slide, please. I'm particularly excited to disclose that the first patient has been recruited into the Be Well Phase III program for beteraversin in the treatment of hepatitis B patients with low baseline surface antigen. Remember that in our Phase II trial, Be Clear, we observed that an unprecedented number of patients treated with low baseline surface antigen experienced sustained FB surface antigen and DNA loss at the end of the 48-week study period. Hepatitis B infection is a significant unmet medical need, with over 300 million people having this chronic disease and around 900,000 who die from liver disease-related consequences. The current standard of care achieves functional cure in fewer than 5% of patients, And managing the disease places a significant burden on global healthcare systems. Our aim is for Biparaversin to become the backbone of future therapy. Around Mijero, I also look forward to sharing data from B-Together, a phase two trial that administers Biparaversin followed by interferon therapy with the goal of improving functional cure rates still further. Next slide, please. In November, we reported that two phase 3 hepatitis in trials for the treatment of uncomplicated urinary tract infections were stopped early for efficacy after successful interim analysis. Data collection and analysis are ongoing, and we anticipate making a regulatory submission later this year. The world needs new classes of antibiotics, treatment failure, increasing community resistance rates, and increasing safety warnings for existing medicines, including fluoroquinolones, are reducing the available oral options for uncomplicated UTIs. If approved, jephthysin would become the first new oral antibiotic for the treatment of uncomplicated UTI for over 20 years. Unmet medical need is significant, with around 15 million episodes of uncomplicated infection in the US alone, a quarter of which recur or have some level of resistance. Gepatitis would be positioned as an oral option for patients at risk of treatment failure. In September last year, to complement the development of our antimicrobial franchise, we announced a license agreement with Sparrow Therapeutics to commercialize Tebupen, a novel antibiotic in phase 3 development for the treatment of complicated UTIs. There are around 3 billion complicated UTIs in the U.S. each year. These infections are resistant to broad spectrum oral antibiotics. Tebapenem could be the first oral carbapenem approved for the treatment of complicated UTI reaching the market by 2026. Our goal is to develop two novel oral antibiotics that cover the spectrum of urinary tract infections and address increasing recurrence and community antimicrobial resistance. Next slide, please. This slide illustrates some of the pipeline news we anticipate over the next year or so. We expect 2023 to be a busy year across the portfolio. We look forward to presenting our RSV older adult vaccine at the forthcoming U.S. FDA VRBAC meeting in March, followed by a U.S. FDA regulatory decision in early May. We also anticipate phase three data from our pentavalent meningococcal vaccine in the first half. There are around 1.2 million cases of invasive meningococcal disease each year, and if successful, this vaccine would target the five most common serotypes in one product. As I mentioned earlier, we expect to present data from the Gepatitis in Phase 3 program and data from the Bipiravir in Phase 2 trial be together around mid-year. In oncology, Momolotinib has been submitted with regulatory authorities, and we expect to hear from the U.S. FDA during the first half. We'll also present the Jen Purley-Rudy data at a medical conference later this year. Finally, we're also anticipating a regulatory decision from the U.S. FDA on the protostat for the treatment of anemia of chronic kidney disease, with a decision from European regulators around mid-year. I'll now hand over to Luke. Next slide, please.

Thanks, Tony. Please turn to slide 16. In 2022, we delivered 13% sales growth or 10% excluding COVID solutions. And we're proud to report that 10 products exceeded 1 billion pounds in sales for the year, including Shingrix, Trilogy, Nucala, Ben Lister, and Devato. This is a great example of strong commercial execution. Ben Lister remains the market leader with 85% of new patients starts in Q4. And we continue to see a strong globally in both SLE and lupus nephritis, with only 25% biopenetration in the US. Eucala continues to lead the IL-5 class across all major markets, and Eucala remains the first and only biologic approved for four eosinophilic diseases, with new indications driving growth and differentiation. And Zabudi delivered 2.3 billion pounds in sales, although based on the trajectory of the pandemic, we expect limited sales in 2023. And Deborah will comment on HIV shortly. In oncology, sales were up 17% for the year, With label changes to Blenrep and Zedula in the US, we expect to see a short-term decline before oncology returns to growth in 2024. In general medicines, Trilogy had an excellent year, up 32% versus last year, retaining leadership in key markets. This was also bolstered by the post-pandemic rebound of the antibiotic market globally and increased demand for Augmentin. Turning to our vaccines performance on slide 17. In 2022, vaccines had a strong year, up 17%, excluding pandemic adjuvant sales. This reflects strong commercial execution across the portfolio, including a record year for Shingrix and increased contributions from Bexero in the US with higher CDC demand and increased market share. Shingrix sales grew significantly across all regions, reflecting post-pandemic rebound and new market launches through geographic expansions. The U.S. saw higher demand in both the retail and non-retail setting and favorable channel inventory movements, while ex-U.S. delivered around $1 billion in sales for the year. Shingrix has launched now in nine markets in 2022 and is now available in 26 countries, and we expect to continue to expand our geographic footprint in line with our goal to be in 35 countries by 2024. Turning to slide 18. Here you can see that prioritization of R&D and commercial investment in specialty medicines and vaccines, plus optimization of the general medicine portfolio is delivering strong growth driver progress. Our 2022 results demonstrate that our strategy is working and we're delivering on the commitments we made at the business investor update in 2021. And the data on the right-hand chart show this shift up from 7% to 42% today. Looking ahead to 2023 for the specialty portfolio, including the short-term impact of oncology, we expect sales in 2023 to increase mid to high single-digit percent, excluding Zavuti. In general medicines, we expect 2023 sales to decrease slightly and remain on track with our broadly stable sales outlook between 2021 and 2026. And in vaccines overall, we expect to increase mid-teens percent, excluding pandemic adjuvant sales, and expect to see Shingrix momentum continue with double-digit growth with another record year of sales. With that, let me now hand over to Deborah on slide 19.

Thank you, Luke. Our HIV business delivered sales of £5.7 billion in 2022, growing 21% in Q4 and 12 for the year, with our US and European businesses both reporting significant growth. We achieved a notable acceleration in our innovation sales, delivering £2.5 billion, representing 43% of our portfolio for the year and 48% in the quarter, up from 29% in full year 2021. Our performance benefited from strong patient demand for our innovation HIV medicines, Dovato, Cabinuva, Jaluka, Recobia and Apertude, contributing 9 percentage points of growth. U.S. pricing favorability and year-end inventory build together contributed four percentage points of growth, which was partially offset by international tentative decline. Sales of Devato delivered 438 million pounds in the quarter and 1.4 billion pounds for the full year. And this medicine is now firmly on track to become our biggest selling HIV product. We see the opportunity for Devato as being balanced globally with around 50% of the potential sales in the U.S., and the remainder split between Europe and the rest of the world. Portfolio. Cabinuva is our first-in-class long-acting treatment regimen for HIV. Sales for the quarter were £129 million and £340 million for the full year, reflecting strong patient demand with high levels of market access and reimbursement across the US and Europe. Moving on to prevention. Apertude is the world's first long-acting injectable for the prevention of HIV, dosed every two months. Launched in the US in January 2022, Apertude delivered 21 million pounds of sales in the quarter and 41 million pounds in the full year. HIV prevention is an area of significant unmet need as current options are associated with stigma and adherence issues. Apertude addresses these challenges and has demonstrated superior efficacy over daily oral tablets. Looking ahead to 2023, we expect to see continued strong patient demand for our new HIV medicines. We expect the year-end inventory build to burn through the first half of 2023. We are confident of delivering mid-single-digit growth this year. We're excited by our pipeline focused on innovative long-acting regimens, which we believe illustrates our ability to maintain our leadership beyond Doletagravir. By the second half of the decade, we expect cabotegravir to increasingly replace dolotegravir as the foundational integrase inhibitor in our portfolio. We have three clear target medicine profiles to provide the world's first self-administered long-acting regimen for treatment and to provide ultra-long-acting regimens for treatment and prevention with dosing intervals of three months and longer. We are looking forward to presenting further data on our pipeline, including the SOLAR study, a head-to-head trial between Cabinuva and Victavi, and data on N6LS, our broadly neutralising antibody, at CROI in Seattle later this month. Our Q4 results demonstrate continued progress against our ambition to achieve a five-year, mid-single-digit sales CAGR to 2026. By 2026, we estimate that long-acting regimens will be generating around £2 billion which equates to around a third of HIV sales. The changing mix of our portfolio towards long-acting and the success of our pipeline offers the potential to significantly replace the revenue from the dollar tag revere post-loss of exclusivity. And with that, I will hand you over to Ian.

Thank you, Deborah. As I cover the financials, references to growth are at constant exchange rates in my state otherwise. As Luke and Deborah have covered the main revenue drivers, I'll focus my comments on the income statement, including the main cost drivers, margins, cash flow, and guidance for 2023. Turning to slide 21. This slide shows the bridge from total to adjusted results and includes the effect of the successful consumer health care demerger in 2022. Total earnings per share were 371.4 pence, of which earnings per share from discontinued operations were 260.6 pence. This primarily reflected the gain on the demerger and the gain on the retained stake in Halion. Turning now to continuing operations, for 2022, turnover was £29.3 billion, up 13%, and adjusted operating profit was £8.2 billion, up 14%. Total earnings per share were £110.8, up 18%, while adjusted earnings per share were £139.7, up 15%. The main adjusting items of note between total and adjusted results for continuing operations in the year were in transaction-related, which primarily reflected VEVE contingent consideration liability movements, the majority of which related to foreign exchange, and in divestments, significant legal and other, which reflected the upfront income received from Gilead in the first quarter, as well as a fair value mark-to-market gain and the retained stake in Halian. Pandemic solutions reduced growth of adjusted operating profit by approximately 3 percentage points and growth of adjusted earnings per share by around 3 points. The full year currency impact was a favourable 6% in sales and 12% in adjusted earnings per share. Turning to slide 22. The 2022 adjusted operating margin of 27.8% reflected an improvement versus last year. The positive margin dynamics reflected the sales growth with a favourable mix excluding Zavudi, high royalty income and favourable currency movements, which are 1.2 percentage point benefit in the full year. These factors were offset by the impact of lower margin sales of Zavudi and commercial investment behind launches and key products. Overall adjusted operating profit grew 14%. COVID solutions reduced adjusted operating profit growth by approximately 3 percentage points And the adjusted operating margin, excluding COVID solutions, was approximately 1.3% higher at the cost of exchange rates. Turning to key dynamics of the year, within cost of goods sold, the increase primarily related to sales of lower margins of woody, which increased the cost of sales margin by around 2.5 percentage points, mainly reflecting the profit share pay-away to beer biotechnology. Excluding Zabudi, cost of goods sold benefited from a favourable business mix, with specialty medicines and vaccines comprising 62% of commercial operations sales ex-pandemic. Though this mixed benefit was partly offset by increased supply chain costs, including in commodity prices and in freight. SG&A increased at a rate slightly above sales, which primarily affected launch investment in specialty medicines and vaccines. It was particularly focused on HIV and Shinrix to drive post-pandemic demand recovery and support market expansion. The SG&A growth also reflected an unfavourable comparison to a beneficial legal settlement in 2021. These factors were partly offset by continued delivery of restructuring benefits with around £900 million of annualised savings to date from the separation preparation programme and tight control of ongoing costs. R&D spend grew 6% with increased investment across several programs, particularly in vaccines clinical development, including in our mRNA technology platforms and maps, following the Finvax acquisition, along with investment in early discovery programs. In specialty medicines, with acids like detimopramab and beproviracin, and within oncology, there was an increased investment in our early stage and new oncology assets and momyletinin, following the Sierra oncology acquisition. These increases were partly offset by the lapping of now-completed late-stage clinical programs and reduced investment in COVID-19 assets relative to 2021. Royalties benefited from Bactarby contribution and higher sales of Gardasil. Again, it should be noted that our Gardasil royalty stream will cease at the end of 2023. Turning to slide 23. Moving to the bottom half of the P&L, it highlighted that net finance expense was higher, reflecting the net cost associated with the November sterling notary purchase, higher interest on tax, partly offset by increased interest income due to higher interest rates and larger cash balances as a result of the consumer health care demerger, and that the effective tax rate of 15.5% reflected the timing of settlements with various tax authorities, which was favorable versus the expectations set out of Q3. On the next slide, I'll cover cash flow. In 2022, we generated £3.8 billion of free cash flow from continuing operations. Within free cash flow, cash generated from operations increased around £700 million, up 10% to £7.9 billion, with higher operating profit being the key driver, partly offset by other factors, which you can see in this slide. Below cash generated from operations, there were higher tax payments and lower proceeds from disposals, along with higher capex, partly offset by reduced purchases of intangibles. In 2023, we expect cash generated from operations to be slightly lower, primarily due to the positive impact of the Gilead settlement in February 2022, partly offset by improved operating profit growth. We remain firmly on track with our medium-term outlooks, driven by higher adjusted operating profit and working cash improvements. Turning now to slide 25 and guidance for 2023. We expect to build upon the step change in performance we delivered in 2022. As a reminder, all of our guidance excludes the contribution from pandemic COVID-related solutions and references to growth at constant exchange rates. We expect sales to increase between 6% and 8%, and we expect adjusted operating profit to increase between 10% and 12%. This is influenced by expected cost dynamics, where we expect cost of goods sold and R&D expected to increase at a rate slightly below sales. SG&A to grow broadly aligned to sales, and for royalties to grow versus 22. Below operating profit, net interest payable is expected to be between 750 and 800 million pounds, and the effective tax rate is expected to be around 15%. In light of these dynamics, we expect adjusted earnings per share to increase between 12 and 15%. You do not expect any significant pandemic-related sales in 2023. With regards to phasing of the year, due to phasing in 2022 and resulting comparators, we would expect operating profit growth to be lower in the first half of the year and higher in the second half, relative to full year expectations. This reflects strong comparisons in the first half, including stock build in Veve and Shinrix US channel inventory build in the first half of 2022. We would also expect SG&A to grow at a higher rate than sales, reflecting investments to support recent and anticipated launches. Q1 is expected to be a more challenging quarter of the Veeve stock building at the end of 2022. In the second half, we would expect the growth to be higher due to expected launches of new products, including RSV, as well as momentum across existing product drivers. Regarding dividends to shareholders, we anticipate a 56.5 pence dividend per share aligned to our dividend policy and prior disclosures. We start 2023 with excellent momentum from a highly successful 22 and remain firmly in track to deliver our medium-term financial commitments. And with that, I'll hand back to Emma.

Thanks, Ian. Turning to slide 27. We continue to be guided in all this by our purpose to unite science, technology, and to get ahead of disease together. Integral to this is running a responsible business, one which builds trust and reduces risk to deliver sustainable health impact at scale, shareholder returns, and to support our people to thrive. To do so, we prioritized our resources to focus on the six material areas depicted here. This quarter, our leadership and progress in access were recognized once again, as we topped the access to medicines index for the eighth consecutive time, and we continue to lead in innovation to address antimicrobial resistance. Also, we announced an investment of 100 million pounds to help strengthen health systems in lower-income countries, along with our commitment to invest a billion pounds in global health innovation where it's needed, as evidenced by our progress with the new first-in-class candidate medicine for patients with tuberculosis. Turning to slide 28. So in closing, I do want to thank our people for delivering this tremendous performance, a landmark year for GSK as a newly focused global biopharma company with big ambitions. We are delivering a step change in performance and we enter 2023 confident that we will keep delivering again this year for our medium term outlooks and with the momentum to sustain growth through this decade and beyond. So with that, operator, the team is ready for the Q&A.

Thank you so much, everyone. Your questions and answers will now begin. If you wish to ask a question, please press star 1 on your telephone. And please remember to ask only one question. Once again, please key star 1 in order to ask a question. And the first question is coming from the line of Kerry Holford. Please go ahead.

Oh, hi, thank you for taking my question. So I'm really focused on the RSV vaccine, specifically the patient cohort. So if you can just discuss the commercial opportunity you see within that 50 to 59-year-old group. If we assume the phase three data that you are going to publish later this year is positive and the vaccine is ultimately approved in that age group, do you think an ACEP recommendation civic population is a realistic scenario. And I'd be interested to know whether your existing target for that asset of more than $3 billion excludes any potential sales in that younger cohort. Thank you.

Thanks, Kerry. Well, I think we'll come straight to Luke on that one. Obviously, an asset we're very excited about. A lot of opportunity here, but Luke.

Thanks, Kerry. I mean, yes, it's in that immunocompromised population. It's a sizable population, but the primary benefit is from a contract negotiation point of view for the 2024 season, because we'll be the only one with that profile and evidence in that group, which, along with older individuals, obviously bears a significant burden from RSV infection. The previous guidance we've given includes that study as the full lifecycle program.

Thanks, Luke. Next question, please.

The next question is coming from Peter Raffel from Jefferies. Please go ahead.

Hi, thanks for taking my question. It's on the outlook for vaccines for mid-teens. I wonder if Luke could give us some idea in terms of the usual sort of update in terms of Shingrix doses and where we are with regards to inventory and in terms of burning through that. Particularly, I guess, given as well, presumably we're back to a more normal seasonality, if you like, of Shingrix, presumably with the sort of flu season, if you like, towards the end of the year. And what have you assumed in that mid-teens for RSV in the outlook as well? Should we be assuming a fairly modest contribution or how should we think about mid-teens in the context of obviously this being the first potential year of RSV sales in the US? Thank you.

Right, great. So I think as Luke said, it's going to be, and I'll go straight to him, but another record year of Shingrix expected with double-digit growth, and obviously the first season for RSV, but for a major contributor to growth for the years ahead. But do you want to give a bit more shape on Shingrix, Luke?

Sure, Emma. So, Peter, thanks. I'll give sort of an overarching answer first and then give you more detail on the US dynamics around stock levels, et cetera, with Shingrix, and then also incorporate RSV into that answer. I mean, our strategy remains the same. I mean, we've tried to decouple Shingrix from the flu season, and yes, there is still volume associated with that, just with people coming into the pharmacy. I think the Inflation Reduction Act in the US taking away the copay in that 65-plus group will be helpful. We know from our data around 8% of patients reject a Shingrix shot based on copay concerns. It's probably understated, but we'll, because pharmacists may self-select... We're proposing that to patients, but we'll see that in time. I think for Europe and Japan, things are starting to move. We just had a record month in January in Germany. Things are moving in Italy and other European markets. And I think if you look at the rest of the world, as China starts to normalize, the potential for that over the next couple of years remains very, very sizable. And then ultimately, we've got the opportunity to go back and re-challenge these populations with a booster in the second half of this decade. In terms of short-term now in the US, I mean, the retail, non-retail split has stabilized. It's about 53% retail, 47% non-retail in Q4. But the growth is evenly balanced between retail and non-retail. Stock levels, they came down in Q4. They're very much within the normal range of 1.1 to 0.9. So we've ended the year at 0.9 levels in the US. Now, in terms of RSV, I don't want to give too much color on RSV, but I think Pfizer's made statements around penetration, similar to flu. We agree with that. I think this product's going to build over multiple years in the US. And then as we follow a similar strategy that we've done with Shingrix, which is maintaining price discipline and then expanding into Europe and rest of the world over the next few years.

Thanks, Luke. I also like the fact that we published it. I think you said that we're 15% more likely to get shingles post-COVID as well. Yes. Yes, it's certainly observable.

Next question, please.

Next one is coming from Dominic Long from Credit Suisse.

Hi, thanks. My question is on pricing. So if you look at the January list price rises for GSK and indeed the industry as a whole, price rises have been in line with the historic price rises. So one could have expected price taking to be a bit stronger given the high levels of inflation. And it looks like there's still room to take further price throughout the year before you hit the limits imposed by the inflation price caps in Medicare as well. So how should we think about pricing through the rest of the year? Could we get maybe smaller, more frequent incremental price rises through the year?

Thanks. So GSK's got a long track record of being very responsible around its pricing. Let's hear, and as you know, on a net basis over the last few years, I think we've been even very slightly down and really thoughtful about how we take this forward. But Luke and maybe Deborah, a comment from you.

Yeah, I completely agree, Emma. We're playing the long game here. I think past patterns over the last two years are probably a good indicator of our behavior going forward.

And I would just obviously agree with what Luke said. I think the other thing that people should be giving some thought to is what's happening outside the US. If you look at our HIV business, for example, and many others will be experiencing the same thing, we're seeing significant additional net price pressure from clawbacks and price cuts. So from a pricing perspective, I think we've priced fairly and appropriately and playing the long game in the U.S., and I think we need to be aware and very vigilant about what's happening outside of the U.S. in terms of economic challenges leading countries to put pressure on pricing. Thank you. Next question, please.

Next question is coming from James Quigley from Walker Stanley.

Hi there, thank you for taking my questions. I've got a question on HIV. Could you give us an idea of the amount of stocking that you saw in the fourth quarter and which of the key products were impacted? Clearly for the full year, Tivica and Trimac seem to fare better in the U.S. than the next U.S. So with those two products as well, what are you sort of assuming for next year in the guidance? And then can you also give us a bit more color on the dynamics for Cabinuva and Apertude in terms of take-up, patient attitudes, physician attitudes, and how that's changing with greater experience and how you expect the growth curve to look for the two long-acting drugs next year.

Thank you. Brilliant. Okay, so let's talk about stocking. So we entered last year with about three days of stock, which was low. Normally, we exit each year about... seven days of stock. So we entered this year with three days of stock, 2022 with three days of stock. We exited with 13 days of stock. So as you can see, there's been a material shift between where we started 22 and where we exited. If we assume that we're going to just have a normal 2023 and that there will be seven days of stock in the channel at the end of the year, you can see that we've got six days to burn and we believe that's going to burn in the first half of the year. So that's kind of the details on the stock evolution. In terms of Tivike and Trimec, we're seeing Tivike and Trimec at a relatively steady evolution. Trimec is declining quite significantly as it's cannibalized by Devato but also competitors. But TIVI-K is pretty stable, actually. It's declining, but obviously it's the only second-generation integrase inhibitor that you can have as a standalone and not as part of a triple or a doublet. So, you know, we continue to see a strong and sustained business for TIVI-K, Trimec. We think that business will decline as better opportunities are now there for people living with HIV. In terms of Cabinuva, so we've seen really strong patient demand. We're seeing excellent execution from our commercial teams, which is broadening the prescriber base and deepening the number of prescriptions each physician is writing. And we're doing a lot of work in the environment to overcome some of the barriers that you see when you introduce an injectable into a new therapy area. for the first time, and we're really happy about the progress we're making. The level of access is significant, and as I've said before, the quality is also probably, you know, really, really positive as well. So I think Cabinuva is doing really well. Aperture was slower last year. As we said, in the first year, of any new medicine, and particularly an injectable, it takes a while to secure access and get all the big accounts signed up, the specialty pharmacies signed up on the product. That is now in a very, very positive place, and we've got very strong ambitions for Apertude uh in 2023 and again all the research we do in terms of physician and patient uh we know that the demand is very strong for this product as it's it's offered something very different to the orals and obviously we've got superiority data so i hope you uh take away from that a lot of ambition and optimism for our long-acting injectable portfolio

I think also, as Debra referred to in her comments, the overall momentum on 2 DRs across the board is up to 40% between Devato and with long acting of the business. That's why we've done what we said we'd do in the shift of the portfolio, and we completely expect to do so again through long acting, as Deb said, with the profile of the business by 26, but also to continue to shift beyond that, ahead of the patent challenge on dolutegravir. And that's what's so exciting about what's coming through in the next generation pipeline, which we'll give, you know, Debra and team will give you more insight on over the 18 months ahead. Next question, please.

We have a question coming from Andrew Brown from Citi.

Hi, Andrew.

Good morning. I'm staying with Cabinuva. And given the profitability of this product, even with the profit share, it's obviously hugely important for GSK going forward. Could you just give us a little bit more information on the source of the switching to date? And by that, I mean just in the U.S. market, how much from Medicare, how much from 340B, how much is there for inventory? I know it may not represent long-term what things look like and it's dynamic, but I would be interested. And then second, in relation to the new generation of Cabotegravir line extensions, including the sub-Q, we're going to get data in 2024. How long would it take, do you believe, to secure approval assuming that you do PKPD by equivalence trials starting in 24? Should I be assuming 26, 27 by the time you've hit the market? Thank you.

Thanks, Andrew. So straight back to Deb. Just as a reminder for everyone, part of our portfolio shift strategy, which is, you know, evidence is working when you see that shift from 46% of the portfolio up to 2,000, our confidence by 26 is getting higher. to three quarters towards vaccination, vaccines, sorry, and specialty medicines is so that we're continuing to drive this leverage in the P&L and affording our ability to keep investing at the same time in R&D and in our launches too. So as well as within HIV through the innovation we're able to talk to, but also on the broader GSK agenda we're seeing an important area of focus there

So just to quickly cover your points, Andrew. So in terms of the source of business, there's two ways we look at this. So first of all, where are we getting the business from? And I can confirm about 60% of our Cabinuva business from our competitors and about 40% from our own portfolio. Second point, which is around what segment of the market are we getting Cabinuva from? Actually, we've got really good coverage across all the payers and all the key accounts. So actually, the splits that we see for Cabinuva is broadly in line with the split of the overall market, which, as you know, is 40% kind of commercial payer in HIV and 60% government. So there's no unique attribute to Cabanova versus how the market normally plays out. In terms of the pipeline, so there are three timelines that we've laid out in our business investor update. So we've talked about a self-administered treatment and a longer acting prevention between 25 and 27. Then we've talked about a longer acting treatment, so three months plus after 2027, probably in the 27, 28 period. And then we've got, which we're very excited about, our third generation integrase inhibitor, which will either be teamed with our Capsid or with our BNAB, and that is where you've got the potential for six months plus in terms of gap between administrations, and that's towards the end of the decade. So that's kind of what we set out in the update that we gave, and we're still absolutely on track for that, very excited about the future. And just to reiterate our shorter term goal, we are very confident in our ability to deliver that two billion pounds of revenue in 2026, which is a third of our overall business in HIV at that point. Thanks, Deb. Next question, please.

The next question is coming from Tim Anderson from Wolf Research.

Thank you. I have a question on COVID flu co-formulated vaccines. So Pfizer yesterday suggested launch of a combo product 2025. Talk about it as a compelling durable offering. Does Glaxo see an opportunity here for itself? And what's the timeline of launch for a similar product from Glaxo? And then if I can just sneak in one quick housekeeping question. Zajula, when do you expect mature overall survival data from the Prima trial and frontline ovarian? Thank you.

Right. Well, both of those to come to Tony. And just as I think he was, well, he did refer to in his remarks. Obviously, we're pleased to see the data that's come through from our, partners at CureVac. And the potential for doublets here is definitely interesting. And we'll update more on our actual specific plans, I think, later in the year. But Tony, I'm sure you'll want to add to that as well as the Zedula question.

Yeah, let me just build on the question about doublets. And I think I'd start with just giving you a sense of the exciting data that we're generating with our partner, particularly in the context of establishing the opportunity for a therapeutic window between immunogenicity and reactogenicity. And in a doublet vaccine, particularly with regards to flu, for example, you can think about this as the majority loading of that doublet vaccine coming from components. that are addressing flu. We very much see the opportunity in the second half of the decade associated with the high-dose flu market where an eight-valent vaccine covering both hemagglutinin and neuraminidase antigens is really the opportunity at hand. So let me just quickly address what we're seeing in these early monovalent data that gives us the opportunity for excitement, and that is in the flu vaccinations, you will have noted that in a comparator, a monovalent comparator, we see immunogenicity at the lowest dose, which is consistent or better than that comparator, and seroconversion, which is also better than the comparator. In our COVID studies, which have a slightly different comparative basis, we see reactogenicity, which is at the, low end in terms of distribution of grades of severity at the highest doses involved. What that is doing for us on the back of monovalent constructs is creating an opportunity for a window in therapeutic index that I think makes a valent flu plus COVID doublet a practical possibility. We're now accelerating studies from monovalency into multivalent phase two studies. The aim of targeting a multivalent seasonal vaccine focused on AIDS-valent flu in the second half of the decade. As far as Prima is concerned, look, obviously this is an event-driven outcome study, so it's something that's going to, I'm reluctant to give data on. We're not expecting OS data before 2024. Thanks.

Right. Next question, please.

We have the next question coming from Graham Perry for Bank of America.

Great. Thanks for taking my question. So it's going back to RSV vaccine. I think you sort of referred to this requiring a lot of education. Obviously, having more than one player in the market can help there. We've also referred to it probably a launch trajectory below Shingrix. I was just wondering if there's a lower bound analog for launch trajectory. that you could point to that you would think is appropriate, whether it's pneumococcal vaccines or perhaps one of the older pediatric vaccines. And any thoughts you've got on the recent Moderna interim data and the level of competitive threat that you see from having three vaccines in the market, just from a contracting and pricing point of view, more than anything else? Thank you.

Right. Luke?

Yeah, Graham. I mean, I think lower bound pneumococcal, again, it's not a perfect comparator, but I think that's a fair one. I think you'll get more information with pricing being presented at the Feb ACIP by ourselves and Pfizer on the 23rd and 24th of February. Look, I think, you know, having three companies there, you're definitely going to drive awareness and a more rapid uptake. So the pie will be larger, but obviously shared three ways. You know, our expectation is that it'll only be Pfizer and ourselves at the June ACIP and that remains the same. I think from a strategy point of view, as always, you need to anchor in your own evidence base. And I think the 94% efficacy that we have in adults with comorbidities is impressive. And the similar range that we have in the 70 to 79-year-old group who obviously bear the brunt of RSV infections. I mentioned earlier from Kerry's question, the 50 to 59-year population that will also have evidence of that for the 2024 cycle. So all of these things help contracting. And I think there's just two big variables that remain unknown. One is the final label that people ultimately get. Again, we've only seen headline data at this point. And then secondly, ourselves and Pfizer are likely to have that second year of exposure data just before the June ACIP. And that's a variable that remains unfactored at this point. But net-net, I think it's still a very exciting opportunity. And what is striking is just the level of awareness and just the depth of the RSV infections that we've seen this year

post covered exactly and our co-admin on flu is another thing to the retail that's where so much of the distribution will be here okay next question please we have a question coming from james gordon from jp morgan james james are you there hello james gordon from jp morgan can you hear me now

Yeah, we can hear you, James. You can hear me?

Brilliant.

Lovely. Two questions, please, both on vaccines. One was on RSV. So just in terms of multi-year protection, based on what you've seen so far, have you seen things that are encouraging just in terms of the efficacy as you've seen through the year that suggest you are likely to get multi-year protection? And if you do, is that something that would actually be upside to the share assumptions you already had? Or was multi-year protection somewhat baked into the projections you've already given for this vaccine? That was the first question, please. And the second one was on Shingrix. So there was the potential need for a booster mentioned. What data would you actually need for that? Do you have some data that's already telling you when you think you might need revaccination? And would you have to do a study that actually showed a statistically significant benefit on symptoms from revaccination? Or would it be more just about antibody titers? Is there like a quicker route to get such a recommendation?

Right. Well, I'll give both of those to Tony. But just as a reminder on Shingrix, we know we launched it in 2018, I think, or 2017. And we've got good data for 10 years. So the cohorts coming through for boosting is more for later in the decade, as Luke alluded to. But definitely something that we'll look at. But Tony, do you want to respond on both those, RSV, durability, and Shingrix?

Yeah, sure. So first of all, in terms of duration for RSC, obviously we have solid coverage across single season vaccine efficacy with our existing data package. And James, you may remember we also have titers that are elevated above baseline as measured at the end of first year. As Luke indicated, we're planning, and indeed the study was designed with this purpose in mind to be able to bring second season data to ACIP in June. Obviously, that is depending on the dynamics of the second season. And so we'll be able to report more on that when we get to the June date. Can you just remind me? Oh, in terms of was it incorporated, second season data was not incorporated in the baseline model, so it would be an upside. And then can you just, sorry, remind me? Shingrix. Second question.

Shingrix. Yeah.

Okay, so look. But obviously, we have 10-year data from study 049 that shows outstanding duration of protection. That's cumulative vaccine efficacy of greater than 82% over the six to 10-year period of follow-up, 89% vaccine efficacy over the 10-year period. Study 049 was designed to continue to generate data in order to answer the booster question. Remember that the vaccine was launched in 2018, and so we're reaching a point now where 10 years subsequent to that we'd be looking to later in the decade. It's reasonable to expect that we will see some waning in vaccine efficacy associated with an aging population. But to your point, James, we're also engaging in ongoing conversations with the regulators to understand what the design of a study required to show the need of a booster would look like and for whom. But I don't want to go into any greater detail about that at this stage.

Great. Thank you. So maybe one or two more questions, and we'll try and speed through those. Next one, please.

Next one is coming from Emily from Barclays.

Hi, Emily. Hi. Thanks for taking my question. The level of detail provided on the ongoing Zantac litigation, the release was very helpful, and particularly following the MDL update in December. And the timelines on California were also helpful. I was just wondering if perhaps you could put in context how you're thinking about the rest of the state cases and just, you know, for on our side, it's been tough to follow kind of what follows the Daubert standard and what doesn't, but just you know, outside of California, if there's any states where cases could be moving to trial in the near future that we should be mindful of. Thank you.

Right. Thanks, Emily. Obviously, we were delighted with the outcome in December. We've got some things to navigate through this year. Ian, perhaps you could update on the different state situations.

Yeah, absolutely, Emily. So, obviously, MDL was incredibly impactful. That sort of took out of the equation 46,000 claims within the suits filed at the federal level. So delighted with that decision, as Emma said. You reflect on the bulk of claims in state court. They sit in Delaware with more than 70,000, and although it's clearly for the courts in Delaware to decide, there is a pattern of behavior where they've tended to follow federal precedent in that regard. So that is probably an encouraging indicator. Then across the other states, we've got a little bit less than 6,000 claims out there, which about 3,000 are in California, and the rest are spread across sort of half a dozen other states. We've got four bellwethers that we expect to take place in California this year, the first of which will kick off a little bit later this month or early March. The Sargon hearing for that trial has actually been pushed back another week to the 16th of February as the judge reflects on input from both plaintiff and defense attorney. Look, again, the really important thing here, the MDL decision, the Daubert decision, was incredibly helpful. It was informed by the strength of the epidemiological independent studies, of which there are now 13, the consensus of which is there's no causality between consumption of rinatadine and any form of cancer. And it's clear from Judge Rosenberg's decision that was the significant factor in forming our decision. We'll continue to defend vigorously, and first up are a couple of trials in California. We'll keep you posted.

Thanks, Ian. And last question, please.

Our final question comes from Simon Baker from Ledburn.

Thanks so much for squeezing me in, and I promise I'll be quick. A question on BlendRep. Tony, back in November on the Dream3 call, You mentioned that there was ongoing analysis involving soluble BCMA as a prognostic indicator. I just wonder if you could give us any update on the findings from that. And related to Blendweb, I see DREAM 7 and 8 have moved from H1 into H2. Is that significant for event-driven studies or is there anything else we should be aware of? Thank you very much.

You cut out just the second part of that question, but I think it was one of the implications of the first half, second half on seven and eight. But for you, Tony.

Yeah, look, so Simon, the analysis that we discussed in terms of soluble BCMA and other markers that might explain the crossover that we see in DREAM3 is still ongoing. As far as DREAM-7 and DREAM-8 outcomes are concerned, we're now targeting a more complete picture of those. And if I remind you, these are two studies that are looking at Belenrep in combination versus standard of care in contrast to DREAM-3, which was Belenrep in monotherapy. We're expecting to be able to provide a deeper update on those at the end of the year. And not much more to say at this stage, Simon. The analysis is ongoing. We'll bring it back.

Thanks, great. Well, thank you, everyone. I hope this has been an efficient call for you. We're delighted with the momentum and progress in the business. We look into 2023 with confidence.