Roche Holding AG

Ladies and gentlemen, welcome to Roche's third quarter sales webinar 2024. My name is Henrik and I'm the technical operator for today's call. Kindly note that the webinar is being recorded. I would like to inform you that all participants are in listen-only mode during the call. After the presentation, there will be a question and answer session. You are invited to send in questions for this throughout the entire session using the Q&A functionality of Zoom. In addition to that, you may also raise your virtual hand to address your questions verbally. For participants joining via phone, to raise your hand, use star 9 on your phone's dial pad. When you then get selected to ask your questions, please follow the instructions from the phone and press star 6 to unmute yourself. One last remark, if you would like to follow the presented slides on your end as well, please feel free to go to roche.com slash investors to download the presentation. At this time, it's my pleasure to introduce you to Thomas Schieneker, CEO of Roche Group. Mr. Schieneker, the stage is yours.

Thank you very much and good morning, good afternoon, wherever you are. I'm extremely excited to share with you the very strong Q3 results with you today. Again, very strong growth in this quarter. Now, year-to-date group sales are at plus 6% at constant exchange rates, really driven by a strong base business growth of 8%. The COVID effect is still from Q1. In fact, in Q2 and Q3, we had no COVID effect, and both quarters were growing 9%. So overall, pharma doing well with 9% and diagnostics with 8% growth in the base business. So this is a momentum that will carry us forward into the fourth quarter, but also into next year. The COVID-19 sales decreased by roughly 800 million, and the LOE impact was also about 800 million, and both are in line with guidance, and I'll make more comments about that later in the presentation. Q3 was also a very strong quarter in terms of portfolio progress on the pharma side, with five regulatory approvals of medicines, three positive phase three readouts, and two acquisitions. The five regulatory approvals you see here, one is the U.S. approval of ITOFB, and ITOFB was approved six weeks ahead of schedule, so really also showing how convincing the data was. Beyond that, we had OCRABOS subcut, eccentric subcut approval in the U.S., EU approval for the Weissmoor in retinal vein occlusion, and PSKI in PNH. On the pharma readouts, we had positive, three positive readouts. I would like to highlight Gaciva and lupus nephritis, devastating disease where there are not many very good treatment options. And here with our CD20, we have an opportunity to deliver really a new medicine for these patients. On the diagnostic side, we had two important approvals. One is the respiratory reflex. This is based on a tax technology that we have developed which enables, in this case, 12 different viruses to be detected in a single sample, in a single test, and also the COPUS Pro serology solution, which enters us into the U.S. market for blood banking serology, which is the biggest market in the U.S. And in a lot of parts of the world, in Europe, we've actually gained massive amounts of market share. So I'm really hopeful that we can continue this momentum then also in the U.S., I already mentioned two deals. One is the CDKI portfolio from Riga Therapeutics. The other one is the WINT portfolio, which is a very important pathway in ophthalmology, but also other diseases for antler A. And we closed the Lumira DX deal, which has a very innovative technology in point of care, which we really look forward to bringing to patients around the world. There will be some new flow in this year. I would like to call out the SkyOne data that will come still this year, the TransCinema data, and the PRASI data. We have still some exciting launches ahead on diagnostics with the mass spectrometry, the I601, fully automated, which will come still this year. The next version of COVA6800, 8800, which, as we know, played a significant role in the pandemic. And here we have the next update, which will be launched this year. Again, here just looking at it from a divisional perspective, you can see the sales including and excluding COVID, but really fantastic momentum in both divisions that will continue to drive growth also into the future. Here on the left-hand side, I've shown the slide multiple times now, you can see the group sales development over the last four and a half years. On the right-hand side, you see the development if you exclude COVID. And this is relevant because the COVID effects will not play a significant role going forward. Now, there is one effect in Q4 that I just want to highlight, which is on a diagnostic side. There was a rapid antigen order in Q4 in 2023, last year, and that was roughly around 300 million And so we'll see that impact in Q4, which is approximately 2% of our sales. So not major, so it's something that we can digest. But as we look into 2025, there will be zero impact for us on the COVID side. Here you can see the quarterly development on the pharma and diagnostic side. On the pharma, we see really an acceleration over the last one and a half years into high single-digit range. On the diagnostic side, continuously very good growth between 7, 8%. So we believe we can also continue with a good momentum going forward. Matt will surely talk a little bit more about the last quarter and some impacts in China. But given the new products that we're launching, we're confident also about the outlook in diagnostics. Here you see the key growth drivers of the Roche portfolio in the quarter. And going forward, it has to be clearly the U.S. approval in the U.S. The U.S. approval is very positive for us. We look forward to getting an approval in Europe next year. I already talked about the centric subcuts, that approval. And Libra, we continue to gain market share now climbing to 42%. We also have a phase three enabling readout for the next chain biospecific called NXT-007, which is expected in 2025. On the neuroscience side, we already talked about the U.S. approval for Okvo Subcut, and also Elevitus is really starting to accelerate with more than 100 million in sales just in the last quarter. Then going to the left-hand side, going to Xolair, here, again, we see a very strong pickup of Xolair for food allergy with already more than 30,000 patients on treatment, and we don't expect any biosimilar launches in 2025. On the voivod side, and I know Theresa will comment on that as well, we see a very rapid conversion to the pre-filled syringe in the U.S. And for Susvimo, we're talking several hundred implants in 2024. Diagnostics, we talked about it, very strong base business growth and significant launches that have happened and that will continue to come up. Now, going to the outlook, again, this year, we have launched two new enemies with P.S. Guy and Itofi. And as you can see on the right-hand side, now the new And Young Portfolio, that's very innovative and that's going to carry us into the next years, is now making up 56% of our overall farmer sales. So very good momentum with the new products. Here are the key opportunities for growth beyond 2025. Let me just comment on a couple. First, ITOFBI with the EU approval that we're expecting next year. The Evrisby GYM329, readout that we're also expecting next year, and the recent data from ScholarRock also is quite exciting for us in this regard, and so let's see what will come out of that. Phenobrutinib, we presented at ECTRIMS the phenopt open label extension showing near complete suppression of disease activity and disability progression for up to 48 weeks. Again, I think a good indicator here. We talked about the positive phase three. We're now going to talk to the regulators about these results, and we hope to file next year and get approval as soon as possible. For anti-TL1A, we started phase three trials in UC, and also we will start soon the Crohn's disease phase three trial. There will be additional information on further trials to be shared in the first half of next year. We expect the readout in 25, and I think we've given plenty of updates on our obesity portfolio, which we continue to believe in very strongly. On the diagnostic side, I mentioned the CoBOS Pro serology solutions. This is a product that we've had on the market outside of the U.S. for quite some time. and have gained a lot of market share in this space. Now this is a completely new market opportunity for us in the U.S. because we've not been on the market. Now we've received FDA approval, and so we can gain some momentum there. I talked about the respiratory flex test and the Lumiere DX opportunity as well. So overall, I think we can say 2024 is a very good year for us. We continue to have very strong base business growth. And we believe this will continue in Q4, but also into next year. We do expect the full year COVID-19 sales decline to be 1.1 billion. So the 300 million effect you'll see in the fourth quarter on the diagnostic side, which was a rapid antigen order last year. And we also believe that we'll have to see what really happens in Q4, but we believe there will be some acceleration in terms of LOE impact in Q4 because of Actemra by similar factors. Finally, let me reiterate the guidance which we have raised at half-year on the earnings per share group, sales growing mid-single digits. And I hope you understand also with the COVID effect in Q4, you know, why we believe it will be in the mid-single digit range. We have very good cost discipline. So we are confident in achieving our core EPS growth, and with that, we will further increase dividend in Swiss francs. With that, I hand over to Alan to take you through the financials in a bit more detail.

Yeah, thanks, Thomas. And today is a sales call, so I will be brief. So hi to everybody. It's great to see you. As Thomas said, I can fully agree. I think great performance in Q3. Would like to thank everybody who has contributed to this and certainly foremost the employees. We have really done great things for patients. So let's jump into it. First, a little bit of advertising. I think you get used to this in the meantime. We have really done seven investor events this year. You see that on the lower part of the slide. And we will have two more that are highlighted on the slide. I think really next week we will have a urology event focusing on our Alzheimer disease pipeline, and that's phase one, phase two, Trontinumab data, which we will present at CTAT. And what does that include? I think it includes new data from part one. It includes the cohort four at 28 weeks, and we'll show initial data from the ongoing expansion cohorts in part two. So it will be exciting. Please take a look at it. And then I think we will close the year at November 25th with the digitalization day. And this will be around really using AI and using digital really in R&D development, especially more on the early side. So Aviv Regev will present and you will see especially the use case lab in the loop. Good. With that, let's go into the numbers. I'm not going to talk a lot about the sales because Divisa and Matt will surely cover that masterfully. We have achieved good sales growth, as you've heard from Thomas, in both divisions. And you see that on the left-hand side. When you put it together, you get to the plus 6% at CER, which you see in the middle of the slide. And then you see on the right-hand side the impact coming from currencies, which is minus 4 percentage points, leading us to a growth in Swiss francs of 2%. I think that's a perfect segue to the next slide. So keep the minus four percentage points in mind. So here you see now on the left-hand side, the plus 6%. On the right-hand side, the plus 2% in Swiss francs I've talked about already. And then you see really the major impacts from currencies in the middle. And I think it's pretty evident in our case the U.S. dollar has the highest impact, followed by the Japanese yen, the Chinese yuan in APEC, and certainly the euro. Good. Leads me to the point, okay, what can we expect for full year based on a relatively trivial model that we're following? On the left, let me first say you can see the 2024 average currency rates remain below 2023 for both the U.S. dollar and the euro, which means there is additional impact. And when you then go to the right-hand side and you know what we're doing there, we keep the currency rates end of September 2024 stable until the end of the year, and then look at the impact. And you see really for Q4, we expect a minus 5 percentage points impact. When you then look at year-to-date, full year, if you like, as a full year in total, we expect a minus 4 percentage points, a minus 6 percentage points on cooperating profit, and a minus 7 percentage points on core EPS. I think what is a bit encouraging, I think if you look at 2025 and you do the same thing and take today's currencies and keep them stable, really, over the period of 2025, we would have on sales an impact of minus 2.4 percentage points. Certainly, this is very, very speculative. We will see what's going to happen. But, well, you see really what we guess we will end up with. Certainly, I think as we now progress to year end, this is much more stable compared to the previous quarters. Good. With that, let's go once again to the guidance. And I think Thomas has said a lot. Let me be specific about the core EPS growth because the impact from the resolution of tax disputes in 2023 was a minus $774 million. I think that's important. In the year itself, plus $774 million for 2024. It's a minus $774 million. I think Thomas talked about COVID, the COVID sales, the $1.1 billion. He talked about the loss of exclusivity impact of minus $1.4 billion, which looks conservative at first sight, but includes September. And I'm sure Theresa makes a comment about it. And then I think to be very clear what have been the COVID sales Q4 2023. That was, in diagnostics, 337 million, and in pharma, 5 million. That's why we are going with the rounded numbers of 300 million approximately, but the Q4 2023 numbers are a fact. That's why I mentioned them. I think we also saw it's perhaps also interesting to make a comment about 2025, and certainly we're not giving any guidance here at this stage. We will do that at our full year press conference, but when we look into 2025 and what we know now, We consider the current growth rates for 2025 that we find in the consensus for sales as well as for core EPS reasonable. That's what we can say at this stage. It looks okay. It's something that we can achieve with. There's still a lot of stuff which is going to happen, and we will change that picture potentially. And especially on the core EPS side, because very clearly M&A will play a role and how much debt we will have on the balance sheet plays a major role here. So I think we feel okay with the consensus, looks reasonable at this stage. But still, I think there are lots of things that can move around. Good. And with that, I think I hand over to Theresa.