GSK : 2022 Q3 pre-announcement aide memoire (PDF - 462.7KB)

Q3 2022 Pre-Announcement Aide Memoire

Issued: Thursday, 13 October 2022

GSK has prepared this Q3 2022 pre-announcementaide-memoire per our standard prior practice. It includes statements made in previous public communications by GSK as extracted from their original source and, therefore, by definition, they should only be taken as speaking as at the date they were initially made, and they do not reflect subsequent or recent events, circumstances, or developments. Any updates to these and other previously made statements would only be included in further communications by GSK to the market and the inclusion of the extracted statements herein should not be taken to indicate that they will not be updated in the future.

As our Q2 2022 stock-exchange announcement indicated, the potential impact of the COVID-19 pandemic on GSK's trading performance and all its principal risks have been assessed, with appropriate mitigation plans put in place. GSK is encouraged by the uptake in demand in the first half for its medicines and vaccines, particularly Shingrix. The Company remains confident in the underlying demand for its medicines and vaccines, given the number of COVID-19 vaccinations and boosters administered worldwide. The pandemic continues to be challenging to predict and remains a dynamic situation with the worldwide rate of community infections presenting increasing due to Omicron subvariants BA.5 and BA.4; these variants of concern could potentially impact GSK's trading results, clinical trials, supply continuity, and its employees materially.

Please read the assumptions and cautionary statements regarding forward-looking statements set out on pages 69 and 70 of the Q2 2022 stock-exchange announcement and the further circulars, reports, announcements, press releases issued by the Company, including the information in paragraph 19 of Part 7 of the Circular to shareholders relating to the proposed demerger of the Consumer Healthcare business to form Haleon published on 1 June 2022 (the "Demerger Circular");and the "Basis of preparation, assumptions and cautionary statement" section of the announcement issued by the Company on 23 June 2021 in relation to its Investor Update. Please read the definitions and reconciliations for non-IFRS measures on pages 37 and 68 of the Q2 2022 results release and the annual report on Form 20-F for FY 2021.

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Full-year 2022 Guidance

Commentary from Q2 2022 stock-exchange announcement: With the momentum from the business performance to date, GSK now expects 2022 sales to increase between 6 to 8 per cent and adjusted operating profit to increase between 13 to 15 per cent, excluding any contributions from COVID-19solutions. Adjusted Earnings per share is expected to grow around 1 per cent lower than Operating Profit. We have delivered first half performance ahead of our full year guidance, slightly better than expected, informed by strong business delivery and the dynamics of prior year comparators.

Predominantly reflecting a more challenging H2 2021 sales comparator as well as an expected increase in R&D spend, we expect lower reported growth in the second half. Key external factors that will influence the second half of 2022 include the continued risk from COVID-19 dynamics and possible developments in the current uncertain global economic environment.

Q3 2022 key information

Foreign exchange:

We expect that the positive impact of foreign exchange on Q3 2022 sales will be around +9%.

As a result of the mix of currency movements relative to the combination of costs, we expect that the positive impact of foreign exchange on Q3 2022 sterling adjusted operating profit will be more significant than the positive impact on sales.

Weighted average number of shares (WANS)

The basic WANS in Q3 2022 was 4,030m (an increase of 0.6% relative to Q3 2021).

The information below includes commentary from recent circulars, stock-exchange announcements, investor/analyst calls, and previously published outlook statements.

2022 COVID-19 solutions expectations

Commentary from Q2 2022 stock-exchange announcement: The majority of expected COVID-19solutions sales for 2022 have been achieved in the first half of this year. Based on known binding agreements with governments, we expect that sales of COVID-19solutions will be substantially lower in the second half. Compared with 2021, sales will be at a reduced profit contribution due to the increased proportion of lower margin Xevudy sales. Given the higher-than-expectedsales achieved in the year to date we now expect this to reduce Adjusted Operating profit growth (including COVID-19solutions in both years) by between 4% to 6%.

Note that H1 2022 Xevudy sales were £1,773m with no contribution from pandemic vaccines.

Impact of COVID-19 solutions

	In £ millions			Q1		Q2		Q3			Q4			FY			Q1			Q2
				2021		2021		2021			2021			2021			2022			2022
	Turnover (£m)		-		276	209		920	1,405		1,307	466
	Adjusted Operating profit (£m)		(12)	233	97	214	532		194	58
	Adjusted EPS (p) *		(0.2)	4.8	1.9	4.7	11.2	4.1	1.2

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Sales: GSK

2022 full year guidance: Sales expected to grow between 6% and 8% at CER (excluding the commercial benefit of COVID-19 solutions).

Q2 2022 comment on phasing for H2

Q3: Strong comparator; expect sales and Adj. OP growth below full-year expectations

Q4: Favourable comparator; expect sales and Adj. OP growth ahead of Q3

H2: Expect to see lower growth (note: H1 +12%) based on a more challenging H2 sales comparator and the expected increase in R&D spend

Specialty

2022 outlook: Revenues expected to increase approximately 10% for Specialty, excluding Xevudy sales. HIV is expected to grow at a mid to high single-digit rate.

HIV

Commentary at Q2 2022: Momentum is firmly behind our innovation portfolio, which delivered more than one billion pounds in the first half of the year and now accounts for 41 per cent of our sales. Our ambition for the year is now to deliver mid to high single-digit sales growth.

Cabenuva - Commentary at Q2 2022: Sales almost doubled in the quarter delivering £72m. 11,000 patients are now taking Cabenuva, an increase of 5,000 through this quarter, and around 1,200 HCPs are prescribing the medicine. The approval and launch of the every-two-monthly dosing in the US in February and the removal of the oral lead-in requirement in the US has simplified and improved patient experience and delivered a significant inflection for this injectable therapy. Underlying patient demand is high, and we are therefore very confident about the potential of this medicine to transform the treatment paradigm of HIV.

Apretude - Commentary at Q2 2022: It was launched in the US in January 2022. This quarter we received the J-Code for Apretude, which is an important step as it enables prescribers to 'buy and bill' and simplifies reimbursement for the medicine. With around 1,700 patients already taking Apretude in the US, we have high levels of ambition for this medicine and launch activity continues to centre on building awareness and access

Commentary at Q4 2021: we remain confident that Apretude will deliver significant benefits to patients in the years ahead and significant commercial value beginning in 2023.

Zejula - Commentary at Q2 2022: In Oncology, sales increased 23% as we are seeing signs in the US of ovarian cancer and surgery rates stabilising. We are well positioned as the market recovers with half of new first line ovarian cancer maintenance patients receiving Zejula

Vaccines

2022 outlook: Sales are expected to grow at a low to mid-teens percentage at CER (excluding pandemic adjuvant sales).

Meningitis

2022 outlook: expected to increase mid to high single-digit.

Flu

2022 outlook: Sales are expected to be slightly down compared to 2021.

Shingrix

2022 outlook: expected to deliver a record year for sales, with strong double-digit growth. Shingrix H2 sales expected to be slightly down on H1

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Commentary at Q2 2022: We remain on track for a record year with strong double-digit sales growth this year. Previously, we expected sales to be weighted to the second half, but following the earlier than anticipated channel inventory build, we now expect slightly lower sales in H2 than in H1, reflecting an anticipated one million doses of inventory burn.

Established Vaccines

2022 outlook: sales are expected to be broadly flat to a slight decrease.

COVID immunisation progress in the US is tracked by the CDC. For US COVID vaccine demographics, including adoption by age, you can visit: https://covid.cdc.gov/covid-data-tracker/#vaccination-demographic

General Medicines

2022 outlook: Slight decrease in revenues expected.

Financials (adjusted) for new GSK

Operating profit

2022 Full-yearguidance: The adjusted operating profit is expected to grow between 13% and 15% at CER (excluding the commercial benefit of COVID-19 solutions). Please note that H1'22 adjusted operating profit grew 27%

Cost of goods sold

2022 Full-yearoutlook: COGS expected to increase at a rate below turnover.

Q3 comment on the impact of pandemic solutions: Q3 2021 sales of £209m consisted of £114m of Xevudy (high COGS) and £95m of pandemic vaccines (low COGS). In Q3 2022, we expect any sales to be predominantly of Xevudy. For Xevudy, GSK books all sales and pays a 72.5% profit share through COGS.

SG&A

2022 outlook: expected to increase at a rate slightly above turnover.

R&D

2022 outlook: expected to increase at a rate slightly below turnover.

Royalties

From 1 February 2022 until 5 October 2027, Gilead will pay a 3% royalty on all future sales of Biktarvy (2021 US Biktarvy sales were $7,049m/ £5,108m). GSK announces settlement between ViiV Healthcare and Gilead Sciences, Inc., resolving litigation relating toBiktarvyand ViiV's dolutegravir patents and entry into a patent licence agreement | GSK

Associates

2022 Outlook: expected to be negligible.

Net Interest payable

2022 Outlook: £750m to £800m.

Tax

2022 Outlook (new GSK): expected to be around 16%, similar to 2021 for new GSK and aligned to medium-term outlook.

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Historic London Stock Exchange announcements (LSE announcements) and press releases Since the beginning of Q3 2022, we have issued several LSE announcements and press releases, each of which can be accessed using the following links: https://www.gsk.com/en-gb/media/press-releases/https://us.gsk.com/en-us/media/press-releases/

https://us.gsk.com/en-us/products/https://www.gsk.com/en-gb/investors/stock-exchange-announcements/london-rns/

Key updates during Q3

26 September:Iain Mackay, Chief Financial Officer, to retire from GSK, Julie Brown appointed as successor | GSK

22 September:GSK and Spero Therapeutics announce exclusive licence agreement for tebipenem HBr, alate-stageantibiotic that may treat complicated urinary tract infections | GSK

06 September:GSK announces update on US FDA regulatory review of daprodustat in anaemia of chronic kidney disease | GSK

06 September:WHO grants prequalification to GSK's Mosquirix - the first and only approved malaria vaccine | GSK

17 August:US FDA accepts new drug application for GSK's momelotinib for the treatment of myelofibrosis | GSK

16 August:Statement: Zantac (ranitidine) U.S. litigation | GSK

16 AugustGSK completes acquisition of Affinivax, Inc. | GSK

11 AugustStatement: Zantac (ranitidine) litigation | GSK

03 AugustGSK Announces Offer to Repurchase Exchangeable Senior Notes Due 2023 | GSK

28 July:ViiV Healthcare announces new data at AIDS 2022 from unblinded phase of HPTN 084 study in women in sub Saharan Africa showing continued superior efficacy of injectable cabotegravirlong-actingfor PrEP over daily, oral TDF/FTC tablets | GSK

25 July:ViiV Healthcare to present new data from innovative HIV treatment and prevention portfolio at AIDS 2022 | GSK

11 JulyGSK prepares US for2022-23flu season with over 50 million influenza vaccine doses | GSK US

05 JulyGSK disclose discontinued operations from Q2 2022 (investis.com)

01 JulyGSK completes acquisition of Sierra Oncology | GSK

For your reference, the following pages include tables with historical financial information. We have included additional details to help with modelling Q3 2022 and full-year estimates.

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