GlaxoSmithKline : Q1 2022 results transcript PDF - 266.7KB

GLAXOSMITHKLINE Q1 2022 RESULTS

Wednesday, 27 April 2022

Nick Stone (Head of Global Investor Relations): Hello everyone.

Welcome to our Q1 2022 conference call and webcast for investors and analysts. The presentation was posted to GSK.com and it was sent by email to our distribution list earlier today. Please turn to slide 2.

Cautionary statement regarding forward-looking statements

This is the usual safe harbour statement and we shall be making comments on our performance using constant exchange rates or CER unless otherwise stated.

Agenda

This is today's agenda where we plan to cover all aspects of our Q1 2022 results.

The presentation will last approximately 25 minutes with a further 35 minutes for questions.

For those on the phone, please join the queue by pressing *1, and we request that you ask a maximum of two questions so that everyone has a chance to participate.

Today, our speakers are Emma Walmsley, Luke Miels, Deborah Waterhouse, Brian McNamara and Iain Mackay. The Q&A portion of the call will be joined by Hal Barron, Roger Connor and David Redfern. With that, I now hand the call over to Emma.

Strong start to a landmark year

Emma Walmsley (CEO): Thanks, Nick, and hello to everyone joining today's call. Please turn to slide 5.

Q1 2022: delivering a step change in performance

I am very pleased to share our Q1 2022 results, which demonstrate a strong start to this landmark year for GSK. With double digit sales growth, we are delivering on our financial commitments to a step change in performance.

In the first quarter, sales increased 32%, adjusted operating profit increased 39% and adjusted EPS grew 43% to 32.8 pence per share. Sales growth was driven by excellent commercial execution and strong demand across the whole portfolio. Biopharma sales increased 40% - 15% excluding Xevudy. Across the three biopharma business areas, that meant that Specialty Medicines delivered 97% growth to £3.1 billion with strong double digitgrowth across all areas, particularly HIV. I was pleased to see Xevudy contribute to COVID-19 solutions at scale. Excluding Xevudy, Specialty Medicines also grew 15%.

Vaccine sales increased 36% to £1.7 billion, driven primarily by Shingrix which delivered its best quarter yet, more than doubling sales as we continue our global launch programme across several countries and patients' demand returned.

General Medicines also grew 3%, reflecting strong growth from Trelegy. Consumer Healthcare delivered 14% sales growth in the quarter, benefiting from strong growth across all categories, particularly Respiratory Health.

This is, of course, the last full quarter ahead of creating a new, independent company

- Haleon - with a focused strategy to deliver sustainable, above-market growth and attractive returns to shareholders. As a new standalone company, dedicated to Consumer Health, Haleon is a compelling prospect with an outstanding brand portfolio and a fantastic leadership team led by CEO designate Brian McNamara.

We are absolutely on track with the demerger, having very successfully raised the necessary debt and delivered all significant technical system cutovers. Brian will share more on our progress and performance shortly, and I know he is very much looking forward to your questions.

On innovation-driven transformation, we continue to advance with recent regulatory approvals in Specialty Medicines, particularly HIV, with the US approval of Cabenuva every two months, the label update that makes the oral lead-in period optional, and the update for virologically-suppressed adolescents aged 12 years and older living with HIV.

In addition, the US FDA approved Triumeq paediatric, the first dispersible, single-tablet regimen containing dolutegravir as a once-daily treatment for children living with HIV. In Immunology, China approved Benlysta for active lupus nephritis.

In the quarter, we continued our investment in R&D with the proposed acquisition of Sierra Oncology for $1.9 billion. We have consistently said we are pursuing targeted business development to augment and complement our organic pipeline, great opportunities with strategic fit, and this acquisition aligns with our strategy of building a strong portfolio of new and specialty medicines alongside our Vaccines portfolio. The deal is expected to contribute to 2023 sales with adjusted EPS accretion in 2024. In a moment, Luke will highlight why we believe momelotinib has the potential to address a critical unmet medical need in myelofibrosis patients with anaemia and complements our haem-onc business.

Overall, we see these results as a very encouraging start to the year despite the reality of macroeconomic and geopolitical challenges today. We are very confident inreaffirming our full-year 22 guidance - 5-7% sales growth and 12-14% adjusted operating profit growth at CER.

Excellent progress across all three strategic priorities

Turning to slide 6, the first quarter was another period of excellent progress across all three of our long-term strategic priorities.

In Innovation, in addition to the examples I just gave, we also received the US and EU regulatory submission acceptances for daprodustat, a potential best-in-class medicine for treating anaemia of chronic kidney disease, and the US FDA has set a PDUFA date of 1 February 2023.

In Performance, our executional edge continues to strengthen, as you will hear from the team shortly, and, although flattered by the comparison to Q1 2021, underlying demand is clearly strong.

Lastly, on Trust, we continue to progress our ESG leadership, executing our ambitious commitments to differentiate GSK on ESG delivery.

Significant R&D pipeline news flow continues

Turning to slide 7, as our innovation-driven transformation gains momentum, 2022 is an important year for several significant late-stage milestones. In Q2, we expect the results for RSV older adults, with an anticipated regulatory submission before the year-end, potentially putting us on a path for inclusion in the June 2023 ACIP meeting. This disease represents a significant unmet medical need, with RSV infections accounting for around 180,000 hospitalisations each year and about 14,000 deaths in the over-65 population in the US alone.

In the second half, we have several late-stage read-outs, including the pivotal DREAMM-3 trial for Blenrep in patients with third-line multiple myeloma and the Phase 2B data for bepirovirsen for patients with chronic Hep B infection. There is a significant unmet medical need for these patients, with over 300 million people living with Hep B, and the disease is responsible for over 900,000 deaths each year.

This is an exciting year for our high-quality pipeline and I am encouraged by the progress this quarter.

With that, I will now hand over to the team. Luke, first over to you.

Growth drivers

Luke Miels: Thanks, Emma. Please turn to slide 9.

Biopharma demonstrates continued strong performance

In the quarter, our commercial Pharma business continued to deliver strong performance. In Specialty Meds, including HIV - which Deborah will speak about momentarily - we increased sales by 15%, excluding Xevudy. We continued to see double-digit growth from our market-leading lupus medicine, Benlysta, up 18%, and were pleased to see the expansion into lupus nephritis in China and Japan driving new patient starts. In Oncology, sales increased 15% despite a headwind in the ovarian cancer area where, unfortunately, diagnosis rates are still depressed - down about 29% compared to pre-COVID levels.

We were also pleased to contribute pandemic solutions with around £1.3 billion of Xevudy sales in the first quarter and, as COVID is an ever-evolving landscape, we are having ongoing discussions with regulators and working at pace with Vir to add to the dataset.

On the right hand of the slide, you can see that we have spotlighted the fantastic performance of Nucala, up 16% in the quarter. Nucala remains the leading IL-5 in key markets like the US, Japan and the EU5, and it is the only biologic approved for four indications across eosinophilic diseases.

The new indications and deeper penetration in severe eosinophilic asthma represent further growth opportunities. These are complemented by our long-term life-cycle innovation plans with Phase 3 trials for Nucala in COPD and, of course, our long-acting IL-5, depemokimab, both expected to read out in 2024.

And, finally, our general meds portfolio was up 3% this quarter, with classic and established product declines more than offset by strong Trelegy growth, up 35% in the quarter. We continue to lead the triple market in the US and Japan, with increasing new-to-brand prescription and overall market share gains.

Please turn to slide 10.

Vaccines: Shingrix delivers record quarter of sales

Moving to Vaccines, we had a very strong recovery for Shingrix, which helped drive sales growth of 36%. Shingrix sales more than doubled, delivering a record quarter of nearly £700 million of turnover. The strong performance is reflected in the benefit of a favourable comparator, good demand and channel inventory build, including a large retail purchase that we do not expect to repeat in Q2.

In the US, encouragingly, pharmacists are beginning to prioritise Shingrix as the second preferred vaccine, with around 52% now indicating that they are looking to increase shingles vaccinations.

In Europe, strong growth benefitted from high demand in Germany and contributions from new launches as our geographic expansion is making Shingrix more widely available.

Shingrix is now available in 19 countries globally. Our unconstrained supply position puts us on track to expand to 35 countries by 2024, making Shingrix available in nearly 90% of the global vaccine market. As shown on this slide, we have seen increased contributions from our geographic expansion efforts. This year, we are on track for a record year for Shingrix, with double-digit sales growth, and we expect contributions to build from new launch markets as we move through the year, versus the stronger comparator quarters in the second half.

Shingrix will be a key driver of this year's expected low teens sales growth in Vaccines, excluding pandemic solutions. And Shingrix is well-positioned to deliver the ambitions we laid out last year for our 2026 commitments to growth.

Please turn to slide 11.

Anaemia is intrinsic to myelofibrosis

Earlier, you heard Emma highlight the strategic rationale for our proposed acquisition of Sierra Oncology. I want now to focus on the benefit of momelotinib as a potential new medicine to address a critical unmet need in myelofibrosis patients with anaemia.

Anaemia is a significant issue in myelofibrosis, caused by two drivers: first, the natural progression of the disease, where the bone marrow is progressively failing, causing cytopenia, of which anaemia is the most frequent, and second, the standard of care treatment for myelofibrosis is dominated by myelosuppressive JAK inhibitors.

Many patients sooner or later will become transfusion-dependent, and on the left side of slide 11, you can see the transfusion is an independent prognostic factor, with transfusion-dependent patients having significantly worse survival. This is a significant challenge, with the right side showing how significant a challenge it is - up to 30% of patients who have still not received a JAK inhibitor already require a transfusion. That number goes up to 70% in patients who have already been treated with JAK inhibitors.

With momelotinib, we're excited to have an opportunity to bring a potential new medicine to GSK, which is differentiated in a segment of patients with a high unmet medical need.