GSK (LSE:GSK) Q3 2026 Earnings Call

0:00 Welcome everyone, and thanks for joining GSK's Q3 2026 results. Today's call will last approximately one hour, with the presentation taking around 30 minutes and the remaining time for your questions. Before we begin, this slide is our usual safe harbor statement. We will comment on our performance using constant exchange rates or CER unless otherwise stated. I will now hand over to Luke Miels, CEO.

0:29 Thanks, Jeff. I'm joined today by Tony Wood, who will give an update on the pipeline, Nina Moyes, who will cover growth drivers, Julie Brown, who will cover financial performance, and David Redfern will join for Q&A. First, let's review the company performance. Next slide, please. Q3 was strong, and we have continued operational momentum with sales up 5% to 8.9 billion pounds. As expected, specialty is driving our momentum, including launches in respiratory and oncology. Core operating profit grew 5% and core earnings per share were up 1%. Our cash generation remains very positive at 7.4 billion pounds year to date. Our Q3 dividend is 17 pence and we're on track with our responsible business rating.

1:15 Given our operating momentum and launch progress, we're pleased to reconfirm 2026 guidance today. Next slide, please. This slide is a reminder of our key priorities to drive value for the business and our shareholders. To start, we're focused on maximising launches. This quarter, we've made good progress on Blend Rep, where repeat prescribers are growing as physicians and patients get comfortable using the medicine. and Accenture, where we're seeing momentum building with prescribers, patients and access, all increasing in the quarter. We've now also had our first launch in non-small cell lung cancer with Giadetro for TKI pre-treated ROS1 positive patients, which has already delivered 3 million pounds. And our oncology portfolio continues to grow with a further indication for Gemperli and locally advanced rectal cancer.

2:02 We also received approval for Hipsaga in the US and Japan, the first fine art treatment to offer a functional cure for patients with chronic hepatitis B. Each of these products will meaningfully contribute to near-term growth as we continue to build momentum in our specialty business. At quarter two, we outlined clear plans to accelerate R&D and we're now delivering on those plans. We are recruiting in 18 of the 22 phase 3 trial starts for 2026 including two new phase 3 studies for flu and the rest on track to start recruiting before the end of the year. We also presented data for several of these assets including Gydatro, Rizrez, Mores and Gemperli demonstrating significant progress in our oncology pipeline and proof points for our approach to BD. Finally on simplification we made progress on the accelerate growth Thank you very much.

3:14 Thanks, Luke. It's been a busy period for R&D with a number of recent approvals and pivotal data readouts. Juditro and Hipsago approvals were received ahead of their FDA PDUFA dates, and Jen Purley received accelerated approval for rectal cancer. These, together with the strength of the data presented at recent medical congresses, demonstrate the value of assets in our late-stage pipeline, where the majority have potential to be best in class, and where we've added 12 new phase three study starts this quarter, bringing us to 18 for the year. Next slide, please. Moving to new products and indications. Juditro for ROS1 positive and Nelodalkib for ALK positive mutations in non-small cell lung cancer have the potential to meaningfully improve on standard of care.

4:03 These mutations represent three to 5% of all non-small cell lung cancer. Here patients are often younger in their 40s and 50s and remain on therapy for years while experiencing high rates of central nervous system side effects and often developing brain metastases. Importantly, Judietro is the first and only ROS1 TKI to address both selective targeting of ROS1 resistance mutations and CNS activity, thus aiming to improve treatment for patients with brain metastases while minimizing truck-related CNS adverse events. Similarly, Nelodalkib is a once-a-day medicine designed to avoid off-target adverse events which can be treatment limited for patients. We anticipate FDA approval in November supported by the ALCO study which showed a median progression-free survival of 14.5 months in a previously TKI-treated population. Also in oncology, approval for Gemperli in locally advanced rectal cancer is based on the ASIO1 data which shows 68% of participants with no detectable signs of cancer one year or more after treatment.

5:13 Current standard of care achieves complete clinical response in around 20 to 25% of cases and can have lasting consequences including bowel and urinary dysfunction and secondary cancers. and finally for Hipsargo. Nina will cover our launch plans for this important medicine in a moment but I want to reiterate how transformational Hipsargo will be for those living with chronic hepatitis B. These patients are at an increased risk of death from cirrhosis and liver cancer and current treatment options involve lifelong therapy. Hipsargo is the first finite treatment for chronic hepatitis B which provides the potential for a functional cure. We plan to share additional data from the development program at AASLD in November.

5:58 Now moving to our development plans for Juditro and Nelodalkib in TKI-naive patients. Juditro data were presented at the recent World Lung Congress. The AROS-1 response rates are amongst the highest ever reported in this patient population with a 94% overall response rate and a 15% complete response rate. The median duration of response has not yet been reached, but 86% of patients have a duration of response of greater than 12 months. Data on brain metastases in this TKI-naive population show no CNS progression events observed in patients without metastases at baseline and a 100% response rate in those with brain metastases at study entry.

6:44 The emerging clinical profile for Juditro suggests it has the potential to deliver meaningful outcomes as a best-in-class therapy for TKI naive patients. Nelodalkib is also in development for a TKI-naive population. And here the phase 1-2 ALCO study shows an 86% overall response rate. Median duration of response has not yet been reached. However, 91% of patients have a duration greater than 12 months, as you can see on this slide. The corresponding phase 3 TKI naive study Alcazar is more than 50% recruited. And based on available data today, we believe Nelodalkib could have the potential to drive years of progression-free survival.

7:31 Next slide, please. Next for RISRES, where emerging data demonstrate robust and consistent outcomes across a range of solid tumor types. In small cell lung cancer, the Chinese phase III Artemis08 data presented at World Lung by Hanso showed a 54% reduction in risk of death and a median overall survival of 18.5 months. The Global Pantumor Phase 1-2 EMBOLD-101 study has now enrolled with more than 550 patients. Data from the small cell lung cancer cohort of this study were presented last weekend at ESMO and showed a 61% response rate, consistent with the 58% overall response rate observed in Artemis-08.

8:18 The Global Phase 3 trial in bold SCLC301 is also recruiting well and we anticipate preliminary data by the end of 2027. Next slide please. Also for RISRES, data from the HANSO Phase 3 Artemis 11 study which looked at RISRES versus standard of care in Chinese patients with relapsed refractory osteosarcoma was selected for the Presidential Symposium at ESMO this week. Osteosarcoma is a rare tumour and relapsed patients have few treatment options. The current standard of care delivers around 2% response rate and 1.5 months of progression-free survival. In this trial, RIS-RES demonstrated a 67% reduction in risk of disease progression or death in patients with relapsed disease.

9:08 A global GSK Phase 2 trial, EMBOLD Sarcoma 202, started earlier this year and is recruiting well. The global EMBOLD program has now over 1,000 patients who've received RIS-RES, with more than half of those enrolled in the past eight months. Over the next 12 months we anticipate data readouts across multiple indications and we look forward to sharing these as they mature. Next slide please. For Mores, new data presented at ESMO from the Global Phase 1 Behold1 trial confirms the potential for best-in-class activity in ovarian cancer, with median progression-free survival of around 11 months in a non-biomarker-selected population.

9:54 These data compare favourably with current standard of care, which delivers around 6-8 months of PFS. As promised at the Accelerate Growth event in July, we've now started recruitment for five phase three trials in ovarian and endometrial cancer. Over the next 12 months, alongside Hanso, we will continue to generate longer term data to demonstrate the durability, response and safety profile of this novel ADC. Next slide, please. Also at ESMO, we presented interim pivotal results from ASIO1, which looked at Jim Purley in the treatment of patients with DMMR, locally advanced rectal cancer. The current standard of care for these patients achieves a complete clinical response in around 20-25% of cases, but involves chemotherapy, radiotherapy and surgery, and is associated with significant morbidity.

10:49 In ASIA-1, over two-thirds of patients achieved a complete clinical response and after a two-year follow-up period, no disease recurrences were reported amongst patients who responded. The study continues to generate data and offers an important potentially curative option for patients with locally advanced rectal cancer. Next slide please. Turning now to vaccines. Last season, over 700,000 people, mostly older adults, were hospitalized with flu in the US. Currently, flu vaccines, which generally focus on hemagglutinin, protect unevenly. Our mRNA flu vaccine candidate, which has achieved fast-track designation from the FDA, targets both hemagglutinins and neuraminidase.

11:36 Neuraminidase changes more slowly, so protection may be more durable when strains mismatch. Targeting both has the potential to offer broader immunity and better, more consistent protection. In phase two, our candidate produced stronger immune responses against both targets than a high dose comparator, supporting our decision to start a large phase three study in more than 50,000 adults aged 65 and over. The study started in September and more than two thirds of this season's enrollment target has already been recruited. This study will run over two seasons and we anticipate preliminary data next year pending a sufficient number of cases. Next slide, please. Across R&D, we continue to make fantastic progress in accelerating our late stage pipeline.

12:24 At Q2, we described our plans to start 20 plus phase three studies in 2026. We've now started 18 phase three studies with a further four on track to start before the end of the year. These studies have been accelerated based on our confidence in the differentiation and benefit to patients of our late stage assets. I'm pleased with the continued hard work of our teams to deliver this previously unmatched pace of acceleration across a broad and growing portfolio. Next slide, please. Before I close, I momentarily want to share this slide, which we presented in July. It demonstrates the expansion of the late stage portfolio. And from 2028 onwards, we expect to build further as we progress phase one and two studies and continue to pursue external opportunities.

13:13 I'll now hand over to Nina to cover commercial performance.

13:17 Thanks, Tony. Commercial momentum continued in the third quarter, driven mainly by specialty medicines up 15%. Our top performing product was Cabinuva, which grew 35% in the quarter. More than 75% of switches continue to come from competitors in the US and Cabinuva remains the only long-acting injectable regimen for HIV treatment, establishing a strong foundation with patients who prefer to take medicines less frequently. This is setting us up for success as we move closer to 2027, when we will have data for our three times a year formulation for HIV treatment. In prevention, Aperitude is performing strongly with 21% growth in the quarter and holding market share.

14:05 Nukala was also a very strong contributor, up 18% driven by the successful launch into COPD, while Extensure continues to expand the biological opportunity in severe asthma. In oncology, we've also now launched our first medicine in non-small cell lung cancer, G-Datron. Blender is continuing to build as expected, while Sojara and Jim Purley again delivered strong double-digit growth for the quarter. Vaccine performance was down 2%, with the drag from Shingrix, China, destocking, partly offset by growth in the US. We had significant growth in our meningitis portfolio, up 12%. This was driven by strong growth from our meningitis B-containing portfolio in the US, including new contributions from the first full back-to-school season for Penmenube.

14:56 And we now have over 90% share of the MenB market globally. General medicines was flat in the quarter, with trilogy performance offsetting the decline of the established portfolio. In the US, Trilogy returned to growth, up 8% as patients reached their Medicare deductibles and adjusted to coinsurance. In the triple inhaler class, we maintained market leadership in COPD and asthma. However, the overall US inhaler market and SID class continues to face price pressure. Globally, the SIT class remains the fastest-growing inhaler class and Trilogy continues to grow double-digit internationally, up 11% in the quarter.

15:42 Next slide, please. Starting with Blendrip, now approved in 52 markets, we continue to launch globally. As we are launching more broadly, we continue to see that the hands-on experience is the clearest predictor of future use, frequently changing the pre-existing beliefs. In the UK, Blendrip is now the market leader in second line for NICE approved regimens. And in the US, HCPs are getting more comfortable with Blendrip and repeat prescribers account for about one third of sales so far and are building. Recently updated NCCN guidelines recognize the full breadth of BLENDRIP data and include both DREAM 7 and DREAM 8 data in the second line plus patient population significantly beyond the US label.

16:31 Prescribers are getting more familiar with dosing. This is leading to an improved experience with BLENDRIP while also extending the period between prescriptions. This extended dosing is similar to what we have in DREAM 10 first line study expected to have MRD data in 2028. Next slide, please. Moving to respiratory, we have two key launches that have enabled GSK to gain IL-5 market leadership in a class that's up 12% versus last year. The importance of reducing exacerbations that lead to hospitalizations is the highest unmet need among physicians. And the success we are having with Nucal and COPD continues to have a halo effect across all five of its indications. New to brand patients in the US is up 19% with COPD driving a majority of the growth and significant room to continue growing as only 6% of COPD patients are on a biologic.

17:32 International growth continues up 21% in the quarter with now achieved market leadership in China. The success we've had with Nucala and the relationships we've established with these providers has been key as we launch Extensure. Extensure sales were £27 million in the quarter, with the majority of sales coming from bio-naive patients. Third quarter was a pivot point, following the availability of the J-code in July and then rollout of the average selling price as of October. As a result, new prescribers in the US were up 68% in Q3 and new patient starts were up 74% when we include those who received the free first dose through our Fast Start program.

18:21 Access continues to build with more than two thirds of insured patients now being covered. And significant growth opportunity remains as around 70% of patients who could be on a biologic for severe asthma still are not. Next slide, please. Finally, I wanted to share further details on our launch plans for Hipsago. In Japan, chronic hepatitis B is a government priority, and there are already established processes in place and guidelines that support functional cure. Since approval, we have received a very positive reimbursement decision, and physicians have already identified patients to receive therapy. In the US, chronic hepatitis B is very concentrated with the majority of patients in five states. We have launched with a focus on patients with surface antigen level lower than 1000, where the opportunity to have a positive experience leading to functional cure is the highest. The US, Japan and China represent around 80% of the potential value for Hipsago. Following the approvals in Japan and the US, we look forward to hearing from regulators in China, where managing chronic hepatitis B is a national priority and where we have established a strategic collaboration with Sino Biopharmaceuticals, a recognized leader in hepatology in China.

19:46 I'll now hand over to Julie.

19:48 Thank you, Nina. I will now cover financial performance with growth rates at CER unless otherwise stated. Next slide, please. Starting with the income statement for the quarter, sales grew 5%. Gross profit was up 7%, supported by product mix and efficiencies. SG&A increased 1%, including new valent costs, demonstrating smart resource allocation and improved ROI. And R&D grew 22%, in line with our accelerate growth agenda outlined at Q2, with a further 12 phase three trials initiated this quarter. Growth was driven primarily by accelerated oncology spend on ris, res, mo, res and valsatinib, as well as further investment in fulcorcubart and epimus firmin.

20:41 Operating profit grew 5%, with the margin broadly stable, as increased R&D investment was broadly offset by cost of goods and SG&A productivity, as we further match our cost base to the evolving portfolio. EPS was up 1% with the differential due to increased interest costs following the Newvalent acquisition and the higher tax rate in the quarter. Turning to total results, the quarter was impacted by 0.3 of a billion accelerate growth charge with the program to simplify and reallocate spend towards R&D now well underway. We're moving at pace and ahead of schedule and since July we have initiated a series of changes across the organisation to streamline support services, simplify our supply chain and reallocate resources and we now expect charges of up to £1 billion in 2026. Next slide please.

21:41 Moving to cash generation, year-to-date performance has been strong. CGFO was £1.1 billion ahead of last year, underpinned by business performance with increased operating profit and favourable working capital movements. And as a reminder, the year-on-year comparison was impacted by £0.7 billion Zantac cash outflow in 2025. and Annette Hedwind of 0.2 of a billion from the CureVac settlements. Turning to free cash flow, it was up 1.8 billion year to date, including $650 million from the outlicence of Lina Expat and the special dividend received due to the Veve shareholding change.

22:29 Looking forward to the full year, we remain on track to deliver our target of around 10 billion sterling CGFO at constant rates. Next slide, please. Over the past years, we have significantly improved cash generation, conversion of profit to cash, and the strength of the balance sheet. This has enabled targeted business development to strengthen our late stage pipeline. And most recently, with the acquisition of NewValent, whilst retaining capacity within a strong balance sheet with net debt to core EBITDA at 1.8 times. Next slide, please. Looking ahead, we remain on track to deliver our full year 2026 guidance.

23:17 Sales are expected in the upper half of the range driven by specialty performance. Core operating profit is also expected in the upper half of the range and Margin remains on track to be more than 31% at constant rates. This is enabled by SG&A which is projected to be broadly stable, cost of goods benefits from product mix and efficiencies and royalties which are now upgraded to around £900 million for the year. Whilst R&D is expected to grow significantly ahead of sales for the year, as we more than double the number of phase three starts from the 10 expected at the start of the year to now 22. EPS growth is expected to be in the low half of the range with full year interest expected to be 700 to 750 million including around 160 million relating to the acquisition of new valent with respect to currency we now expect foreign exchange headwinds of minus one percent on sales and minus three percent on operating profit and finally looking ahead we remain committed to our long-term outlook and in the appendix you will find modeling considerations to the end of this year and into next thank you and with that i'm pleased to hand back to Luke

24:40 Thanks, Julie. To close, we remain focused on executing our strategy, which is built on driving top line growth, building and accelerating the late stage portfolio and actively reallocating resources to where they can create the largest value for patients and shareholders. We'll now open for Q&A.

25:01 For the Q&A, please use the hand raise feature in the virtual meeting if you would like to ask a question. We will go with James Gordon, You're unmuted. Hi, James.

25:14 Hello. Hi, James Gordon from Barclays. Thanks for taking two questions. First question was on HIV and next generation injectables and also more broadly what's going on in HIV or Veve. So I read there was an update about Cabo for monthly prep and that you've got the data in-house. and PK analysis is still underway. But how should we read that? Does that mean you've got to do a bit more work on the PK equivalents? Are the questions there? And could that delay the launch? I think there was a comment about the data next year. But do you still think you could launch on the same timelines? And is there any read through? Because I believe it's the same tech for four monthly Aperture as four monthly Cabinuva. So could there be a delay or any extra work you've got to do there? And the broader question in HIV, there's been quite a few management changes. So Aviv's CEO and CFO and fairly recent R&D head change.

26:00 So is this at all connected? Is there a trend there? Any implications? Is there any sort of reboot going on in HIV since Luke became CEO? And then the second question was just on new launches. So Extensa and BlendRep. And I've heard comments about you've now got the J code. I think it was from the beginning of July. Was that the key thing that was holding up the launches? And do you now think we're going to see a big acceleration, a big inflection into next year? Or might we need to wait a little bit longer because there's some other things you also need to really see those products accelerate?

26:29 Right. Thanks, James. I think you've done your colleagues a favor because I suspect we'll be able to capture a number of themes there. So why don't we do the questions first? I'll just say something. you can cover Accenture and Blend Rep. Look, I think firstly No connection to management changes. I mean the fact is that Deborah got a promotion to be the CEO of CSL. These things don't come along every day and I think that's great news for Deborah and actually I just want to personally thank her for her years as GSK as a peer and a team member and as an Australian I hope she does very well at CSL just not too well on the vaccine side. Lynn ran the, just as background, Lynn Baxter, who stepped in.

27:16 So it was a very quick process. Pretty much as soon as I got the phone call from Deborah, I called Lynn. Lynn ran the USB business and she launched the long acting products and she has been on the B board during this time. So, you know, she's very much up to date. It was an easy decision and I've known Lynn for a long time since my Roche days. Kim retired remember and Charlotte stepped in and she remains the head of the R&D and Charlotte worked with Tony at Pfizer and as I think you all saw at Q2 she knows what she's doing so I feel very comfortable there. I think more broadly, operationally, I want beef to be closer. And so there will be more intensive interaction and supervision there, but that's not a bad thing.

28:03 Secondly, before I hand to you, David, I just wanted to make a broader point about how we want to communicate with the owners of the company and you as analysts and I guess the market more broadly. Look, we're going to call things as we see them and we're not going to park crap on page 41 of a press release and hope none of you notice it. So, you know, we'll tell you as much as we can. We will have a plan to address it. But please just adjust your parameters on that because that's how we want to operate.

28:36 All right.

28:37 So with that, David, over to you. Yeah, no, Tony, feel free to add anything. Thanks, Luke. I mean, the first thing I want to do, actually, is just echo what Luke said around Deborah. I mean, she led BEEB incredibly strongly through almost 10 years, obviously drove a huge amount of growth through that time, not least this year, where BEEB is up 10% in the quarter and for the year. and as Luke said I mean Lynn Baxter may not be particularly well known to the investment community but she's very well known inside GSK, very distinguished leader with experience on both sides of the Atlantic, led the North America for six years so very connected in the HIV community in America and obviously during that time introduced the long-acting medicines to the US market and as Luke said Lynn plus Charlotte Allerton I'm very confident in their strength right through the management team.

29:41 James, in terms of the pipeline, not much more to say at this point on Extend for. and obviously we will update the market once that analysis is complete. What I would say is we're very pleased with the progress we're making with the treatment pipeline in parallel. So the first thing I'd call out actually for Cavanuva is the phase 3b crown study where we've shown the headline that showed superiority of Cavanuva There's probably about 40% of the market is unsuppressed.

30:32 So over 400,000 people. So that's just people living with HIV. So that's a significant growth opportunity. We will show that data at future Congress. And we will also update the regulators and apply for a label expansion on that. And just remind you, Thank you very much. just to remind you it is an efficacy study comparing four months with two monthly Cabinuva but that's obviously now very much on track to read out next year and we continue to make progress with the six monthlies 184 and 499 that are progressing as planned through phase two and we still intend to start a pivotal study with that combination with six

31:48 Great, thanks David. I'm sure we'll get some more questions.

31:51 Anything you want to say? Just a couple of very quick points. But first of all, Charlotte's a very experienced pharmacokineticist and R&D leader. You saw that at 2Q.

32:07 So, Extensure and Blendrub. Extensure, very specific question. J-code, has that been a milestone or a change? So, for Extensure, I'm actually pretty confident that yes. Just for background, we got the J-code 1st of July, maybe a little bit more technical. Usually with J-code, the team gets something that we call the ASP document, which is a very Thank you very much. of both sold volume and the free goods volume that is part of our fast start.

33:08 Another piece to remember, Q3, because of the summer tends to be the quarter that has the lowest number of patient visits. The ASP document became available as of 1st October. Obviously, you don't see the sales after that. I can just maybe mention every week since then has been the highest week of sales for extension 1A. and the last week being the high sales. So yes, definitely for Accenture, this has been a milestone kind of moment and we do expect to see a change in trend from now on. All of that said, it still remains, you know, it's the first long acting and there has to be adjustment to that, but definitely very, very positive, very positive moments. Maybe just to add, This is the time when we start seeing patients coming back. So it's six monthly, so you would start seeing patients after six months receiving again another shot, which is our whole benefit of extension that patients remain on therapy for a long time.

34:22 It's very small number of patients that is reaching that point, but the numbers that we see are actually very encouraging. So let's see if that holds as more and more patients get to six monthly mark. Blendrack, the way I would describe Blendrack, you have seen now that about half of the sales are coming from ex-US and that reflects again that more experience existing ex-US both in the clinical setting and in the commercial setting. The previous experience is the most relevant factor when it comes to prescribing Blendrep and that's reflected in XUS.

35:11 A lot of learnings XUS that can be moved to the US. So we are intensifying peer-to-peer exchange in the US. Those who have experience to potentially impact the perceptions. I would probably say that the pre-existing perception of Blender is the biggest challenge rather than anything else. And we have a number of activities that are hopefully going to change that.

35:40 Great. Thanks, Nina. Next question, Jeff. Next question is from Simon Baker at Redfern. Simon, you'll be unmuted. Thank you, Jeff.

35:52 Good afternoon. Hi, Luke, and thank you for taking my questions. Two, if I may, please. Firstly, on Shingrix, I wonder if you could just dig down a little bit into the pushes and pulls within the various regions. We do see quite a divergent performance across the world. And related to that, perhaps you could give us an update also on the The potential accelerants for Shingwick's growth going forward. Firstly, the MACE opportunity and then beyond that, the dementia potential indication. And then the second question on on Hibsago. Given this is the first treatment for a very long time in that indication, perhaps you could give us an idea of how we should think about the trajectory and also the initial scriber reaction to the profile of the product and the label.

36:44 We've had a few people questioning the monitoring. I'm wondering in the real world, how much of that really is that really a barrier to adoption? Thanks so much.

36:56 Thanks, Simon. So what we'll do, thank you. I'll cover the Shingrix component and then Tony, you can cover the acceleration, sorry, the acceleration and basically MACE and dementia. And then Nina, after that, we'll come back to Hipsargan. So, Simon, how about I go region by region? and call out if I confuse you. So for the US, the IZ rate's 46%, which is up three percentage points, which is in the middle of the two to 4% range that we said that we would get in a year. TRXs are okay and we've got slightly stronger NBRX. The key thing is we're seeing stronger penetration now in the healthcare system.

37:42 So this is the comorbid population, so we're getting some traction there. But we do need to balance that with the fact that the adult market overall, adult vaccines market, Overall is still challenging. Now, Shingrix is doing a little bit better in relative terms. So the adult market's down about 18% versus this time last year, but Shingrix is down about 14%. Inventory is usually a question we get. Wholesale is steady at 0.4, same as last year. But the pharmacists have been buying. and so the stock level is higher right now in pharmacy. It's around 2.3 versus 1.7 million doses this time last year and that's likely driven by the fact that we've got a later flu season. So we'll get a clearer picture in Q4.

38:27 So that's the US. China is, I think it's steady improvement is how I'd describe it. So the key is in-arm demand. So we're doing about 300,000 shots a month and that's up 60% versus last year. So I would say that's steady growth over time and it seemed to be pretty resilient despite the structural CDC ordering stock management challenges and remember we called this early when it was slowing down in 2024 and look we're basically doing what we said we would do which is to work off the volume in the pipe and the the inventory has dropped so there was you know summer last year around 4.3 million doses and now we're down to 1.4 million doses as of August so that's about one and a half months of demand so that's about as low as you would want it and so I would expect you know ideally next year we we do a reorder but we again we're not doing mass shipments we want to sort of match the demand knowing it's quite a we've got quite a long time frame between Thank you very much.

39:57 We did have a bit of a softer time in Germany and France in summer. We think that's partly due to the heat, but also there's some parallel trade impact. And then on the rest of international, it's very much expansion and really driving access in markets like Brazil, Turkey, other markets like that, and Saudi. Tony, did you want to, sorry, Simon, long answer, but A broad question. Did you want to cover the dementia and MACE?

40:25 You bet. Thanks for the question, Simon. So look, we've got a broad range of work going on looking at both the MACE and dementia aspects for Shingrix, including mechanistic studies and There are two of those going on, Simon, in Finland and Denmark, looking to enroll about 200,000 adults and we're expecting initial results from those two studies. Thank you very much. have ongoing discussions with regulators at this point in time, but this will be a very broad study in 2020.

41:36 Thanks, Tony.

41:37 Nina, Hipsago. So Hipsago was approved in Japan and the US. Regulatory discussions are ongoing very intensely in China. So that's the next one to come. So Japan, we got the reimbursement. I think one of the testaments to Hipsago uniqueness is reimbursement in Japan was justified by the regulators with 50% usefulness premium, which is a number that you hardly see in Japan, and then additional 10% premium for single designation. So very, very happy with that conversation. In the US, and again, in Japan, we have actually patients already In the US, we got the approval, the price is available, the product is going to be on the market, I think, available actually within the next, I think, 10 days or something like that, so very soon.

42:51 Questions on monitoring. Did we expect it? Yes. because that monitoring exactly as described was part of the study protocol, so we couldn't expect anything different. Monitoring is there for two reasons. One is ALT elevation, so liver enzyme elevation, and the other one is thrombocytopenia. Now, both of those happen relatively quickly. Thrombocytopenia specifically, I think it's even quoted in the USPI, they were Two cases off. Thank you very much. in the initial periods and we do expect that physicians will monitor early seeing if their patients are by any chance one of those who have early elevation of ALT or severe reduction of severe thrombocytopenia and then following that we expect that physicians and patients will find some kind of balance of when and how frequently they do monitoring.

44:21 Thanks, Nina. I think also the feedback that we're getting from experts is that sort of mentally gating the first 12 weeks Thank you very much.

44:59 within that period.

45:03 Good. Anything else? We're just underscoring a few things in terms of thrombocytopenia. As Nina mentioned, only two patients with severe cases, 8% had lower platelet counts. That's easily managed through dose holding. And then on the ALT flares, more than half of the functional cure patients had a So it's a really important sign of potential response. You're going to hear more from us on Hipsargo, AA, SLD. So I might as well just give you a quick summary of that now, which is the long-term sustained data out to 48 weeks. The surface antigen measurements of 12 weeks is a predictor of functional cure. Retreatment modeling for future approaches.

45:51 And then lastly, continued description This is a disease with significant morbid and mortality outcomes.

46:04 Yeah, and I mean, I think for memory training, it was over 60% of patients who are below 1,000 at baseline could get to below 100 of surfsanogen for at least a year post-treatment.

46:17 That's right. More on that analysis at AASLA. Okay, good.

46:23 Thanks. from Jefferies, Michael. Hi, Michael.

46:31 Hey, thanks for taking the questions. Two, please. One for Julie. It sounds like there was inventory in the top line around Shingrix. Were there any other items in the third quarter we should take into consideration? And then as you think about the guidance for the full year, you beat very nicely on SG&A in particular in the third quarter, but the guidance doesn't go up. So just the pushes and pulls on why not, given you do have some slight help from the royalty income and also lower net financials into the end of the year. And then the question on, I guess, for Luke or maybe Tony and or David, I understand there's limited amounts you can say about Q4 treatment as in cap treatment and the read across from the prep dose, but it's the same tech.

47:16 It's the same product. You clearly had an outcome with the with the PrEP data, the PKPD study that didn't exactly tell you what you were hoping for and you're saying there is no read-across into treatment. How can you make that statement? How can you give us confidence that there isn't any read-across? Thank you.

47:33 Yeah, yeah. Tony, do you want to... Well, Julie, you can go with inventory and then David and Tony would... David, you go on the PrEP answer and then Tony could add anything technically if you want.

47:44 Yeah, okay. So specifically on Shingrix, I think Luke's covered some of this, but in terms of sort of quantifying the US inventory build in the third quarter, in the quarter it amounts to about two percentage points of global growth. And you do get these swings, as you know. Very confident, though, in the overall picture for Shingrix. And I think China, Luke has touched on this, it's all about injections in arms, and we anticipate Shipping again in 2027. So I think that covers Shingrix. In terms of the third quarter and the beat versus consensus, first of all, you know, we appreciate it was difficult to forecast the third quarter, many moving parts, including the acquisition of New Zealand.

48:31 and there are a few things to flag about the third quarter. Sales were higher than our original expectations and this included some phasing between Q3 and Q4. As we mentioned we had the US Shingrix inventory build, meningitis ordering patterns and we also had Ventolin impacting the quarter. The operating profit in Q3 was impacted by SG&A phasing, better royalties as you mentioned, partially offset by the phasing of R&D, which was a very high, it was a peak growth in R&D in the third quarter of 22%. So if we move now, obviously we're comfortable with the overall guidance for the full year. We do expect sales growth to moderate slightly, partly HIV pricing, partly we've talked about Shingrix, because last year we had a shipment going out in the fourth quarter to China.

49:27 And then we're also lapping some of the French and Japanese launches outside the U.S., And then I think finally, when you think about SG&A, we're going to have the launches to support for Hepsago and Newvalent. But at the same time, there was a charge last year in SG&A of about 0.2 of a billion that will not repeat in the fourth quarter of this year. Okay.

49:53 Thanks, Julie. And David,

50:00 Yes, I mean, I think what I can say, Michael, is, is extent, which is prep study and quattro, which is the treatment study are very different studies. So extend is a PK bridging study, where we're looking at drug substance levels at steady state, no earlier than month 13, as well as safety and tolerability. Quantro study is an efficacy study comparing the four monthly formulation of cabotegravir and ropivirine with two monthly cabinuba. So they're very different studies.

50:39 I'll probably leave it at that yeah I think the key thing here Michael we don't want to front-run discussions with a regulator that tends to backfire so again as I said earlier we're telling you as much as we can at this point but in the interest of long-term value creation I'll limit it to that at this point and appreciate your understanding and the second we can update you

51:06 Next question, please. Next question is from Kerry Holford at Barenburg. Kerry? Hi, Kerry.

51:15 Thank you for taking my questions. I'm sorry, just a very quick follow-up on Aperture Q4M. Just interested to know whether you do have a date scheduled to review that data with the FDA, whether you can share that with us. Ultimately, when can we expect more clarity on the issues here in the next steps? And then if we think into next year, and I appreciate you wanting to give guidance at this point, but just given the commentary you made earlier, Julie on the OPEX in Q4. In the context of those phase restarts this year, and at least I think you highlighted six additional phase threes starting next year, how confident are you that the necessary incremental R&D spend moving into next year can be offset by SG&A savings and COG savings in 2027? Thank you. Thanks.

52:10 So David, you want to? we are confident we will be sharing the data with the regulator before the end of the year and obviously you know post regulator discussions we will update appropriately so that sort of timing but I can't be more specific than that. Thanks, David. Julie.

52:45 Yeah, thanks. Thanks, Terry, for the question. So as you know, we've got a really good track record of delivering margin accretion and at the same time investing more and more in R&D. And this is part of the program around accelerate growth. So we've also got as the business pivots more towards specialty, you do get a natural margin lift. Thank you very much. but as demonstrated we can deliver profitable growth through the efficiency and both the cost of goods and we've talked about the specialty pivot together with the SG&A and the accelerate growth program is all about removing cost from what you might call support services and some of the manufacturing network and it's moving it towards the front line of R&D.

53:51 Right, thanks Kerry, thanks Julie. Next question. All right. Next, we're going to go to Sachin Jain from Bank of America. Hi, Sachin.

54:05 Hi there. Thanks for taking my questions. A couple on some drivers into next year, if I could. So first, you want to just comment on the Trilogy IRA impact. You call it out on the 27th driver slide, Julie. I'm assuming this is already heavily rebated. Is there any color on additional IRA pressure? and the second one you can just touch on is Devato. You talk about DTT tender impact in the quarter. Should we expect that to grow into next year? And then just one follow-up for Nina on Hibsago China. Very clear on approval timelines. Can you just run us through timelines for reimbursement? I assume this requires NLDL listing, et cetera. So just any color there. Thank you.

54:47 Sure, so David, you want to do Devato first and then we'll come back to Nina to do Trilogy and HipSaga, I think.

54:55 Sure, I mean, I could be quick. I think, Sachin, I mean, Devato, there are some international markets, notably Brazil, where the patents on Doluto Career expired this year and that's had some marginal impact, although obviously overall we're very pleased with the commercial performance of Veev growing double digit. Some impact in Brazil. Actually, as you know, the composition of matter for the dollar target in the US is 28. Next year, we don't really have any other significant markets where we lose patents. So we expect most of the trends to continue. Right.

55:36 Nina, do you want to start with Hipsaga and then we can come to the trilogy if we've got time?

55:39 Yeah, so Hypsago China, as I said, discussions are ongoing. I'm not sure I want to commit to a specific timeline because what we have seen is a huge desire from the Chinese authorities to make the drug available. I expect it's going to be sooner than what we planned, but let's leave it with that. We are going to launch immediately. We will launch in the private market. in China as it becomes available. And then with the next round of NRDL discussions, it will be included. I hope by the end of next year we should be there.

56:22 Yeah, I think on trilogy, we just have to rebase it. I mean, as you know, it was added to the list for CMS and I think November 25. So the negotiated price for 30 days is now 175, which is a 73% discount to the 24 list price. So there will be a one off impact in the US, we'll rebase that. And then positioned beyond that, again, we're being thoughtful in terms of how we resolve

56:52 Thanks, Luke. Obviously, just to say that the WAC price reduction, clearly this is a product in its more mature phase, so there are rebates and returns associated with it, so net-net, not quite as significant as Luke's indicated, totally included in our guidance. We judged it fairly well a number of years ago, and it was built into the long-term forecast. In terms of, we've also got Brio alongside Trilogy impacting in 2027, together with the big target royalty stream that comes off in October in 27, which is a headwind of around 70 million a quarter. and those are the main things. We've actually included a slide to help. We know you'll be focused more and more on 2027.

57:37 We've included a slide on modelling considerations in the appendix for those who haven't seen it just yet.

57:43 Right. Thanks, Julie. Should we keep going, Geoff? Yeah. I'm sure we've got people with questions. If you guys are happy to keep running, we can run for another 10 or 15.

57:51 Yeah, that's great. We have a number of questions. Let's go with Zane Everham from JP Morgan. Zane. Hi, Zane.

58:00 Hello, thanks for taking the questions. Just to follow up on the previous question in terms of if we think about the totality of the IRA headwind for both Rio and Trilogy, Is the consensus outlook for general medicines in the right sort of place for next year? I know you said it's broadly in line with your forecast, but just if you could clarify that, that would be helpful. And then on Hipsargo, I noticed you mentioned that you've got some clarity on the pricing. So how does that compare versus your initial expectations for Pepsi-like pricing in the US that is? And just remind us on what proportion of the population here is Part D and when we can expect Part D inclusion?

58:38 Yep, sure. So I'll just I mean, I'm pricing it's about 50,000 pounds in Japan, just over 100,000 pounds in the US. And just so I'll give you some epi, because I think it would be helpful. So US is about 1.7 million patients, 400,000 diagnosed, 120,000 treated. Japan is 1.9 million. are treated so sort of similar and China about six million treated so it's in a category of sign but obviously access and pricing is different there. Julie did you want to cover anything on beyond what we can say on that as it is forward looking?

59:22 I think at this stage we'll concentrate on giving you comprehensive guidance at the end of the year certainly you know by product area or product category we'll come back to that. Yeah

59:32 Anything you wanted to add on Hipsago, Part D, Split? I mean, on commercial, Nina?

59:38 Most of these patients do have commercial coverage. So, you know, and there is no competition, which is relevant.

59:56 Yeah, and the cost of these patients obviously as the disease progresses. I mean, look at the market research and it makes sense. I think physicians are going to concentrate on the younger patients initially and build that experience there with them. And as Nina said, I mean, I think 2031 is the earliest entrant, excluding China, that we would expect. And of course, there's a history of combinations. Thanks, Sai.

1:00:27 Next question, please. Next question will be from Matthew Weston at UBS. Matthew. Hi, Matthew.

1:00:36 Hi, Luke. Thank you. Two questions, please. I hear your confidence in Xtensa, but Nucala was also weak in 3Q as well. Can I understand if you've offered debates on Nucala in the additional access you're talking about on Xtensa? or whether or not it's pressure overall in the IL-5 category as physicians prefer T-slip. And then secondly, Julie, it's a Joe Walton pro memoria question. On 2027 net financial charge, you've highlighted the strong cash flow, but obviously the cash out for New Valen and for the restructuring program. Do you think that consensus has next year's net financial charge modeled correctly or we need to sharpen our pencils?

1:01:23 No worries. Thanks, Matthew. So just quickly on Nucala. I mean, if you look at the numbers in the US volume, I think it was up nearly 40%, 39%. Price is down 15%. So there is some pressure there. I would be cautious about reading that across to Accenture. So one of the things we've been quite deliberate on, which is holding the line on Accenture pricing. You know, we want to take a long-term view here. We've got a long-acting T-SLAB. We've got a long-acting IGE. We've got a long-acting IL-33. So if you look at coverage, I mean, you know, in terms of commercial parity, to say a Nucala or a Fenrolizumab, we've gone from 18% in Q2 to 43% in Q3. And overall, we've got 71% of lives covered, you know, with the difference.

1:02:09 Julie Brown, Roanne Parry

1:02:39 So yeah, just in terms of The interest charges that are coming through, and you're right, obviously we've had some considerable cash outflows, particularly in the second half of the year with the new vehement acquisition, and accelerate growth. The good news is it's moving at pace, so we're anticipating charges this year. We originally guided 0.7. We're expecting now charges in the order of a billion. This is P&L, and obviously that's going to affect the cash flow going into next year. So in terms of the financial charge, We've guided for the second half of this year that New Valent will be 160, so it gives you an idea about how much it will cost us next year in terms of interest. It's going to be over 300 million. And then in terms of the overall interest charge, we'll guide this at the end of the year, but it's going to be in the order of 900 to maybe a billion. Rates are adverse at the moment as well, which is the team did a great job of financing New Valent when we did, but the rates are getting harder.

1:03:38 and I guess with the topic of New Zealand, can I make a request? We have, people have got questions on oncology. We've just had, I think a remarkable ESMO. So I don't know, Jeff, hopefully someone's got a question on oncology next.

1:03:51 Yeah, well, next up we'll go with Graham Perry. So Graham, I'm not on the spot, but you're up next.

1:03:59 You ask what you want, Graham.

1:04:00 Great, thanks for taking my questions. Yeah, I asked my oncology questions yesterday, I'm afraid. So I'm just going to go back to the Xtend4M and just if you can help us understand what it is it needs fully characterizing about the new formulation. And can you just remind us, I think this was the study for monthly dosing was actually determined from PK simulations from the phase one Cabriolet study that you presented at CROI in 2024. So it is really this just that the PK Thank you very much. And then my final question is just thoughts on the Naptis bio litigation update.

1:05:06 You've now had the post-trial hearing. Are we heading towards a negotiated settlement here or are you waiting for a ruling? Thank you.

1:05:15 Thanks, Greg. Well, I think on the second question, I would direct you to their share price on the day. And I can't say much more than that. At this point, David, again, I'm not sure you can add too much more. We would love to tell you more. But again, we don't want to prejudice our discussions with regulators.

1:05:35 But yeah. I think we need to do the analysis and then we need to talk to the regulators. So I'm not going to go into much detail. I mean, what I can say, Graham, is you're right on the PK levels were set based on the pivotal study that we did for two monthly. And you're right that it's the same formulation in both Xtend and Quattro. We are very confident in that formulation.

1:06:10 and I think we've said it several times, there's no read across.

1:06:13 No.

1:06:14 Okay. Thank you. Did we cover every one of Graham's questions? We did. I think we got it, Graham.

1:06:22 Thanks. Maybe time for one more? Time for one more question. Let's go with Trung from RBC. Hi, Trung.

1:06:32 Hi, guys. Unfortunately, no oncology question here either.

1:06:36 But we did have a couple of pipelines.

1:06:42 You answered them all yesterday. So on food allergy, you've got the extensor phase two data next year. How are you thinking about the opportunity here? The competitive landscape does seem like it's evolving somewhat. There's perhaps more generic entry. Remy is moving into phase three. So just what's your view on how that market develops and where Extensa can differentiate there. Then the second one is just on the agreement with Hengroo. So one of those assets is a PDE 3.4 in COPD. Just can you provide a bit more detail on some of the other targets that you're evaluating in this collaboration? When can we expect the next programs to be optioned?

1:07:27 How can we think about milestones, economics as these progress? Thank you. Sure.

1:07:32 So thanks, Frank. I'll let Tony cover the collaboration in a second. I'll just give you, I assume you mean AUSJA, Rupert, IG, not Accenture for food allergy? um so uh yeah basically in 27 we'll get a 2b readout for food allergy um and the aim is to start the phase three in the second half of next year look this is a huge opportunity there's about 17 million people in the US that have some form of food allergy and about 1.6 million of them have Thank you very much. Thank you very much.

1:08:37 yeah could be a three monthly three monthly shot with you know either three doses or an upside scenario one one dose look I think we've covered the BTK you know it's two two tablets a day you've got the tox heritage of BTKs you know XL 111 it's phase one due at the end of the year so I think you need to risk adjust that and it's it's really a long way behind so yeah I think we've We've got a very, very nice asset here. We've got a very deliberate development plan. It's properties that behaves the same way it binds, the same way as Zolaire. So factor that in. And that, again, is part of our BD strategy. So, yeah, I think we're encouraged with the profile that we see.

1:09:22 Anything you want to add on that, Tony, before we go to Hanzo Henry?

1:09:26 No, I think you've covered it well. I mean, Zolaire was all about the nomogram simplification. as well as Luke said. And then on Hungary, the PD34 is in early clinical development. This is very much looking for immediate dose inhaler opportunity for that particular approach and you'll be aware of the early clinical data in the area from competitors that suggest that We were very careful to look for a molecule that had a similar profile. We've got 11 other targets in the collaboration. They haven't been disclosed, but it's fair to say that we're engaged very actively with Hungary on selecting the next range of those for disclosure. I'm very pleased with the options that we have in front of us.

1:10:13 Great. Thanks, Tony. I think we should conclude. We're 11 minutes over. Thank you, everyone, again, for very thoughtful questions. I appreciate you, darling.