GSK : FY 2022 results transcript

Full year and Q4 2022 results

Conference call and webcast for investors and analysts

Wednesday, 1 February 2023

Introduction | Nick Stone, Head, Investor Relations

Hello, everyone and welcome to our full year and Q4 2022 conference call and webcast for investors and analysts. The presentation was sent to our distribution list by email earlier today and you can also find details at GSK.com.

Cautionary statement regarding forward-looking statements

This is the usual safe harbour statements. We will comment on our performance using constant exchange rates or CER unless stated otherwise. As a reminder, the Consumer Healthcare business was demerged on 18 July, 2022 to form Haleon.

For today we are presenting continuing operations for GSK.

Agenda

Today's management presentation will last approximately 30 minutes with the remaining 30 minutes for your questions, and this is to ensure that we get you to your next call given it's such a busy day for those on the street.

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

Our speakers are Emma Walmsley, Tony Wood, Luke Miels, Deborah Waterhouse and Iain Mackay, with David Redfern joining the rest of the team at Q&A.

I will now hand the call over to Emma..

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Strategic summary | Emma Walmsley, Chief Executive Officer

Thanks, Nick, and welcome to everyone.

A focused global biopharma company with bold ambitions

2022 was a landmark year for GSK. We successfully delivered the most significant corporate change in 20 years and began a new chapter of competitive and profitable growth. GSK is a focused global biopharma company with the ambition and purpose to unite science, technology and talent to get ahead of disease together.

We are a world leader in the prevention and treatment of infectious diseases with an industry-leading Vaccines franchise that continues to strengthen and expertise in HIV that is pioneering in innovation, and we have an exciting emerging pipeline based on the science of the immune system.

Through ongoing focus on R&D productivity and operating performance we are unlocking the potential of this company. We are realising our bold ambitions reflected in our commitments to attractive growth and a significant step-change in delivery, and through the demerger of Haleon, a world leading consumer healthcare business in its own right, we have strengthened our balance sheet creating additional flexibility to invest in continuing growth and innovation.

Full year 2022 Delivered a landmark year

I am delighted with today's results which demonstrate that our strategy is driving the step-change in financial performance we committed to with continued strong momentum as we enter 2023.

In 2022 we delivered:

• double-digitsales growth of 13%, 10% if you exclude COVID solutions including the more than £2 billion sales of Xevudy
• adjusted operating profit growth of 14%, 17% excluding COVID solutions
• adjusted EPS growth of 15%
• and strong free cash flow of £3.3 billion, further strengthening our financial flexibility.

This outstanding performance was driven by strong sales growth across both Specialty Medicines and Vaccines alongside continued pipeline progress and underpins our guidance today.

In 2023, excluding COVID solutions, we expect sales to increase between 6% and 8%, adjusted operating profits to increase between 10% and 12% and adjusted EPS growth between 12% and 15%.

Delivering committed improvements in performance

Excluding COVID-19 solutions

This strong delivery in 2022 and commitment to do so again this year supports our increased confidence in all dimensions of the 2026 outlook and demonstrate the continuing successful momentum in our transformation of GSK.

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Our portfolio mix has meaningfully shifted to Vaccines and Specialty Medicines, now approaching two-thirds of our sales in 2022 compared to 46% in 2017. This evolving portfolio shape and our prioritised investment in innovation and product launches with good cost discipline are reflected in our continuing margin expansion.

2022 pipeline progress and momentum

World leader in infectious disease based on science of the immune system

Before handing over to Tony for more detail, I would like to share a couple of headlines on our progress in reshaping and advancing our pipeline, our number one priority.

We have built a pipeline of 69 vaccines and medicines, many with the potential to be first or best-in-class. We have also had over 20 new approvals in the last five years, now representing nearly a third of our 2022 sales, excluding COVID solutions, and we anticipate more regulatory decisions this year.

Our 2022 achievements include the launch of Apretude, the first and only long-acting injectable for HIV prevention alongside Cabenuva, the first and only long-acting HIV treatment regimen. We intend to continue to lead in changing the landscape for people living with HIV around the world over the coming years.

In Vaccines, the key highlight was our exceptional RSV older adults data that led to a prompt regulatory submission and priority review acceptance by the US FDA. Our vaccine candidate has a potential best-in- class profile and represents a significant commercial opportunity with multi-billionShingrix-like potential.

We also made some important advances in the clinical development of two late-stage assets, gepotidacin, a new novel antibiotic for uncomplicated UTIs, and bepirovirsin, which has the potential to provide a first-in- class functional cure for chronic Hep B.

Strategic business development also played an important role in reshaping our pipeline. The acquisitions of Sierra Oncology and Affinivax complement our portfolio and, in the case of Affinivax, it gives us access to not only a Phase II next gen 24-valent pneumococcal vaccine but also the novel MAPS platform technology to target complex pathogens that have multiple serotypes.

We have a world-leading profile in infectious diseases and an exciting portfolio in the pipeline based on the science of the immune system which we are confident will sustain growth through this decade and beyond. I will now hand over to Tony for more details.

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Innovation | Tony Wood, Chief Scientific Officer

Thank you, Emma.

Innovation: four focused therapeutic areas

Today, I will talk about recent R&D developments and preview important events that will shape our pipeline.

In 2022, nearly a third of our sales came from assets launched in the prior five years and we are confident that our early-stage pipeline is well positioned to provide continued strong commercial execution to deliver our 2031 ambitions.

This slide illustrates our focus in four key therapeutic areas, shaped by our world-leading capabilities in infectious diseases, our understanding of the science of the immune system, and human genetics.

In 2022, we progressed 16 novel candidates into the clinic, added nine to Phase II and started five Phase III programmes, which reflected our core therapeutic focus, including the initiation of Phase III lifecycle innovation trials for depemokimab in eosinophilic disease, and cobolimab for the treatment of second-linenon-small cell lung cancers.

Today, our pipeline comprises 22 vaccines and 47 medicines, many of which are potential first or best in class. These novel programmes will form the basis for our next wave of pipeline innovation and growth.

I am pleased with our continued progress and the next slide shows some highlights from last year.

Innovation: 2022 in review

In 2022, our highest profile result was the publication of the Phase III data for our RSV older adult vaccine candidate. This demonstrated 94% protection against severe disease, with consistent and sustained high efficacy against both RSV A and B strains, in people in their 70s and in those with comorbidities.

Our global regulatory submissions include data showing that the vaccine can be safely co-administered with a flu vaccine, without diminishing the effect of either. Following regulatory submission, we received a priority review from the US FDA and we anticipate a regulatory decision in early May.

Our ongoing Phase III trial continues to collect data and will determine if protection extends beyond one season. We anticipate generating second season data in time for the June ACIP meeting. Additionally, we are also recruiting a Phase III trial examining the effectiveness in protecting adults aged 50 and above who are at higher risk of developing severe disease.

It is important that I mention the ongoing development of Shingrix. We presented data last year showing the Shingrix provides overall efficacy greater than 80% over a follow-up period of six to 10 years after the initial vaccination.

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These 10-year data were generated as part of our ongoing lifecycle innovation and we regularly review Shingrix's duration of protection and the potential need for a booster. These data will inform the next steps in clinical development and I will keep you updated with progress.

In HIV, we are committed to improving the existing treatment options for people living with HIV. We have an exciting pipeline, including options for self-administration and ultra-long-acting medicines. We are also investigating new approaches to HIV treatment. Last year we presented proof of concept data from the Phase

1. BANNER trial for N6-LS, our broadly neutralising antibody. This is one of several exciting opportunities within our HIV portfolio and we remain on track to move these into Phase III development in 2024.

Oncology is an emerging therapeutic area. We reported positive high-level results of the Jemperli Phase III RUBY trial, which met its primary endpoint - the first trial to show a PFS benefit for an IO agent in the treatment of women with primary advanced or recurrent endometrial cancers. These data may support the use of Jemperli in the first-line setting.

We also decided to progress all arms of the COSTAR lung trial into Phase III. This compares cobolimab and dostarlimab combinations in treating patients with advanced non-small cell lung cancers - a large patient population with significant unmet medical need. We expect to see data from this trial in 2024.

In 2022, we progressed several Phase I programmes and reported positive proof of concept data. Read-outs last year included data from our randomised Phase Ib trial of CCL17 in osteo-arthritis, demonstrating evidence of efficacy at the end of the eight-week dosing period. We plan to progress development and will share more later this year.

Our partner, CureVac, also announced interim Phase I data for flu and COVID mRNA vaccines. These preliminary data provide promising evidence of activity, which included a monovalent flu vaccine that successfully boosted antibody titers against a matching flu strain - even at the lowest dose. Based on these promising data, we believe there is a significant opportunity to accelerate the development of this based on this technology. We are excited about the potential of doublet vaccines and we are pleased with the progress we are making on both the COVID and influenza projects.

As Emma mentioned, we also completed several business development deals in 2022, enhancing our portfolio and platform technology. These deals supplement our late stage pipeline, support further growth and deliver our R&D strategy. BD and capital allocation will be a strong focus in 2023 and beyond.

We also announced a collaboration with Wave Life Sciences to enhance our discovery and development capabilities using novel oligonucleotides.

Now I would like to provide a brief summary of the progress of our most advanced oligonucleotide bepirovirsen.

Innovation: bepirovirsen - a potential new era in the management of hep B

I am particularly excited to disclose that the first patient has been recruited into the B-WELL Phase III programme for bepirovirsen in the treatment of hepatitis B patients with low baseline surface antigen.

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