GSK

Year-to-Date and Q3 2022 Results

Wednesday, 2 November 2022

Conference Call and Webcast for Investors and Analysts

Nick Stone (Head of Investor Relations): Welcome to our year-to-date and Q3 2022 conference call and webcast for investors and analysts.

Earlier today, the presentation was posted to GSK.com and it was also sent by email to our distribution list. Please turn to slide 2.

Cautionary statement regarding forward-looking statements

This is the usual safe harbour statement. We will be making comments on our performance using constant exchange rates or CER, unless stated otherwise.

As a reminder, the Consumer Healthcare Business was demerged on 18 July to form Haleon and, as a result, we are today presenting continuing operations for GSK.

Turn now to slide 3.

Agenda

This is today's agenda, where we plan to cover all aspects of our year-to-date and Q3 2022 results. The presentation will last approximately 35 minutes with around 40 minutes for questions. For those on the phone, please join the queue by pressing *1, and we request that you ask one question so that everyone has a chance to participate. We can always come back for a second round.

Today, our speakers are Emma Walmsley, Tony Wood on the phone, Luke Miels, Deborah Waterhouse and Iain Mackay. In the Q&A portion of the call we will also be joined by David Redfern.

Turning to slide 4, I will now hand the call over to Emma.

Year-to-date and Q3 2022 - delivering a landmark year

Emma Walmsley (CEO): Thanks, Nick, and hello to everyone joining our Q3 conference call today. Please turn to the next slide.

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Year-to-date 2022 - delivering a landmark year

I am very pleased with today's results, which demonstrate that our strategy is driving the step-change in performance and landmark year that we committed to. Year-to-date, we have delivered double-digit sales growth of 19%; adjusted operating profit growth of 16%; adjusted EPS growth of 20%, and strong free cash flow of £2.5 billion. This broad-based momentum and our continued pipeline progress support my strong confidence, heading into 2023, and in our medium-term outlook and growth through the decade.

Based on these encouraging results and our excellent momentum, we are again increasing our full-year guidance, which excludes COVID solutions. We now expect sales to increase by between 8% to 10%, with improving outlooks in all three product areas, with adjusted operating profit growth between 15% to 17% and adjusted EPS growth around 1% below adjusted operating profit.

Please turn to slide 6.

Q3 2022 - Sales growth +9%1 (+7%2)

In Q3 we delivered another quarter of growth, with sales increasing 9% to £7.8 billion; adjusted operating profits growing 4% to £2.6 billion - an increase of 2% excluding COVID solutions, and adjusted EPS growth of 11%, to 46.9 pence. This performance was driven by consistently strong commercial execution all across our business, as we build our broad portfolio of scale medicines and vaccines, with Specialty Medicines growing 24% to £2.7 billion and by 11%, excluding Xevudy. Here, we continue to benefit from strong demand for our HIV medicines, particularly Dovato and Cabenuva, as well as Nucala in Respiratory and Benlysta in immunology. Vaccine sales grew by 5% to £2.5 billion and by 9% excluding pandemic vaccines. This strong performance reflected another record quarter for Shingrix, with sales exceeding £750 million. Lastly, General Medicines sales grew 1% to £2.6 billion, driven by the strong growth of Trelegy in Respiratory.

We continue to invest in commercial growth and our R&D pipeline.

In SG&A, we continued our disciplined cost control, while prioritising effective investment behind launches - particularly Shingrix - as we accelerated international expansion and in HIV, to drive the growth of our innovation during the year.

In R&D, we continued to increase investment in Vaccines clinical development, including in mRNA technology and the newly acquired Affinivax MAPS platform, as well as in late-stage

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Specialty Meds - particularly the Phase 3 programme for depemokimab in severe asthma. We also continued our investment behind several earlier stage research projects.

Please turn to slide 7 and our pipeline headlines.

Year-to-date 2022: late-stage R&D pipeline momentum

This quarter we took significant steps to progress our pipeline and platform capabilities and, of course, we are now delighted to have Tony as Chief Scientific Officer - and you will hear more from him in a moment.

It was great to present at IDWeek the Phase 3 results of our RSV older adults vaccine, which demonstrated more than 90% efficacy against severe disease. It is wonderful to have received US priority review as well as regulatory submission acceptances in Europe and Japan, all over the last couple of weeks. Overall, we believe our RSV vaccine has the potential best-in- class profile and we are very excited about the potential benefits it can bring to older adults. Of course, it is a tremendous commercial opportunity for GSK.

During the quarter, we also received several important regulatory approvals in our Vaccines business and as we close out this landmark year we look forward to further newsflow across the portfolio.

I want to reiterate that there are no changes in our capital allocation priorities. As a company, we continue to focus on making significant improvements in R&D and productivity, and performing competitively in the field with our pipeline remaining our top priority. We will continue to focus investment across four therapeutic areas while adding complementary and strategic business development to bring additional optionality.

This quarter we completed the important acquisition of Affinivax, and gained access to a Phase 2 next generation 24-valent vaccine. We also signed an exclusive licence agreement with Spero Therapeutics for tebipenem, a novel oral antibiotic in late-stage development, for UTIs.

Importantly, we are consistently driving pipeline momentum. This remains our priority, and alongside our strong commercial performance makes us stronger and better-positioned to achieve our ambitions than we were even a year ago.

Now, Tony, to you on Slide 8.

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Innovation

Tony Wood: Thank you, Emma.

A focused biopharma company

Our shared purpose within GSK is to unite science, technology and talent, to get ahead of disease together. I want to spend the next few minutes explaining how R&D will support this objective, and how I expect the organisation to evolve under my leadership.

First, it's essential to recognise that GSK has changed: we have developed a unique operating model based on the science of the immune system, human genetics and advanced technologies. With this we have delivered a much more competitive performance in new drug approvals. This is encouraging, and something our organisation can be proud of, but there's more to be done. I'm confident we can further strengthen our pipeline of innovative and practice- changing new vaccines and medicines, to deliver long-term competitive growth.

To achieve this, we will rigorously prioritise R&D capital allocation in our four therapeutic areas. To achieve these objectives I have three key priorities for R&D. My first priority is to execute flawlessly on our pipeline, today consisting of 23 vaccines and 42 medicines. Flawless execution means prosecuting the development of our late-stage pipeline, bringing new vaccines and medicines to patients as quickly as possible, organically and through business development. It also means acceleration of development of our most promising pre-clinical and early-stage research projects. Our guiding question will be, can this meaningfully improve patient outcomes, and deliver a new standard of care?

My second key priority is exploiting new and existing platform and data technology to identify and accelerate clinical development opportunities. We already have a broad set of platform technologies, including an unrivalled suite within vaccines. We will continue to add to this, augmenting our capabilities. To illustrate this, we leverage our world-leading adjuvant capabilities to deliver a best in class RSV vaccine candidate for older adults. Likewise, through complementary strategic development we acquired Affinivax, and the disruptive MAPS technology mentioned by Emma. This allows us to develop multi-valent vaccines for complex bacterial infections.

In data technology we have access to the richest and largest data set, thanks to our data- focused collaborations, including our recent agreement with Tempest, which provides access to one of the world's largest sources of de-identified patient data, to accelerate drug discovery.

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My third priority relates to R&D culture: a key element of my job is to create an environment in which we are ambitious for patients, and where our people are empowered to take smart risks and make the right decision at the right time; but taking smart risks is not solely a scientific endeavour. Luke and I chair a Portfolio Review Board, with cross-functional teams providing input into all key R&D decisions. My partnership with Luke and Deborah is key, and has never been more important, as we allocate capital towards those new vaccines and medicines that have the greatest potential to raise the bar for patients.

Innovation: four focused therapeutic areas

We will continue focusing on developing innovative vaccines and specialty medicines. Infectious diseases and HIV now represent about two-thirds of our pipeline and are the primary focus for R&D. We have an opportunity to build on our leading position in vaccines, and complement the extraordinary success with Shingrix with new vaccine candidates for RSV in older adults, meningitis and pneumococcal disease. In HIV we are true innovation pioneers: we have led the way with two-drug regimens and long-acting injectible medicines. We will strengthen our leading position with longer-acting and more convenient treatments for people living with HIV, and alternative options in pre-exposure prophylaxis.

At the intersection of infectious disease and immunology we are developing bepirovirsen, a potentially transformative treatment for people living with chronic hepatitis B, which is responsible for around 900,000 deaths annually. Bepi also represents a foundational asset for the new oligonucleotide platform, that will increase our scope to prosecute promising new research targets from our leading position in genetics. We will prioritise immunology, respiratory and oncology programmes, using human genetics, functional genomics and AI/ML to support smart risk-taking.

Within Oncology, our primary focus is Jemperli and the CD2-26 axis and outside of IO we will take a pragmatic approach within synthetic lethality and tumour cell targeting.

In business development we will remain agile and ambitious, looking for opportunities that address high unmet medical need and complements our R&D strategy.

We will also target opportunities with genetic evidence that suggests a higher probability of success.

Let me now review some of the recent highlights within our pipeline. Please turn to Slide

11.

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GSK plc published this content on 03 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 November 2022 16:32:06 UTC.