Earnings Call Transcript - AZN Q1 2024

Operator, Operator

Good morning to those joining from the U.K. and the U.S. Good afternoon to those in Central Europe, and good evening to those listening in Asia. Welcome, ladies and gentlemen, to AstraZeneca's First Quarter Results 2024 Webinar for Investors and Analysts. Before I hand over to AstraZeneca, I'd like to read the safe harbor statement. The company intends to utilize the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Participants on this call may make forward-looking statements with respect to the operations and financial performance of AstraZeneca. Although we believe our expectations are based on reasonable assumptions, by their very nature, forward-looking statements involve risks and uncertainties and may be influenced by factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements made on this call reflect the knowledge and information available at the time of this call. The company undertakes no obligation to update forward-looking statements. Please also carefully review the forward-looking statements disclaimer in the slide deck that accompanies this presentation and webinar. There will be an opportunity to ask questions after today's presentation. Please use the raise a hand feature to indicate you wish to ask a question, and remember to unmute your line when invited to speak. And with that, I'll now hand you over to the company.

Andy Barnett, Head of Investor Relations

A warm welcome to AstraZeneca's first quarter 2024 presentation conference call and webcast. I'm Andy Barnett, Head of Investor Relations at AstraZeneca. And before I hand over to Pascal and other members of the executive team, I would like to cover some important housekeeping points. Firstly, all of the materials presented today are available on our website. This slide contains our safe harbor statement, which I'd encourage you to take the time to read. We will be making comments on our performance using constant exchange rates or CER, core financial numbers and other non-GAAP measures. A non-GAAP to GAAP reconciliation is contained within the results announcement. All numbers quoted are in millions of U.S. dollars unless otherwise stated. This shows the agenda for today's call. And following our prepared remarks, we will open the line for questions. As usual, we will try to address as many questions as we can during the allotted time, although I would ask participants to limit the number of questions you ask to allow others a fair chance to participate in the Q&A. And with that, Pascal, I will hand over to you.

Pascal Soriot, CEO

Thank you, Andy. Good day, everybody. I'm pleased to report that we have made a very strong start in 2024. Total revenue grew by 19% in the first quarter, reflecting continued strong demand, and core earnings per share rose by 13%. Recall, the first quarter of 2023 benefited from a $240 million gain in other operating income following the divestment of PULMICORT FLEXHALER in the U.S. Collaboration revenue and other operating income were minimal this quarter, which makes the EPS year-over-year growth all the more impressive. We're also pleased to announce an increase in the annual dividend of 7% at the Annual General Meeting earlier this month. This increase is in line with our progressive dividend policy and reflects the continuing strength of AstraZeneca's investment proposition for shareholders. Please advance to the next slide. We saw strong double-digit growth across our therapy areas in the first quarter. This is also the first quarter where quarterly revenue from our oncology and biopharma businesses exceeded $5 billion and rare diseases exceeded $2 billion, reflecting the value our medicines bring to patients globally. We saw 19% growth in both the U.S. and Europe this quarter, driven by strong demand. Our business grew substantially in the emerging markets, and growth was especially pronounced outside of China, driven by our sustained presence and commitment to these markets. Next slide, please. Our strong pipeline momentum has continued into 2024. We announced positive trial results for LAURA and ADRIATIC, both of which have been selected for presentation during the ASCO plenary, reflecting the important benefits seen for lung cancer patients. As a reminder, there are five presentations at the plenary, so two out of five is a very unusual result. We saw a number of exciting new approvals in the first quarter. The approval of Tagrisso in combination with chemotherapy establishes a new benchmark for efficacy in frontline EGFR-mutated non-small cell lung cancer. The approval of a HER2 in previously treated HER2 positive cancers is the first tumor-agnostic approval for HER2-directed therapy and offers new hope for patients with a range of cancers. Ultomiris was approved in NMOSD, and we are now working on establishing Ultomiris as the new standard of care for this debilitating disease. This approval builds on the momentum we are seeing from other recent approvals listed here, and we're investing to ensure that each of these new opportunities reach full commercial potential. ADRIATIC and LAURA, if approved, coupled with the three approvals I've just described and ongoing launches, have the potential to deliver several billion dollars in additional revenue in 2030. This is what our pipeline is delivering in the first quarter of 2024. With that, please advance to the next slide, and I will hand over to Aradhana, who will take you through our first quarter financials.

Aradhana Sarin, CFO

Thank you, Pascal. And as usual, I will start with our reported P&L. Please turn to the next slide. Total revenue in the first quarter increased by 19% to $12.7 billion, predominantly resulting from strong product sales, which grew by 18%. The underlying demand for our medicines was very strong across the board in the quarter across both brands and geographies. Enhertu and Tezspire continued their strong growth trajectory, and as a result, Alliance revenue increased by 59% to $457 million, driven by profit shares in regions where our partner booked product sales. Please turn to the next slide, which shows our core P&L. The product sales core gross margin was 82% in the quarter. As previously stated, we still expect gross margin for the year to be slightly lower than last year due to strong growth for partner medicines, including Enhertu and Tezspire, as well as increased product supply to Sanofi for Beyfortus into the 2024-25 RSV season. In the second half, we see additional impact from usual seasonal effects from medicines such as FluMist. Total operating expense increased by 15% in the quarter. R&D spend increased by 18%, partly driven by the Phase 3 trial starts, including dapa combinations with Baxdrostat and a new combination therapies. We continue to anticipate R&D spend will remain in the low 20s percentage of total revenue, inclusive of investments we are making to maximize the potential of medicines acquired in recent business development transactions. We continue to show operating leverage, supporting the 19% revenue growth, while SG&A increased by 13% in the quarter. We have seen strong initial uptake for Airsupra, Truqap, and Wainua in the U.S., and we're investing behind this revenue growth as well as behind our existing brands, such as Breztri and Farxiga. We're also increasing our promotional efforts behind our rare disease medicines to support continued growth. We anticipate quarterly variations in our operating expenses given the dynamic nature of our business. Despite the limited contribution from other operating income this quarter, we saw core operating profit growth of 15% and core EPS of $2.06. Please turn to the next slide. In the first quarter, cash flow from operations was $2.5 billion. We saw CapEx of $417 million in the quarter, and we continue to anticipate CapEx to increase approximately 50% on a full-year basis to support increased manufacturing capacity and growth. We had deal payments of $2.9 billion, including upfront payments for Icosavax and Gracell acquisition, both of which closed during the first quarter. We also paid the third and final payment to the former shareholders of Acerta. Lastly, we paid the second interim dividend for 2023. At the end of Q1, our net debt-to-EBITDA ratio was 1.9x. We anticipate the announced Fusion and Amolyt transactions to close in the coming months, strengthening our radiopharmaceutical capabilities and expanding our presence in rare endocrinology. As a result of recent business development and debt refinancing, we expect finance expenses to grow compared to the prior year. Reflecting the strength of our business, we are reiterating our full-year guidance for both total revenue and core EPS at constant exchange rates. With that, please advance the next slide, and I will hand over to Dave, who will take you through our Oncology performance.

David Fredrickson, SVP, Oncology

Thank you, Aradhana. Next slide, please. Oncology total revenues grew 26% to $5.1 billion in the first quarter, driven both by double-digit growth across all regions and strong demand for our key medicines. Tagrisso global revenues grew 15% in the quarter, reflecting continued global demand for ADAURA and FLAURA. Following U.S. approval in February, we've seen strong interest and early uptake for FLAURA2 in the frontline setting, with oncologists particularly focused on patients with L858R mutations and CNS metastases at baseline. Lynparza delivered product sales growth of 11% in the first quarter and remains the leading PARP inhibitor globally across all tumor types. Imfinzi total revenues grew 33% on continued strength in biliary tract cancer with TOPAZ-1, which is now approaching peak market share penetration in the U.S., Japan, and Europe. Launches continue at pace across emerging markets, where biliary tract incidence and prevalence is high. As previously communicated, we recognized a 25% mandatory price reduction in Japan effective from February 1, and anticipate a second mandatory price discount later this year. For the first time, we have split out Imjudo in our reporting and are pleased with its launch trajectory. We've established a strong foundation in hepatocellular carcinoma with HIMALAYA and see continued growth in non-small cell lung cancer with POSEIDON. Calquence total revenues increased 35% in the first quarter, driven by sustained BTK inhibitor leadership in frontline CLL across the U.S. and Europe. Enhertu total revenues increased 79% in the first quarter. Again, we drove sequential market share growth in second-line HER2-positive breast cancer in the U.S. and Europe, where considerable growth remains. We see continued adoption in HER2 low across many global markets and eagerly await the DESTINY Breast 06 readout, which brings the potential for further expansion, moving Enhertu one line earlier. Following approval in November last year, we are pleased with the strong Truqap adoption in the biomarker altered population, achieving $50 million in the first-quarter total revenues. Looking forward, we anticipate further expansion of Tagrisso with the approval of FLAURA2 in frontline non-small cell lung cancer and maximizing the U.S. launch of Enhertu across HER2-expressing tumors. Lastly, we're excited that both ADRIATIC in limited stage and LAURA in Stage 3 unresectable cancer have been selected for the ASCO plenary session. Each of these represents substantial growth opportunities in the near future and beyond, as Pascal has already outlined. With that, please advance to the next slide, and I'll hand over to Susan to cover key R&D highlights in the quarter.

Susan Galbraith, SVP, Oncology Research

Thank you, Dave. We've had an exciting start to the year with a number of key presentations, including data for our new generation PARP inhibitor, Saruparib in advanced solid tumors presented at this year's AACR. This quarter, we announced the proposed acquisition of Fusion Pharmaceuticals, furthering our ambition to redefine the backbone of current cancer treatment. Along with chemotherapy, radiotherapy has been a mainstay of cancer treatment for decades. In fact, 30% to 50% of all patients receive radiotherapy. Whilst this treatment is effective, there's also a toxic off-target effects. Fusion has developed a clinical stage portfolio of radio conjugates that are designed to deliver radiation therapy to tumor cells in a more targeted manner than external beam radiation. As we've discussed already, we believe the future of cancer care is in combinations and there's immense potential to combine radio conjugates with other modalities in our pipeline, including next-generation IO bispecifics, cell therapy, T-cell engagers, and our DNA damage response agents. Importantly, the planned acquisition of Fusion accelerates our radiopharmaceutical manufacturing to commercial scale capabilities by over three years and offers additional security in actinium supply, with multi-source supply agreements in place. The lead pipeline candidate, FPI-2265, has potential to be the first actinium-based PSMA-targeted radiotherapy approved for the treatment of post-Lutetium metastatic gastric-resistant prostate cancer. FPI-2265 is differentiated and has potential to be both more potent and tolerable than currently approved B2 emitted conjugates. Data presented earlier this month at AACR demonstrated further valuation of FPI-2265's efficacy and tolerability. PSA50 response was achieved in 50% of patients overall and 43% of the lutetium-treated patient population and 54% of Lutetium-naive population. Furthermore, there were zero discontinuations related to Xerostomia, a common toxicity. We believe that our proven expertise in targeted delivery, together with Fusion's clinical stage portfolio and manufacturing capabilities, presents an opportunity for clear leadership in the radio conjugate space. And with that, please advance to the next slide, and I'll pass over to Ruud to cover BioPharmaceuticals performance.

Ruud Dobber, SVP, BioPharmaceuticals

Thank you, Susan. Next slide, please. BioPharmaceuticals delivered total revenue of $5.2 billion in the first quarter of 2024, representing growth of 16%. Our key underlying growth drivers remain in place, including the continued growth of the largest cardiorenal medicine on the market, Farxiga. The increased uptake of biologic medicines in severe asthma and the ongoing momentum behind Breztri, our inhaled COPD medicine. In the United States, demand for Farxiga was strong in the quarter and benefited from the launch of an authorized generic. We saw solid growth in emerging markets despite the entry of generic competition in some countries. Presently, we still anticipate Farxiga may be included in China VBP in the second half of 2024. Additionally, we saw a strong Symbicort performance in the first quarter despite generic pressures. This was particularly evident in emerging markets, where we saw strong underlying demand in both China and ex-China markets, strengthening its position as market leader in the region. Awareness of Airsupra continues to grow, and more than 18,000 healthcare practitioners have prescribed this new medicine, translating into 65,000 prescriptions in the quarter. The performance has been particularly strong among specialists. Airsupra already has over 15% of new share prescriptions by allergists and over 10% share of prescriptions from pulmonologists. As Airsupra is still in the first few months of launch, our revenues in quarter 1 did not reflect the full extent of initial demand due to introductory discounts. These introductory discounts will fade through the year as we continue to expand access. Awareness is also building for Wainua, and we are very pleased to report our first revenues this quarter, following its recent approval for ATTR polyneuropathy in the United States. Wainua has only been available for a few weeks, but we are seeing good uptake among patients including some who are new to the class of medicine and some that have switched from other brands. Finally, we saw continued sales from Beyfortus in Q1, albeit with the expected seasonal drop versus Q4. We were particularly pleased to see the real-world data coming out of the U.S., with the Centers for Disease Control reporting that Beyfortus was 90% effective at preventing infants from being hospitalized with RSV. Next slide, please. I will now hand over to Sharon to discuss our ongoing development program for Wainua in TTR cardiomyopathy, where we have the potential to reach up to 0.5 million patients globally.

Sharon Barr, SVP, Rare Diseases

Thanks, Ruud. I wanted to take the opportunity to highlight results from a 66-week analysis of exploratory cardiac endpoint in the Phase 3 NEURO-Transform study of Wainua in hereditary ATTR polyneuropathy. In a predefined cardiac subgroup of hereditary ATTR polyneuropathy patients, treatment with oplontresin showed stabilization or improvement in cardiac function and structure relative to external placebo, including levels of NT-proBNP, a measure of cardiac stress, and a trend towards improvement in echocardiographic parameters such as left ventricular wall thickness, diastolic and stroke volume. These results provide confidence in our Phase 3 CARDIO-TTRansform trial in ATTR cardiomyopathy. ATTR cardiomyopathy is a systemic, progressive and fatal condition that typically leads to progressive heart failure and often death within three to five years from disease onset. With more than 1,400 patients enrolled, CARDIO-TTRansform is the largest, most comprehensive ATTR cardiomyopathy study and importantly, includes cardiovascular outcome endpoints. In other key programs, we continue to maximize the opportunity for our best-in-class SGLT2 inhibitor, Farxiga. We have the potential to manage cardiorenal disease through three distinct mechanisms, complementary dual mechanisms combined dapagliflozin with new investigational agents or treatments. I am delighted to announce that all three combinations are now in Phase 3. Please move to the next slide, and I will now hand over to Marc, who will cover our Rare Disease portfolio.

Marc Dunoyer, CEO, Rare Diseases

Thank you, Sharon. Can I get the next slide, please? I'm delighted to report Rare Disease delivered our first $2 billion total revenue quarter, up 16% year-on-year. The growth rate here includes a small benefit from countries with high inflation. Growth was driven by neurology indications, increased patient demand, and launches in new markets. In the quarter, Ultomiris revenue grew 34%, with the vast majority of growth coming from generalized myasthenia gravis. GMG patients grew by 41% driven by demand in Europe and established rest of the world. In the U.S., we saw the highest number of new-to-brand patients in the quarter, supported by our increased promotional activities. During the quarter, we received U.S. approval of Ultomiris in NMOSD. In the Phase 3 CHAMPION NMOSD trial, Ultomiris demonstrated adjugated relapses over 138 weeks. Given the strength of this data, we expect Ultomiris to be the treatment of choice for relapsing patients naive to biologics. We expect patient conversion from Soliris to Ultomiris over the short term. Following approval in U.S. and EU, Voydeya, an add-on therapy, ensures that PNH patients who experienced clinically significant extravascular hemolysis can continue receiving standard of care, Ultomiris or Soliris. Beyond complement, both Strensiq and Koselugo grew 21% and 18%, respectively, driven by patient demand as well as order timing in certain tender markets. Please advance to the next slide. During the quarter, we announced our plans to acquire Amolyt Pharma, which includes a Phase 3 asset in eneboparatide for patients with hypoparathyroidism. Hypoparathyroidism is characterized by a deficiency in parathyroid hormone production, which results in significant dysregulation of calcium and phosphate leading to life-altering symptoms and complications, potentially including chronic kidney diseases. It is one of the largest known rare diseases. Phase 2a data from eneboparatide showed normalization of serum calcium levels and a reduction in dependence on daily calcium and vitamin D supplements, both clinical priorities for treating patients. Data also suggested that eneboparatide has the potential to restore normal bone turnover and preserve bone mineral density. We believe eneboparatide has blockbuster potential and anticipate data from the Phase 3 CALYPSO trial in 2025. With that, please advance to the next slide, and I will hand back to Pascal for closing remarks.

Pascal Soriot, CEO

Thank you, Marc. Can I have the next slide, please? As you have heard, our company has made a very strong start to 2024 with demand for our medicines continuing to grow. Looking ahead, we are once again anticipating multiple pivotal trials to reach throughout the remainder of the year. Several important potential catalysts are shown here as well as DESTINY-Breast06, which Dave spoke about earlier. I would like to highlight CAPItello-281, which will be the first registrational study of Truqap in prostate cancer, an important potential new growth driver for this medicine. Since our full-year 2023 update, we have initiated the eight pivotal trials shown here, all of which are potentially transformative for patients and could meaningfully accelerate our growth. In addition to the exceptional delivery from our internal pipeline, we've also been directive with business development, building capabilities and adding new platforms to strengthen our R&D efforts in key areas, which we believe have the potential to radically improve patient outcomes, including radio conjugates, gene therapies, and cell therapies. We're very much looking forward to sharing more details about our pipeline and the long-term outlook for our company at our upcoming Investor Day on May 21. Please advance to the next slide and we will go to the Q&A. As Andy mentioned at the start of the call, please limit the number of questions you ask to allow all a fair chance to participate. For those online, please use the raise your hand function on Zoom. And with that, let's move to the first question, which is from James Gordon of JPM. Over to you, James.

James Gordon, Analyst, JPMorgan

Hello. This is James Gordon from JPMorgan. Thank you for taking my questions. My first question is regarding the 2024 guidance. There's a strong revenue growth projected at 19%. To avoid having revenue growth in the teens for the year, it seems that growth needs to be around 10% for the remainder of the year. What headwinds should we be aware of that could lead to a nine percentage point deceleration? I noted a comment about possible pricing for Farxiga, VBP, and Imfinzi in Japan, but are there additional factors to consider for Farxiga, Symbicort, and Tagrisso, which performed well this quarter? Are there potential challenges throughout the year, or is this growth sustainable? Additionally, regarding the 2024 guidance and operating expenses, the current ratios look good, but that's before the two deals close. If revenue growth slows throughout the year and we consolidate these deals, should we be cautious about those ratios, or can we maintain a high margin? Lastly, I’d like to ask about [indiscernible] and the Oral GLP-1 trial. I understand the trial has been expanded and dosing may be increased. What is the latest perspective on when we might see the data? I didn’t see any mention of the ADA conference, and how do you view the competitiveness of this product in terms of weight loss and other features compared to recent competitor readouts?

Pascal Soriot, CEO

Thank you, James. James, sorry. Aradhana, maybe you can take the first one. And Sharon, would you take the second one?

Aradhana Sarin, CFO

Great. Thank you, James, for the question. It is obviously early in the year. And as you know, generally, we don't update or provide more color on the guidance in the first quarter. You've seen from the reported results, the underlying trend in our revenue product sales is very, very strong across the board. You've also mentioned some of the uncertainties that Ruud also mentioned as well as Dave. So those uncertainties are there for the remainder of the year. However, if our momentum continues the way it has been in the first quarter and some of these uncertainties on VBP pricing, etc., are in our favor, you can think about our product revenues, our product sales, and Alliance revenues could be at the upper end of our range or higher. But again, we're not updating our guidance at this point. We will continue to invest in our R&D for the long-term, including the acquired product, and continue to invest in SG&A to drive the top line momentum that you've seen. Operating leverage continues to be a focus for us. Again, you've seen this quarter as well, with 19% revenue growth and 13% SG&A growth. And we will try to maintain stronger revenue growth than expense growth in the coming quarters as well. With that, maybe Sharon?

Sharon Barr, SVP, Rare Diseases

Sure. So thank you for the question about AZD5004 oral GLP-1 receptor agonist. We're really excited about this molecule and its potential to treat the interrelatedness of cardiometabolic and cardio renal disease. You asked specifically about the Phase 1 study. And as I'm sure you're aware, we completed, together with Ecogene, a highly controlled inpatient Phase 1 earlier this year. We have the data in hand and look forward to presenting that at an upcoming medical conference later this year. You also asked about how we view the competitive position of this molecule. And recognizing that it is a highly competitive field, we do feel very optimistic about the potential for this molecule as a stand-alone as well as in combination. So when we think about how we're treating obesity and metabolic health, I think we honestly do ourselves a disservice by referring to this as obesity. What I'd like us to do is think about this more clearly as treating the interconnectedness of disease. And to that end, we are uniquely well positioned to combine this orally available molecule with other molecules in our portfolio that help address those interrelated diseases. As an example, combining 5004 with our SGLT2 inhibitor. So when we think about this, we can imagine that at a fixed dose, we may want one dose that would be compatible for fixed-dose combinations and another dose that would be more compatible for additional weight loss in obesity indications. And we'll keep that in mind as we continue to design our clinical development program. Moving forward, we have publicly stated that we will be launching two Phase 2b studies later this year, one in obesity and one in Type 2 diabetes.

Pascal Soriot, CEO

Thank you, Sharon. And James, you asked the question of the doors, but you got to remember that not everybody needs to lose the same amount of weight. And so as you target higher weight losses, Sharon was talking about in the obesity segment, you would expect to have to go through a titration regimen and get to a higher dose. So it's not surprising that we would explore different doses depending on how much weight loss patients are needing. The next question is Seamus Fernandez of Guggenheim. Over to you, Seamus.

Seamus Fernandez, Analyst, Guggenheim

Great. Thanks for the questions. So I guess, Pascal, a little bit of a preview of the upcoming analyst event. Just hoping that you could provide us with a little bit of color on how you're thinking about potential for updated guidance. Is the most important factor of the meeting really giving and helping us understand long-term visibility around revenue? Or is it more on a margin or a little bit of both? And then just a second question. As we think about the three products that you've highlighted on the BioPharma side of the business, the oral PCSK9, the GLP-1 and the long-acting amylin, just hoping you could help us provide some context around which one you're most excited about and perhaps when we might see data on all three? Thanks.

Pascal Soriot, CEO

Thanks, Seamus. So the first question about the Investor Day, I guess I would like to invite you to join us in beautiful Cambridge to see more details of what we're going to present. But the short answer to your question is a little bit of both. Essentially, what we want to do is show people how we are looking at what I call today, tomorrow, and the day after. Today is what do we intend to deliver in terms of our financial progression in '24, '25, '26. Tomorrow is what are the products we are going to launch that will drive our growth between 2025 and 2030, and what is our strategy there? What do we intend to do with our pipeline, and what other products do we believe are growth drivers to 2030? And the day after tomorrow is really the sort of post-2030 period. What do we believe are the technologies that will shape the future of medicine in oncology and beyond, and how are we building some of those platforms that will help us shape — participate in shaping the future of medicine in the therapy areas where we are. So that's really what we want to do at the Investor Day. For those of you who are early risers and will be physically on site, we'll also give you a chance to look around our site and experience a little bit of what we have on site. The second question, let me give you a couple of comments and then maybe Ruud and Sharon could add. We are always more excited about products for which we have more advanced data. Those three products are, of course, exciting, but we have more data for the PCSK9, which is a very exciting product. And also more data for the oral GLP-1. Long-acting amylin is technically interesting where we need more data, but it certainly so far looks pretty good. And we think we can actually, as Sharon said, with the combination of the GLP-1 and the rest of our pipeline, not only PCSK9 but also dapa and also potentially Baxdrostat, we can make a difference in this segment of patients who need to lose weight but also manage their cardiovascular risk factors. And in the obese segment, where people need to lose 20%, 25% of their weight, then we can look at combining our overall GLP-1 with the long-acting amylin and some other mechanisms. Sharon, if you want to also add a little bit on how you see this pipeline.

Sharon Barr, SVP, Rare Diseases

Sure. So I'll jump in on both. People often ask about which molecule I'm more excited about. I find that very difficult to answer because, obviously, I'm very invested in all of them. But the first one that you asked about was our oral PCSK9 inhibitor, and we are extremely excited about the potential for this molecule. We will be releasing Phase 1 data at an upcoming conference in the very near future. But I think it's safe to say that we set ourselves a very high bar with this molecule, and we expect it to be able to meet a major unmet medical need. We know that despite high-intensity statins, about half the patients with cardiovascular disease are not hitting their LDL targets. And so we asked this molecule to be able to offer substantial lowering on top of statins, and we're very encouraged by the data that we see. So we are actively moving forward with this molecule in clinical development and thrilled to be sharing the data at an upcoming conference. Relatedly, you asked about our obesity portfolio. And again, I think I would really think of it more as our optimal weight management portfolio, in which we are exploring both incretin and non-incretin pathways as multiple mechanisms to manage both weight and interrelated cardiometabolic and cardiorenal disease. We are positioned to go beyond short-term weight loss and to deliver long-term weight management and healthy lean mass management, addressing cardiometabolic risk and also organ protection. We think that we'll be able to achieve this by driving forward with multiple mechanisms in combination. Thinking about both the incretin pathways, as we've discussed earlier with 5004, and non-incretin pathways, for example, with long-acting Amylin. Long-acting amylin, as you can imagine, is a different route of administration and we think could offer some additive benefits outside of that, that we're already seeing in the incretin pathway. So we are accelerating several assets through Phase 1. We spoke earlier about 5004, AZD6234 is our long-acting amylin, ACD9550 is our GLP-1 glucagon dual receptor agonist. And both of those added two molecules are progressing through Phase 1. We look forward to sharing it with you when ready.

Pascal Soriot, CEO

Thanks, Sharon. Ruud, anything you want to add?

Ruud Dobber, SVP, BioPharmaceuticals

No.

Pascal Soriot, CEO

Cool. So let's move to the next question, Sachin Jain at Bank of America. Sachin, over to you.

Sachin Jain, Analyst, Bank of America

Hi, there. Thanks for taking my questions. This is Sachin Jain from Bank of America. First, I'd like to ask about Truqap. It was a strong first quarter, and I'm interested in any initial feedback from the launch. Also, Roche mentioned $2 billion for their PI3K yesterday. Can you discuss how your asset compares to that and whether you see potential to exceed $2 billion in breast and prostate markets, as Pascal specifically highlighted? My second question is for Susan. AVANZAR is expected in 2025. When can we expect data that supports your confidence? I'm particularly interested in the timing of any TROP2 biomarker data and what we should focus on regarding TLO2 at ASCO, which I believe you've mentioned before. Lastly, for Sharon, with 25 plus now, do you still plan an interim next year? Thank you.

David Fredrickson, SVP, Oncology

Dave, do you want to start? Sure. Thanks, Sachin for the questions. So on Truqap, we are really pleased with the launch and following what was a really positive reception to the presentation of the data, we've seen that the uptake is really moving quite nicely. And I think that uptake in the biomarker population really speaks to the need to extend endocrine-based therapies. We see testing rates well established by NGS in the U.S., so we've got over 60% on that. And while there was a previous standard of care with PI3K, we're seeing that rapidly get displaced, there is still plenty of opportunity to continue to grow within that segment. So demand is off to a very good start, though I think that there is certainly much more opportunity for us to continue to grow. There's some late line bolus that we're probably seeing within the numbers as well. But again, I think that underlying demand and the indication that we've got is very, very strong. On your specific question also around comparison to the INAVO120 data, from my and our understanding, I think that you first have to take a look at the inclusion criteria. The inclusion criteria are certainly different between that study and 291. In that study, the inclusion criteria only include patients who have progressed during or within 12 months of adjuvant ET completion. It's also limited to the PIK3CA patient population. So if you take a look at 291 within that context, we really have the de novo and the non-early relapsers in the second line post-CDK4/6 plus AI setting in addition to the fast progressors. I see more like three-quarters of the patients falling into this de novo non-early relapser population. So I'm enthusiastic about the opportunity in breast cancer. I'm enthusiastic about the opportunity also in prostate cancer. And I think you put these two together, and we've got the potential for Truqap to be a multi-blockbuster.

Pascal Soriot, CEO

Susan?

Susan Galbraith, SVP, Oncology Research

Okay. Thanks, Dave. So for AVANZAR, again, yes, as I said, the trial is going well. But the TROP2 biomarker data, I expect that we would be able to share those data at the Congress within the next 12 months certainly. And as far as ASCO goes, one thing beyond the lung cancer data that I would encourage you to take a look at is the I-SPY 2 data, which is a neoadjuvant study in breast cancer. Again, looking at the combination of dapa and Imfinzi in that setting. I think we continue to be happy with the profile that we're seeing for data plus IO across the first-line settings in lung cancer. The safety is looking very reasonable because we've got many patients now enrolled into those first-line settings. And again, as we move this combination into the earlier lines in settings like the neoadjuvant setting, I think both the safety and efficacy profiles look encouraging. So that's what I would point you to ASCO. Thanks.

Pascal Soriot, CEO

Thanks, Susan. Regarding part of your question, we do not comment on interim analysis, so we will not address it here either. Next question is from Tim Anderson at Wolfe. Tim, it's your turn.

Tim Anderson, Analyst, Wolfe

Thanks. Hopeful of questions. On data, just an update on your thinking on the lung filing in the U.S., if the overall survival data only continues to be directionally supportive and doesn't cross the upper-end threshold of one. Is that enough to get U.S. approval? And then what would that mean for ex-U.S. approval? And when is that next survival look going to incur? And then the second question is just emerging markets. China, obviously, has slowed from years ago for lots of companies. What really stands out in your results is that non-China emerging market segment, which is substantial now continuing to grow. But it's just not clear to me what the drivers of that are in terms of geographies and products, and therefore, what the future growth expectations should be in those non-China markets. So if you could add some commentary, that would be helpful. Thank you.

Pascal Soriot, CEO

Thank you. So maybe, Susan, you could take the first one.

Susan Galbraith, SVP, Oncology Research

Yes. So for Dato-DXd TROPION-Lung01 study, obviously, we've announced that we have filed, obviously, for all regulatory authorities. OS in lung cancer is an important component that they want to look at. We said that the timing of the OS data cut is around the middle of the year. As you know already that we saw an overall trend in favor of OS on the data arm in the ITT, but what we also saw is in the non-squamous group a more positive trend with the upper end of the confidence interval just crossing one. So we were looking and hoping that we'll see both of those continue or improve. That will be an important piece for the regulatory authorities to look at. Thank you.

Pascal Soriot, CEO

Thank, Susan. And the second one, maybe Leon, who is online, I believe, Leon, can you actually comment on that one?

Leon Wang, SVP, International Markets

Yes. I think, Tim, actually, across the all geographic AstraZeneca emerging market has been growing rapidly and almost without exception. Of course, there is some currency depreciation in certain countries. But overall, still very, very strong growth. And we are also in line with the global new product launch. I think Tagrisso, Farxiga, these oncology brands, and also rare diseases as a new growth driver, is also doing very well across the emerging markets. All in all, on top of that, the LOE post patent expired products, the legacy products, that are still quite that we spend very little resource on are still growing nicely to support our new launches. Across the region, we are speeding up approvals in many emerging markets. So we launched new products much earlier than before.

Pascal Soriot, CEO

Thanks, Leon. So net-net, Tim, you have really two factors. One is we have a very strong commercial footprint in those countries. Now we are actually the number one pharma company in the international region. And so we are leveraging this strong commercial footprint across all subregions. The second factor is we actually, a couple of years ago, invested more resources into a specific international region, regulatory team. That team has been fast-tracking, filing, and approving new products in those countries, which historically were falling behind the priority geographies. Now we still launch after the U.S. and Europe or Japan in those countries, but not that much later, and we are still working on accelerating this. So those two factors are really the most important growth drivers. The next question, I think, is Mattias Häggblom at Handelsbanken. Mathias, over to you.

Mattias Häggblom, Analyst, Handelsbanken

Thank you. It is Mattias Häggblom, Handelsbanken. Two questions, please. So firstly, on Dato-DXd, you initiated a couple of additional Phase 3 programs during the quarter with your partner. So what makes you so confident to continue to invest in these programs? Or asked perhaps differently, what in particular do you see that investors may miss? And then secondly, as one of the few companies with both bispecific antibodies as well as cell therapy capabilities in-house, can you talk about how you think about engaging these tools into autoimmune disease, whether it's emerging early data from both sets of technologies that looks promising? Thanks so much.

Pascal Soriot, CEO

Thanks, Mattias. So first question, I think we'd go to Susan. And the second, Sharon, you'll take that one. Okay.

Susan Galbraith, SVP, Oncology Research

Yes. Thanks for asking the question about Dato-DXd. So yes, we have announced that we've started a combination with rilvegostomig, our PD-1/TIGIT bispecific and data, compared to pembro in locally advanced first-line non-small cell lung cancer. Again, that is a program where we're going to be looking at this activity in a biomarker selected group as well. But it also includes the ability to compare rilvegostomig directly with pembro in that setting. What underpins our confidence there is both the combinability and with IO that we have seen in different settings, and the potential for some added efficacy for the addition of the TIGIT mechanism of action as part of this bispecific within the PD-L1 greater than 50% patient population as well. We think that this can be a winning combination in that setting. The other important study that I draw your attention to is the TROPION-Lung14 study, this is a combination of Dato-DXd and Tagrisso in the first-line non-squamous EGFR-mutant non-small cell lung cancer. This builds on both safety and efficacy data that we've seen from the ORCHARD platform study that we have in a post-generation EGFR inhibitor patient population in the EGFR-mutant. The safety and combinability for that combination are also compelling. So I think this has the opportunity to further build on the data that we had from FLAURA2 and the data from ORCHARD and really have a winning combination in the first-line setting for EGFR-mutant non-small cell lung cancer.

Pascal Soriot, CEO

Thank you, Susan. Sharon?

Sharon Barr, SVP, Rare Diseases

Sure. Thank you very much for the question about cell therapy and bispecifics in autoimmune disease, because I think it's a really interesting topic that has become a key focus for us. As we think about how we manage diseases of immune dysregulation, we are moving from managing symptoms to modifying disease by addressing the causality of disease. The mechanisms that you mentioned, cell therapy and bispecific molecules, are two excellent modalities that allow us to really address the causality of disease. To that end, we have invested in internal capabilities, but also accelerated our ambition with recent acquisitions. As you saw, we very recently closed an acquisition of Gracell which brought to us some, I think, leading capabilities that allow us to really accelerate our ambitions in cell therapy for patients with autoimmune disease. Specifically, Gracell has a bi CAR-T which they have used to complete an investigator-initiated trial in China for patients with systemic lupus erythematosus, or SLE. We look forward to sharing those data at an upcoming medical conference. It's safe to say that the data we have seen across the patients treated is at least as compelling as anything that we see in the published literature and gives us a lot of excitement and optimism about how we may be able to address SLE for patients moving forward. At the same time, we're also investing in our internal platforms for creating T-cell engagers, which we think could also be a very powerful modality in the autoimmune space.

Pascal Soriot, CEO

Thank you, Sharon. Mark Purcell at Morgan Stanley. Mark, over to you.

Mark Purcell, Analyst, Morgan Stanley

Yes, thank you very much, Pascal. Two questions. The first one, the U.S. oral oncology products, the product sales there were very strong in the quarter. Could you help us understand the impact of treatment initiation dynamics and potential changes in affordability? And then secondly, on the Fusion Pharmaceuticals platform, for FPI-2265, can you help us understand your plans for moving into sort of pre-taxane setting? Would you do a head-to-head trial there versus Pluvicto, potentially combined with PARP-1? Obviously, understanding with the post-Pluvicto opportunity itself has blockbuster potential anyway. Thank you very much.

David Fredrickson, SVP, Oncology

So Mark, thanks. I'll take the first question, probably Susan on the second. I think the first important piece is that within the quarter on our oral oncolytics, particularly with Calquence and Tagrisso, we saw a strong market share performance. Calquence remains the leading BTK inhibitor in frontline CLL, and strong continued demand growth for Tagrisso in adjuvant in front line and encouraging early FLAURA2 launch. With that said, we also see early encouraging trends of lower abandonment and improved access due to affordability, though it really is too early to quantify. Recall, Mark, that in 2024, there's no added liability associated with Part B, whereas it comes in '25. But we'll continue to keep updated on how those dynamics on affordability evolve over the course of the year.

Pascal Soriot, CEO

And Mark, on your second question, the deal hasn't closed and so we are not able to comment at this point in time. Sorry about this, and hopefully, we can give you an answer pretty soon. Richard Parkes at Exane. Richard, over to you.

Richard Parkes, Analyst, Exane

Hi, thanks for taking my questions. Firstly, sometimes when speaking to investors, I get the perception that they feel AstraZeneca is spreading itself too thinly with expansion into vaccine, cell therapy, radioligand. Just wondering how you respond to that and whether you see any risk of the organization losing focus, and how you're thinking about some of those investments in new platforms? It feels to me like there's more you're just thinking about than the day after tomorrow. So that would be very helpful. And then on Airsupra, could you just talk a little bit more about the opportunity you're seeing? Obviously, we're seeing some very large drugs in that category in the past. And just thinking about how your thinking has evolved on the opportunity since the launch. Thank you.

Pascal Soriot, CEO

Thanks, Richard. I'll address the first question, and Ruud can handle the second one. First, I want to emphasize that we have an exceptionally strong team dedicated to oncology, BioPharma, rare diseases, and portfolio management. Second, we are now a company valued at around $50 billion, which requires a diverse portfolio for continued growth. This is one of our key advantages, as we are not reliant on just a couple of products; instead, we have a range of products that are driving our growth. I'll provide more details at the upcoming Investor Day. Additionally, this portfolio allows us to explore combinations. I intend to elaborate on this during the Investor Day. We have a unique opportunity to integrate approaches in oncology, such as antibody-drug conjugates and bispecific treatments, and potentially consider long-term strategies for solid tumors by combining these with cell therapies. In the cardiovascular field, as Sharon mentioned, we can leverage GLP-1 and PCSK9 agents along with PARP inhibitors, which are crucial for our strategy. Regarding vaccines, there seems to be some misunderstanding about our goals. We are not looking to establish a traditional vaccine business but rather to develop vaccines that are strategic and synergistic with our existing products, particularly those related to oncology and respiratory diseases. These would aim to protect patients from complications associated with COPD, asthma, and even COVID or flu for cancer patients, especially those with blood cancers. Our focus is on creating strategic synergies across our portfolio and utilizing our expertise effectively. I don’t believe we are overstretched. The challenge—and also the opportunity—within our industry lies in balancing immediate needs with long-term vision. While it might be simpler to concentrate on the next four or five years, we must also consider what will influence medicine in the next five to ten years, ensuring that our organization continues to grow in both the short and long term. This balancing act is always a challenge, but if we execute it well, we can differentiate ourselves as a company. Now, Ruud, it’s your turn.

Ruud Dobber, SVP, BioPharmaceuticals

Yes, of course. And thank you so much for the question, Richard. So first of all, Airsupra is a unique product in the United States because it's the first rescue therapy for asthma patients above 18 years of age. It's a very substantial market. The short-acting beta agonist market. Just to give you a little bit of context, roughly 35 million inhalers are prescribed every year for the 18-plus population in the United States. So the volumes are very substantial. We truly believe with that, we have a product in place which can change the treatment paradigm of as needed as rescue medication in the U.S. Of course, it's still early days, but the fact that we already see a very substantial number of scripts every week, plus that more and more physicians are prescribing it. I truly believe that over the next few years that this product will become a blockbuster molecule. We're also looking for other opportunities in other geographies in the world. Especially in the Middle East, we see good opportunities to launch the product there as well in the next few months. So all in all, very bullish regarding the forecast and the potential of this product moving forward.

Pascal Soriot, CEO

Thanks, Ruud. The next question is from Christopher Uhde at SEB. Christopher, over to you.

Christopher Uhde, Analyst, SEB

Hi, can you hear me?

Pascal Soriot, CEO

Yes.

Christopher Uhde, Analyst, SEB

Good. So yes, I guess, first question is a lot of the key Part D products, and I guess the U.S. in general had really strong performance. Can you quantify how big a headwind the typical U.S. coverage resets amounted to? And what factors beyond strong demand help explain why Q1 was so strong? And roughly, how much did they selectively contribute to top line growth? Noting that, for example, Farxiga was one of those factors. Was the authorized generic? And then my second question, which pipeline events for the rest of 2024 do you get most excited about? And which do you think the street might be underappreciating and what are we missing if so? And if I could sneak in the last one. You said M&A will slow down earlier today I've read. As you've got most of what you need, I know you don't have a KRAS though, perhaps you could tell us what your thoughts are around KRAS and why that isn't in your portfolio? Thank you.

Ruud Dobber, SVP, BioPharmaceuticals

Yes, an excellent question. We have seen very strong growth in the United States for both Farxiga and Symbicort. It's driven by two different factors. First of all, we have launched an authorized generic of Farxiga in the United States, providing patients a lower cost option. So far, we are very pleased with that introduction of this new offer to patients. Regarding Farxiga growth globally, there's no reason to believe that it will slow down anytime soon. Symbicort has closed our list price in the United States like other competitors have done as well. We need to see how that will evolve in the next few quarters. It's a new dynamic in Part D for our products. A very nice first few months, and we will monitor it very closely, of course, moving forward.

Pascal Soriot, CEO

Thank you, Ruud. I will address the other two questions quickly to save time. First, regarding the pipeline and what is exciting until 2030, Christopher, I invite you to join us in Cambridge. We are offering free tickets and a chance to visit beautiful Cambridge, and I’m sure we can arrange a nice lunch for you. As for M&A, I mentioned it will slow down, which doesn’t imply it will stop completely. What I really meant is that, from a technology and platform perspective, we have acquired and developed most of what we currently need; now we need to focus on executing what we have. However, this doesn’t mean that business development will cease entirely. Regarding the last question, I can share more about our internal program during our conversation in Cambridge. Now, I'll turn it over to Eric Le Berrigaud at Stifel. Eric, the floor is yours.

Eric Le Berrigaud, Analyst, Stifel

Thank you, Pascal. First question to come back on Farxiga and Symbicort in the U.S. Maybe more specifically on Farxiga, is there any way we can get any idea about the one-off could be into the Q1 numbers with the inventory buildup for the authorized generic? And on Symbicort, in the context of the drug being genericized in the U.S., we're expecting sales to go down. It was up 28% in Q1. What could be the dynamic for U.S. Symbicort for the full year '24? And then a more general question. We see more and more companies simplifying and streamlining the organization by combining the different divisions in one single like vaccine with pharma or onco with the rest of pharma. And you're still operating with different entities like onco, BioPharma, Alexion, D&I. Could you maybe summarize maybe your thinking about doing things differently, but the benefits of doing the way you do and benefit versus risk and complexity? Thank you.

Pascal Soriot, CEO

So let me start with this question, and Ruud can cover Farxiga and Symbicort in the U.S. It's not still, it's actually we moved to that structure not that long ago, a few years. So in our industry two, three years is not a long time or four years is not a long time. That's what we believe in the importance of being focused. On the one hand, people say you have too much; on the other hand, we say, well, put everything together. The reason we can succeed with our portfolio and leverage that portfolio is because indeed, we are focused. We're focused on oncology, biopharma, and rare disease. And anybody who's operated in oncology I think would, hopefully, agree with me that oncology is very specific. This is very specific and just the same as cardiovascular, you need to build capabilities. You can do this if you do two things. First, recruit the right talent to understand the environment they are in. And secondly, create a culture and community where people feel they work together to the same goal. In the case of cancer, the goal is to eliminate cancer as a cause of death. Every community in the company has this total focus, that shared purpose, and that's what drives people. People come to work to make a difference in the field they are in and the field they love typically. I think this is the reason why we can succeed, and we'll intend to keep that structure as it is. Ruud, over to you.

Ruud Dobber, SVP, BioPharmaceuticals

Yes. Thank you so much for the question, Richard. So first of all, Airsupra is a unique product in the United States because it's the first rescue therapy for asthma patients above 18 years of age. It's a very substantial market. The short-acting beta agonist market. Just to give you a little bit of context, roughly 35 million inhalers are prescribed every year for the 18-plus population in the United States. The volumes are very substantial. We believe we have a product in place that can change the treatment paradigm of as-needed rescue medication in the U.S. Of course, it's still early days, but the fact that we already see a substantial number of scripts every week and that more and more physicians are prescribing it means I truly believe that over the next few years, this product will become a blockbuster molecule. Moreover, we're also looking for other opportunities in other geographies in the world, especially in the Middle East, where we see good opportunities to launch the product there as well in the next few months. All in all, we're very bullish on the forecast and potential of this product moving forward.

Pascal Soriot, CEO

Thanks, Ruud. The next question is from Christopher Uhde at SEB. Christopher, over to you.