Conference Transcript - GSK 2026-09-09

Operator

It gives me great pleasure to spend time and all of us to spend time with Julie Brown, CFO of GSK today. I've got a few prepared questions we're going to go through and then we're going to open up to the floor for questions. Or if you would prefer to submit your questions via the pigeonhole, I can look at those via the iPad. So without further ado, Julie, thank you ever so much. So first question, I was going to just talk about the new CEO. So could you just talk a little bit about the changes Luke is making to speed up and improve the quality of investment decisions at the company?

Julie Brown, CFO

Yeah, sure. Good morning, everybody. Nice to see you. Yeah, so Luke has become the CEO from the beginning of the year and he was an internal candidate. So he knows GSK well. He's worked with GSK for a long time. um what he did uh from the very beginning was his focus was really on three priorities um the first one was all about accelerating r&d the second one was to fuel the launches and the third the third one was simplification so what he's done in in those early stages is he really wanted he set up a group that was called the strategic portfolio review group and they met every two weeks with the people who run the programs so effectively delayed by going directly to the people who were running the programs and looked at how we could accelerate the major assets or the prioritized assets within R&D. At the same time we also set up another group which was looking at how we could simplify the way we run the business, how we could use technology and AI to simplify the business the benefit then of the two coming together was we said we want to accelerate r&d we want to fund the launches but we don't want to change the operating profit profile of the company so we needed to find the funding through the second group's work running in parallel with the first group around accelerating r&d and those assets and the benefits been and we announced a major change program just recently at the end of July. So we were targeting almost 2 billion of savings, 1.9 billion of savings that could be, the majority could then be reinvested in the pipeline. It means that we've got 20 phase three starts this year from 10. We started off at 10 and we've now got 20 phase three starts across seven assets and around 18 indications. So this is really showing that GSK is changing into, you know, a more asset rich company. The other point was we decided to do is we decided to allow part of those savings to drop through to the margin in the period when we lose HIV, doltegravir, patent protection, which is 28 to 30. So we've now said during that period, the margin will be stable to improving. So net net, there's been a big change programme running in the first six months, together with, of course, not to mention the biggest deal we've done for quite a long time, which was the New Valent deal, which was a 10 billion deal, just over a 10 billion dollar deal. Yeah, so it's been a busy six months since he started.

Operator

And actually sort of sticking with that phrase of the company keeping busy, could you just share a few thoughts on the kind of long term improvements with regards to R&D that GSK expects to be driven by moving a lot of the UK-based R&D to Cambridge, UK, to the Biocampus?

Julie Brown, CFO

Yes. Yes, and we decided to move. For those of you that don't know, we're currently in Stevenage, and we've been in Stevenage for quite a long period. And the decision, we took the decision to move to Cambridge, essentially because you've got a total biotech ecosystem in Cambridge. You've got access to some of the most prominent hospitals in the UK, like Addenbrooke's. And you've also got over 400 biotech organisations built out of there, together with obviously the university. So it creates this ecosystem that our scientists can then work in so that we will have new labs, new state-of-the-art facilities to really motivate those scientists to do their best work. And they will be interacting all the time with either hospital, university, all on the doorstep, which we believe will make a difference and really energize the organization. Similarly, you know, we work very closely with academic centers in the US. And the benefit is you can sort of shorten the period from research into translational medicine into the clinic. And that's the whole ethos of what's driven the change. just expanding a little bit on those relationships with east coast institutions so is your sense that hopefully the ability to forge those academic relationships on the east coast of the us will get stronger with the move to cambridge as well yes absolutely um you know both both in the uk in the us but also very importantly increasingly we've built additional capability in terms of BD to access BD opportunities in China so I would say these are the you know the key focal points UK, Cambridge, east coast of the US together with some biotechs in California you've seen us do deals with those and very importantly also China and we've done very significant deals there with two major companies Hengrui in respiratory and Hanso in oncology so that deal scouting capability and those relationships and proximity mean you can get quicker from research into commercial yeah i'm just going to switch to hiv for a minute as well um could we just talk a little bit about the advantages that gsk sees with shifting to the to the longer acting therapies and away from the tablets and and what that might mean for share shifts in US HIV mid to mid to long term? Yes of course so with regard to HIV we have got you know a very strong a very strong franchise with dolotegravir and we've been pursuing long acting therapies for the simple reason that patients prefer longer acting therapies in HIV it means that instead of having a daily oral tablet that reminds them that they've got HIV every day and they stand the risk of viral breakthrough if they forget a tablet and then they can pass HIV on to somebody else the benefit is with a long-acting injectable is that they are protected for the course of the duration of that injection and so at the moment we've got two months on the market which means the person's got to have an injection every six times a year so we've got two months on the market and we are the leader in terms of HIV treatment for long-acting injectables it's probably important to say that an integrase inhibitor is at the core of this and we're the only company with integrase inhibitor at the core of hiv long-acting therapies now to justin's point we are moving increasingly from once every two months to once every four months that's a big transformation because it means the person goes in three times a year usually coincides with their testing for sexually transmitted diseases so it fits with that and we're anticipating having the the final readout of that in 27 and the launch in 28 so that's basically three times a year and then the next stage is to move to basically lasting for six months long-acting injectables for six months which is twice a year so that's a big big step forward. Treatment is the most value opportunity and it's 90% of the market in HIV. So it's a large component. And this is where we're in the leadership in terms of when we'll bring those products to launch. And to the point about, you know, the patient, when we've done a study, we did a solar study, 90% of patients prefer long acting injectables to orals. And it's because of this lack of stigma it's no need for a reminder to take their medication and it's the assurance of protection and then from the physician point of view we did a study called latitude which was again comparing daily orals with long-acting injectables and again the data monitoring committee stopped it early because the data was so compelling that people were more protected with long-acting injectables so this is the big change that's going on now and will continue to go on as we you know launch longer acting therapies in HIV.

Operator

That's super great and could we just talk a little bit about that 2031 patent expiry for the that long-acting HIV molecule and why GSK doesn't see that as a material headwind?

Julie Brown, CFO

Yeah so the Cabanova so if I step back the treatment solution will always be a combination of two of two products and with regard to the the product we've got on the market for treatment you've got a combination of caban uva and real piverine and that means you've got the treatment you've got the integrase and and the capsid so putting the two together in terms of the patent patent estate caban uva is a single asset the new chemical entity patent expires in 2031 which is what justin's referring to there is the prospect as you put combination products together cabanova with real piverine or the next generation of assets the patent estate will go for longer and we've got applications with the patent office to take us to you know 2035 beyond that 2040s so we are not concerned about the patent situation because we've got all these applications pending and the newer assets which is the six monthly treatment would be vh184 vh499 that patent estate would be brand new so this is why as we convert the business and we're leaders in treatment this is where you you feel assured about the future of hiv brilliant thank you yeah um so switching on to oncology and you

Operator

You kind of mentioned New Valent a few moments ago, but could you just delve a little bit more into the rationale for that transaction and the impact? And, you know, in terms of other niches where GSK is confident it could win in oncology and why?

Julie Brown, CFO

Yes, of course. So we were we did a lot of work on the New Valent acquisition, as you can imagine. It was a big it was a big deal for GSK and we had studied it for a long time. For those of you that are not so familiar with it, it's a precision oncology company. and rather than being a single asset which a lot of our deals have been single assets this actually brings with it two major assets very late phase assets who are late phase three together with a phase one what new valent did being a precision oncology company is they were looking for opportunities in non-small cell lung cancer which is one of the largest lung it's one of the largest cancer markets to be able to make changes so that therapies that were efficacious but had tolerability issues they could amend the product so that it could address that tolerability problem and this is essentially what we what we did what we were looking for so the the the first one was neladalkib which has actually got its PDUFA date already in November this year, so very, very soon. The other product was Zydesamtinib, which is also, this is ALK and ROS1 treatment for non-small cell lung cancer. And this has also been approved early by the US FDA. The PDUFA date was actually in two months, but it was approved in July, so it's come early. So now we're in the process of launching Zydesamtinib and Naladalkib comes in just a few months both of these assets are tackling the genes that cause tumor replication but they are doing so in an efficacious way but with far less side effects so some of the competitor products have some limited use because of the side effects the side effect profile and when you think about the patient in this case in non-smill cell lung cancer with ALK and ROS1 they they're typically quite young they're 40 to 50 years old typically women non-smokers and so they're working age and not having a tolerable medicine to be able to take means effectively

Operator

they can't work so well so this is a big innovation and we're excited about you know the launch and then the next stage which is an allodelca product that's coming shortly super yeah and are there other niches within oncology you would talk to where blood cancer possibly where GSK also thinks it can generate outside returns as well?

Julie Brown, CFO

Yes, no question. I mean, there are a few products, you know, to pull out in this regard. We've got Blenrep, which is already on the market for multiple myeloma. Again, Blenrep had fantastic data behind it. It can be used in the community, which is 70% of the US market. But the data is basically it halves the risk of death and it triples progression-free survival so there's this astounding data in an oncology field the second two to draw your attention to will be the the two ADCs antibody drug conjugates so we've got B7H4 which is for gynecological indications endometrial as well as ovarian and then we've also got B7H3 which will first go into two major tumor types small cell lung cancer and also prostate but the beauty of b7h3 is it's actually a pipeline within a product and the opportunity to take this into multiple tumor types gives a very very significant commercial opportunity and then the final one just to draw to your attention is zoltantinib and this one is is basically for gastrointestinal stromal tumours and there we see this as a second line opportunity with first line trials ongoing so coming into again a market and one of this is one of our features we will look for opportunities where the market is not satisfied either through efficacy or tolerability and this is another example of that. Great thank you I'm going to change gears to vaccines if that's okay yes could we talk a little bit about Shingrix potential both US and and ex-US life cycle management that kind of thing sure so Shingrix for those of you that don't know I'm sure in terms of the audience but Shingrix is a great asset it's a vaccine obviously for shingles it's got an astounding amount of data behind it and exposure to you know a huge number of patients already people already I should say because it's a vaccine the data for Shingrix was phenomenal in terms of almost an 80% efficacy rate, and the longevity was 6 to 11 years, majority 11 to 8 years. So once you have Shingrix, it protects you for that period of time. The US is obviously the major market. The US, it's all about the level of penetration that you can achieve, i.e. how many people in the US population are vaccinated. And the good news is we've been growing that penetration level, and we're now up to around 45% penetration of people in the US, and we're now into the category of harder to reach. So we're anticipating getting an additional two to four percentage points of penetration in the US market each year is where we're tracking at the moment. the second part of um of the world is obviously um you've got europe international and uh part of that is china and with regard to the the rest of world markets the top 12 markets in the rest of the world the penetration level is still low it's still 12 you compare that with where we are in the us is a big difference so it just shows the opportunity to penetrate more and our european growth of Shingrix, as you probably saw from Q1 and Q2, has been very, very strong. It's been way into the double digits. And we've had very good success in the private market and the public market in a number of Scandinavian countries in the first half of this year. So we're penetrating further and further when it comes to the opportunity for Shingrix. And then the final major market, of course, China. Again, we had phenomenal efficacy data in the Chinese population with 100% efficacy of the Shingrix vaccine. And we're working with a partner, Zhefei. It's private pay in China, so depending on the situation of the Chinese economy depends on the rollout. So we're working with Zhefei, who's a phenomenal partner, but just responding to the macro situation that we find in China at the moment. But net-net, you know, Shingrix, we've guided more than a 4 billion asset. I think in the first quarter, it was around already a billion. so it's doing incredibly well and you should answer the second part of your question which was mason dementia um so what we found through observational studies is that and we believe it may be the adjuvant component of shingrix that it potentially reduces the degree of inflammation people experience when they get shingles and that means there's a potential benefit in terms of cardiovascular events together with dementia so what we've decided to do is to do studies in terms of dementia but then we're running we've initiated a major trial for mace this is one of the assets we decided to accelerate for cardiovascular events for shingrix where we're doing trials now that should lead if successful to an extension of the fda label which could be very compelling because through the observational work we've seen we've seen the potential for you know between 30 and 40 percent reduction in the risk of events such as cardiovascular events so this is a major this is one of the targeted areas that we came up with as part of the work that we referred to at the beginning. Sure brilliant thank you I'm just going back to the US for a minute in terms of what seems to be like a bit still of an anti-vax environment that we have if you would agree and just any thoughts you might have about how that potentially becomes a tailwind mid to mid to long term yes yeah this is a very very topical a very topical question um i mean unfortunately what we find is that if vaccination levels drop because of public policy or sometimes you know commentary um unfortunately the the rate of illness increases because people are more susceptible to the disease whatever whatever that might be and we've seen that with um you know mmr vaccinations and we we saw sad situations happening with measles and and young children dying as a consequence and it it makes so not only is it better for people but it's also better for the health care system because the u.s spend around nine billion dollars a year on vaccine preventable diseases and around 80 percent of that is adults that could have been protected from the disease that they then got that cost them and the health care system a lot of money so what we find is when as I mentioned when it drops it then comes back again because people need it and actually parents you know our MMR business you know was really really strong at the beginning of the year because people were worried about measles incidence so net net what we do believe is this will go in cycles we believe it will come back at some point we continue to invest in vaccines we've just taken mRNA for flu which is obviously going to compete with high dose into the into the into the market into the clinic and so we we're behind it we will stay behind it and we expect the you know the the commentary and the rhetoric to start to change based on scientific evidence.

Operator

Yeah got it. I'm going to change tack to lung diseases now or respiratory. Could you talk a little bit about Extensor that you've just launched and the competitive differentiation that that product has?

Julie Brown, CFO

Yes absolutely. So Extensia which we used to call Depimocumab. So Extensia is the brand name and this is a big innovation the reason it's an il-5 it's in the il-5 category we've already got a product on the market for il an il-5 for respiratory disorders which is new carla the big benefit of extensure is the dosing and instead of having medication once a month or in some cases once every two weeks or once every two months extensure runs for is one injection once every six months so it's very compelling because for somebody who's suffering from asthma they can basically have two injections a year and be protected from exacerbations now you may say why is that so important the the reason it's important is because each exacerbation injures the lung function so you you want to avoid for the patient point of view you want to avoid the exacerbation the other thing is exacerbations can frequently lead to hospitalisation. And again, that's cost for the patient, cost for the healthcare system. And Extensure has very strong data. So there's a 72% reduction in exacerbations that result in hospitalisation. That is a phenomenal piece of data and extremely competitive. And the other opportunity with Extensure is there are very few people on biologics in asthma in serious asthma there's only a third about 30 percent of people are actually taking biologics which means there's a golden opportunity to encourage those people to go and so the bio naive market opportunity is significant we call bio naive so net net i think this is a golden opportunity because people also those the 30 that do have biologics there's quite a high dropout rate and we think that's because they feel protected they feel safe and then they stop taking the monthly therapy and then they then exacerbate which then does what exactly what i said so the longer you can keep the therapy the better and this is six months we launched it earlier in the year we got the approval in december last year in the u.s we've got approval now across a range of countries and the key with the u.s market especially for a six-month therapy is you need the j code because it takes away the risk for the physician of holding six monthly treatments without being sure of reimbursement and the j code gives access to reimbursement and that came in just just a couple of months ago so this next q3 results q4 results q1 the following year will give a much better you know line of sight in terms of how this is performing

Operator

Thank you. I'm going to change tack to liver diseases, if that's OK.

Julie Brown, CFO

And could you just spend a few minutes sort of explaining why the company is confident that in what seems to be a very high unmet need market, the company will be able to lead there? yes I think in in terms of liver diseases um we there are a number of a number of assets to pull through and Vepra Verzin is probably the first one to call out um so Vepra Verzin just recently had one key opinion leader called it totally transformational data to be able to support the launch this the product called Beproverzin has now got fast track designation or Senku in Japan fast track designation in the majority of major countries across the world and that's because of the power of this data so people with hepatitis hepatitis B go on if not treated to develop liver disease and in China in particular it's a major issue because there's a lot of stigma associated with hepatitis b they have you know regular testing similar to h the way hiv is seen in the west so it's a major a major issue and the data we got was basically that and this is revolutionary 90 percent of patient 19 percent of patients um bep reversion offers a functional cure for hepatitis b so it means they take six months of therapy and then they're effectively cured which is groundbreaking because otherwise they will be taking you know daily tablets which are not tolerable and then we found an additional percentage of patients also have a benefit from reduced surface antigen which means there's less chance of going on to develop cirrhosis or liver cancer so this is a major innovation so around 50 percent of people have a chance to either be functionally cured which means they don't need to take therapy thereafter or they can have surface antigens reduced which has a medical benefit so this is a major i can't stress how important a major major innovation and like i say we've now just got approval just over the last few weeks uh in japan and in terms of commercial potential for those who are interested in the uh in the financials there are essentially three markets that will make up three quarters of the business And that is the U.S., China, because of the incidence level, and Japan, the major three markets. And then coming behind that, we've got products for steatophic liver disease earlier in development. But again, products that we are accelerating, effidmose, ferment, etc. We're accelerating them considerably as part of this program so that we can bring them to the market earlier. Yeah.

Operator

Thank you. Can we just circle back to margins a little bit more? Could you possibly just expand on the moving parts we need to think about going through those HIV tablet patent expires 28 to 29 and 28 to 30? And the mitigating factors and the reinvestment and the 1.9 billion is very, very helpful.

Julie Brown, CFO

Yes, of course. Of course. So the when I when I first joined GSK, I I went out and did investor listening sessions. And people quite often fed back that they were concerned about the dolotegravir patent expiry. There was uncertainty at that point as to when it was actually going to have an impact. And we clarified that it would be between 28 and 30, with the majority impact between 29 and 30, which is when the US patents go. As you know, we are protecting the dolotegravir business ourselves by introducing long-acting HIV injectables with longer patent estate if we talked about with with Justin so that's all underway in addition we are pivoting our business more and more to specialty which brings with it margin benefits because the SG&A associated with specialty products is so much lower than it would be if you were dealing with other parts of the range so net net what we see is that we will be able to hold the margin stable through the dollar tagravir period which is 28 to 30 and we made that commitment about three years ago and we're holding that commitment and we're confident of being able to do it now what we decided to do with the change program that we announced at the end of july which is a 1.9 billion savings program we decided the majority will go towards investing in those assets like 20 phase three starts seven major assets 18 indications we will invest in that but an element of it we will also drop through to the margin in that period of 28 to 30 and that means our margin through that period will now be stable to improving people have asked me why is it stable to improving because depending on how the pipeline's performing it will determine you

Operator

know whether we put more priority towards investment but it will be at least stable and we have the option our choice to have it is improving so that's sort of given people i think a reassurance through that period and i'm pleased to say that consensus expectations over that period have now have now risen as a consequence from where they were before yeah i'm going to ask last one of my questions and thank you very much i've got five questions in the pigeonhole so thank you for that and we can have more some last one from me before going to the pigeonhole would be on mna um could you just share some thoughts about it's been a very busy period for the company your ability to sustain the the rate of activity which sort of started in in 2022 uh and then just a few

Julie Brown, CFO

thoughts on how as an organization with mna you guard against sort of biting off more than you can chew yeah yeah it's a very it's a very good question i think um r&d pipelines increasingly are built through very good sourcing of internal and external you've got to have both you've definitely got to have both and um and therefore we've got very very very strong teams scouting for the right opportunities in different parts of the world as we talked about us europe certainly the US and very much now China, increasingly in China. To Justin's point about, you know, we've done a lot this year. We've already done, we've done 35 farmer, we've done wrapped. These two deals were around one to two billion. And then we also did New Valent, which was a 10 and a half billion deal, but it was seven billion net because they had cash in sterling. It took our leverage level to just less than two times net debt to EBITDA. So it was a fairly significant deal we are very committed to a strong investment grade balance sheet and we will we will maintain a strong investment grade balance sheet because we want our investors money to stay totally safe and you can see that what we've done recently is we funded ourselves to do the acceleration of r&d and bring in these assets in fact and we committed as part of the new valent deal that we would it's immediately sales accretive because the assets are launching now it's operating profit accretive next year it's eps accretive in 2029 so you can see that we are you know generating income cash ourselves to be able to offset the headwinds associated with doing this so net net i am very comfortable we won't bite off more than we can chew we we hold that balance sheet dear to our hearts as well as looking for the best assets as well as exercising capital discipline inside our organization to generate savings to fund what we're doing so yeah you can feel assured about that brilliant thank you so i'm going to go to the questions from the audience now if that's okay um first one is very high level it's sort of uh your view on what stock markets are probably getting wrong about the company any any thoughts you might have there yeah that's a great question um yeah i start with the easy one yeah um i think i think these in in pharmaceuticals um i spent i spent most of my life in pharmaceuticals i had six years in a consumer a consumer goods product but most of my life in pharmaceuticals it takes a while in pharma things don't happen overnight um cycles in industries vary hugely and in our industry you have to prove that things have changed and you prove it only with two ways really you prove it with data readouts usually phase three data readouts um and you prove it with commercial execution once the product is on the market and that is really the way you but that takes a long time because when you know lead time cycle times are long and i think obviously gsk was a conglomerate it had a you know consumer healthcare business it only became a pure a biopharmaceutical business in 2022 so not that long as you mentioned so it just means that we have got to prove to the market that we have changed and that we're different and we're doing it because if we take consensus i know some of the buy side models are different and they're higher but the consensus models for our sales by 2031 we guided more than 40 40 billion and we guided a margin stable consensus at the you know earlier on the the sales were 33 billion 7 billion adrift and the margin was down to 25 percent so five you know you know significantly adrift and what we've been able to do over time i think through data readouts you never you don't win everything everything in this industry if you're doing you know better than 60 percent in phase three probability of success it's pretty good results and we've had a lot more than that if you can prove these points as time goes on then then the market starts to to believe in the matter and consensus is now moved we haven't got all the figures in but the consensus is now moved from what was around 33 up to around 37 you know either close to or on 37 billion and the margin consensus you were just talking about this earlier justin our margin through that dollar dolutegravir period has now moved um to around 30 31 so it's a big change from where we were

Operator

and we've just got to prove it we recognize that we've got to get the data readout we've got to get beperversion on the market we've got to get the commercial success of these assets um and that's what we'll we'll prove the day yeah i've got one on hiv now um how confident is gsk in switch rates from tablet dolutegravir-based therapies to long-acting with regards to cushioning the revenue losses and how dependent is that vision on the launch of the twice-yearly injection?

Julie Brown, CFO

Yes, it's a very good question. We're very encouraged by what's happening already with the switch from oral to long-acting. The solar data, 90% of patients are preferring it, which is phenomenal. And we've now already, even though we're only on the market a number of years with Apertrude and Cabanova, which are the long-acting, you take it six times a year, it lasts for two months. We've now got, you know, over 30% of our business in the US is already transferred to long-acting injectables, which shows when you are only dosing people three times a year and twice a year, this is going to be a major breakthrough for them. Because that, again, will be very, very supportive. um the point about dependence on the six monthly or twice a year because we own treatment and we're taking patients from you know two months to four months to six months we own it we own treatment there's a big competitor out there that you know has moved into prevention they've got a six month their six month prevention um way forward they haven't got treatment yet So this gives us the advantage. This is why we're confident that we will navigate the dollar tag of a patent expiry.

Operator

Brilliant. Thank you.

Julie Brown, CFO

Yeah.

Operator

Another one on HIV. Thank you. Are there any concerns over availability of nearby clinics to administer the HIV injections in the US?

Julie Brown, CFO

This is a great question.

Operator

Not mine.

Julie Brown, CFO

It's a great question. Whoever came up with this one is a great question. um this has been a constraint it's undoubtedly a constraint um there would be more throughput of injections if clinics had more capacity in the u.s they have been building capacity and we've engaged in training and nurse support for the training etc to enable there to be a higher level of throughput the the benefit is in moving from um every two months to every four months basically you can do you can deliver twice the amount of therapy so and obviously six months you can increase it further again but even just focusing on going to four months where we're expecting the launch for treatment to be 2028 and for prevention for 2027 you're already doubling the capacity in the united states which again is a big factor supporting the commercial strength through that period yeah yeah i wish we i wish but obviously you're in the hands of um health care providers and we can't change that we we just have to try and influence the benefits of the therapy yeah thank you and a follow-on question would then be could you talk about the margin structure for HIV long-acting injectables versus HIV tablets yes um the margin structure um I mean the margin structures in HIV are healthy you know they're very very healthy it's um it's a very profitable business um in terms of you know the it's an it's a very specialized sell as well so the sgna component um is relatively low the the gross margin um obviously oral's gross margins are very healthy you've then got the move and we've already made the move to caban uva and caban uva and real pivory in the combination the real pivory component of that comes from jansen and therefore you have got a payaway that's going to Janssen. So there is some pressure on the gross margin from the Caban-Uva-Ril-Pivirin combination. The longer-term solution, which is the six months, this is where the combination of the two assets, it's basically an integrase inhibitor, 184, and it's a capsid, 499, and they're both GSK assets. This is where the margin structure improves again. so yeah it will vary there's nothing simple about explaining anything in HIV but it will vary as we go through these different cycles of products the most important message is we can assure you of profitability through the loss of exclusivity of the franchise and that we've got next generation assets coming through the pipeline and we lead in 90 percent of the market which is treatment thank you um an oncology one now if that's okay um certainly when I chatted to Nina at the CMD she talked about I think even now that returns on R&D in oncology are one of the highest in the company if not not the highest despite the scale of the of the company there could you talk a little bit about how sustainable that would be going forwards and would all these pipeline products coming through in oncology would that allow oncology to still remain from an R&D return perspective the the leading segment within the company um yes oncology oncology returns i mean obviously we've been in an investment phase in oncology um for you know quite a number of years now since we did since we did the tesaro deal essentially um so we've been very much in an investment phase and the beauty of oncology is once you get a product onto the market and you know we'll we're expecting to have a number of products onto the market now through this next five years the economics i mean the payback is is phenomenal you know they're very high gross margin they're often orphan drug status so it's another benefit of zidosantinib and neladalkib from nuvalent both orphan drug status means you're more immune to mfn and ira etc etc so the margins are healthy at the gross level and because it's a very specialized cell you know you are dealing with specific oncologists in a specific field the sgna is relatively low so hence you do get a very good roi the issue occurs in oncology is if you're not getting the products through to the market and then you're investing heavily but you're not getting them through but we're now on a trend of of getting these products approved and onto the market yeah thank you um another one on China with regards to the M&A and how confident is the company that it can continue to replicate the success that we've already seen so far as you alluded to with Henguru and Hanzo yeah we're um we're very confident I mean the relationship with Hanzo and Henguru is is very strong um there was a big meeting even with them last week actually they are exceptional at identifying products identifying unmet medical need identifying tolerability challenges and modifying the asset accordingly to meet that need and therefore we're delighted with the collaboration we've had with them they're also in parallel you know producing their own data in Chinese patients. They retain rights to Chinese territories and we have the rights to the rest of the world, which obviously gives us a big opportunity. And so it's a good partnership and we can run in parallel. B7H4 is a great example. They've had very strong data in endometrial and ovarian cancer. We've been publishing, you know, progression-free survival data in the low 60s and the high 60 percent range respectively so the two companies together both producing data in different parts of the world with different patient populations it's a very strong um it's a very strong collaboration and we will continue to do that i mean within gruey we struck a respiratory collaboration recently um that gives us access to the lead asset together with another 11 assets behind it yeah going to the other end of the scale um you of course would have seen the speculation of Astra and Bristol-Myers Squibb, so we'd love to get your thoughts on why that is not something that GSK needs to entertain with regards to large consolidation. Yes, it was an interesting time at the beginning of August, and I think obviously there was a lot of commentary in the press, and obviously a lot of commentary from shareholders at the time and and the commentary and analyst reports on it as well that you know the the pros and cons of mega of mega mergers there was a period i was i mean i was part of the team that put astra and zeneca together there was a there was a time when it made a lot of sense and and i was on the rush board you know around the time we we sealed the deal the final deal with genentech so there was a time when it made a lot of sense I think the the benefits of scale but then now the majority of big farmers are sizable scale I mean the when the mergers were occurring before companies were a lot smaller so I think the scale is there you need a certain scale to be able to compete in pharmacy schools I think the majority of the top 20 or so have got that level of scale and there is always whenever you do a major merger of that sort of size you've always got some element of disruption to R&D and you've kind of got to weigh those two factors up you've also got to navigate when the patent expiry is occurring and how you get through them because every company faces these patent expiries so I can't comment on what AstraZeneca do and don't do I mean for for GSK

Operator

we know we're we are focused on now integrating new valent driving those assets forward launching them successfully accelerating that pipeline like say 20 phase threes we've never had that level before it's been six and seven a year we got 20 this is what we're driving for focused on our business good brilliant thank you um going back to the accelerate growth program and the 1.9 billion of sgna that could get reinvested are there any particular assets or pipeline milestones you would like the audience to think about with regards to this is a really promising asset and that's going to merit going to need a lot of reinvestment to maximize the npv any any sort of few you would call out there or is it a bit too early to to go there in in terms of sgna or just general investment i think more a case of just of other situations with certain drugs where actually it could be a situation where that merits another five phase three trials so quite a lot of that one a certain chunk of that 1.9 is going to get reinvested as opposed to dropping down which might mean the margin pressure might be a little bit a little bit more or is it too early to talk about it yeah i think um you know we we focused the attention of the 1.9 on um around there were seven, seven major assets and 18 additional indications.

Julie Brown, CFO

And it was interesting that of the, of the 18 indications, um, 11 are oncology, which kind of brings you back to, you know, where, and if we, if we take B7H3 as an example of that, we, we, we refer to it as a pipeline within a product, which is unusual. Um, and we're going first with, um, small cell lung cancer and um platinum resistant prostate there are multiple other tumors that could follow this and you saw with jen pearly you know if jen pearly first went into endometrial we just had a very positive readout for rectal cancer phase two was 100 efficacy we're going into head and neck with jen pearly probably oncology areas would be the areas you would target doing simultaneous pursuit of solid tumours I think that would be the probably the area I would call out you also can go into first line more more quickly following second line again it's it's an area oncology I would call out there are some respiratory elements as well that I would also continue to look for and as we get readouts in the respiratory field and hepatology field you know you want to invest behind the success yeah i hope this one doesn't come across as a curveball um i ask this question at the end of every kind of meeting like this so are there any particular issues that we've not discussed that would keep you awake at night um i think we've i think we've been very very comprehensive i think um i think all your questions and the ones from the audience have been have been really really strong wrong that there's nothing actually that keeps me awake at night um i mean i sleep really well which you have to in this job i sleep really well uh because i don't get much sleep actually but i i just think we're focused on making the most of the company we're focused on being able to get that valuation to where we believe it should be um i think we're a very good buy at the moment that's for sure and we're focused on bringing these assets to to the market and to the patients who need them the most and you just listen to one of these patient stories like Neladalkib you know relatively young mostly female non-smokers hit with non-small cell lung cancer with a gene expression that causes the cancer to replicate quickly the treatment on the market which is probably the best at the moment causes sometimes psychosis weight gain they've now got or they will have a new opportunity to take something that doesn't do that it's major brilliant we've got 15 seconds left so um i think we'll end it there julie thank you i really appreciate it thank you