Earnings Call Transcript - GSK Q2 2020

Operator, Operator

Good afternoon, ladies and gentlemen, and welcome to the analyst call on the GSK Second Quarter 2020 Results. I will now hand you over to Sarah Elton-Farr, Head of Investor Relations, who will introduce today's session.

Sarah Elton-Farr, Head of Investor Relations

Thank you. Good morning and good afternoon. Thank you for joining us for our Q2 2020 results, which were issued earlier today. You should have received our press release and can view the presentation on GSK's website. For those unable to view the webcast, slides that accompany today's call are located in the Investors section of our website. Before we begin, please refer to Slide 2 of our presentation for our cautionary statements. Our speakers today are Chief Executive Officer Emma Walmsley, Chief Financial Officer Iain Mackay, and Chief Scientific Officer Dr. Hal Barron. We have a broader team available for Q&A. And with that, I will hand the call over to Emma.

Emma Walmsley, CEO

Thank you, Sarah. Welcome, everybody, to today's call. I hope that you and those around you continue to be well. At this half-year mark, and in what have been extraordinary circumstances, I am pleased to report that we've mobilized across GSK to respond to the pandemic and have simultaneously advanced our long-term strategic goals at pace. Adjusting rapidly to the new ways of working, we've secured supply, strengthened the pipeline, progressed multiple solutions for the pandemic, and our integration and separation programs are all firmly on track. While we have seen some COVID disruption to our performance this quarter, we're pleased with our half-year delivery, and our confidence in our business and its prospects remains high. Hal will give you an update on our innovation progress shortly, but particular highlights in the last few months include, in Oncology, the U.S. approval for Zejula as a first-line monotherapy maintenance treatment for women with ovarian cancer. We were also pleased to see positive opinions from the FDA's ODAC and CHMP on belantamab mafodotin, a medicine we believe will be very important for multiple myeloma patients. In Infectious Diseases, we made great progress in HIV with the presentation of truly groundbreaking data for long-acting cabotegravir in the PrEP setting. And in Vaccines, we're poised to move into pivotal studies for very significant opportunities in RSV and meningitis and have just announced our collaboration with CureVac, targeting up to 5 infectious disease pathogens. Despite short-term pressures, our performance fundamentals continue to strengthen with good momentum and strengthening commercial execution on our key growth drivers. We're winning share in Respiratory; in oncology with Zejula; with 2-drug regimens in HIV; and in power brands and consumer, including a notable acceleration in VMS demand. We've seen strong acceleration of our digital capabilities as we've continued to increase our share of voice with HCPs, both virtually and face-to-face where possible, as well as winning share in an accelerating e-commerce channel in consumer. Our consumer integration and company separation programs both continue to progress well and undistracted, with over 90% of Pfizer revenues now successfully remotely switched over to GSK systems. And Iain will update you on this and broader cost discipline later. We continue to progress our consumer divestments, including Horlicks, to set up the world's leading pure-play consumer healthcare company with the most competitive portfolio possible. On trust, alongside others, we helped launch a $1 billion AMR action fund to fight another major risk to global health. We were delighted to receive U.S. approval for a new pediatric formulation of dolutegravir. Finally, I was very pleased to see all-time record levels of employee engagement in the quarter driven by pride in GSK's purpose, our people's sense of being valued, and the positive cultural changes we're making. We've taken a comprehensive approach to respond to COVID-19 using our science and technologies to develop adjuvanted vaccines and therapeutic solutions while at the same time accelerating momentum on existing R&D projects and investing in our future capabilities and competitive advantage. We at GSK firmly believe multiple vaccines will be needed to fight COVID, and it's why we've deliberately taken a unique collaborative approach with a proven technology to develop adjuvanted vaccines. GSK's adjuvant is proven in a pandemic situation, and alongside improved efficacy, it can help reduce the amount of antigen needed and get to scale faster. We can deliver more than 1 billion doses of adjuvant in 2021. We announced an agreement to supply the U.K. this morning, and we're in late-stage discussions with multiple other governments taking a global and access-led approach. We're also making good progress to start clinical development of promising therapeutic antibody options, which could be in the market next year. We've moved to accelerate our access to new technology platforms through strategic collaborations that will advance our R&D in multiple disease areas and could be relevant in future pandemics. We continue to accelerate momentum with existing projects, which remains important while so much attention is focused on COVID. Of course, as we expected, COVID has disrupted our performance this quarter. Pro forma group sales declined 10% in CER terms, with the greatest impact of the pandemic seen in our Vaccines business as access to vaccinations was limited. We also saw some patient and consumer stock build in Q1 reverse as expected. Group adjusted operating margin for the quarter was 22.9%, reflecting particularly the performance in Vaccines, together with increased investments in our pipeline and new products, partly offset by ongoing tight cost control. On a total basis, earnings per share were up over 100% to 45.5p, and adjusted earnings per share decreased 38% to 19.2p. For the first half overall, sales were up 8% reported and flat on a pro forma basis, with continued progress on our performance in Pharma and Consumer despite the significant but short-term impact we saw from the pandemic in Vaccines. Adjusted operating profits were down 7% pro forma as we continue to invest behind advancing our pipeline and new product launches. The momentum here is encouraging in our key growth drivers. In Vaccines, despite lockdown impacts on vaccination rates, we believe the underlying demand for our key vaccines, including shingles and meningitis, remains very strong. The guidance from government agencies, including the CDC, is emphasizing the importance of routine immunizations and catch-up for all age groups, including adults. We're seeing encouraging signs of recovery in selected geographies in Q3 and are investing to support it. So there remains some way to go to get back to pre-COVID levels for adult vaccinations such as Shingrix. We expect to see vaccination rates recover in the second half of the year. We're confident it will come, but clearly, there remains a degree of risk on the exact timing. We continue to work on expanding capacity for Shingrix to support recovery in demand and to enable further launches around the world with this important and much-needed vaccine. Sales in our Respiratory portfolio are performing strongly. With Trelegy, we continue to lead the market as a single-inhaler triple therapy and also grow the market, with sales up 58% in Q2. We're looking forward to the FDA's decision too on the asthma indication for Trelegy later this year. For Nucala, we continue to see strong growth aided by strong uptake of at-home administration. We're retaining leadership in all key markets and expanding our label in other eosinophilic indications, which will further cement our leadership. In Oncology, we've built a strong commercial platform from which to grow Zejula and also launch belantamab on approval. Zejula in the U.S., the latest Flatiron data, which was for May, already indicated a 50% increase in Zejula share in first-line maintenance to 21%. Although with the pandemic, we've seen delays in the initiation of chemotherapy and debulking surgery in recent months, which does add a near-term headwind, we remain confident in the long-term outlook for Zejula, and there is a lot of opportunity with new guidelines and currently low levels of PARP penetration in first-line maintenance. We continue to believe Zejula is an important medicine with potentially unique properties. In HIV, as expected, we've seen the unwind of Q1 pull-forward. Whilst the pandemic has reduced switching and new diagnoses, we nonetheless continue to see increases in Dovato and Juluca NBRx share to 9% this week in the U.S. and are optimistic that 2-drug regimen growth will accelerate when the situation normalizes. We also expect Dovato to benefit from a broader U.S. label later this quarter with the anticipated conclusion of data from the TANGO study. We continue to make great progress on innovation in HIV, and Hal will give more detail on this in a moment. I'm now going to hand over to Iain, who will take you through our financial performance and outlook.

Iain Mackay, CFO

Thanks, Emma. All the comments I'll make today will be on a constant currency basis, except where I specify otherwise. I'll cover both total and adjusted results. On Slide 10 is a summary of the group's results for Q2 and the half-year. In the first half, turnover was up 8% on a reported basis and flat on a pro forma basis. Excluding the impact of disposals, revenues were up 1%. Adjusted operating profit was up 2% reported and down 7% pro forma. Adjusted earnings per share were 56.9p, down 6%. For Q2, turnover declined 3% on a reported basis and 10% on a pro forma basis. Excluding the impact of disposals, revenues were down 8%. As you've heard from Emma, we continue to see strong underlying performance of the business. However, during Q2, we saw turnover adversely impacted by the COVID-19 pandemic, with the most significant impact within Vaccines. I'll go into the business drivers in a moment. Total operating profit was up 90%, with total EPS up over 100%, primarily reflecting the net profit on the disposal of Horlicks and Consumer Healthcare brands. On an adjusted basis, operating profit was down 21% reported and 27% pro forma, while adjusted EPS was down 38%. Earnings were impacted by lower turnover, continued investment in R&D, support of new product launches, increased effective tax rate, and a higher noncontrolling interest allocation of Consumer Healthcare profits. These were partially offset by continued tight control of operating costs across the business. We delivered £2.5 billion of free cash flow in the first half, reflecting favorable working capital, timing of RAR payments, and proceeds from divestments of intangible assets. On currency, in the quarter, there was a 1% tailwind on both sales and adjusted earnings per share. Slide 11 summarizes the reconciliation of our total to adjusted results. The main adjusting items in the quarter were major restructuring, reflecting continued progress in the Consumer Healthcare integration and separation preparation programs; transaction-related, within which the main contributor was a charge relating to the remeasurement of the contingent consideration relating to ViiV Healthcare; and finally, the disposals column includes the disposal in the quarter of the Horlicks and other Consumer Healthcare brands. My comments from here onwards are on adjusted results unless stated otherwise. Slide 12 summarizes the Pharmaceuticals business where revenues were down 5% in Q2, primarily resulting from the decline in Established Pharma. As expected, the COVID-19-related customer stock building in Q1, predominantly in Europe and the U.S., broadly reversed in Q2, with only a minor dolutegravir impact in Europe and the U.S. remaining. We estimate that the impact of the stocking reversal on growth in Q2 was approximately 4%. The quarter also saw lower levels of new patient prescriptions in the U.S. and Europe, reduced market demand for allergy and antibiotics products internationally, and some pressure on net prices in the U.S. informed by a shift in channel mix. For the first 6 months, Pharma revenues were flat CER, and adjusted operating margin was 25.4% CER. Emma just took you through the performance of some of our key products, so I will just point out a couple of important considerations with respect to the second quarter. Starting with Respiratory, sales were up 16% with strong growth from Trelegy and Nucala. In Oncology, Zejula sales were £77 million in the quarter, up 32%. In HIV, revenues were down 3%, with the dolutegravir franchise down 2% globally. Sales were impacted in the quarter by customer destocking following the increased demand in Q1 due to COVID-19. We continue to see good uptake of the 2-drug regimens, however, giving us confidence in the longer-term growth outlook. Excluding the impact of customer stocking, we estimate that HIV sales would then increase slightly in the quarter, and we expect sales to be broadly flat for the full year. Our Established Pharmaceuticals portfolio declined 17% overall, impacted by Ventolin, which was down 39% as a result of generic substitution in the albuterol market, as well as pandemic-related destocking in Europe. Seretide/Advair sales were up 2%, with the U.S. up 34%, reflecting higher demand in the ICS/LABA class, offset by declines in Europe as a result of generic competition and pandemic-related destocking. Outside Respiratory, Established Pharma portfolio declined by 20%, primarily reflecting lower demand for our dermatology products and antibiotics during the pandemic. Overall in Pharma, trends remain encouraging, and our new products continue to perform well. We continue to expect Pharma sales to decline slightly in 2020, excluding divestments. Turning to the Pharma operating margin. As anticipated, we saw a decline in Q2 primarily reflecting sales performance, while we continue to invest in R&D behind priority assets and promotional activity for new launches. We have maintained a sharp focus on cost management across the business, with focus on increased efficiency in noncustomer-facing activities. More on this subject later. Slide 13 gives you an overview of Vaccines performance, with sales down 29%. As expected, Q2 revenues were impacted by containment measures, informing customers' ability and willingness to access immunization services across all regions. Shingrix declined 19% globally, primarily reflecting lower vaccination rates in the U.S., which was partially offset by favorable return and rebate movements. The meningitis portfolio declined 29%, impacted by lower demand across all regions. In the U.S., Bexsero maintained and Menveo grew market share. Hepatitis vaccines declined 62%, primarily reflecting travel restrictions. DTPa-containing vaccines declined 43% as vaccination rates fell. Sales of Infanrix/Pediarix were also impacted by unfavorable year-on-year U.S. DC stockpile movements and supply constraints in Europe. One should also note that divestments of the travel vaccines, Rabipur and Encepur, resulted in a drag to vaccine sales in the quarter of around 3% and will have a similar drag on vaccine sales growth this year. The operating margin of 23.4% reflected the impact of reduced sales in the quarter. In the first half, Vaccines revenues were down 6% CER, and adjusted operating margin was 38.2% CER. Turning to Slide 14. Revenues in Consumer Healthcare on a pro forma basis were flat, excluding brands either divested or under review, reflecting the unwind of increased COVID-19 demand we saw in Q1. Including those brands, turnover declined 6% pro forma. At a regional level, China returned to growth as mandated retailer shutdowns were lifted. However, this was more than offset by declines in Europe and the U.S. as a result of the pantry-loading unwind. The vitamins, minerals, and supplements category continued to grow strongly, with sales growth in the high teens on a pro forma basis. This higher demand reflects an increased customer focus on health and wellness. In pain relief, sales benefited from the continued strong performance of Panadol and the successful Rx-to-OTC switch and launch of Voltaren OTC in the U.S. This was offset by an adverse impact on Advil due to initial market misinformation relating to COVID-19 ibuprofen treatment, which has since been corrected. We're also excited about the launch of Advil Dual Action. Sales also benefited from the increased retailer stocking ahead of a systems cutover in North America as part of Pfizer integration activities, which added 2 percentage points of growth in the quarter, largely in the digestive health and pain relief categories. This benefit is expected to reverse in Q3. We're close to fulfilling our commitment to divest £1 billion of noncore brands in order to refocus our portfolio as well as fund integration and restructuring activities within Consumer Healthcare. Operating margin for the quarter was down 120 basis points year-on-year. In the first 6 months, Consumer revenues increased 2% CER pro forma and 7% excluding the impact of divested brands and brands under review. Pro forma adjusted operating margin was 24.5%. With the integration on track, we're delivering synergies as anticipated and continue to maintain strong cost control while investing behind our brands. On Slide 15, we summarize the sales and adjusted operating margin for Q2. As I mentioned, our group operating margin was down 530 basis points on a pro forma basis and is informed primarily by the sales impact in the quarter while we continue to invest in R&D behind priority assets. SG&A for the quarter was down 5% on a pro forma basis, reflecting integration savings and reduced promotional and variable spending across all 3 businesses, a result of this pandemic. This is partially offset by targeted investments in customer-facing activities focused on growing the top line. We continue to maintain a sharp focus on cost management and are on track to deliver, firstly, synergies from the consumer integration, achieving £500 million savings between now and '22; secondly, benefits from the separation preparation program across multiple activities, including the supply chain, development and R&D, commercial operations, and our global support functions, resulting in efficiencies which will deliver £800 million of savings by 2023 and will contribute to meaningful margin expansion from 2022 onwards; and thirdly, savings from learnings over the past 4 months with opportunities initially across travel and entertainment, conferences and meetings, commercial real estate, and through finding new ways of engaging with customers, healthcare professionals, and our other stakeholders. We've included in the appendix this analysis covering the year-to-date information. Moving to the bottom half of the P&L, I would highlight that interest expense was £227 million. The increase primarily reflects reduced swap interest income and foreign currency hedges, lower interest income, and reduced overseas cash post the close of the divestment of Horlicks and other Consumer Healthcare nutrition products in India. This was partly offset by favorable refinancing of term debt. The effective tax rate of 20.5% reflected delays in the settlement to open periods and updated forecast profit mix for the year. We now expect full-year effective tax rate of around 16%. Noncontrolling interest reflected Pfizer's share of profits over the Consumer Healthcare JV. We've delivered cash flow of £2.5 billion in the first half of the year. The increase primarily reflects the reduction in trade receivables as a result of collections following strong sales in Q1, beneficial timings of payments for returns and taxes, a lower seasonal increase of inventory, and disposals of intangible assets. These were partly offset by higher dividends to noncontrolling interests. Recognizing the lower Q2 revenues and the H1 impact on timing of RAR and tax payments, we anticipate lower free cash flow in the second half. Overall, we still expect cash flow to be a step down from 2019. As well as the positive cash flow we delivered in H1, we closed the quarter with strong cash balances, have an effective approach to working capital management, and maintain access to extensive undrawn committed facilities. Turning now to our outlook and guidance for this year. We're maintaining our full-year guidance of adjusted EPS down 1% to 4%. Our performance for Pharma and Consumer in the first half of the year is in line with where we expect it to be. We expect limited impact from COVID-19-related stocking patterns for the balance of the year in these 2 businesses. However, there remain notable risks to business performance over the balance of the year, primarily in Vaccines. As evidenced in the second quarter, the pandemic's biggest impact has been here. The key variable in achieving adjusted EPS guidance in the full year is the timing of the recovery of vaccination rates. Underlying demand for our Vaccines portfolio remains strong, and we put in place a range of actions to support the recovery of vaccination rates, which we anticipate and are seeing take place so far in the third quarter. Should we experience a delay in recovery of vaccination rates of, say, 3 months, for example, this would adversely impact full-year adjusted EPS by up to 5 percentage points. As we move into the second half of 2020, there's no change in our capital allocation priorities. These are investing in R&D behind priority pipeline assets and delivering returns to shareholders. As noted in our earnings release, we've declared a 19p quarterly dividend, in line with expectations we set out earlier this year. And with that, I'll hand over to Hal.

Hal Barron, Chief Scientific Officer

Thank you, Iain, and good afternoon, everyone. It's been 2 years since I shared our new approach to R&D, and I'm very pleased with the progress we are making. Today, I will review this progress and then discuss several very exciting medicines and vaccines in our pipeline. Let me start with a brief reminder of our approach to R&D, which I outlined in 2018. That is to strengthen our pipeline through a focus on the science related to the immune system and to use human genetics and advanced technologies such as functional genomics and machine learning to enable us to identify novel targets that have a higher probability for success and a robust life cycle potential. To achieve this, we have focused on 4 key strategic levers: first, to drive organic growth by focusing our research organization on human genetics, and on both the adaptive and innate immune system. In development, we have removed numerous projects from the portfolio to enable us to design and execute robust clinical trials on the more promising programs. Second, to effectively leverage business development to augment our pipeline; third, to improve how commercial and R&D work together to maximize the life cycle of our medicines and vaccines; and lastly, to shift our culture in R&D to one that embraces innovation by focusing on smart risk-taking, single-point accountable decision-making, and hiring and developing outstanding people. I believe we have made significant progress over the past 2 years. Over 70% of the targets in research are now genetically validated, with nearly 30 therapeutic targets originating from the 23andMe collaboration. We have exceeded industry averages for success in proof-of-concept studies, enabling us to initiate 9 potentially registrational studies. In addition, we've had 17 positive results from pivotal studies. Lastly, we are on track to achieve 14 approvals since July 2018, with potentially 5 new molecular entity approvals this year alone. The last 3 months have seen particularly strong pipeline delivery, including: first, the FDA approval for Zejula in first-line ovarian cancer based on the outstanding PRIMA data, which resulted in a uniquely broad label; second, the first regulatory approval for daprodustat in Japan; third, terrific PrEP data with cabotegravir that could redefine the management of HIV; and most recently, receiving a 12 to 0 positive vote from the FDA's ODAC on belantamab mafodotin, which was further endorsed by last week's positive CHMP opinion in Europe. Turning now to Slide 22. We now have a biopharma pipeline of 35 medicines and 15 vaccines, with 39 of these 50 assets having a direct effect on the immune system. I'd now like to discuss several of these programs in more detail. Starting with Vaccines on Slide 23. I am very pleased to share some great news on 3 of our vaccine programs. First, RSV. Scientists have been pursuing RSV vaccines for more than 50 years that have only recently gained a fundamental understanding of how to induce a protective immune response: by immunizing with a pre-fusion protein. This was used in both our maternal and older adult vaccines. It's important to note that 50% of infants are infected with RSV before they are 1 year old, and virtually everyone gets an RSV infection by the time they are 2. In children, RSV can cause acute bronchiolitis, which can lead to respiratory distress, hospitalization, and even death. In addition, RSV is an important pathogen in the elderly and high-risk adults. Although pediatricians are keenly aware that RSV may cause serious illness in their patients, most interns are less familiar with the morbidity and even mortality associated with RSV in patients over 60. Given the lack of treatment options, this lack of awareness is understandable. In older adults, the infection can cause pneumonia, which can lead to hospitalization. It has been observed that the 1-year mortality in these patients may be as high as 25%. Our older adult vaccine not only capitalizes on the pre-fusion antigen, but it is also combined with our AS01 adjuvant to optimize the immune response, as we did with Shingrix. We hope that, if successful, this vaccine will have a meaningful impact on people over the age of 60 who are at the greatest risk from this high disease burden infection. I'm excited to share that we have had positive readouts for both of these RSV vaccines, and we are moving both into Phase III. We hope to share these data with you in more detail at a medical congress later this year. In addition, we're also moving our 5-in-1 meningococcal vaccine combining serogroups ACWY and B into Phase III trials this year. Moving on to HIV. For me personally, one of the most exciting pipeline data readouts this quarter was the cabotegravir PrEP study, which we announced had been stopped in early May. These impressive data were presented at the AIDS 2020 conference a few weeks ago and demonstrated that long-acting injectable cabotegravir administered every 2 months is 66% more effective than daily pills at preventing people from developing HIV. We look forward to discussing these data with regulators and are working with them on a path towards registration. In addition, Cabenuva, our first long-acting injectable, has been resubmitted to the FDA for approval, and we anticipate the response in early 2021. Lastly, Rukobia, our first-in-class attachment inhibitor, was approved at the beginning of the month for heavily treatment-experienced adults who are living with HIV. Now focusing on the pandemic. I am proud of GSK's contributions to developing solutions for COVID-19. The breadth of response is summarized on Slide 25. As already mentioned by Emma, we have progressed several adjuvant collaborations to support the development of vaccines for COVID. We believe that by improving the immune response, both cellular and humoral, our adjuvant will have a clinically meaningful impact on the COVID pandemic. In addition, by reducing the amount of protein needed for a vaccine, we will be able to increase the number of doses that can be delivered to those in need. I believe our adjuvant may be underappreciated and may ultimately enable antigen-based vaccines to have a superior profile to other approaches. Two such programs have moved into the clinic, and we expect preliminary data in August on the COVID project. Additionally, our collaboration with Sanofi is on track to move into the clinic in September. We're also working towards advancing therapeutic solutions for COVID via our collaboration with Vir Biotechnology, which we announced last quarter, to accelerate the development of monoclonal antibodies to directly neutralize the virus. We will be starting the first of these clinical studies with GSK-136 next month. This quarter, we also started the proof-of-concept study, OSCAR, with otilimab, our anti GM-CSF antibody for the treatment of severe pulmonary COVID-related disease. GM-CSF can act as a pro-inflammatory cytokine that induces survival activation and polarization of monocytes and macrophages, which are thought to be implicated in the cytokine release syndrome, which occurs in severely ill COVID patients. We think this is an exciting program, and we anticipate receiving data in the first quarter of 2021. The next slide underscores that when looked at in totality, the medicines and vaccines we are developing to combat HIV, COVID, urinary tract infections, hepatitis B, and many other infectious diseases as a result of our focus on immunology has resulted in a world-class ID portfolio with 24 medicines or vaccines in clinical testing, of which more than 80% are immune modulators. In fact, infectious disease now accounts for almost half our pipeline. This pipeline of 24 programs complements our existing marketed portfolio of more than 20 infectious disease therapies that together delivered almost £17 billion in revenue for GSK in 2019. Analogous to the declared war on cancer, which has resulted in a marked increase in investments by the pharma biotech sector on discovering and developing important medicines for cancer patients, we are optimistic that the world's experience with COVID may lead to an increased focus on the importance and value of developing new therapies to treat and prevent infectious diseases. With that, I'd like to turn to another key portfolio within the R&D pipeline that has benefited from our increased focus on the science of the immune system. That is oncology. Slide 27 shows you how our focus on immunology has helped strengthen our oncology pipeline, where we now have 14 assets in development, 13 of which act by modulating the immune system. I'd like to briefly share some of the progress we have made over the last 2 years and flag key upcoming data we anticipate sharing with you over the next 18 months. We expect data in the second half of next year on TSR-033, our LAG-3 antagonist, which is currently being explored alone and in combination with dostarlimab in solid tumors. We also anticipate proof-of-concept data next year on our TIM-3 antagonist, cobolimab. GSK'609, our ICOS agonist, is in a Phase II/III gated study for head and neck squamous cell cancer patients in combination with pembro, and we expect to see data in 2021. Bintrafusp alfa, the TGF-beta trap/PD-L1 bispecific we are codeveloping with Merck Serono, is on track to read out the pivotal study in second-line biliary tract cancer next year. In addition, the lung studies remain on track. Lastly, dostarlimab, our PD-1 inhibitor, has been submitted to the regulators for approval in second-line MSI-high endometrial cancer. In the next slide, I want to introduce you to the newest addition to our immuno-oncology pipeline. I'm excited to announce that our anti-CD96 antibody, our first molecule being co-developed with 23andMe, has started Phase I this month. CD96 is an immune checkpoint receptor expressed on T cells and NK cells. This is part of the TIGIT CD155/CD226 costimulatory axis, as shown on this slide. We're excited about this asset as blocking CD96 from binding to CD155 allows CD155 to interact with CD226 and, importantly, activate an immune response analogous to how TIGIT induces this effect. This mechanism of action is distinct from and possibly synergistic with PD-1/PD-L1 inhibitors as well as possibly synergistic with TIGIT inhibition. It is important to note that this axis was genetically validated by 23andMe via proprietary algorithm using their unique data sets. Turning to Slide 29, we move from our newest to the most advanced asset that modulates the immune system, belantamab mafodotin, which, as you know, has 4 modes of action: blockade of BCMA receptor; delivery of the cytotoxic MMAF conjugate; and importantly, enhancing antibody-dependent cellular cytotoxicity and phagocytosis due to a fucosylation of the Fc domain, as well as inducing an immunogenic cell death. We remain confident in the positive benefit/risk profile of bela maf in relapsed/refractory myeloma patients, and we are pleased with the outcome of the FDA's ODAC hearing earlier this month and last week's positive opinion issued by the EMA's CHMP. We take patient safety very seriously and are focused on helping physicians and patients understand and manage the corneal events, as well as aggressively looking at ways to reduce the ocular events, particularly in earlier lines of therapy. Earlier this quarter, we dosed the first patient in the DREAMM-5 study with bela maf and our gamma secretase inhibitor that we in-license from SpringWorks. I want to take a minute to share why I'm so excited about this combination. As you can see on the right-hand side of the slide, the gamma secretase is responsible for clipping BCMA off the surface of plasma cells. We believe soluble BCMA may act as a sync for our ADC, potentially compromising efficacy. As you can see in the panels at the bottom of the slide, the gamma secretase inhibitor blocks the shedding of BCMA, resulting in higher expressions of BCMA on the surface of the plasma cells. And as such, you see greater cytotoxicity and an increase in ADCC. If this effect translates into the clinic, we may be able to lower the dose of bela maf and still have strong clinical activity. In addition to the combination with the gamma secretase inhibitor, we're exploring lower doses and less frequent dosing in the earlier lines where bela maf will be given with other effective therapies. We're cautiously optimistic that these approaches will enable us to successfully develop bela maf in earlier lines of treatment. I'd like to speak about the most advanced of all of our cancer medicines, that is Zejula. Despite having no synthetic lethal drug targets in 2018, we committed to becoming a world leader in this exciting field. Our first step was to acquire Zejula based on the functional genomic studies that suggested PARP inhibitors should be effective beyond those women who have a BRCA mutation. We were pleased that the PRIMA study bore out this hypothesis, showing that the treatment effect in HRD-positive patients was similar to that observed in women with a BRCA mutation. In addition, because of its unique tumor-concentrating effect, Zejula actually exceeded our expectations and demonstrated benefit in all-comers, which has translated into a unique and differentiated label. As such, the TESARO acquisition validated our belief that functional genomics can be used to identify exciting, underappreciated target, and we hope to expand this technology to find novel targets for patients with specific alterations in their tumor. Slide 31 shows what has been achieved towards this vision since PRIMA has read out. Based on the PRIMA and other preclinical data, we are excited about the potential for Zejula to work in other tumor types such as lung cancer. Given its unique PK properties such as tumor accumulation and the ability to cross the blood-brain barrier, we believe we have the best-in-class PARP inhibitor. We will start a Phase III study in first-line non-small cell lung cancer later this year. Our confidence in the concept of synthetic lethality has led us to build out our pipeline in this key emerging area of science. We now have 5 new synthetic lethal assets, one being our homegrown type 1 PRMT inhibitor; 3 coming from a partnership with IDEAYA that we just announced earlier this quarter; and of course, Zejula. We've also established a new research unit in Boston with a new leader in place. I'm pleased to share with you today that we have agreed to a 5-year collaboration with one of the world's leading functional genomic centers, the Broad Institute, to help us advance our mission. Taken together, I believe we have made excellent progress on our goal to build an industry-leading pipeline in synthetic lethality. Not only has our focus on immunology resulted in a strong infectious diseases and oncology pipeline, but we also have 10 other immune-modulatory drugs that are targeting diseases such as osteoarthritis, systemic lupus erythematosus, rheumatoid arthritis, Duchenne muscular dystrophy, ulcerative colitis, systemic sclerosis, asthma, and COPD. I'm particularly proud of the team working on Benlysta. We announced positive headline results from the BLISS study in lupus nephritis in December last year, and we expect these data to be published in a top-tier journal very soon. Furthermore, we anticipate approval of this indication early next year. In addition, the BLISS-BELIEVE study in Benlysta in combination with Rituxan for SLE will read out in a similar time frame. We have also made excellent progress on Nucala. We have generated positive pivotal data in nasal polyps, filed for approval for hypereosinophilic syndrome, and resumed our pivotal study in COPD. We're also exploring a long-acting anti-IL5, which, if successful, will potentially transform the respiratory market in a manner similar to the way that cabotegravir may disrupt the treatment of HIV. Building on the previous slide, I want to briefly highlight the important impact that business development has had in supporting the transformation of R&D pipeline at GSK. The various deals outlined on Slide 33 will deliver significant value to GSK, either by adding strategically targeted assets to our pipeline or providing access to world-leading technologies and outstanding scientists that will help us progress the next-generation transformative medicines and vaccines to patients. Lastly, before I close with our upcoming pipeline milestones, I wanted to discuss culture. 2 years ago, I spoke about the importance of culture to an organization and how we were going to focus on creating the right culture within the R&D organization at GSK. I'm delighted to share with you some of the results from the most recent GSK employee survey that demonstrates the progress we are making across R&D. Most importantly, we had an 8% increase in the engagement scores for R&D employees and a 20% increase in employees' belief in our commitment to scientific expertise. We were also pleased to see our focus on innovation was acknowledged by Science Magazine, where we were ranked as one of the top 20 companies to work for for the first time. We've also worked to simplify the governance model across our pipeline to improve our agility. This improvement in our agility is best illustrated by Vir and the otilimab OSCAR study in COVID-19. The Vir deal took less than 3 weeks to pull together and announce. The Phase II OSCAR study took less than 10 weeks from the idea to the first patient being dosed. Another great example is the speed with which the team took bela maf from essentially 35 patients in Phase I to the 10-study DREAMM development program and, hopefully, approval in just over 2 years. As I mentioned earlier this year, I'm excited that we are combining our Vaccines and Pharma development organizations into one single group as I believe the opportunity for increased exchange of scientific ideas and expertise will greatly benefit our pipeline. We're seeing much closer working between R&D and commercial to improve our focus on life cycle management. This has resulted in many expansion indications under investigation for Zejula, bela maf, Benlysta, and Nucala. Moving to my final slide, I want to look forward over the next 18 months where we have a number of important milestones. We have a lot of work to do, but I would particularly like to highlight 4 areas as a priority: first, maximizing the patient impact of our marketed medicines such as Zejula, Benlysta, and Nucala; second, bringing the transformational impact of cabotegravir to patients and treating HIV; third, advancing our oncology portfolio by achieving approvals for bela maf and dostarlimab while building a pipeline of future indication expansion; and of course, delivering proof-of-concept studies for a number of exciting earlier assets; and lastly, delivering a robust Phase III pipeline, including three new pivotal studies I mentioned earlier with our RSV and meningitis vaccine. In closing, let me say I'm extremely pleased with the progress we've made over the last two years, and I'm confident that the approach we are taking is delivering. We will continue working to build a stronger, more productive, and more innovative R&D pipeline. With that, I will now hand it back to Emma.

Emma Walmsley, CEO

Thanks, Hal. So in summary, we're confident in the underlying demand for our portfolio despite short-term quarterly impacts. GSK has been resilient and agile in its response to the pandemic, and we're successfully navigating the crisis and meaningfully contributing to solutions, while at the same time making sure we're delivering our long-term priorities of innovation, performance, and trust and on our 2020 areas of focus. We're building on the significant progress Hal has spoken to and strengthening our pipeline further. We're driving improvements in our operating performance. We're progressing the consumer JV integration at pace, including the reshaping of our brand portfolio. We started our program to prepare the group for separation into two new companies with relevant and competitive purpose portfolios and strategies: one, a biopharma company focused on the science of the immune system and genetics, the other dedicated to everyday consumer health. Ultimately, we remain confident in the resilience and sustainability of GSK's business and our ability to deliver very successfully on our strategic goals. So we're now joined for Q&A by Luke, Brian, David, and Roger. With that, operator, the team is ready to take questions.

Operator, Operator

We now have Matthew Weston from Crédit Suisse.

Matthew Weston, Analyst

Two questions, please. Firstly, for Emma. President Trump's proposed a number of executive orders on U.S. drug pricing, including international best price. As one of the first CEOs who's able to comment immediately after those announcements, I'd be interested in what's GSK's view on the proposals and what you would expect to shake out as we approach the election. And then secondly, probably for Luke, given the need for a vaccine rebound in the second half, can you talk about this year's flu season? How many doses are GSK targeting to ship versus last year? Should we assume price improvements given, I presume, high government demand for immunization across the board?

Emma Walmsley, CEO

Right. Luke in a second, but just to comment on the executive orders, which, as you said, have just come out. We're reviewing that and monitoring how things evolve, obviously, being conscious and thoughtful about what can actually happen ahead of the election. I mean these are all topics that have previously been raised. Our position is maintained; it's the same, which is we support any shifts that continue to drive access and support innovation that the world has never seen more than now is required for all of the unmet need. We're supportive of programs that lower out-of-pockets, particularly for patients that are under economic pressure, and likewise due governance around access to 340B. We do, however, have concerns about international pricing indices and importation because global systems are not comparable, and the focus should be on maintaining safety and quality of products and also incentivizing innovation. Nonetheless, our priority is continuing to focus on quality, needed, differentiated medicines. You all know that GSK has a strong track record in terms of responsible pricing. We have continued to innovate for access, visible when you think about 3-in-1 respiratory with Trelegy, the fact that Zejula is a single treatment, or indeed, the growth we're seeing and investing in 2-drug regimens; and of course, commitments to price responsibly for COVID solutions. So Luke, do you want to comment, please, in terms of the focus on the flu season, which we know is very important?

Luke Miels, CRO

Sure. Thanks, Emma. Thanks, Matthew. So in the U.S., we expect to ship around 50 million doses in the upcoming season. The manufacturing team has done a great job, and we expect those to be in the market shortly. This is a critical part of our acceleration program for Shingrix, and that's up from 46 million in 2019, which back then was about 19% of market share. The U.S. is where we send 2/3 of our supply.

Louise Pearson, Analyst

I got a couple on the RSV program, please. So firstly, in terms of revenue opportunity in older adults, do you see this as a vaccine that could potentially support a premium price point like Shingrix should this program ultimately be successful? And secondly, specifically on the maternal vaccine, is there any reason to believe your vaccine will be differentiated from the Pfizer maternal vaccine, which also recently came through proof-of-concept?

Emma Walmsley, CEO

Thanks very much, Louise. I'm going to turn to Roger, but we believe that the RSV portfolio has significant potential, both in addressing unmet needs and in our competitive positioning. Roger, would you like to provide more details on this, particularly regarding our differentiated adjuvant, which has been effective in older adults?

Roger Connor, President of Global Manufacturing and Supply

Thank you, Louise. We are very pleased with the positive data from the two RSV assets that Hal mentioned. It's important to highlight the fast-track designation from the FDA. For RSV in older adults, we believe we have a unique advantage due to the pre-F antigen and the adjuvant that Emma referenced. The adjuvant system used in Shingrix, the AS01 adjuvant, achieved over 90% efficacy in that vaccine, generating excitement as we think it may provide broader and longer-lasting protection. Regarding pricing, if we establish that level of differentiation and protection, we believe that pricing will be justified, although this will be determined as we progress through the trials. We're scheduled to enter Phase III in early 2021 for the older adult segment. Looking at the maternal vaccine, it shares the same antigen as the older adult vaccine and will also enter Phase III in the second half of this year. I want to emphasize two points. First, it should complement other CDC-recommended maternal vaccines in our portfolio, allowing us to leverage our experience in maternal vaccination. Second, our vaccine may provide polyclonal coverage that could outperform competitors relying on monoclonal antibodies, offering broader strain protection against virus mutations or variants that escape monoclonal treatment. There's enthusiasm for both initiatives, and we will present data on this in Q4 later this year.

Keyur Parekh, Analyst

Two, please. First, kind of just on the cost trends that we've seen this quarter, Emma and Iain, would love your thoughts on how do you see the sustainability of the growth in costs as we go through the rest of the year. I think a lot of your peer groups seem to be reporting margins meaningfully better than expected. I would be keen to hear your perspectives on how long you think the need for reinvestment continues to be. That's question number one. And then question number two, on Zejula, I think the numbers are a bit below expectations for the quarter. Clearly, some stocking kind of moving from Q1 to Q2 or likewise. But Luke, would love your thoughts on how you think you're doing in the real market please, if you can refer to some market share trends. When do we anticipate a real pickup that justifies the value you paid for TESARO?

Emma Walmsley, CEO

Thanks, Keyur. So let's go to Iain first and then over to Luke.

Iain Mackay, CFO

Okay. Thanks, Emma. Keyur, thanks very much for the question. Look, cost, I think one of the differentiating aspects of our focus around capital allocation is investment behind R&D pipeline. Key assets in the pipeline are absolutely key priorities for us, and you continue to see cost increases in that regard as we invest behind those priority assets. So in the second quarter, Pharma R&D was up 13%, and year-to-date overall for the company was up 11%. That will remain a focus for us. On the other hand, on the SG&A front, in the quarter, it was down 5%, which is a very strong focus on all noncustomer-focused activities. We continue to invest in terms of supporting new product launches and completion of the build-out in terms of specialty. If you refer to the programs we are delivering savings against: integration of the Consumer Healthcare business, and Brian and the team are beginning to deliver savings from that integration, very much in line with the £500 million we expect to deliver between now and 2022. The future-ready program, the separation preparation program by another name, is beginning the very early stages of delivery. But again, between now and 2023, $800 million of savings with the lion’s share of that delivered by the end of 2022 with meaningful margin improvement. In addition to that, just the day-to-day tactical management of costs in the second quarter saw T&E down to a very small number. As you would imagine, conferences and meetings are down to a very small number. Found ways to continue activity with our customers, with our healthcare professionals through virtual means. That has particularly been noted in the U.S., which, again, takes costs out of the travel and entertaining, the fleet expenses for the sales force, for example. There’s a very strong focus across noncustomer-facing activities as well as just continuing to deliver productivity through the supply chain and the commercial organization. So I’m happy with the progress in terms of 5% down on SG&A in the quarter. Continued focus in that area, but we’ll continue to invest behind priority assets and R&D.

Luke Miels, CRO

Sure. Yes. Thanks, Keyur. So Keyur, I'll answer this in a few pieces. I mean Iain's covered the inventory effect, which was plus 5% in quarter one, and then we had a change of wholesale delivery from Monday and Thursday to Wednesday and Thursday, which was $5 million in Q2. So that's a $10 million swing there. But in terms of operational, I guess I'll split this into 2 parts: things that we can control and things that we can't. So in terms of things that we can control, I think we're doing well. First-line market share jumped 14% to 21%. If you look at the class, it's up close to 100% in 12 months. We still only have 15% of women in first-line getting a PARP. We had the leading share of voice to average around 39%, peaking at 49% because we rapidly changed our model when COVID hit. As soon as we had state-level clearance and government clearance, we got straight back out there. If you look at message recall tracking, this is translating to strong and clear recall of our key messages, which, again, is encouraging. The most dynamic measure is the average new patient starts in the U.S., which is at an all-time high. Comparing Q1 vs. Q2, it's up 58%. That's despite a big drop in late March and for most of April. Lastly, we've seen just over the last month more than 400 new unique writers since PRIMA. These are things within our gift, and I think we're competitive there. In terms of what we can't control, it's clear when you look at the oncology market that there is a very dynamic trend here in terms of slower progressing tumors, the referrals of new patient starts. In-office treatment rates are lower, and ovarian is in that category. New patient diagnoses are down about 10% in April. Debulking surgeries are around 25% in the last data we saw. These are factors outside our control. We launched PRIMA in the middle of COVID. Our focus is to keep executing like we are, growing the class and ensuring we're getting our fair share.

Operator, Operator

This is now Tim Anderson from Wolfe Research.

Unidentified Analyst, Analyst

This is Richard Wagner with Wolfe Research for Tim Anderson. Question on the COVID vaccine. It's commonly understood that there are 3 major diversified vaccines players: GSK, Sanofi, and Merck. Yet all of the leading COVID-19 vaccine initiatives are by none of the 3 big companies. Instead, they're led by companies that don't have the same level of experience in the space. How did we end up in this place? I appreciate that GSK has multiple vaccine collaborations underway, but these are not commonly described as one of the leading programs. Was it because of the traditional vaccine companies feeling like vaccine development would be on the usual protracted timeline or something like that? That's the first question. On belantamab, I know GSK doesn't give single product guidance, but can you at least tell us whether you think this product has the potential to achieve blockbuster levels of sales, meaning crossing the £1 billion or $1 billion threshold at some point?

Emma Walmsley, CEO

Thank you, Richard. In response to your second question, I can say yes, but it will depend on the program of work that Hal outlined. I might ask Luke shortly to provide more insights as we prepare for the launch. Regarding vaccines, it's noteworthy that you mentioned the leading programs are not coming from the largest vaccine manufacturers today, and I understand that perspective. I would add that there is a belief across the industry, from both large and small companies, that multiple vaccines will be necessary to address this issue. That’s why we determined early on that prioritizing a vaccine is essential, though treatments will still be needed because the FDA has indicated they would consider approving vaccines with 50% efficacy. Even with an extraordinary vaccine, treatments will continue to be necessary both in the short term and long term. This is why we are investing in the areas that Hal discussed, and we are optimistic about our future there. We also decided to incorporate an adjuvant in our technology approach, which is significant because it has been proven at scale, is safe, and we know it can enhance efficacy and provide antigen-sparing benefits while allowing for multiple opportunities for success. This is evident in the way governments are currently engaging in contracting amidst uncertainty regarding future outcomes. We are encouraged by the initial results from this new technology that has not yet been licensed, but there is still much to learn about the duration of response and how it affects different population groups, particularly older cohorts. We, along with others in the industry, remain actively involved in our ongoing programs. As Hal mentioned, we already have two in the clinic with another about to start. We are very confident that, subject to positive results, we can provide 1 billion doses of the adjuvant while continuing to advance our existing pipeline and invest in promising new technologies, whether developed in-house or through our partnership with CureVac. We have more to share regarding the future of vaccine solutions. Luke, do you have any additional comments on how you view the upcoming commercial execution and the prospects for bela?

Luke Miels, CRO

Thank you, Emma. The important point to focus on here is that we are observing significant single-agent activity. We believe the side effect profile is manageable, and it presents an attractive infusion regimen. We think we can effectively manage corneal events. Furthermore, when we communicate with physicians using the drug, the efficacy is appealing. As for managing the toxicity profile, we will monitor how that develops and whether it aligns with what we observe from investigators once they administer the drug to patients and gain a better understanding of its effects. Also, with programs like DREAMM-5 that Hal mentioned, we are carefully considering the pathways for this drug in earlier treatment lines. In summary, we remain very confident about this asset.

Andrew Baum, Analyst

A couple of questions. COVID-19 is obviously going to have lots of impacts on the industry, but one that seems obvious to us is the importance of the government as a stakeholder is going to be materially greater going forward than it has been historically. With that in mind, to what extent does that influence your capital allocation? I'm thinking of areas that you're already in such as vaccines, but in addition, areas where you have been in historically, maybe thinking antimicrobial and anti-infectors more broadly. Is this a driver for you to increase your investment there? And then second, on the announced deal about vaccines, thinking about your pricing strategy for your COVID-19, there's obviously a divergence between the AstraZeneca approach being pro bono during the pandemic period and, obviously, Pfizer and BioNTech going for profit. How are you thinking about pricing your vaccine for the pandemic period should there be safety and efficacy to meet approval?

Emma Walmsley, CEO

Thanks, Andrew. I completely agree that the global landscape and many governments have acknowledged the strategic importance of our industry and the innovations within it, especially considering the current geopolitical context. In terms of how this affects our capital allocation decisions, Hal clearly outlined our portfolio mix during his presentation. It's important to emphasize GSK's strength in infectious diseases, particularly in prevention. Despite any quarterly fluctuations, we should be confident in the strategic relevance and future potential of vaccinations, an area where GSK excels with a growing pipeline and enhanced competitive abilities. Additionally, we maintain a diverse portfolio in infectious diseases, leading the way in HIV innovation. The opportunities we see with cab in both prevention and treatment are particularly significant. There is also an increasing focus on antimicrobial resistance, and as Hal pointed out, we possess an asset in that area which we believe offers attractive economic returns. Regarding vaccine pricing, we have historically been leaders in this area and recognize our responsibility to ensure access while also achieving profitable returns. Any short-term profits made during the pandemic will be reinvested into pandemic preparedness, including donations for access. Pandemic preparedness involves advancements in technology, support for new pathogens, and funding for sustainable capacity, all while being mindful of our global manufacturing and supply footprint.

Laura Sutcliffe, Analyst

I've got two questions on the RSV vaccine. Firstly, what sort of timeline do you think you might be looking at for Phase III readout for both of your assets? Secondly, your older adult vaccine is obviously adjuvanted. I think previously, the evidence has suggested there was little to no benefit from adding an adjuvant to vaccines that are going into this setting. Should we assume that since you're going forward, you have seen something remarkably different here? I know the data will be presented later this year, but any color you can offer us would be very helpful.

Emma Walmsley, CEO

Yes. I'm not sure you're going to get a huge amount of preview of data that's later to be presented. But Roger, would you like to follow up for Laura, please, on those questions?

Roger Connor, President of Global Manufacturing and Supply

Yes. Laura, thank you. I won't share the data we will present later in the year. However, I can say that AS01 is performing exceptionally well in Shingrix among the older adult population, where we understand the critical age-related decline in the immune system. As for timing, we plan to begin clinical trials for RSV in older adults early in 2021. The Maternal vaccine is set to enter Phase III in the second half of this year. These will be quite large trials, and we expect them to take a few years to complete, pending regulatory approval if the results are positive. In the current COVID environment, we are evaluating our clinical trial execution strategies and regulatory engagement, and we will apply any learnings on how to implement these efficiently in our priority programs.

James Gordon, Analyst

Two questions. The first one was just that your 2020 guidance is now caveated around the recovery in vaccination rates. We're a month into the quarter, so could you talk about how much better things are looking for July and maybe what the exit rate is towards the end of this month? Is Shingrix, for instance, a good proxy for what's going on overall for vaccines? Or do we need to be careful reading through from that? The second question was just the Consumer spin-off. I think when the spin-off was first announced, there was a plan for 3.5x or 4x leverage, and the base case was you dividend the whole company to GSK and Pfizer shareholders in '22. Is that still the concrete plan or default plan? Or might you do some other creative stuff like IPO-ing part of the business? Might you consider not putting quite so much debt in the business? Are other things being considered?

Emma Walmsley, CEO

Thanks, James. I'll ask Iain to unpack the guidance and assumptions a bit more for you. But just so there's no change in terms of our position on Consumer separation, be that former leverage or timing. So Iain, any thoughts?

Iain Mackay, CFO

Yes. Thanks, Emma. And maybe Luke can add some color on this. What we’re seeing through July is a significant recovery of pediatric vaccinations back close to pre-COVID-19 levels. Certainly, in the adult and adolescent vaccinations, we're seeing encouraging activity. It's not back to the levels that it was pre-COVID, but as we've pointed out in our guidance, that is the recovery that we are beginning to see, and we need to see that happen in the third quarter with a very strong performance coming through in the fourth quarter. We’re encouraged by what we see so far. Our strong view is that it's not a question of if this demand comes back but when it comes back. What we've seen through the 24th of July, which is the most recent data, is certainly encouraging.

Emma Walmsley, CEO

Luke, do you want to talk a bit more about the activity that’s ongoing?

Luke Miels, CRO

Yes. Just to build on Iain's point, there’s a clear difference when you look at the U.S. and Europe. In Europe, the bulk of our business is pediatric vaccines, and that rebounded relatively quickly. In the U.S., pediatrics, if you look at the industry as a whole, in February, it was about 500,000 a week, and that dropped by 50% for 4 weeks in March and April. It rebounded pretty quickly. So it was about -40% in late April and -10% in June. It came back quickly, whereas adult vaccinations dropped similarly but have been slower to recover. Also, older people visiting their physicians will see a hierarchy that they will focus on initially. In terms of what we’re doing about it, we haven't been passive at all. There’s a series of things we've done. We’ve linked early flu doses, which I mentioned earlier, because people come in for flu shots. That’s a prime opportunity for the pharmacists to bring up Shingrix. The field activity with our retail customers is back to pre-COVID levels. With retailers, we’ve got a lot of signage volume goals and some other things that I don’t want to disclose. We’ve been chasing people for their second doses and getting them back, which is holding up quite well. We’re doing DTC at the point of sale. Similar things are ongoing, but we’re doing everything we can, including targeted TV and print-based media as well. We now need to see how that goes with the dynamics in the U.S.

Geoffrey Porges, Analyst

Apologies for jumping on the call later. I may ask if the question you've already answered. But first, on flu, could you just give us a sense of your timing for shipments to the U.S. market, the volume change you expect compared to last year, most importantly, whether you see any net positive price due to mix of contracts? And then just a follow-up on the COVID program. When can we expect the publication of your preclinical data, particularly primary data? Could you comment on the mix of CD8 and CD4 responses that you've seen with AS01 in your other studies relevant to COVID?

Emma Walmsley, CEO

Thanks. So Luke, I mean, we had the question on flu before. Perhaps if you can just repeat what we're aiming for in terms of volumes roughly. And then, Roger, I don't know if there's any further disclosure you want to bring on the COVID programs.

Luke Miels, CRO

Shipping in July, linking and lining it up with the Shingrix acceleration program, we're targeting 50 million doses. Also, getting them in earlier is important. It reduces the return rate that you see later in the year because physicians tend to over-order. Up from 46 million in 2019, which is just down to 20% of the market, we sold 2/3 of it in the U.S. In terms of pricing flexibility, it’s limited for this year in the U.S.

Roger Connor, President of Global Manufacturing and Supply

Yes. I'm not going to go into detail about the data we've seen. However, I believe one significant aspect related to COVID-19 is the role of immune response and T-cell contribution to the effectiveness of vaccines, which may affect how the population responds to them. I would note that adjuvanted vaccines have a proven history of inducing both humoral and cellular immune responses, which we believe could be crucial for COVID. It's too early to draw conclusions, and this will become clearer over the coming months as we gather more data on our vaccines and others.

Hal Barron, Chief Scientific Officer

No. I just want to emphasize something Roger mentioned, which is that the cellular response may play a significant role in the effectiveness of vaccines. Besides assessing some of the traditional markers you mentioned, GSK's vaccine research team has invested considerable effort and innovation in determining what is actually predictive in clinical settings regarding what to look for in surrogate markers. I believe it will be interesting not only to observe when these responses occur but also to consider the quality of what we might see.

Operator, Operator

Thank you. That concludes your conference call for today. Thank you for joining, and all take care.