Good afternoon, ladies and gentlemen, and welcome to the analyst call of GSK Fourth Quarter 2020 Results. I will now hand you over to Nick Stone, Head of Global Investor Relations, who will introduce today's session..

Thank you, operator. Hello, everyone. Welcome to our full year and Q4 2022 conference call and webcast for investors and analysts. The presentation was sent to our distribution list by e-mail earlier today, and you can also find details under gsk.com. Please turn to Slide 2. This is the usual safe harbor statement.

We will comment on our performance using constant exchange rates, or CER, unless stated otherwise. As a reminder, the Consumer Healthcare business was demerged on 18th of July 2022 to form Haleon. But today, we're presenting continuing operations for GSK. Please turn to Slide 3.

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

Our speakers are Emma Walmsley, Tony Wood, Luke Miels, Deborah Waterhouse, and Iain MacKay with David Redfern joining the rest of the team for Q&A. Please turn to Slide 4, and I'll now hand the call over to Emma..

Thanks, Nick, and welcome to everyone. Please turn to the next slide. 2022 was a landmark year for GSK. We successfully delivered the most significant corporate change in 20 years and began a new chapter of competitive and profitable growth.

GSK is a most global biopharma company with the ambition and purpose to unite science, technology and talent to get ahead of disease together.

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

Through ongoing focus on R&D productivity and operating performance, we're unlocking the potential of this company. We are realizing our bold ambitions reflected in our commitment to attractive growth and a significant step change in delivery.

And through the demerger of Haleon, our world leading consumer healthcare business in its own right, we've strengthened our balance sheet, creating additional flexibility to invest in continuing growth and innovation. Turning to Slide 6.

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

In 2022, we delivered double-digit sales growth of 13%, 10% if you exclude COVID solutions, including the more than GBP 2 billion sales of Xevudy; adjusted operating profit growth of 14%, 17% excluding COVID solutions; adjusted EPS growth of 15% and strong free cash flow of GBP 3.3 billion, further strengthening our financial flexibility.

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

In 2023, excluding COVID solutions, we expect sales to increase between 6% and 8%, adjusted operating profit to increase between 10% and 12% and adjusted EPS growth between 12% and 15%. Please turn to Slide 7.

The strong delivery in 2022 and commitment to do so again this year supports our increased confidence in all dimensions of these 26 outlooks and demonstrate the continuing successful momentum in our transformation of GSK.

Our portfolio mix has meaningfully shifted to Vaccines and Specialty Medicines, now approaching 2/3 of our sales in 2022 compared to 46% in 2017. This evolving portfolio shape and our prioritized investments in innovation and product launches with good cost discipline are reflected in our continuing margin expansion. Please turn to Slide 8.

Before handing over to Tony for more detail, I'd like to share a couple of headlines on our progress in reshaping and advancing our pipeline, our #1 priority. We've built a pipeline of 69 vaccines and medicines, many with the potential to be first or best-in-class.

We've also had over 20 new approvals in the last 5 years, now representing nearly 1/3 of our 2022 sales, excluding COVID Solutions, and we anticipate more regulatory decisions this year.

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

In Vaccines, the key highlight was our exceptional RSV older adult data that led to a prompt regulatory submission and priority review acceptance by the U.S. FDA. Our vaccine candidate has a potential best-in-class profile and represents a significant commercial opportunity with multibillion Shingrix life potential.

We also made some important advances in the clinical development of 2 late-stage assets, gepotidacin and new novel antibiotic for uncomplicated UTIs and bepirovirsen, which has the potential to provide a first-in-class functional cure for chronic Hep B.

Strategic business development also played an important role in reshaping our pipeline, the acquisitions of Sierra Oncology and Affinivax complement our portfolio, and in the case of Affinivax, give us access to not only a Phase II next-gen 24 million new COVID vaccine, but also the Novamax platform technology to target complex pathogens that have multiple serotypes.

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

Thank you, Emma. Next slide, please. Today, I will talk about recent R&D developments and preview important events that will shape our pipeline. In 2022, nearly 1/3 of our sales came from assets launched in the prior 5 years, and we are confident that our early-stage pipeline is well positioned.

In terms of continued strong commercial execution to deliver our 2031 ambitions. This slide illustrates our focus in 4 key therapeutic areas, shaped by our world-leading capabilities in infectious diseases, our understanding of the science of the immune system and human genetics.

In 2022, we progressed 60 novel candidates into the clinic, added 9 to Phase II and started 5 Phase III programs, which reflected our core therapeutic focus, including the initiation of Phase III life cycle innovation trials for depemokimab in eosinophilic disease and cobolimab for the treatment of non-small cell lung cancer.

So today, our pipeline comprises 22 vaccines and 47 medicines, many of which are potential first or best in class. These novel programs will form the basis for our next wave of pipeline innovation and growth. I'm pleased with our continued progress and the next slide shows some highlights from last year.

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

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

Our ongoing Phase III trial continues to collect data and will determine if protection extends beyond one season. We anticipate generating second season data in time for the June ACIP meeting.

Additionally, we're also recruiting a Phase III trial examining effectiveness in protecting adults aged 50 and above who are at higher risk of developing severe disease. It's important that I mention the ongoing development of Shingrix.

We presented data last year showing that Shingrix provides overall efficacy of greater than 80% over a follow-up period of 6 to 10 years after the initial vaccination. These 10-year data were generated as part of our ongoing life cycle innovation, and we regularly review Shingrix's duration of protection and the potential need for a booster.

These data will inform the next steps in clinical development, and I'll keep you updated with progress. In HIV, we are committed to improving the existing treatment options for people living with HIV. We have an exciting pipeline including options for self-administration and ultra long-acting medicines.

We're also investigating new approaches to HIV treatment. Last year, we presented proof-of-concept data from the Phase II banner trial for N6LS, our broadly neutralizing antibody. This is one of several exciting opportunities within our HIV portfolio, and we remain on track to move this into Phase III development in 2024.

Oncology is an emerging therapeutic area. We reported positive high-level results for Jemperli Phase III RUBY trial, which met its primary endpoint, the first trial to show a PFS benefit for an I-O agent in the treatment of women with primary advanced or recurrent endometrial cancer.

These data may support the use of Jemperli in the first-line setting. We also decided to progress all arms of the COSTAR lung trial into Phase III.

This compares cobolimab and dostarlimab combinations in treating patients with advanced non-small cell lung cancer, a large patient population with significant unmet medical need, and we expect to see data from this trial in 2024. In 2022, we progressed several Phase I programs and reported positive proof-of-concept data.

Revax last year, includes data from our randomized Phase Ib trial of CCL17 in osteoarthritis, demonstrating evidence of efficacy at the end of the 8-week dosing period. We plan to progress development and we'll share more later this year. Our partner, CureVac also announced interim Phase I data for flu and COVID mRNA vaccines.

These preliminary data provide promising evidence of activity, which included a monovalent flu vaccine that successfully boosted antibody titers against a matching flu strain even at the lowest dose. Based on these promising data, we believe there is a significant opportunity to accelerate the development based on this technology.

We're excited about the potential of doublet vaccines, and we're pleased with the progress we're making on both the COVID and influenza projects. As Emma mentioned, we also completed several business development deals in 2022, enhancing our portfolio and platform technology.

These deals supplement our late-stage pipeline to support further growth and deliver our R&D strategy. BD and capital allocation will be a strong focus in 2023 and beyond. We also announced a collaboration with Wave Life Sciences to enhance our discovery and development capabilities using novel oligonucleotides.

Now I'd like to provide a brief details on the progress of our most advanced oligonucleotide, bepirovirsen. Next slide, please. I'm particularly excited to disclose that the first patient has been recruited into the B-WELL Phase III program for bepirovirsen in the treatment of hepatitis B patients with low baseline surface antigen.

Remember that in our Phase II trial B-CLEAR, we observed that an unprecedented number of patients treated with low baseline surface antigen experienced sustained Hep B surface antigen and DNA loss at the end of the 48-week study period.

Hepatitis B infection is a significant unmet medical need with over 300 million people having this chronic disease and around 900,000 who die from liver disease-related consequences. The current standard of care achieves functional cure in fewer than 5% of patients, and managing the disease places a significant burden on global health care systems.

Our aim is for bepirovirsen to become a backbone of future therapy. Around Moderna, I also look forward to sharing data from B-TOGETHER. A Phase II trial that administers bepirovirsen followed by interferon therapy with the goal of improving functional cure rates still further. Next slide, please.

In November, we reported that 2 Phase III gepotidacin trials for the treatment of uncomplicated urinary tract infections were stopped early for efficacy after a successful interim analysis. Data collection and analysis are ongoing, and we anticipate making a regulatory submission later this year.

The world needs new classes of antibiotics, treatment failure increasing community resistance rates and increasing safety warnings for existing medicines, including fluroquinolones are reducing the available oral options for uncomplicated UTIs.

If approved, gepotidacin would become the first new oral antibiotic for the treatment of uncomplicated UTI for over 20 years. Unmet medical need is significant with around 15 million episodes of uncomplicated infection in the U.S. alone, a 1/4 of which occur or have some level of resistance.

Gepotidacin would be positioned as an oral option for patients at risk of treatment failure. In September last year, to complement the development of our antimicrobial franchise, we announced a license agreement with Spero Therapeutics to commercialize tebipenem, a novel antibiotic in Phase III development for the treatment of complicated UTIs.

There are around 3 billion complicated UTIs in the U.S. each year, and 40% of these infections are resistant to broad-spectrum oral antibiotics. Tebipenem could be the first oral carbapenem approved for the treatment of complicated UTI reaching the market by 2026.

Our goal is to develop 2 novel oral antibiotics that cover the spectrum of urinary tract infections and address increasing recurrence and community antimicrobials. Next slide, please. This slide illustrates some of the pipeline news we anticipate over the next year or so. We expect 2023 to be a busy year across the portfolio.

We look forward to presenting our RSV older adult vaccine as the forthcoming U.S. FDA VRBPAC meeting in March, followed by a U.S. FDA regulatory decision in early May. We also anticipate Phase III data from our invasive meningococcal vaccine in the first half.

There are around 1.2 million cases of invasive meningococcal disease each year, and if successful, this vaccine would target the 5 most common serotypes in 1 product. As I mentioned earlier, we expect to present data from the gepotidacin Phase III program and data from the bepirovirsen Phase II trial B-TOGETHER around midyear.

In oncology, momelotinib has been submitted with regulatory authorities, and we expect to hear from the U.S. FDA during the first half. We'll also present the Jemperli RUBY data at a medical conference later this year. Finally, we also anticipate regulatory decision from the U.S.

FDA on daprodustat for the treatment of anemia of chronic kidney disease, with a decision from European regulators around midyear. I'll now hand over to Luke. Next slide, please..

Thanks, Tony. Please turn to Slide 16. In 2022, we delivered 13% sales growth or 10% excluding COVID Solutions, and we're proud to report that 10 products exceeded GBP 1 billion in sales for the year, including Shingrix, Trelegy, Nucala, Benlysta and Dovato. This is a great example of strong commercial execution.

Benlysta remains the market leader with 85% of new patient starts in Q4, and we continue to see a strong growth globally in both SLE and lupus nephritis with only 25% buyer penetration in the U.S.

Nucala continues to lead the IL-5 class across all major markets, and Nucala remains the first and only biologic approved for 4 esinophilic diseases with new indications driving growth and differentiation.

And Xevudy delivered GBP 2.3 billion in sales, although based on the trajectory of the pandemic, we expect limited sales in 2023, and Deborah will comment on HIV shortly. In oncology, sales were up 17% for the year, with label changes to BLENREP and Zejula in the U.S., we expect to see a short-term decline before oncology returns to growth in 2024.

In General Medicines, Trelegy had an excellent year, up 32% versus last year, retaining leadership in key markets. This was also bolstered by the post-pandemic rebound of the antibiotic market globally and increased demand for Augmentin. Turning to our Vaccine's performance on Slide 17.

In 2022, Vaccines had a strong year, up 17%, excluding pandemic-adjuvant sales. This reflects strong commercial execution across the portfolio, including a record year for Shingrix and increased contributions from Bexsero in the U.S. with higher CDC demand and increased market share.

Shingrix sales grew significantly across all regions, reflecting post pandemic rebound and new market launches through geographic expansion. The U.S. saw higher demand in both the retail and non-retail setting and favorable channel inventory movements, while ex U.S. delivered around GBP 1 billion in sales for the year.

Shingrix has launched now in 9 markets in 2022 and is now available in 26 countries, and we expect to continue to expand our geographic footprint in line with our goal to be in 35 countries by 2024. Turning to Slide 18.

Here, you can see that prioritization of R&D and commercial investment in Specialty Medicines and Vaccines, plus optimization of the General Medicine portfolio is delivering strong growth and drive our progress. Our '22 results demonstrate that our strategy is working, and we're delivering on the commitments we made at the investor update in 2021.

And the data on the right-hand chart show this shift up from 7% to 42% today. Looking ahead to 2023, for the Specialty portfolio, including the short-term impact of oncology, we expect sales in 2023 to increase mid- to high single-digit percent, excluding Xevudy.

In General Medicines, we expect 2023 sales to decrease slightly and remain on track with our broadly stable sales outlook between 2021 and 2026; and in Vaccines, overall, we expect to increase mid-teens percent, excluding pandemic-adjuvant sales and expect to see Shingrix momentum continued with double-digit growth with another record year of sales.

With that, let me now hand over to Deborah on Slide 19..

to provide the world's first self-administered long-acting regimen for treatment and to provide ultra long-acting regimen for treatment and prevention with dosing intervals of 3 months and longer.

We are looking forward to presenting further data on our pipeline, including the SOLAR study, a head-to-head trial between Cabenuva and ViiV and data on N6LS, our broadly neutralizing antibody at CROI in Seattle later this month.

Our Q4 results demonstrate continued progress against our ambition to achieve a 5-year mid-single-digit sales CAGR to 2026. By 2026, we estimate that long-acting regimens will be generating around GBP 2 billion, which equates to around 1/3 of HIV sales.

The changing mix of our portfolio towards long-acting and the success of our pipeline offers the potential to significantly replace the revenue from dolutegravir post loss of exclusivity. And with that, I will hand you over to Iain..

Thank you, Deborah. As I cover the financials, references to growth are at constant exchange rates unless stated otherwise. As Luke and Deborah covered the main revenue drivers, I'll focus my comments on the income statement, including the main cost drivers, margins, cash flow and guidance for 2023. Turning to Slide 21.

This slide shows the bridge from total to adjusted results includes the effect of the successful consumer health care demerger in 2022. Total earnings per share were 371.4p, which earnings per share from discontinued operations were 260.6p. This primarily reflected the gain on the demerger and the gain on the retained stake in Haleon.

Turning now to continuing operations. For 2022, turnover was GBP 29.3 billion, up 13%, and adjusted operating profit was GBP 8.2 billion, up 14%. Total earnings per share were 110.8p, up 18%, while adjusted earnings per share were 139.7p, up 15%.

The main adjusting items of note between total and adjusted results for continuing operations in the year were in transaction-related, which primarily reflected the contingent consideration liability movements, the majority of which related to foreign exchange and in divestments significantly than other, which reflected the upfront income received from Gilead in the first quarter as well as a fair value mark-to-market gain and the retained stake in Haleon.

Pandemic Solutions reduced growth of adjusted operating profit by approximately 3 percentage points and growth of adjusted earnings per share by around 3 points. The full year currency impact was a favorable 6% in sales and 12% in adjusted earnings per share. Turning to Slide 22.

The 2022 adjusted operating margin of 27.8% reflected an improvement versus last year. The positive margin dynamics reflected the sales growth with a favorable mix, excluding Xevudy, higher royalty income and favorable currency movements, which are a 1.2 percentage point benefit in the full year.

These factors were offset by the impact of lower margin sales of Xevudy and commercial investment behind launches and key products. Overall adjusted operating profit grew 14%.

COVID Solutions reduced adjusted operating profit growth by approximately 3 percentage points and adjusted operating margin excluding COVID Solutions, was approximately 1.3% higher constant exchange rates. Turning to key dynamics of the year.

Within cost of goods sold, the increase primarily related to sales of lower margin Xevudy, which increased the cost of sales margin by around 2.5 percentage points, mainly reflecting the profit share pay away to biotechnology.

Excluding Xevudy, cost of goods sold benefited from a favorable business mix with Specialty Medicines and Vaccines comprising 62% of commercial operations sales ex pandemic. So this mix benefit was partly offset by increased supply chain costs, including in commodity prices and in freight.

SG&A increased the rate slightly above sales, which primarily reflected launch investments in Specialty Medicines and Vaccines. We're particularly focused on HIV and Shingrix to drive post-pandemic demand recovery and support market expansion. The SG&A growth also reflected an unfavorable comparison to a beneficial legal settlement in 2021.

These factors were partly offset by continued delivery of restructuring benefits with around GBP 900 million of annualized savings to date from the separation preparation program and tight controlled ongoing costs.

R&D spend grew 6%, with increased investment across several programs, particularly in vaccines, clinical development, including in our mRNA technology platforms and MAPS following the Affinivax acquisition, along with investments in early discovery programs.

In Specialty Medicines, with assets like depemokimab and bepirovirsen and within oncology, there was an increased investment in our early-stage immuno-oncology assets and momelotinib following the Sierra Oncology acquisition.

These increases were partly offset by the lapping of now completed late-stage clinical programs and reduced investment in COVID-19 assets relative to 2021. Royalties benefited from the Gavi contribution and higher sales of Gardasil. Again, it should be noted that our Gardasil royalty stream will cease at the end of 2023. Turning to Slide 23.

Moving to bottom half of the P&L and highlight that net finance expense was higher, reflecting the net cost associated with the November sterling notes repurchased, higher interest on tax, partly offset by increased interest income due to higher interest rates and larger cash balances as a result of the consumer health care demerger.

And the effective tax rate of 15.5% reflected the timing of settlements with various tax authorities, which was favorable versus the expectations set out of Q3. On the next slide, I'll cover cash flow. In 2022, we generated GBP 3.3 billion of free cash flow from continuing operations.

Within free cash flow, cash generated from operations increased around GBP 700 million, up 10% to GBP 7.9 billion, with higher operating profit being the key driver, partly offset by other factors, which you can see on this slide.

Below cash generated from operations, there were higher tax payments and lower proceeds from disposals along with higher CapEx, partly offset by reduced purchase of intangibles.

In 2023, we expect cash generated from operations to be slightly lower, primarily due to the positive impact of the Gilead settlement in February 2022, partly offset by improved operating profit growth. We remain firmly on track with our medium-term outlook, driven by higher adjusted operating profit and working on improvements.

Turning now to Slide 25 and guidance for 2023. We expect to build upon the step change in performance we delivered in '22. As a reminder, all of our guidance excludes the contribution from pandemic COVID-related solutions and references to growth at constant exchange rates.

We expect sales to increase between 6% and 8%, and we expect adjusted operating profit to increase between 10% and 12%. This is influenced by expected cost dynamics where we expect cost of goods sold and expect to increase at rates slightly below sales, SG&A to grow broadly aligned to sales and for royalties to grow versus 22%.

Below operating profit, net interest payable is expected to be between GBP 750 million and GBP 800 million and the effective tax rate is expected to be around 15%. In light of these dynamics, we expect adjusted earnings per share to increase between 12% and 15%. We do not expect any significant pandemic-related sales in 2023.

With regards to phasing of the year, due to phasing in 2022 and resulting comparators, we would expect operating profit growth to be lower in the first half of the year and higher in the second half, relative to full year expectations. This reflects strong comparisons in the first half, including stock build in ViiV and Shingrix U.S.

channel inventory build in the first half of 2022. We would also expect SG&A to grow at a higher rate than sales, reflecting investments to support recent and anticipated launches. Q1 is expected to be a more challenging quarter in the ViiV stock building at the end of 2022.

In the second half, we would expect the growth to be higher due to expected launches of new products, including RSV as well as momentum across existing product drivers. Regarding dividends to shareholders. We anticipate a 56.5p dividend per share aligned to our dividend policy and prior disclosure.

We started 2020 with excellent momentum from a highly successful '22 and remain firmly on track to deliver our medium-term financial commitments. And with that, I'll hand back to Emma..

to unite science, technology to go ahead of disease together. Integral to this is running a responsible business, one which builds trust and reduces risk to deliver sustainable health impact at scale, shareholder returns and to support our people to thrive. To do so, we prioritize our resources to focus on the 6 material areas affected here.

This quarter, our leadership and progress in Access were recognized once again as we top the Access to Medicines Index for the eighth consecutive time, and we continue to lead in innovation to address antimicrobial resistance.

Also, we announced an investment of GBP 100 million to help strengthen health systems in lower-income countries, along with our commitment to invest GBP 1 billion in global health innovation where it's needed, as evidenced by our progress with the new first-in-class candidate medicine for patients with tuberculosis. Turning to Slide 28.

So in closing, I do want to thank our people for delivering this tremendous performance, a landmark year for GSK as a newly focused global biopharma company with big ambitions.

We are delivering a step change in performance, and we enter 2023 confident that we will keep delivering again this year for our medium-term outlook and with the momentum to sustain growth through this decade and beyond. So with that, operator, the team is ready. So let's move into Q&A..

[Operator Instructions]. And the first question is coming from the line of Kerry Holford..

So my real focus on the overall feedback specifically about the patient cohort. So I wonder if you can just use the commercial opportunity you see within that 50 to 59 year old group, if we assume the Phase III data that you are going to publish later this year is positive and the vaccine is ultimately approved in that age group.

Do you think an age set recommendation population is a realistic scenario? And I'd be interested to know whether your existing in terms of target for that asset that brought us GBP 3 billion excludes any potential sales in that younger cohort..

Thanks, Kerry. Well, I think we'll come straight to Luke on that one. Obviously, an asset we're very excited about a lot of opportunity here, but Luke..

Thanks, Kerry. I mean, yes, it's in that immunocompromised population.

It's a sizable population, but the primary benefit is from a contract negotiation point of view for the 2024 season because we'll be the only one with that profile and evidence in that group, which, along with older individuals is obviously -- bears a significant burden from RSV infection.

The previous guidance we've given includes that study is the full life cycle program..

The next question is coming from Peter Welford from Jefferies..

It's on the outlook for Vaccines, for mid-teens.

I wonder if Luke could give us some idea in terms of the usual sort of update into the Shingrix doses and where we are with returns to inventory and in terms of burning through that, particularly, I guess, given as well, presumably we're back to a more normal seasonality, if you like, of Shingrix, presumably with the sort of flu season, if you like, towards the end of the year.

And what have you assumed in that mid-teens for RSV in the outlook as well? Should we be assuming is any modest contribution? Or how should we think about mid-teens in the context of obviously this being the first potential year of RSV sales in the U.S..

All right. Great. So I think as Luke said, it's going to be -- and I'm going straight to him, but another record year of Shingrix expected with double-digit growth and obviously, the first season for RSV, but for a major contributor to growth for the years ahead.

But do you want to give a bit more shape on Shingrix, Luke?.

Sure, Emma. So Peter, thanks. I'll give a sort of an overarching answer first and then give you more detail on the U.S. dynamics around stock levels, et cetera with Shingrix and then also incorporate RSV into that answer. So I mean, our strategy remains the same. I mean, we tried to decouple Shingrix from the flu season.

And yes, there is still volume associated with that just with people coming into the pharmacy. I think the Inflation Reduction Act in the U.S., taking away the co-pay in that 65-plus group will be helpful. We know from our data, around 8% of patients reject a Shingrix shot based on co-pay concerns.

It's probably understated, but we'll -- because pharmacists may self-select into proposing that to patients, but we'll see that in time. I think for Europe and Japan, where really things are starting to move, we just had a record month in January in Germany. Things are moving in Italy and other European markets.

And I think if you look at the rest of the world, as China starts to normalize, the potential for that over the next couple of years remains very, very sizable. And then ultimately, we've got the opportunity to go back and rechallenge these populations with a booster in the second half of this decade.

In terms of short term now in the U.S., I mean, the retail-nonretail split has stabilized. It's about 53% retail, 47% nonretail in Q4. The growth is evenly balanced between retail and nonretail. Stock levels have -- they came down in Q4. They're very much within the normal range of 1.1% to 0.9%, so we ended the year at 0.9 levels in the U.S.

Now in terms of RSV, I don't want to give too much color on RSV, but I think Pfizer has made statements around penetration similar to flu. We agree with that. I think this product is going to build over multiple years in the U.S.

and then as we follow a similar strategy that we've done with Shingrix, which is maintaining price discipline and then expanding into Europe and rest of world over the next few years..

Thanks, Luke. I also like the fact that we published it. I think you said that we're 15% more likely to get Shingrix post-COVID as well..

Yes. Yes, it's certainly observable..

Next one is coming from Dominic Lunn from Credit Suisse..

My question is on pricing. So if you look at the January list price rises for GSK and indeed the industry as a whole, price rises have been in line with the historic price rises. So -- and one could have expected price taking to be a bit stronger given the high levels of inflation.

And it looks like there is still room to take further price throughout the year before you hit the limit imposed by the inflation price cap in Medicare as well.

So how should we think about pricing through the rest of the year? Could we get maybe smaller, more frequent incremental price rises through the year?.

Thanks. So look, GSK has got a long track record of being very responsible around its pricing. Let's hear, and as you know, on a net basis over the last few years, I think would be even very slightly down and really thoughtful about how we take this all. But Luke and maybe Deborah, a comment, please..

Yes, completely agree, Emma. We're playing the long game here. I think past patterns over the last 2 years are probably a good indicator of our behavior going forward..

And I would just -- obviously, I agree with what Luke said. I think the other thing that people should be giving some thought to is what's happening outside the U.S. So if you look at our HIV business, for example, and many others will be experiencing the same thing, we're seeing significant additional net price pressure from clawbacks and price cuts.

So from a pricing perspective, I think we've priced fairly and appropriately and playing the long game in the U.S., and I think we need to be aware and very vigilant about what's happening outside of the U.S. in terms of economic challenges leading countries to put pressure on pricing..

Next question is coming from James Quigley from Morgan Stanley..

I've got a question on HIV. So could you give us an idea of the amount of stocking that you saw in the fourth quarter and which of the key products were impacted clearly for the full year, Tivicay and Triumeq seem to fare better in the U.S. than the next U.S.

So with those 2 products as well, what are you sort of assuming for next year in the guidance? And then can you also give us a bit more color on the dynamics for Cabenuva and Apretude in terms of take-up, patient attitudes, physician attitudes and how that's changing with greater experience and how you expect the growth curve to look for the 2 long-acting drugs next year?.

Brilliant. Okay. So let's talk about stocking. So we entered last year with about 3 days of stock, which was low. Normally, we exit each year with about 7 days of stock. So we entered this year with 3 days of stock, 2022, with 3 days of stock. We exited with 13 days of stock.

So as you can see, there's been a material shift between where we started '22 and where we exited. If we assume that we're going to just have a normal 2023 and that there will be 7 days of stock in the channel at the end of the year, you can see that we've got 6 days to burn, and we believe that's going to burn in the first half of the year.

So that's kind of the details on the stock evolution. In terms of Tivicay and Triumeq, I mean we're seeing Tivicay and Triumeq at a relatively kind of steady evolution. Triumeq is declining quite significantly as it's cannibalized by Dovato but also competitors. Tivicay is pretty stable actually.

It's declining, but obviously, it's the only second-generation integrase inhibitor that you can have as a stand-alone and not as part of a triple or a doublet. So we continue to see a strong and sustained business with Tivicay. Triumeq, we think that business will decline as better opportunities are now there for people living with HIV.

In terms of Cabenuva, so we've seen really strong patient demand. We're seeing excellent execution from our commercial teams, which is broadening the prescriber base and deepening the number of prescriptions each physician is writing.

And we're doing a lot of work in the environment to overcome some of the barriers that you see when you introduce an injectable into a new therapy area for the first time. And we're really happy about the progress we're making. The level of access is significant. And as I've said before, the quality is also really, really positive as well.

So I think Cabenuva is doing really well. Apretude was slower last year. As we said in the first year of any new medicine and particularly in injectable, it takes a while to secure access and get all the big accounts signed up, the specialty pharmacy signed up on the product.

That is now in a very, very positive place, and we've got very strong ambitions for Apretude in 2023. And again, all the research we do in terms of physician and patient. We know that the demand is very strong for this product as it offers something very different to the other, and obviously, we've got superiority data.

So I hope you take away from that a lot of ambition and optimism for our long-acting injectable portfolio..

I think also, as Deb referred to in our comments, I mean, the overall momentum on 2DRs across the board, I think, is up to like 40% between Dovato and with long-acting of the business.

That's why we've done what we said we'd do in the shift of the portfolio, and we completely expect to do, again -- to do so again through long-acting, as Deb said, with the profile of the business by '26, but also to continue to shift beyond that ahead of the patent challenge on dolutegravir.

And that's what's so exciting about what's coming through in the next generation pipeline, which we'll give -- Deborah and team will give you more insight on the 18 months ahead..

We have a question coming from Andrew Baum from Citi..

Staying with Cabenuva and given the profitability of this product even with the profit share, it's obviously hugely important for GSK going forward. Could you just give us a little bit more information on the source of the switching to date? And by that, I mean, just in the U.S.

market, how much from Medicare, how much from 340B, how much is there for inventory? I know it may not represent long-term what things look like and its dynamic, but I would be interested. And then second, in relation to the new generation of cabotegravir line extensions, including the subcu, we're going to get data in '24.

How long will it take, do you believe, to secure approval, assuming that you do PK/PD bioequivalence trial starting in '24? Should I be assuming '26, '27 by the time you hit the market?.

Thanks, Andrew. So straight back to Deb.

Just as a reminder for everyone, part of our portfolio shift strategy, which is evidence is working when you see that shift from 46% of the portfolio up to 2/3 and our confidence by '26 is getting to 3/4 towards vaccination -- Vaccines, sorry, and Specialty Medicines is so that we're continuing to drive leverage in the P&L and affording our ability to keep investing at the same time in R&D and in our launches, too.

So as well as within HIV through the innovation as we talked to, but also on the broad GSK agenda, we're seeing an important area of focus there for us.

Deb?.

So just to quickly cover your points, Andrew. So in terms of the source of business, there's 2 ways we look at this. So first of all, where are we getting the business from and I can confirm about 60% of our Cabenuva business from our competitors and about 40% from our own portfolio.

Second point, which is around what segments of the market are we getting Cabenuva from. Actually, we've got really good coverage across all the payers and all the key accounts.

So actually, there's the split that we see for Cabenuva is broadly in line with the split of the overall market, which, as you know, is 40% kind of commercial payer in HIV and 60% government. So there's no unique attribute to Cabenuva versus how the market normally plays out.

In terms of the pipeline, so there are 3 time lines that we've laid out in our business investor update. So we've talked about a self-administered treatment and a longer-acting prevention between '25 and '27. Then we've talked about a longer-acting treatment, so 3 months-plus after 2027 probably in the '27, '28 period.

And then we've got, which we're very excited about, our third-generation integrase inhibitor, which will either be teamed with our capsid or with our bNAb , and that is where you've got the potential for 6 months plus in terms of gap between administration. And that's towards the end of the decade.

So that's kind of what we've set out in the update that we gave. And we're still absolutely on track for that. Very excited about the future. And just to reiterate our shorter-term goal, we are very confident in our ability to deliver that GBP 2 billion of revenue in 2026, which is 1/3 of our overall business in HIV at that point..

The next question is coming from Tim Anderson from Wolfe Research..

I have a question on COVID flu co-formulated vaccine. So Pfizer yesterday suggested the launch of a combo product in 2025, talked about it as a compelling durable offering. Does Glaxo see an opportunity here for itself? And what's the time line of launch for a similar product from Glaxo? And then if I can just sneak in one quick housekeeping question.

Zejula, when do you expect mature overall survival data from the PRIMA trial in frontline ovarian?.

Right. Well, both of those to come to Tony. And just as I think what he did refer to in his remarks, obviously, we're pleased to see the data that's come through from our partners at CureVac, and the potential for doublets here is definitely interesting. And we'll update more on our actual specific plans, I think, later in the year.

But Tony, I'm sure you want to add to that as well as the Zejula question..

Yes. Let me just build on the question about doublets. And I think I'd start with just giving you a sense of the exciting data that we're generating with our partner, particularly CureVac, in the context of establishing the opportunity for a therapeutic window between immunogenicity and reactogenicity.

And in a doublet vaccine, particularly with regards to flu, for example, you can think about this as the majority loading of that doublet vaccine coming from components that are addressing flu.

We very much see the opportunity in the second half of the decade associated with the high-dose flu market, where an 8-valent vaccine covering both hemagglutinin and neuraminidase antigens is really the opportunity at hand. So let me just quickly address what we're seeing in these early monovalent data that gives us the opportunity for excitement.

And that is in the flu vaccinations, you will have noted that in a comparator -- a monovalent comparator, we see immunogenicity at the lowest dose, which is consistent or better than that comparator and seroconversion, which is also better than the comparator.

In our COVID studies, which have a slightly different comparative basis, we see reactogenicity, which is at the low end in terms of distribution of grades and severity at the highest doses involved.

What that is doing for us on the back of monovalent construct is creating an opportunity for a window and therapeutic index that I think makes a valent flu plus COVID doublet a practical possibility.

We're now accelerating studies from monovalency into multivalency in a Phase II study the aim of targeting a multivalent seasonal vaccine focused on 8-valent flu in the second half of the decade. As far as PRIMA is concerned, look, obviously, this is an event-driven outcome study. So it's something that's going to -- I'm reluctant to give data on.

We're not expecting OS data before 2024..

The next question is coming from Graham Parry from Bank of America..

So it's going back to RSV vaccine. I think you sort of referred to this requiring a lot of education, obviously, having more than one player in the market can help there. We've also referred to probably a launch trajectory below Shingrix.

I was just wondering if there's a lower bound analog for launch that you could point to that you would think is appropriate, whether it's pneumococcal vaccines or perhaps one of the older pediatric vaccines.

And any thoughts you've got on the recent Moderna interim data and the level of competitive threat that you see from having 3 vaccines in the market just from a contracting and pricing point of view more than anything else..

Thanks.

Luke?.

Yes, Graham. I mean, I think lower bound pneumococcal, again, it's not a perfect comparator but I think that's a fair one. I think you'll get more information with the pricing being presented at the Feb ACIP by ourselves and Pfizer on the 23rd, 24th of February.

Look, I think that having 3 companies there, you're definitely going to drive awareness and a more rapid uptake. So the pie will be larger but obviously shared 3 ways. Our expectation is that it will only be Pfizer and ourselves at the June ACIP and that remains the same.

I think from a strategy point of view, as always, you need to anchor in your own evidence base. And I think the 94% efficacy that we have in adults with comorbidity is impressive and the similar range that we have in the 70 to 79 year-old group who obviously bear the brunt of RSV infections.

I mentioned earlier from Kerry's question, the 50 to 59 year population that will also have evidence of that for the 2024 cycle. So all of these things help contracting. And I think there's just 2 big variables that remain unknown. One is the final label that people ultimately get. Again, we've only seen headline data at this point.

And then secondly, ourselves and Pfizer are likely to have that second year of exposure data just before the June ACIP, and that's a variable that remains unfactored at this point. But net-net, I think it's still a very exciting opportunity.

And what is striking is just the level of awareness and just the depth of the RSV infections that we've seen this year post-COVID..

Exactly. And our co-admin on flu is another big umbrella to retail. That's where semi distribution will be here..

You have a question coming from James Gordon from JPMorgan..

James? James, are you there?.

James Gordon from JPMorgan.

Can you hear me now?.

Yes..

Yes, we can hear you, James..

You've hear me. Brilliant. Lovely. Two questions, please, both on vaccines. One was on RSV.

So just in terms of multiyear protection, based on what you've seen so far, have you seen things that are encouraging just in terms of the efficacies you've seen through the year that suggest you are likely to get multiyear protection? And if you do, is that something that would actually be upside to the share assumptions you already had? Or was multiyear protection somewhat baked into the projections you've already given for this vaccine? That was the first question, please.

And the second one was on Shingrix. So there was the potential need for a booster mentioned.

What data would you actually need for that? Do you have some data that's already telling you when you think you might need revaccination? And would you have to do a study that actually showed a statistically significant benefit on symptoms from revaccination? Or would it be more just about antibody titers? Is there like a quicker route to get such a recommendation?.

Right. Well, I'll give both of those to Tony. But just as a reminder on Shingrix, we launched it in 2018, I think. So -- or '17. So -- and we've got good data for 10 years. So the cohorts coming through, the boosting is more for later in the decade, as Luke alluded to. But definitely something that we'll look at.

But Tony, do you want to respond on both the RSV durability and Shingrix..

Yes, sure. So first of all, in terms of duration for RSV, obviously, we have solid coverage across single-season vaccine efficacy with our existing data package. And James, you may remember, we also have titers that are elevated above baseline as measured at the end of first year.

As Luke indicated, we're planning -- and indeed the study was designed with this purpose in mind, to be able to bring second season data to ACIP in June. Obviously, that is depending on the dynamics of the second season. And so we'll be able to report more on that when we get to the June date.

Can you just remind me -- in terms of was it incorporated, second season data was not incorporated in the baseline model, so it would be an upside.

And then can you just -- sorry, what was the second question?.

Shingrix..

Shingrix booster, yes. Okay. So obviously, we have 10-year data from Study 049 and that shows outstanding duration of protection. That's cumulative vaccine efficacy of greater than 82% over the 6- to 10-year period of follow-up, 89% vaccine efficacy over the 10-year period.

Study 049 was designed to continue to generate data in order to answer the booster question. Remember that the vaccine was launched in 2018. And so we're reaching a point now with 10 years subsequent to that, we'll be looking to later in the decade.

It's reasonable to expect that we will see some waning in vaccine efficacy associated with an aging population. But to your point, James, we're also engaging in ongoing conversations with the regulators to understand what the design of a study required to show the need of a booster would look like and for whom.

But I don't want to go into any greater detail about that at this stage..

Great. Thank you. So maybe one or two more questions and we'll try and speak through those. Next one, please..

Next one is coming from Emily Field from Barclays..

The level of detail provided on the ongoing Zantac litigation release was very helpful and particularly following the MDL update in December. And the time lines on California were also helpful.

I was just wondering if perhaps you could put in context how you're thinking about the rest of the state cases and just for -- on our side, it's been tough to follow kind of what follows the dower standard and what doesn't.

But just outside of California, if there's any states where cases could be moving to trial in the near future that we should be mindful of?.

Right. Thanks, Emily. Obviously, we were delighted with the outcome in December. We've got some things to navigate through this year.

But Iain, perhaps you could update on the different state situation?.

Yes, absolutely. Emily. So obviously, MDL was incredibly impactful. That took out the equation, 46,000 claims within the suits filed at the federal level. So I'm delighted with that decision, as Emma said. You reflect on the bulk of claims in State Court, they sit in Delaware with more than 70,000.

And although it's clearly for the courts and Delaware to decide there is a pattern of behavior where they tended to follow federal precedent in that regard. So that is probably an encouraging indicator.

Then across the other states, we've got a little bit less than 6,000 claims out there, which about 3,000 are in California and the rest are spread across sort of half a dozen other states.

We've got 4 bell weathers that will -- that we expect to take place in California this year, the first of which will kick off a little bit later this month or early March. The Sargon hearing for that trial has actually been pushed back another week to the 16th of February as the judge reflects on input from both plaintiff and defense attorney.

So look, again, the really important thing here, the MDL decision, the diverse decision was incredibly helpful. It was informed by the strength of the epidemiological independent studies of which that are now 13, the consensus of which is there's no causality between the consumption of ranitidine in any form of cancer.

And it's clear from Judge Rosenberg's decision that was the significant factor in informing our decisions. So we'll continue to defend vigorously and first up or a couple of trials in California, we'll keep you posted..

Right. And then last question, please..

Our final question comes from Simon Baker from Redburn..

I promise I'll be quick. A question on BLENREP. Tony, back in November on the Q3 call, you mentioned that there was ongoing analysis involving soluble BCMA as a prognostic indicator. I just wonder if you could give us any update on the findings from that. And related to BLENREP, I see DREAMM-7 and DREAMM-8 have moved from H1 into H2.

Is that shifting here for event-driven studies or is there anything else we should be aware of?.

You cut out just to the second part of that question, but I think it was 1 of the implications in the first half, second half on 7 and 8. But -- sorry, for you, Tony..

Yes. Look. So Simon, the analysis that we discussed in terms of soluble BCMA and other markers that might explain the crossover that we see in DREAMM-3 is still ongoing. As far as DREAMM-7 and DREAMM-8 outcomes are concerned, we're now targeting a more complete picture of those.

And if I remind you, these are 2 studies that are looking at BLENREP in combination versus standard of care in contrast to DREAMM-3, which was BLENREP and monotherapy. We're expecting to be able to provide a deeper update on those at the end of the year. And not much more to say at this stage, Simon. The analysis is ongoing.

We'll bring this, when I've got a clearer picture..

Thanks. Great. Well, thank you, everyone. I hope this has been an efficient call for you. We're delighted with the momentum and progress in the business. We look into 2023 with confidence and do so also for our medium-term outlook and beyond. We look forward to staying connected and keeping you updated in coming quarters and along the way.

Thanks very much. Bye..