GSK plc (NYSE:GSK) Q1 2024 Earnings Call Transcript

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In addition, DREAMM-7 and 8 also demonstrated strong overall survival trends, and we will continue to follow up to completion. We look forward to presenting these data at ASCO in June and are targeting regulatory filing in the second half of the year. Next slide, please. Finally, turning to our General Medicines portfolio, sales grew 1% in the quarter, led by Trelegy, delivering £591 million, and established products in Emerging Markets. We have also seen growth owing to stockpiling and patient demand. It’s still early in the year, and we are continuing to assess and manage the impact of the AMP Cap removal in the U.S. As a reminder, there was a US$150 million impact in 2023, and we continue to expect up to US$550 million of sales at risk for the full-year.

The growth outlook for Gen Meds is unchanged. I’ll now hand over to Deborah to cover HIV.

Deborah Waterhouse: Thank you, Luke. We continue to drive HIV market transformation and are pleased to see our growth momentum continuing with HIV sales growing 14% to £1.6 billion in the first quarter. This is driven mainly by increased patient demand for our oral two drug and long-acting injectable regimens and represents an increase of more than 2 percentage points in global market share versus Q1 2023. This continued strong performance demonstrates our leadership in transforming the HIV marketplace and delivering on individual patient needs. Looking across our portfolio, Dovato, our leading oral two-drug regimen and number one selling HIV medicine, grew sales by 27% versus Q1 2023. Our long-acting portfolio is also showing strong momentum with Cabenuva, growing 73%, and Apretude growing over 100%.

With more than 60 thousand patients benefitting from these medicines, our ongoing growth is underpinned by strong patient demand and excellent operational execution. We believe that long-acting options have the potential to change the trajectory of the HIV epidemic and as the leaders in driving this market shift, it is positive to see this portfolio, growing more than 80% versus Q1 2023 and contributing 17% of total portfolio sales. In absolute terms, this resulted in £116 million of growth, representing more than 50% of the total HIV CER growth. Overall Q1 has been a very strong quarter and puts us firmly on track to deliver a growth rate of high single-to-low double digits in 2024. We were also pleased by the positive reaction from the scientific and medical community to the comprehensive set of Early phase, as well as phase 3b/4 and real-world evidence data that was presented at CROI in March, demonstrating confidence in our current portfolio and progress towards our pipeline of ultra-long-acting regimens.

HIV physicians and healthcare providers reinforce to us time and time again that the long-acting regimens, which they have in their hands today, are really transforming the lives of people living with HIV, liberating people from the daily burden of oral therapy, improving adherence and tackling stigma, which remains stubbornly pervasive. Data from over 11,000 patients participating in long-acting clinical and real-world evidence trials clearly demonstrates the effectiveness of our long-acting treatment regimen. We were particularly pleased with the interim data from the LATITUDE study indicating that Cabenuva has superior efficacy compared to daily oral therapy in individuals living with HIV who have adherence challenges. We also presented positive phase 1 data from a study of cabotegravir ultralong-acting dosed at intervals of at least every four months and positive phase 2A data from the BANNER study, exploring the use of our novel broadly neutralising antibody N6LS for the treatment of people living with HIV.

These data show continued progress towards our ambition to end the HIV epidemic, delivering our ultra-longacting pipeline, with cabotegravir replacing dolutegravir as our foundational medicine. We remain on track to offer four monthly dosing options for prevention in 2026 and treatment in 2027 as well as extending the dosing interval of our long-acting regimens in treatment and prevention to enable every-six-month dosing towards the end of the decade. At our September 2023 Meet the Management event, we committed to delivering around 40% of our revenue from long-acting medicines by 2027 and our current performance puts us on the right trajectory to achieve that goal. We are therefore confident in our ability to navigate through the revenue impact associated with the loss of exclusivity of dolutegravir.

With that, I will hand to Julie.

Julie Brown: Thank you, Deborah, and good morning, everyone. As a reminder, to align with European pharmaceutical peers, we have changed our naming convention, so I will be referring to ‘Core’ instead of ‘Adjusted’ results. Next slide, please. Starting with the income statement, with growth rates stated at constant exchange rates. Sales increased 13%, excluding COVID solutions, and were up 10% overall, reflecting continued strong business performance. As Luke mentioned, growth benefited from newly launched products Arexvy, Ojjaara and Jemperli, along with earlier-than-expected Shingrix sales to our partner Zhifei in China. Together, these added around 5 percentage points of growth in Q1. Core operating profit grew 35%, excluding COVID, and 27% overall.

The margin increased to 33.2%, with leverage from gross margin and SG&A. Cost of goods benefited from mix effects, including growth of higher margin Arexvy, Shingrix and Specialty care products. We expect to deliver gross margin leverage in the full-year, with benefits predominantly in the first half given anticipated sales phasing and mix dynamics. At the full-year, we discussed our focus on delivering improved operational leverage as we seek to benefit from the investment made over recent years. Against this backdrop, we’re pleased 2024 has started well, with underlying low-single-digit percentage SG&A growth. This, together with a one-off benefit from the successful Zejula royalty dispute, caused SG&A spend to decrease in the quarter by 2%.

R&D investment continued to grow broadly in-line with sales as expected, mainly within our Vaccines, Respiratory and Infectious Diseases late-stage portfolios. Core earnings per share grew 37% excluding COVID solutions. Now turning to the total results, operating profit decreased 18% to £1.5 billion, primarily reflecting a charge arising from remeasurements of the ViiV CCL and Pfizer put option, largely resulting from improved longer-term prospects in our HIV business and currency. Overall, currency was adverse in the quarter due to the strengthening of sterling against the U.S. dollar and emerging market currencies. Next slide, please. Moving to the Core operating profit margin. On this slide, we have shared including and excluding COVID, to provide a review of margin dynamics.

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