GSK plc (NYSE:GSK) Q3 2023 Earnings Call Transcript

GSK plc (NYSE:GSK) Q3 2023 Earnings Call Transcript November 1, 2023

GSK plc beats earnings expectations. Reported EPS is $1.28, expectations were $1.09.

Nick Stone: Hello, everyone. It’s Nick Stone, Head of Investor Relations. Welcome to our Year-to-Date and Q3 2023 Results Conference Call and Webcast for Investors and Analysts. The presentation was sent out to our distribution list by email. And you can also find us on gsk.com. Please turn to Slide 2. This is the usual safe harbor statements. We will comment on our performance using constant exchange rates, or CER, unless stated otherwise. As a reminder, following the Consumer Healthcare demerger in 2022 to form Haleon, we’re representing performance and growth of the continuing operations for GSK. Please turn to Slide 3. Today’s call will last approximately one hour with the management presentation taking around 30 minutes and the remaining time for your questions.

[Operator Instructions] Our speakers are Emma Walmsley, Tony Wood, Luke Miels, Deborah Waterhouse and Julie Brown, with David Redfern joining the rest of the team for the Q&A portion of the call. I’ll now hand the call over to Emma.

Emma Walmsley: Thanks, Nick, and welcome to everybody joining us today. I am delighted to be presenting to you all with another set of excellent quarterly results. Please turn to the next slide. Sales and profits grew double-digits for the quarter, with sales up 16% to £8.1 billion, adjusted operating profit up 22% to £2.8 billion, and adjusted earnings per share up 25% to £0.504, all excluding pandemic solutions. Our strong performance was broadly based and benefitted particularly from the outstanding US launch of our RSV vaccine, Arexvy, on track to be a blockbuster in its first year on the market. This excellent execution together with our drive for efficiency and margin accretion, means we can upgrade our 2023 sales, adjusted operating profit and adjusted EPS guidance.

For the year, we now expect sales to increase between 12% and 13%, adjusted operating profit to increase between 13% and 15%, and adjusted EPS to increase between 17% and 20%. Within sales, we are upgrading the outlooks across all segments for the year, reflecting our clear momentum. Our performance also clearly demonstrates delivery of the strategic choices we’ve made to invest in prevention, as well as the treatment of disease. New products launched since 2017 have contributed sales of £7.8 billion so far this year, with nearly 80% of them coming from Vaccines and Specialty Medicines. Approvals this year for Arexvy and Apretude, together with two important oncology medicines Jemperli and, most recently, Ojjaara, further strengthen this new product portfolio, and offer meaningful sources of profitable growth.

So taken altogether, this is a strong and sustained performance heading into 2024. Next slide, please. This quarter, further underscore the importance and strength of our Vaccines’ business. Prevention is an increasing focus for healthcare systems all around the world. GSK is a world leader in vaccines and is extremely well-placed to deliver innovation and offer value to both individuals and payers. The introduction of Arexvy in the US is evidence of this, demonstrating our strong launch capabilities because with over £700 million of sales and its very first quarter as we protect people at scale from this life-threatening disease, and especially those with comorbidities. Generating further clinical evidence for Arexvy remains a clear priority and we were pleased to present positive data in adults aged 50 to 59 years at the CDC’s Advisory Committee on Immunization Practices last month.

See also 12 Best Travel Stocks To Buy Right Now and 20 States That Produce Most Wind Energy.

Q&A Session

We also added to the outstanding clinical profile of the Shingrix this quarter. Results of the large post-marketing study in China demonstrating a 100% efficacy. And alongside this, we’re additionally significantly expanding availability of Shingrix in China, our exclusive partnership with Zhifei signed last month is going to support and accelerate our goal to Shingrix’s annual sales of more than £4 billion by 2026, and with opportunities to expand this partnership further, including potentially with Arexvy. Our innovation in RSV, shingles, meningitis and pediatrics, all demonstrate our world-leading vaccines capabilities. And we have further substantial innovation in the pipeline where we have our comprehensive and leading suite of vaccine platform technologies, including next-generation mRNA, our multiple antigen presenting system, or MAPS, as well as, of course, as our adjuvant systems.

All of these offer exciting new opportunities in seasonal respiratory, bacterial and chronic viral infections, and we continue to explore the science beyond infectious diseases. Next slide, please. Alongside delivering stronger shareholder returns, we also continue to build trust by delivering across the six key areas we prioritize for ESG. This quarter, I’m highlighting our continued commitment to fight malaria with innovation. GSK scientists working with Johns Hopkins Institute and others published their groundbreaking discovery of the naturally-occurring bacteria that can significantly reduce the malaria parasite load in mosquitoes, indicating the potential to inhibit transmission of malaria to humans. And we also continue to deliver our environment and diversity, equity and inclusion goals.

Further details, along with more, on all six key areas are included in the Q3 results announcement. Now, let’s hear more from the team on our progress, starting with Tony and R&D.

Tony Wood: Thank you, Emma. My priority is investing in our pipeline and accelerating R&D to deliver new vaccines and medicines to patients. Today, the pipeline comprises 67 assets in clinical development, two-thirds of these prevent and treat infectious diseases and HIV. During the quarter, we’ve seen continued progress. In infectious diseases, we’re focused on seasonal respiratory viruses, bacterial, fungal and chronic viral infections. In seasonal respiratory viruses, Arexvy received approval in Japan as the country’s first RSV vaccine for older adults. And we also shared positive data for 50-year-olds to 59-year-olds with the Advisory Committee on Immunization Practices in the US. In chronic viral infections, we will present data later this month on bepirovirsen, a potentially transformative treatment for chronic hepatitis B.

I’ll talk more about these data shortly. In HIV, the European Medicines Agency approved Apretude as the first and only HIV prevention option in combination with safer sex practices to reduce the risk of sexually-acquired HIV infection in high-risk adults and adolescents. For respiratory, Japan accepted the regulatory submission of Nucala for chronic rhinosinusitis with nasal polyps, and later this month alongside Luke, I look forward to providing you with insights into our respiratory strategy and medicines at the next focused Meet the Management event. For oncology, the European Medicines Agency recommended not renewing conditional marketing authorization for Blenrep. As a reminder, given the changing regulatory environment, our expectations remain low for the event-driven DREAMM-7 and DREAMM-8 Phase III trials.

We now expect to read these out in 2024. This quarter, we also reached an exclusive licensing agreement with Hansoh for a Phase I B7-H4 targeted antibody-drug conjugate, or ADC. We believe this has best-in-class potential in ovarian and endometrial cancer with opportunities in other solid tumors. Lastly, we’re delighted with the US FDA approval of Ojjaara, or momelotinib, which is indicated for treating myelofibrosis in adults with anemia, and the approval of Jemperli, our highly effective PD-1 inhibitor, as the first new frontline treatment for patients with dMMR/MSI-High primary advanced or recurrent endometrial cancer. The profile for Jemperli was strengthened by the recent interim analysis of RUBY Part 1, which reported a statistically significant and clinically meaningful survival benefit in the overall population enrolled.

We aim to present these OS data at a conference early next year. Next slide, please. Last week, we presented further safety and immunogenicity data for Arexvy to ASIP. The vaccine met its co-primary endpoints and demonstrated non-inferiority in people aged 50 to 59 years of age, when compared with adults of six years and older, including those at increased risk of RSV lower respiratory tract disease. These data continue to demonstrate the consistent strength of Arexvy’s profile in protecting the most vulnerable. We will make a supplementary biological licenses application to the US FDA before the end of this year in time for next year’s ASIP to further support potential label updates. For Shingrix, we continue to build our knowledge with new data demonstrating 100% efficacy in the prevention of shingles in China for adults aged 50 and over, a remarkable result.