AstraZeneca PLC (NASDAQ:AZN) Q1 2024 Earnings Call Transcript

AstraZeneca PLC (NASDAQ:AZN) Q1 2024 Earnings Call Transcript April 25, 2024

AstraZeneca PLC misses on earnings expectations. Reported EPS is $1.03 EPS, expectations were $1.22. AstraZeneca PLC isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning to those joining from the U.K. and the U.S. Good afternoon to those in Central Europe, and good evening to those listening in Asia. Welcome, ladies and gentlemen, to AstraZeneca’s First Quarter Results 2024 Webinar for Investors and Analysts. Before I hand over to AstraZeneca, I’d like to read the safe harbor statement. The company intends to utilize the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Participants on this call may make forward-looking statements with respect to the operations and financial performance of AstraZeneca. Although we believe our expectations are based on reasonable assumptions, by their very nature, forward-looking statements involve risks and uncertainties and may be influenced by factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements.

Any forward-looking statements made on this call reflect the knowledge and information available at the time of this call. The company undertakes no obligation to update forward-looking statements. Please also carefully review the forward-looking statements disclaimer in the slide deck that accompanies this presentation and webinar. There will be an opportunity to ask questions after today’s presentation. Please use the raise a hand feature to indicate you wish to ask a question, and remember to unmute your line when invited to speak. And with that, I’ll now hand you over to the company.

Andy Barnett: A warm welcome to AstraZeneca’s first quarter 2024 presentation conference call and webcast. I’m Andy Barnett, Head of Investor Relations at AstraZeneca. And before I hand over to Pascal and other members of the executive team, I would like to cover some important housekeeping points. Firstly, all of the materials presented today are available on our website. This slide contains our safe harbor statement, which I’d encourage you to take the time to read. We will be making comments on our performance using constant exchange rates or CER, core financial numbers and other non-GAAP measures. A non-GAAP to GAAP reconciliation is contained within the results announcement. All numbers quoted are in millions of U.S. dollars unless otherwise stated.

This shows the agenda for today’s call. And following our prepared remarks, we will open the line for questions. As usual, we will try and address as many questions as we can during the allotted time, although I would ask participants to limit the number of questions you ask to allow others a fair chance to participate in the Q&A. And with that, Pascal, I will hand over to you.

Pascal Soriot: Thank you, Andy. Good day, everybody. I’m pleased to report that we have made a very strong start in 2024. Total revenue grew by 19% in the first quarter, reflecting continued strong demand and core earnings per share rose by 13%, sorry. Recall, the first quarter of 2023 benefited from a $240 million gain in other operating income following the divestment of PULMICORT FLEXHALER in the U.S. Collaboration revenue and other operating income were minimal this quarter, which makes the EPS year-over-year growth all the more impressive. We’re also pleased to announce an increase in the annual dividend of 7% at the Annual General Meeting earlier this month. This increase is in line with our progressive dividend policy and reflects the continuing strengths of AstraZeneca’s investment proposition for shareholders.

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Q&A Session

Please advance to the next slide. We saw strong double-digit growth across our therapy areas in the first quarter. This is also the first quarter where quarterly revenue from our oncology and biopharma businesses exceeded $5 billion and rare diseases exceeded $2 billion reflecting the value our medicines bring to patients globally. We saw 19% growth in both the U.S. and Europe this quarter, driven by strong demand. Our business grew substantially in the emerging markets, and growth was pronounced — especially pronounced outside of China, driven by our sustained presence and commitment to this markets. Next slide, please. Our strong pipeline momentum has continued into 2024. We announced positive trial results for LAURA and ADRIATIC, both of which have been selected for presentation during the ASCO plenary, reflecting the important benefits seen for lung cancer patients.

As a reminder, there are five presentations at the plenary, so two out of five is a very unusual result. We saw a number of exciting new approvals in the first quarter. The approval of Tagrisso in combination with chemotherapy establishes a new benchmark for efficacy in frontline EGFR-mutated non-small cell lung cancer. The approval of a HER2 in previously treated HER2 positive cancers is the first tumor-agnostic approval for HER2-directed therapy and offers new hope for patients with the right range of cancers. And finally, Ultomiris was approved in NMOSD, and we are now working on establishing Ultomiris as the new standard of care for this debilitating disease. This approval is further build on the momentum we are seeing from other recent approvals listed here, and we’re investing to ensure that each of these new opportunities reach full commercial potential.

ADRIATIC and LAURA, if approved, coupled with the three approvals I’ve just described and ongoing launches, have the potential to deliver several billion dollars in total revenue — additional revenue in 2030. And this is what our pipeline is delivering in the first quarter of 2024. With that, please advance to the next slide, and I will hand over to Aradhana, who will take you through our first quarter financials.

Aradhana Sarin: Thank you, Pascal. And as usual, I will start with our reported P&L. Please turn to the next slide. Total revenue in the first quarter increased by 19% to $12.7 billion, predominantly resulting from strong product sales, which grew by 18%. The underlying demand for our medicines across the board was very strong in the quarter across both brands and across geographies. Enhertu and Tezspire continued their strong growth trajectory, and as a result, Alliance revenue increased by 59% to $457 million, driven by profit shares in regions where our partner booked product sales. Please turn to the next slide, which shows our core P&L. The product sales core gross margin was 82% in the quarter. As previously stated, we still expect gross margin for the year to be slightly lower than last year due to strong growth for partner medicines, including Enhertu and Tezspire as well as increased product supply to Sanofi for Beyfortus into the 2024-25 RSV season.

In the second half, we see additional impact from usual seasonal impact from medicines such as FluMist. Total operating expense increased by 15% in the quarter. R&D spend increased by 18%, partly driven by the Phase 3 trial starts, including dapa combinations with Baxdrostat and [indiscernible]. We continue to anticipate R&D spend will remain in the low 20s percentage of total revenue, inclusive of investments we are making to maximize the potential medicines acquired in recent business development transactions. We continue to show operating leverage. Supporting the 19% revenue growth, SG&A increased by 13% in the quarter. We have seen strong initial uptake for Airsupra, Truqap and Wainua in the U.S., and we’re investing behind this revenue growth as well as behind our existing brands, such as Breztri and Farxiga.

We’re also increasing our promotional efforts behind our rare disease medicines to support continued growth. We anticipate quarterly variations in our operating expenses given the dynamic nature of our business. Despite the limited contribution from other operating income this quarter, we saw core operating profit growth of 15% and core EPS of $2.06. Please turn to the next slide. In the first quarter, cash flow from operations was $2.5 billion. We saw CapEx of $417 million in the quarter, and we continue to anticipate CapEx to increase by approximately 50% on a full-year basis to support increased manufacturing capacity and support our growth. We had deal payments of $2.9 billion, including upfront payments for Icosavax and Gracell acquisition, both of which closed during the first quarter.

We also paid the third and final payment to the former shareholders of Acerta. Lastly, we paid the second interim dividend for 2023. At the end of our Q1, our net debt-to-EBITDA ratio was 1.9x. We anticipate the announced Fusion and Amolyt transactions to close in the coming months strengthening our radiopharmaceutical capabilities and expanding our presence in rare endocrinology. As a result of recent business development and debt refinancing, we expect finance expenses to grow compared to prior year. Reflecting the strength of our business, we are reiterating our full-year guidance for both total revenue and core EPS at constant exchange rates. With that, please advance the next slide, and I will hand over to Dave, who will take you through our Oncology performance.

David Fredrickson: Thank you, Aradhana. Next slide, please. Oncology total revenues grew 26% to $5.1 billion in the first quarter, driven both by double-digit growth across all regions and strong demand for our key medicines. Tagrisso global revenues grew 15% in the quarter, reflecting continued global demand for ADAURA and FLAURA. Following U.S. approval in February, we’ve seen strong interest and early uptake for FLAURA2 in the frontline setting, with oncologists particularly focused on patients with L858R mutations and CNS metastases at baseline. Lynparza delivered product sales growth of 11% in the first quarter and remains the leading PARP inhibitor globally across all tumor types. Imfinzi total revenues grew 33% on continued strength in biliary tract cancer with TOPAZ-1, which is now approaching peak market share penetration in the U.S., Japan and Europe.

Launches continue at pace across emerging markets, where biliary tract incidence and prevalence is high. And as previously communicated, we recognized a 25% mandatory price reduction in Japan effective from February 1, and anticipate a second mandatory price discount later this year. For the first time, we have split out Imjudo in our reporting and are pleased with its launch trajectory. We’ve established a strong foundation in hepatocellular carcinoma with HIMALAYA and see continued growth in non-small cell lung cancer with POSEIDON. Calquence total revenues increased 35% in the first quarter, driven by sustained BTK inhibitor leadership in frontline CLL across the U.S. and Europe. Enhertu total revenues increased 79% in the first quarter.

Again, we drove sequential market share growth in second-line HER2-positive breast cancer in the U.S. and Europe, where considerable growth remains. We see continued adoption in HER2 low across many global markets and eagerly await the DESTINY Breast 06 readout, which brings the potential for further expansion, moving Enhertu one line earlier. Following approval in November last year, we are pleased with the strong Truqap adoption in the biomarker altered population, achieving $50 million in the first quarter total revenues. Looking forward, we anticipate further expansion of Tagrisso with the approval of FLAURA2 in frontline non-small cell lung cancer and maximizing the U.S. launch of Enhertu across HER2-expressing tumors. Lastly, we’re excited that both ADRIATIC in limited stage and LAURA in Stage 3 unresectable cancer have been selected for the ASCO plenary session.

Each of these represents substantial growth opportunities in the near future and beyond, as Pascal has already outlined. With that, please advance to the next slide, and I’ll hand over to Susan to cover key R&D highlights in the quarter.

Susan Galbraith: Thank you, Dave. We’ve had an exciting start to the year with a number of key presentations, including data for our new generation PARP inhibitor, Saruparib in advanced solid tumors presented at this year’s AACR. This quarter, we announced the proposed acquisition of Fusion Pharmaceuticals, furthering our ambition to redefine the backbone of current cancer treatment. Along with chemotherapy, radiotherapy has been a mainstay of cancer treatment for decades. In fact, 30% to 50% of all patients receive radiotherapy. Whilst this treatment is effective, there’s also a toxic off-target effects. Fusion has developed a clinical stage portfolio of radio conjugates that are designed to deliver radiation therapy to tumor cells in a more targeted manner than external beam radiation.

As we’ve discussed already, we believe the future of cancer care is in combinations and there’s immense potential to combine radio conjugates with other modalities in our pipeline, including next-generation IO bispecifics, cell therapy, T-cell engagers and our DNA damage response agents. Importantly, the planned acquisition of Fusion accelerates our radiopharmaceutical manufacturing to commercial scale capabilities by over three years and offers additional security in actinium supply, with multi-source supply agreements in place. The lead pipeline candidate, FPI-2265, has potential to be the first actinium-based PSMA-targeted radiotherapy approved for the treatment of post-Lutetium metastatic gastric-resistant prostate cancer. FPI-2265 is differentiated and has potential to be both more potent and tolerable than currently approved B2 emitted conjugates.

Data presented earlier this month at AACR demonstrated further valuation of FPI-2265’s efficacy and tolerability. PSA50 response was achieved in 50% of patients overall and 43% of the lutetium-treated patient population and 54% of Lutetium-naive population. Furthermore, there were zero discontinuations related to Xerostomia, a common toxicity. We believe that our proven expertise in targeted delivery, together with Fusion’s clinical stage portfolio and manufacturing capabilities, presents an opportunity for clear leadership in the radio conjugate space. And with that, please advance to the next slide, and I’ll pass over to Ruud to cover BioPharmaceuticals performance.

Ruud Dobber: Thank you, Susan. Next slide, please. BioPharmaceuticals delivered total revenue of $5.2 billion in the first quarter of 2024, representing growth of 16%. Our key underlying growth drivers remain in place, including the continued growth of the largest cardiorenal medicine on the market, Farxiga. The increased uptake of biologic medicines in severe asthma and the ongoing momentum behind Breztri, our inhaled COPD medicine. In the United States, demand for Farxiga were strong in the quarter and benefited from the launch of Generic. We saw solid growth in emerging markets despite entry of generic competition in some countries. Presently, we still anticipate Farxiga may be included in China VBP in the second half of 2024.

Additionally, we saw a strong Symbicort performance in the first quarter despite generic pressures. This was particularly evident in emerging markets, where we saw strong underlying demand in both China and ex-China markets, strengthening its position as market leader in the region. Awareness of Airsupra continues to grow, and more than 18,000 health care practitioners have prescribed this new medicine, translating into 65,000 prescriptions in the quarter. The performance has been particularly strong among specialists. Airsupra already has over 15% of new share prescriptions by allergists and over 10% share of prescriptions from pulmonologists. As Airsupra is still in the first few months of launch, our revenues in quarter 1 did not reflect the full extent of initial demand due to introductory discounts.

These introductory discounts will fade through the year as we continue to expand access. Awareness is also building for Wainua, and we are very pleased to report our first revenues this quarter, following its recent approval for ATTR polyneuropathy in the United States. Wainua has only been available for a few weeks, but we are seeing good uptake among patients including some who are new to the class of medicine and some that have switched from other brands. Finally, we saw continued sales from Beyfortus in quarter 1, albeit with the expected seasonal drop versus quarter 4. We were particularly pleased to see the real-world data coming out of the U.S. with the Center of Disease Control reporting that Beyfortus was 90% effective at preventing infants from being hospitalized with RSV.

Next slide, please. I will now hand over to Sharon to discuss our ongoing development program for Wainua in TTR cardiomyopathy, where we have the potential to reach up to 0.5 million patients globally.

Sharon Barr: Thanks, Ruud. I wanted to take the opportunity to highlight results from a 66-week analysis of exploratory cardiac endpoint in the Phase 3 NEURO-Transform study of Wainua in hereditary ATTR polyneuropathy. In a predefined cardiac subgroup of hereditary ATTR polyneuropathy patients, treatment with oplontresin showed stabilization or improvement in cardiac function and structure relative to external placebo, including levels of NT-proBNP, a measure of cardiac stress; and a trend towards improvement in echocardiographic parameters such as left ventricular wall thickness, diastolic and stroke volume. These results provide confidence in our Phase 3 CARDIO-TTRansform trial in ATTR cardiomyopathy. ATTR cardiomyopathy is a systemic, progressive and fatal condition that typically leads to progressive heart failure and often death within three to five years from disease onset.

With more than 1,400 patients enrolled, CARDIO-TTRansform is the largest, most comprehensive ATTR cardiomyopathy study and importantly, includes cardiovascular outcome endpoints. In other key programs, we continue to maximize the opportunity for our best-in-class SGLT2 inhibitor, Farxiga. We have the potential to manage cardiorenal disease through three distinct mechanisms, complementary dual mechanisms combined dapagliflozin with [indiscernible] or Zibotentan. I am delighted to announce that all three combinations are now in Phase 3. Please move to the next slide, and I will now hand over to Marc, who will cover our Rare Disease portfolio.

Marc Dunoyer: Thank you, Sharon. Can I get the next slide, please. I’m delighted to report Rare Disease delivered our first $2 billion total revenue quarter, up 16% year-on-year. The growth rate here includes a small benefit from countries with high inflation. Growth was driven by neurology indication, increased patient demand and launches in new markets. In the quarter, Ultomiris revenue grew 34%, with the vast majority of growth coming from Generalized myasthenia gravis. GMG patients grew by 41% driven by demand in Europe and established rest of the world. In the U.S., we saw the highest number of new-to-brand patients in the quarter, supported by our increased promotional activities. During the quarter, we received U.S. approval of Ultomiris in NMOSD.

In the Phase 3 CHAMPION NMOSD trial, Ultomiris demonstrated adjugated relapses over 138 weeks. Given the strength of this data, we expect Ultomiris to be the treatment of choice for relapsing patients naive to biologics. We expect patient in Soliris to convert to Ultomiris over the short term. Following approval in U.S. and EU, Voydeya, an add-on therapy, ensure that PNH patients who experienced clinically significant extravascular hemolysis are able to continue on standard of care, Ultomiris or Soliris. Beyond complement, both Strensiq and Koselugo grew 21% and 18%, respectively, driven by patient demand as well as order timing in certain tender markets. Please advance to the next slide. During the quarter, we announced our plans to acquire Amolyt Pharma, which includes a Phase 3 asset in eneboparatide for patients with hypoparathyroidism.

Hypoparathyroidism is characterized by deficiency in parathyroid hormone production, which results in significant disregulation of calcium and phosphate leading to life-altering symptoms and complications, potentially including chronic kidney diseases. It is one of the largest known rare diseases. Phase 2a data from eneboparatide showed a normalization of serum consume level and a reduction in dependence on daily calcium and vitamin D supplements, both clinical priorities for treating patients. Data also suggested that eneboparatide has a potential to restore normal bone turnover and preserve bone mineral density. We believe eneboparatide has blockbuster potential and anticipate data from the Phase 3 CALYPSO trial in 2025. With that, please advance to the next slide, and I will hand back to Pascal for closing remarks.

Pascal Soriot: Thank you, Marc. Can I have the next slide, please? As you have heard, our company has made a very strong start to 2024 with demand for our medicines continuing to grow. Looking ahead, we are once again anticipating multiple pivotal trials to reach throughout the remainder of the year. Several important potential catalysts are shown here as well as DESTINY-Breast06, which Dave spoke about earlier, I would like to highlight CAPItello-281, which will be the first registrational study of Truqap in prostate cancer, an important potential new growth driver for this medicine. Since our full-year 2023 update, we have initiated the eight pivotal trials shown here, all of are potentially transformative for patients and could meaningfully accelerate our growth.

In addition to the exceptional delivery from our internal pipeline, we’ve also been directive with business development, building capabilities and adding new platforms to strengthen our R&D efforts in key areas, which we believe have the potential to radically improve patient outcomes, including radio conjugates, gene therapies and cell therapies. We’re very much looking forward to sharing more details about our pipeline and the long-term outlook for our company at our upcoming Investor Day on the 21st of May. Please advance to the next slide and we will go to the Q&A. As Andy mentioned at the start of the call, please limit the number of questions you ask to allow all a fair chance to participate. For those on line, please use the raise your hand function on Zoom.

And with that, let’s move to the first question, which is from James Gordon of JPM. Over to you, James.

Q – James Gordon: Hello. James Gordon, JPMorgan. Thanks for taking the questions. First question is on ’24 guidance. So it’s a very strong revenue growth, 19%. In order not to grow revenues at teens for the year, it looks like you need to only grow at about 10% for the rest of the year. So in terms of headwinds, we should be mindful of that would drive nine percentage points of deceleration. And I heard a comment on maybe for Farxiga VBP and Imfinzi price in Japan, but anything else and in particular, for Farxiga, Symbicort and Tagrisso that were very strong this quarter? Are there things through the year that we need to watch out for? Or does that look quite sustainable? And also on ’24 guidance, just on OpEx, the ratio is a little bit good to say, but this is with the strong top line before the two deals close.

So if revenue growth is a little slower through the year and you consolidate these deals, do we need to be careful on those ratios? Or can you still keep a pretty high margin? And if I could squeeze in a quick second question, just [indiscernible] and the Oral GLP-1. So I believe you’ve expanded the trial and maybe taking dosing higher. So on that, what is the latest thinking in terms of where we might see the data? I didn’t see a reference to ADA. And how are you now thinking about how competitive this product might look in terms of the weight loss and other aspects versus some other recent readouts from competitors?

Pascal Soriot: Thank you, James. James, sorry. Aradhana, maybe you can take the first one. And Sharon, would you take the second one?

Aradhana Sarin: Great. Thank you, James, for the question. It is obviously early in the year. And as you know, generally, we don’t update or provide more color on the guidance in first quarter. You’ve seen from the reported results, the underlying trend in our revenue product sales is very, very strong across the board. You’ve also mentioned some of the uncertainties that Ruud also mentioned as well as Dave. So those uncertainties are there for the remainder of the year. However, if our momentum continues the way it has been in the first quarter and some of these uncertainties on VBP pricing, et cetera are in our favor, you can think about our product revenues, our product sales and Alliance revenues could be at the upper end of our range or higher.

So — but again, we’re not updating our guidance at this point. We will continue to invest in our R&D for the long-term, including the acquired product and continue to invest in SG&A to drive the top line momentum that you’ve seen. Operating leverage continues to be a focus for us. Again, you’ve seen this quarter as well, 19% revenue growth and 13% SG&A growth. And we will try to maintain stronger revenue growth than expense growth in the coming quarters as well. With that, maybe Sharon?

Sharon Barr: Sure. So thank you for the question about AZD5004 oral GLP-1 receptor agonist. We’re really excited about this molecule and its potential to treat the interrelatedness of cardiometabolic and cardio renal disease. You asked specifically about the Phase 1 study. And as I’m sure you’re aware, we completed, together with Ecogene, a highly controlled inpatient Phase 1 earlier this year. We have the data in hand and look forward to presenting that at an upcoming medical conference later this year. You also asked about how we view the competitive position of this molecule. And recognizing that it is a highly competitive field, we do feel very optimistic about the potential for this molecule as a stand-alone as well as in combination.

So when we think about how we’re treating obesity and metabolic health, I think we honestly do ourselves a disservice by referring to this as obesity. What I’d like us to do is think about this more clearly is treating the interconnectedness of disease. And to that end, we are uniquely well positioned to combine this orally available molecule with other molecules in our portfolio that help address those interrelated diseases. As an example, combining 5004 with our SGLT2 inhibitor. So when we think about this, we can imagine that at a fixed dose, we may want one dose that would be compatible for fixed-dose combinations and another dose that would be more compatible for additional weight loss in obesity indications. And we’ll keep that in mind as we continue to design our clinical development program.

Moving forward, we have publicly stated that we will be launching two Phase 2b studies later this year, one in obesity and one in Type 2 diabetes.

Pascal Soriot: Thank you, Sharon. And James, you asked the question of the doors, but you got to remember that not everybody needs to lose the same amount of weight. And so as you target higher weight losses, Sharon was talking about in the Obesity segment, you would expect to have to go through a titration regimen and get to a higher dose. So it’s not surprising that we would explore different doses depending on how much weight loss patients are needing. The next question is Seamus Fernandez of Guggenheim. Over to you, Seamus.

Seamus Fernandez: Great. Thanks for the questions. So I guess as, Pascal, a little bit of a preview of the upcoming analyst event. Just hoping that you could provide us with a little bit of color on how you’re thinking about potential for updated guidance. Is the most important factor of the meeting really giving and helping us understand long-term visibility around revenue? Or is it more on a margin or a little bit of both? And then just a second question. As we think about the three products that you’ve highlighted on the BioPharma side of the business, the oral PCSK9, the GLP-1 and the long-acting amylin, just hoping you could help us or help provide some context around of the three which you’re most excited about and perhaps when we might see data on all three? Thanks.

Pascal Soriot: Thanks, Seamus. So the first question about the Investor Day, I guess I would like to invite you to join us in a beautiful Cambridge to see more of the details of what we’re going to present. But the short answer to your question is a little bit of both. Essentially, what we want to do is show people how we are looking at what I call today, tomorrow and the day after. Today is what do we intend to deliver in terms of our financial progression in ’24, ’25, ’26. Tomorrow is what are the products we are going to launch that will drive our growth between 2025 and 2030, and what is our strategy there, what do we intend to do with our pipeline, and what other products we believe are growth drivers to 2030. And the day after tomorrow is really the sort of post-2030 period.

And what are — what do we believe are the technologies that will shape the future of medicine in oncology and beyond, and how are we building some of those platforms that will help us shape — participate in shaping the future of medicine in the therapy areas where we are. So that’s really what we want to do at the Investor Day. And we also offer, for those of you who are early risers and will be physically on site, we’ll also give you a chance to look around our site and experience a little bit what we have on site. The second question, let me give you a couple of comments and then maybe Ruud and Sharon could add. We are always more excited about products for which we have more advanced data. Those three products are, of course, exciting, but we have more data for the PCSK9, which is a very exciting product.

And also more data for the oral GLP-1. Long-acting amylin is technically interesting where we need more data, but it certainly so far looks pretty good. And we think we can actually, as Sharon said, with the combination of the GLP-1 and the rest of our pipeline, not only PCSK9, but also dapa and also potentially Baxdrostat, we can make a difference in this segment of patients who need to lose weight but also manage their cardiovascular risk factors. And in the obese segment, where people need to lose 20%, 25% of their weight, then we can look at combining our overall GLP-1 with the long-acting amylin and some other mechanisms. Sharon, if you want to maybe also add a little bit on how you see this pipeline.

Sharon Barr: Sure. So I’ll jump in on both. People often ask about which molecule I’m more excited about. And I find that very difficult to answer because, obviously, I’m very invested in all of them. But the first one that you asked about was our oral PCSK9 inhibitor, and we are extremely excited about the potential for this molecule. We will be releasing Phase 1 data at an upcoming conference in the very near future. But I think it’s safe to say that we set ourselves a very high bar with this molecule, but we asked that it be able to meet a major unmet medical need. We know that despite high-intensity statins, about half the patients with cardiovascular disease are not hitting their LDL targets. And so we asked this molecule to be able to offer substantial lowering on top of statins, and we’re very encouraged by the data that we see.

So we are actively moving forward with this molecule in clinical development and thrilled to be sharing the data at an upcoming conference. Relatedly, you asked about our obesity portfolio. And again, I think I would really think of it more as our optimal weight management portfolio, in which we are exploring both incretin and non-incretin pathways as multiple mechanisms to manage both weight and interrelated cardiometabolic and cardiorenal disease. So we are positioned to go beyond short-term weight loss and to deliver long-term weight management and healthy lean mass management, addressing cardiometabolic risk and also organ protection. And we think that we’ll be able to achieve this by driving forward with multiple mechanisms in combination.

Thinking about both the incretin pathways, as we’ve discussed earlier with 5004, and non-incretin pathways, for example with long-acting Amylin. Long-acting amylin, as you can imagine is a different route of administration and we think could offer some additive benefits outside of that, that we’re already seeing in the incretin pathway. So we are accelerating several assets through Phase 1. We spoke earlier about 5004, AZD6234 is our long-acting amylin, ACD9550 is our GLP-1 glucagon dual receptor agonist. And both of those added two molecules are progressing through Phase 1. We look forward to sharing it with you when ready.

Pascal Soriot: Thanks, Sharon. Ruud, anything you want to add?

Ruud Dobber: No.

Pascal Soriot: Cool. So let’s move to the next question, Sachin Jain at Bank of America. Sachin, over to you.

Sachin Jain: Hi, there. Thanks for taking my questions. Sachin Jain, Bank of America. First one today on Truqap. Strong first quarter, just any initial launch feedback. And then I’m going to try and go to Roche talked to $2 billion for their PI3K yesterday. I wonder if you could talk about the relative profile of your asset related to this and whether you’d go bigger then $2 billion in breast and size, the prostate opportunity that Pascal specifically called out? Second question is for Susan. AVANZAR is due in ’25. When do we see the data that informs on your confidence? And what I’m after there is timing of any TROP2 biomarker data? And what should we focus on from TLO2 at ASCO? But I think, you’ve commented to. And then last quick question for Sharon, [indiscernible] now 25 plus. Do you still plan an interim next year? Thank you.

Pascal Soriot: Dave, do you want to start?

David Fredrickson: Sure. Thanks, Sachin for the questions. So on Truqap, we are really pleased with the launch and following what was a really positive reception to the presentation of the data we’ve seen that the uptake is really moving quite nicely. And I think that uptake in the biomarker population really speaks to the need to extend endocrine-based therapies. We see testing rates are well established by NGS in the U.S. So we’ve got over 60% on that. And while there was a previous standard of care with PI3K, we’re seeing that rapidly get displaced, there is still plenty of opportunity to continue to grow within that segment. So demand is off to a very good start, though I think that there is certainly much more opportunity for us to continue to grow.

There’s some late line bolus that we’re probably seeing within the numbers as well. But again, I think that underlying demand and the indication that we’ve got is very, very strong. On your specific question also around comparison to the INAVO120 data, from my and our understanding, I think that you first have to take a look at the inclusion criteria. The inclusion criteria are certainly different between that study and 291. In that study, the inclusion criteria only include patients who have progressed during or within 12 months of adjuvant ET completion. It’s also limited to the PIK3CA patient population. So if you take a look at 291 within that context, we really have the de novo and the nonearly relapsers in the second line post CDK4/6 plus AI setting in addition to the fast progressors.

And I see more like three quarters of the patients falling into this de novo nonearly relapser population. So I’m enthusiastic about the opportunity in breast cancer. I’m enthusiastic about the opportunity also in prostate cancer. And I think you put these two together, and we’ve got the potential for Truqap to be a multi blockbuster.

Pascal Soriot: Susan?

Susan Galbraith: Okay. Thanks, Dave. So for AVANZAR, again, yes, as I said, the trial is going well. But the TROP2 biomarker data, I expect that we would be able to share those data at the Congress within the next 12 months certainly. And as far as ASCO goes, one thing beyond the lung cancer data that I would encourage you to take a look at is the I-SPY 2 data, which is a neoadjuvant study in breast cancer. Again, looking at the combination of dapa and Imfinzi in that setting. So I think we continue to be happy with the profile that we’re seeing for data plus IO across the first-line settings in lung cancer. The safety is looking very reasonable because we’ve got many patients now enrolled into those first-line settings. And again, as we move this combination into the earlier lines in settings like the neoadjuvant setting, I think both the safety and the efficacy profile look encouraging. So that’s what I would point you to ASCO. Thanks.

Pascal Soriot: Thanks, Susan.

Sharon Barr: And then your last question, I believe, was about the Eplontersen CARDIO-TTRansform trial and our expected time line for readout on that one. So as I mentioned earlier today, we remain extremely optimistic and excited about the potential for this molecule. And I showed you some early data that came from our NEURO-TTRansform study, which demonstrated a benefit on cardiac structure and function, which gives us additional confidence in the potential for the molecule as we walk through the CARDIO-TTRansform study. This molecule has the potential to be a best-in-class and transform care for patients with amyloidosis. So to that end, we would like to give this trial the best chance for success and to be able to read the full trial data at the 140-week time point. That in mind, we’ll continue to scan the competitive landscape and make the appropriate decisions as we move forward.

Pascal Soriot: Thank you, Sharon. And Sachin on part of your question, we never comment, as you know, on interim analysis. So of course, we will not do any — we will not do it here either. Next question is Tim Anderson at Wolfe. Tim, over to you.

TimAnderson: Thanks. Hopeful of questions. On data, just an update on your thinking on the lung filing in the U.S., if the overall survival data only continues to be directionally supportive and doesn’t fall a little bit upper-end threshold of one. Is that enough to get U.S. approval? And then what would that mean for ex-U.S. approval? And when is that next survival look going to incur? And then the second question is just emerging markets. China, obviously has slowed from years ago for lots of companies. What really stands out in your results is that non-China emerging market segment, which is substantial now continuing to grow. But it’s just not clear to me what the drivers of that are in terms of geographies and products, and therefore, what the future growth expectations should be in those non-China markets. So if you could add some commentary, that would be helpful. Thank you.

Pascal Soriot: Thank you. So maybe, Susan, you could take the first one.

Susan Galbraith: Yes. So for Dato-DXd TROPION-Lung01 study, obviously, we’ve announced that we have filed, obviously, for all regulatory authorities OS in lung cancer is an important component that they want to look at. We said that the timing of the OS data cut is around the middle of the year. As you know already that we saw an overall trend in favor of OS on the data arm in the ITT, but what we also saw is in the non-squamous group a more positive trend with the upper end of the confidence [ph] interval just crossing one. So we were looking and hoping that we’ll see both of those continue or improve. And I think that will be an important piece for the regulatory authorities to look at. Thank you.

Pascal Soriot: Thank, Susan. And the second one, maybe Leon, who is online, I believe, Leon, can you actually comment on that one?

Leon Wang: Yes. I think, Tim, actually, across the all geographic AstraZeneca emerging market has been growing rapidly and almost no exception. And of course, there is some currency depreciation in certain countries. But overall, still very, very strong growth. And we are also in line with the global new product launch. I think Tagrisso, Farxiga, these oncology brands, and also rare disease as a new growth driver, and is also doing very well across the emerging markets. And all in all, on top of that, the LOE post patent expired products, the legacy products, that are still quite that we spend very little resource and also growing nicely to support as a cash cow, our new launches. And also across the region, we are speeding up approval in many emerging markets. So we launched new products much earlier than before.

Pascal Soriot: Thanks, Leon. So net-net, Tim, you have really two factors. One is we have a very strong commercial footprint in those countries. Now we are actually the number one pharma company in the international region. And so we are leveraging this strong commercial footprint across all subregions. The second factor is we actually, a couple of years ago, invested more resources into a specific international region, regulatory team. And that team has been fast tracking, filing and approvals of new products in those countries who historically were falling behind the priority geographies. And now we still launch after the U.S. and Europe or Japan in those countries, but not that much later, and we are still working on accelerating this. So those two factors are really the most important growth drivers. The next question, I think, is Mattias Häggblom at Handelsbanken. Mathias, over to you.

Mattias Häggblom: Thank you. It is Mattias Häggblom, Handelsbank. Two questions, please. So firstly, on Dato-DXd, you initiated a couple of additional Phase 3 programs during the quarter with your partner. So what makes you so confident to continue to invest into these programs? Or asked perhaps differently, with investor communities still skeptical today to the — what in particular is it you see that investors may miss? And then secondly, as one of few companies with both bispecific antibody as well as cell therapy capabilities in-house. Can you talk about how you think about engaging these tools into autoimmune disease, whether it’s emerging early data from both sets of technologies that looks promising? Thanks so much.

Pascal Soriot: Thanks, Mattias. So first question, I think we’d go to Susan. And the second, Sharon, you’ll take that one. Okay.

Susan Galbraith: Yes. So thanks for asking the question about Dato-DXd. So yes, we have announced that we’ve — we’re starting TROPION-Lung01, which is a combination with rilvegostomig, our PD-1/TIGIT bispecific and data, compared to pembro in locally advanced first-line non-small cell lung cancer. And again, that is a program where we’re going to be looking at this activity in a biomarker selected group as well. But it also includes the ability to compare rilvegostomig directly with pembro in that setting. So I think what underpins our confidence there is both the combinability and with IO that we have seen in different settings, the potential for the — some added efficacy for the addition of the TIGIT mechanism of action as part of this bispecific within the PD-L1 greater than 50% patient population as well.

And we think that this can be a winning combination in that setting. The other important study that I draw your attention to is the TROPION-Lung14 study, this is a combination of Dato-DXd and Tagrisso in the first-line non-squamous EGFR-mutant non-small cell lung cancer. And again, this builds on both safety and efficacy data that we’ve seen from the ORCHARD platform study that we have in a post generation EGFR inhibitor patient population in the EGFR-mutant. And also the safety and combinability for that combination. So that’s what gives us confidence. As you may have seen in the TROPION-Lung05 data that was published is actually really good activity for Dato-DXd within the EGFR-mutant population. And given the FLAURA2 data, which we’ve also seen I think that that also builds confidence in the ability to combine Tagrisso with chemotherapy and directed agents.

And so I think this has the opportunity to further build on the data that we had from FLAURA2 and the data from ORCHARD and really have a winning combination in the first-line setting for EGFR-mutant non-small cell lung cancer.

Pascal Soriot: Thank you, Susan. Sharon?

Sharon Barr: Sure. So thank you very much for the question about cell therapy and bispecifics in autoimmune disease, because I think it’s a really interesting topic that has become a key focus for us. As we think about how we manage diseases of immune dysregulation, we are moving from managing symptoms to modifying disease by adding the causality of disease. And the mechanisms that you mentioned, cell therapy and bispecific molecules, are two excellent modalities that allow us to really address the causality of disease. So to that end, we have invested in internal capabilities, but also accelerated our ambition with recent acquisitions. As you saw, we very recently closed an acquisition of Gracell which brought to us some, I think, leading capabilities that allow us to really accelerate our ambitions in cell therapy for patients with autoimmune disease.

And specifically, gray cell has a bi CAR-T which they have used to complete an investigator-initiated trial in China for patients with systemic lupus erythematosus, or SLE. And we look forward to share those data at an upcoming medical conference. But I think it’s safe to say that the data that we have seen across the patients treated is at least as compelling as anything that we in the published literature and gives us a lot of excitement and optimism about how we may be able to address SLE for patients moving forward. At the same time, we’re also investing in our internal platforms for creating T-cell engagers, which we think also could be a very powerful modality in the autoimmune space.

Pascal Soriot: Thank you, Sharon. Mark Purcell at Morgan Stanley. Mark, over to you.

Mark Purcell: Yes, thank you very much, Pascal. Two questions. The first one, the U.S. oral oncology products, the product sales there were very strong in the quarter. Could you help us understand the impact of treatment initiation dynamics and potential changes in affordability? And then secondly, on the Fusion Pharmaceuticals platform, for FPI-2265, can you help us understand your plans for moving into sort of pre-taxane setting? Would you do a head-to-head trial there versus Pluvicto potentially combined with PARP-1? Obviously, understanding with the post-Pluvicto opportunity itself has blockbuster potential anyway. Thank you very much.

David Fredrickson: So Mark, thanks. I’ll take the first question, probably Susan on the second. I mean I think the first important piece is that within the quarter on our oral oncolytics, particularly with Calquence and Tagrisso, we saw a strong market share performance. Calquence remaining the leading BTKi in front line CLL, and strong continued demand growth for Tagrisso in adjuvant in front line and encouraging early FLAURA2 launch. With that said, also, we do see early encouraging trends of lower abandonment and improved access due to affordability, though it really is too early to quantify. And of course, recall, Mark, that in 2024, there’s no added liability associated with Part B, whereas it comes in ’25. But we’ll continue to keep updated on how those dynamics on affordability evolve over the course of the year.

Pascal Soriot: And Mark, on your second question, the deal hasn’t closed and so we are not able to comment at this point in time. Sorry about this, and hopefully, we can give you an answer pretty soon. Richard Parkes at Exane. Richard, over to you.

Richard Parkes: Hi, thanks for taking my questions. Firstly, sometimes when speaking to investors, I get the perception, those are feeling that AstraZeneca is spreading it cells too thinly with expansion into vaccine cell therapy, radioligand. Just wondering how you respond to that and whether you see any risk of the organization losing focus, and how you’re thinking about some of those investments in new platforms? It feels to me like there’s more you’re just thinking about that the day after tomorrow. So that would be very helpful. And then on Airsupra, could you just talk a little bit more about the opportunity you’re seeing? Obviously, we’re seeing some very large drugs in that category in the past. And just thinking about how you’re thinking has evolved on the opportunity since the launch. Thank you.

Pascal Soriot: Thanks, Richard. Let me try the first question. And maybe Ruud, you could cover the second one. So the first question, I think first point is, I’m sure you’ve realized, we have a very, very strong team and people are very focused on oncology, BioPharma, rare disease and managing their portfolios. Second point is we are now kind of a $50 billion company. So you really need a portfolio to continue growing. And I think this is one of our strengths. We’re not depending on two or three products. We have a portfolio of products that are driving our growth. And we can actually highlight that better to you at the Investor Day very soon. Third point I would make is that actually, this portfolio actually gives us the opportunity to combine.

And again, that’s what we want to highlight during the Investor Day. We’re in a unique position to combine in oncology across ADC, bispecific, potentially in bispecific IO potentially in the long run, take an approach to solid tumors to address the tumor with a combination of ADCs and bispecific and follow this with TCEs or cell therapy. In the cardiovascular space, Sharon has covered it, we can combined across the GLP-1 and PCSK9 or the other agents, the PARP, of course. So I think these are the things that actually help us. On the vaccine front, I think there’s sometimes a misperception of what we’re trying to do. We’re not trying to build a vaccine business like vaccine companies have. We are actually targeting vaccines that will be synergistic, strategic to our vaccine and antibodies, by the way, that are synergistic to oncology or respiratory disease products that will protect patients from exacerbations of COPD or asthma products that would protect patients from COVID or flu infections.

If there are say cancer patients, blood cancers in particular. So this is really what we’re trying to do, always try to be implementing a sort of a strategic synergy across our portfolio and leverage our expertise and [indiscernible] in various places. So I don’t think we are too thin. And then too thin spread. The challenge and the opportunity in our industry is always to be able to think about today, but also the long term. It would be very easy, quite frankly, or easier to focus on the next four, five years. But we also have to think about what is going to shape the medicine in five to 10 years. So that this company remains a growth organization, not only in the next few years, but in the long run. And so that’s always the challenge is really to manage our near-term long-term, but also it’s an opportunity.

If we do that well and if we play our hands very well, we can be very differentiated as a company. So Ruud, over to you.

Ruud Dobber: Yes, of course. And thank you so much for the question, Richard. So first of all, Airsupra is a unique product in the United States, because it’s the first rescue therapy for asthma patients above 18 years of age. It’s a very substantial market. The short-acting beta agonist market. Just to give you a little bit of context, roughly 35 million inhalers are prescribed every year for the 18-plus population in the United States. So the volumes are very, very substantial. And we truly believe with that, we have a product in place which can change the treatment paradigm of as needed as rescue medication in the U.S. Of course, it’s still early days, but the fact that we already see a very substantial number of scripts every week, plus that more and more physicians are prescribing it.

I truly believe that over the next few years that this product will become a blockbuster molecule. And equally, we’re also looking for other opportunities in other geographies in the world. Especially in the Middle East, we see good opportunities to launch the product there as well in the next few months. So all in all, very bullish regarding the forecast and the potential of this product moving forward.

Pascal Soriot: Thanks, Ruud. The next question is from Christopher Uhde at SEB. Christopher, over to you.

Christopher Uhde: Hi, can you hear me?

Pascal Soriot: Yes.

Christopher Uhde: Good. So yes, I guess, first question is a lot of the key sort of Part D products, and I guess the U.S. in general had really strong performance. Can you quantify how big a headwind the typical U.S. coverage resets amounted to? And what factors beyond strong demand, help explain why Q1 was so strong? And roughly, how much did they selectively contribute then to top line growth? Noting that, for example, Farxiga was one of those factors was the authorized generic. And then my second question, which pipeline events for the rest of 2024 do you get most excited about? And which do you think the street might be underappreciating and what are we missing if so? And if I could sneak in the last one. You said M&A will slow down earlier today I’ve read. As you’ve got most of what you need. I know you don’t have a KRAS though, perhaps you could tell us what your thoughts are around KRAS and why that isn’t in your portfolio? Thank you.

Pascal Soriot: Thanks, Christopher. So maybe, Ruud, you could take the first one, and I’ll try to address the others.

Ruud Dobber: Yes. Yes, an excellent question. We have seen very strong growth in the United States for both Farxiga and Symbicort. It’s driven by two different factors. First of all, we have launched an authorized generic of Farxiga in the United States. The option for patients to have a lower cost option as well. And so far, we are very pleased with that introduction of this new — not new medicine, but this new offer to patients. And of course, we will not know until, let’s say, a few quarters more how the products will be perform. But so far, the feedback has been extremely strong. Equally, I think it’s important that looking at Farxiga in totality, that the growth across the world is extremely strong on the basis of the CKD and heart failure indications.

And there’s no reason to believe that that will slow down anytime soon. So that’s good news. Symbicort, we have closed our list price, the so-called reg price in the United States, like other competitors have done as well. So we need to see how that will evolve in the next few quarters. So it’s a little bit of a new dynamic in Part D, let’s say, in quarter one for our products. But all in all, a very nice first few months, and we will monitor it very closely, of course, moving forward.

Pascal Soriot: Thanks, Ruud. I mean, try the — other two questions quickly in the interest of time, is the pipeline and what is more exciting until 2030, Christopher, I would again invite you to join us in Cambridge. We are offering free tickets, a visit to beautiful Cambridge. And I’m sure we’ll find a way to give you a nice lunch, too. On the M&A, I said it will slow down. It doesn’t mean it will be zero. What I meant to say earlier in terms of slowing down is from a technology, from a platform viewpoint, I think we have acquired and built most of what we need for now and we need to execute on what we’ve got. But it doesn’t mean, of course, BD will come down to zero. And in terms of the specific last question, I want to answer this one. But we have our own internal program, and we can discuss some of those things again in Cambridge. So I’ll move to Eric Le Berrigaud at Stifel. Over to you, Eric.

Eric Le Berrigaud: Thank you, Pascal. First question to come back on Farxiga and Symbicort in the U.S. Maybe more specifically on Farxiga, is there any way we can get any idea about the one-off could be into the Q1 numbers with the inventory buildup for the authorized generic. And on Symbicort, in the context of the drug being genericized in the U.S., we’re expecting sales to go down. It was up 28% in Q1. What could be the dynamic for U.S. Symbicort for the full-year ’24? And then a more general question. We see more and more companies simplifying, streamlining the organization by combining the different divisions in one single like vaccine with pharma or onco with the rest of pharma. And you’re still operating with different entities like onco, BioPharma, Alexion, D&I. Could you maybe summarize maybe you’re thinking about doing things differently, but the benefit of doing the way you do and benefit versus risk and complexity? Thank you.

Pascal Soriot: Yes. So let me start with this question, and Ruud can cover Farxiga and Symbicort in the U.S. It’s not still, it’s actually we moved to that structure not that long ago, a few years, of course. But in our industry two, three years is not a long or four years is not a long time. That’s what we believe and in the importance of being focused, on the one hand, people say you have too much; on the other hand, we say, well, put everything together. So I think the reason why we can succeed with our portfolio and leverage that portfolio is because, indeed, we are focused. We’re focused on oncology, biopharm and rare disease. And anybody who’s operated in oncology I think would, hopefully agree with me that oncology is very specific.

This is very specific and just the same as cardiovascular, you need to build capabilities. And you can do this if you do two things. First of all, recruit the right talent to understand the environment they are in. And secondly, create a culture and in a community where people feel they work together to the same goal. In the case of cancer, the goal is eliminate cancer as a cause of death. And every immunity in the company has this total focus, that share purpose, and that’s what drives people. People come to work to make a difference and make a difference in the field they are in and the field they love typically. So I think this is really the reason why we can actually succeed, and we’ll intend to keep that structure as it is. Ruud, over to you.

Ruud Dobber: Yes. Thank you, once again, Eric, for the two questions. First of all, once again, let me remind you about the U.S. is a very important market for Farxiga, there’s no doubt, but it only represents less than 25% of our global sales. And we are very pleased to see that’s the brand is growing extremely fast, not only in the United States but across all the other geographies. Specifically to your question, can you provide a split between the authorized generic and the brands, the short answer is we’re not going to do that. But equally, of course, you can look at the script volume, if you analyze the script volume of Farxiga, is the Farxiga brand as well as the authorized generic. Now whether the strong initial growth will continue moving forward.

We need to see that. We simply don’t know. Equally for Symbicort, Symbicort it’s quite amazing that after 20 — more than 20 years of initial launch, that Symbicort is still annualizing more than $2 billion a year. Very fast growth again in the emerging markets, but also equally this year so far in the United States. And it’s heavily driven by the fact that we have an authorized generic available as well as we have also lowered our WAC, the so-called list price, in the United States. So it becomes more affordable for many patients. And once again, whether that will continue during the course of the year needs to be seen. But so far, it’s very pleasing to see that both brands are off of a very strong start in the United States as well as outside of the United States.

Pascal Soriot: Thanks, Ruud. Maybe I would add that everybody talks about one-offs. And to be honest, I’m not sure why there’s such a focus on one-offs. If you look at Farxiga in the U.S., Q4 sales were $450 million, Q1 sales are $470 million. And if you look at the trend over the last few quarters, we’ve had a very strong trend. And if you may be combine this with the prescription trend that Ruud was talking about, they sell a little bit of stock up. But it is not really what drives the trend for Farxiga, it’s a very strong trend, not only in the U.S. but across the world. So every country is behaving the same way. We have very strong uptake in kidney disease, heart disease, diabetes, et cetera. The next one is Steve Scala at Cowen. Over to you, Steve.

Steve Scala: Thank you so much. I have two questions. First, DBO6 hit its primary completion in March. Is the data in-house? And is that underpinning your confidence? And second, why is there, what seems to be a long delay in presenting the oral GLP-1 and oral PCSK9 data? I could think of four possible reasons. One, there’s a lack of appropriate venues. Two, AstraZeneca is strategizing on next steps on how to approach the market and wants to figure this out first. Three, there’s some issue with the molecules or data that you’re working through, perhaps it is underwhelming. Or four, we’re just being too optimistic on how long this all takes. So any thoughts would be appreciated? Thank you.

Pascal Soriot: Thanks, Steve. So let me just address the last one quickly, and then we could talk about DB06. And you forgot one option which is our policy, and our policy is to present data at medical congresses and that’s what we have decided to do, we stick to this. But maybe your second option is also part of it. For sure, we are, in the meantime, strategizing what we’re going to do with our portfolio and how we develop this product. But really, the driving force is simply we debated it internally because you raised a good point, but we concluded we didn’t want to do — to come up with an exception here. And so you’ll have to wait for the next potential option as a medical congress. We are, by the way, I have said, and I think I can confirm, we’re starting Phase 2 this year. So we are on track, and we will not be preparing Phase 2 if we were not confident with the oral group 1. DB06, Susan, do you want to cover that?

Susan Galbraith: Yes, sure. So DESTINY-Breast06 is obviously a setting earlier than DESTINY-Breast04. It includes the IHC 1+ and 2+ as well as a group of the ultra-low group. And the confidence in DESTINY-Breast06 is really built from the DESTINY-Breast04 dataset, which we obviously presented some time ago. So we are looking forward to the data. We said its first half of this year. So hopefully, you don’t have to wait too long for getting those data, and we’re eager to share them with you. Again, just as a reminder, the primary endpoint is PFS in the HER2 low group. So that the IHC 1+ and 2+, and then there’ll be descriptive analysis of the HER2 ultra-low patient population as well. And as a reminder, further, even though these patients are below the 1+ category, they still have a higher number of HER2 receptors on the cell surface than normal epithelium.

So just to put numbers on that. Normal epithelium for HER2 is about 20,000 receptors per cell. At the 1+ – to 2+ ranges between 100,000 and 200,000. So in that ultra-low group, you’ve got somewhere between 20,000 and 100,000 receptors per cell. So you can see that there’s probably a significant proportion of that group that will have higher expression level of HER2 on the cell surface than normal epithelium would. And that’s one of the reasons why we think there’s a potential to go beyond the 1+ group into that ultra-low group and see benefit over the current standard-of-care chemotherapies.

Pascal Soriot: Thanks, Susan. Next question is from Simon Baker of Redburn. Over to you, Simon.

Simon Baker: Thanks Pascal for taking my questions. Two, if I may, please. Firstly, going back to Farxiga. I just wonder if you could talk us through the rationale for the timing of the authorized generic now. I may be missing something, but the [indiscernible] pattern goes in October ’25. So some thoughts there would be helpful. Alongside also the FDA issuing a request for pediatric studies in March 2019, that hasn’t yet been reflected in the orange book. So I just wondered what the state of that was. And then secondly, on TROPION-Lung10, you’ve moved forward with one of the combinations, which is in the TROPION-Lung04 study, obviously, on high confidence. I just wondered where that — where your confidence rests with the combination with volrustomig and sabestomig? Thanks so much.

Pascal Soriot: Thank you, Simon. So Ruud, in the past, you were complaining not enough questions to BioPharma. You’re now going to complain too many questions.

Ruud Dobber: No, it could be less. But no, it’s a great question, Simon. So why now, it’s relatively straightforward. First of all, we have a huge opportunity still in CKD and heart failure. And it is clear from all the analytics we have done that a lower cost option for some of those patients are very important in order to capture even more volume. The second one is also true, to that extent, it also mitigates the impact of a potential MCAP. So the inflation penalty in the United States as well. So those two factors were important regarding the timing. Regarding the pediatric indication, it’s not yet in the orange book, so that’s a very good observation. But equally, we feel comfortable that the FDA will grant us the pediatric indication. And hence, our base assumption is still that the patterns will stay in place till April 2026, which we have signaled multiple times.

Pascal Soriot: Thanks, Ruud. Susan, do you want to cover the second question?

Susan Galbraith: Yes. In the TROPION-Lung10 study, as I mentioned before, is the combination with volrustomig and Dato and it’s in a patient population that’s greater than 50%. As we said before, what we see in terms of the evolution of the IO checkpoint inhibitor landscape is a segmentation. And our two bispecifics, we see the volrustomig PD-1 TIGIT as being focused on the IO sensitive or highly expressing PD-L1 part of the population, and that’s in line with what you see in terms of the patient population in TROPION-Lung10. Volrustomig, we’re focusing that on the tumor types where CTLA-4 sensitivity has been demonstrated and can add extra efficacy. Obviously, with volrustomig, it is designed to be better tolerated than the combination of CTLA-4 and PD-1 separately, because it only binds CTLA-4 in the presence of PD-1.

And we have shown an improved safety profile, but it still does have more side effects than you get with a PD-1 agent on its own or with volrustomig. So we will select that drug where it will make the biggest difference. And you’ll see that as the — as you see the evolution of the EVOLVE studies with volrustomig.

Pascal Soriot: Thanks, Susan. Next question is from Andrew Berens at Leerink. Over to you, Andrew.

Andrew Berens: Thanks. And congrats on the strong quarter. Kind of a big picture question on the AKT class given the results of Truqap. Just wondering how you see it integrating in the evolving paradigms. It’s obviously incredibly dynamic. And specifically, would like to know how you guys see the AKT class integrating with CDK2 agents, CDK4 selective drugs, the oral SERD to graders, and also the ADCs that are starting to spread their wings into a number of these areas?

Pascal Soriot: Okay, Andrew, thank you. Thank you for asking one question. Actually, Susan, over to you?

Susan Galbraith: Yes. So thanks for the question. So AKT is obviously part of the PI3 kinase AKT pathway, which is the most commonly mutated or aberrant pathway in cancer. So we think this is a very important mechanism. And we are looking at combinations of capivasertib with our camizestrant, our oral SERD drug that’s already in multiple Phase 3 trials as well. So I think there’s potential for it to be further expanded beyond the current set of trials that we’ve already got in development. And I do think there are data that it can be a potential combination agent with a number of the other things that you raised. We do have a CDK2 inhibitor, a highly selective CDK2 inhibitor, which we profiled at the AACR meeting that was in San Diego earlier this month.

We think that’s a very exciting molecule that will address the resistance mechanisms to the CDK4/6 inhibitors. And so I do think that this cost of agents can be combined with the emerging both new endocrine backbone agents and the newer versions of things to address the CDK4 mechanism and the resistance to CDK4, which typically is represented by sensitivity to CDK2 inhibition.

David Fredrickson: Just maybe to also build on to Susan’s answer, and I think what’s important and great about this is we’re talking about leadership in breast cancer. And as part of that leadership in breast cancer, we’re really looking to build and improve upon the two existing pillars in the treatment of metastatic disease and then adding a third. And the existing treatments and existing pillars are ET plus or minus CDK4/6, and then obviously chemotherapy. I think what’s important about the AKT class is it gives an opportunity for patients to continue to stay on ET-based therapies, which has a lot of benefits associated with it. We also know, though, that at some point, ET therapies are no longer effective and that it’s a time to start to switch towards chemotherapy.

And within that, that’s where the ADCs now create a third new pillar that sits in between classical chemotherapy and ET-based approaches. We hope that DB06 will provide even a further therapy option that sits within this. But you start to see the opportunity to begin to offer to physicians more options for how they can think about treating their patients as the disease progresses. And we’ve got best-in-class therapies to go into each of those pillars and then gives us an opportunity to look at combinations down the road.

Pascal Soriot: Thanks, Dave. Actually, this discussion gives me chance to go back to, I think, the question Richard asked earlier about the pipeline. I mentioned combinations, but also this pipeline enables us to actually shape the treatment algorithm, as Dave was suggesting a minute ago, in breast cancer or lung cancer. And it also enables us to better partner with lung cancer oncologists or breast cancer oncologists and really truly be part of the way breast or lung cancer or other cancers are treated. And it’s true for cardiologists, not only managing cardiovascular risk, but also if you look at amyloidosis, we have 2220, which is an amyloid depleter, we also have a [indiscernible]. So Again, all of those things will give us a great chance to partner with key physicians, but also leverage our portfolio to shape treatment algorithms and look at combinations. Emily Field of Barclays. Emily, over to you.

Emily Field: Hi, thanks for taking my questions. Just two on respiratory. A lot of excitement about the tezepelumab COPD data to be presented at ATS. Given what we’ve seen so far, is it your expectation that this would be taken in late-stage development in a broader eosinophil population, i.e., over 150s and over 300s? And then on the back of that, similar to the obesity question that was asked earlier. You have so many assets in late-stage development in COPD. Maybe asking from our side, what should we be focusing on in terms of just all of the late-stage COPD programs that you have? Thank you.

Sharon Barr: Sure. Thanks so much for the question. So I’ll start with your first one which is about tezepelumab in our Phase 2 core study, and then I will speak more broadly about this COPD portfolio. So you touched on teze in our recent Phase 2 trial completion, and we look forward to presenting those data at ATS in the very near future. As I’m sure you know, teze is a monoclonal antibody directed against T-slip. It is the only biologic approved first here severe asthma with no phenotype, and we see tremendous potential for this molecule in COPD. The course Phase 2 study was specifically designed to look at a broader population of patients. So it included patients irrespective of inflammatory drivers, eosinophil levels, emphysema, chronic bronchitis and smoking status, while other trials were more limited.

And this included a prespecified subgroup analysis in populations with different eosinophilic levels, so including below 150, above 150 and above 300. We will present the data that we fully analyzed at the upcoming ATS meeting. But I will only venture to say that we are excited about the possibility of teze in a broader population. It is worth noting that other molecules in this class are playing in the high eosinophilic levels, at more than 300 eosinophils per microliter. And that’s only about 35% of the population that’s eligible for biologics. But those above 150 eosinophils per microliter are about 65% of the biologics eligible population in COPD. So we think that’s a really important differentiator for this molecule. Now you also mentioned — I think you also asked us about our plans to go forward together with our collaborators at Amgen.

We are actively planning the next stage of development. You asked about our overall portfolio in COPD. And I think it’s worth mentioning here that COPD is a very heterogeneous disease with multiple drivers. And to that end, we think that there are multiple mechanisms that may have substantial clinical benefit. So we are testing multiple mechanisms, and we are testing them in populations that allow us to differentiate them from each other. Tozorakimab, as we have previously described, is a differentiated IL-33 monoclonal antibody because it can bind and block both ST2 and RAGEEGFR signaling. We think that’s really important in this disease because it not only blocks the inflammatory pathways, but it can also block mucus production and epithelial remodeling through RAGE EGFR.

So we view that as a differentiated mechanism, which we think may also have very broad utility in the COPD population. So early days, we are reading into our Phase 2 data and thinking about our Phase 3 plans going forward, but I think that we have the potential to be really paradigm shifting for people living with COPD?

Pascal Soriot: Thank you, Sharon. Luisa Hector at Berenberg. Luisa?

Luisa Hector: Hi, thanks, Pascal. Perhaps I could touch on capital allocation. So your high burden of deal-related payments will start to ease at the end of this year, so that improves your cash flow outlook. So will this lead to a change in the nature of deals which you can do? And perhaps you could remind us of your dividend policy given a slightly unusual announcement of the 2024 dividend recently? Thank you.

Pascal Soriot: Thanks, Luisa. Aradhana, your favorite question.

Aradhana Sarin: Thank you, Luisa. So our capital allocation priorities remain unchanged. As you’ve seen, we’ve been very active on the BD front, but we also now sort of need to create value actually from the acquisitions and the partnership transactions we’ve done. So we need to focus on execution of those transactions. We did announce a 7% dividend increase in line with our progressive dividend policy, but also recall that we did not increase dividends in 2022. And so the Board takes a decision on when and how they can increase dividend based on our overall capital allocation priorities. But the capital allocation remains unchanged.

Pascal Soriot: Thank you, Aradhana. So thank you very much for all your great questions. I think it is time for us to respect your time and close this call. Again, thank you so much for all your great questions and your interest in AstraZeneca, and have a good rest of the day.