Q – James Gordon : Thank you. James Gordon from JPMorgan. Two questions, please. The first one was on revenues for this year. So the guidance, low double-digit or low teens as a revenue target, but I think bears are worried that lots of that is collaboration revenues growing and product sales slowing. So can you just say, is that fair? Do you also think that you can sustain the same sort of pace of product sales growth? Or is it really about collaboration revenues taking over from product sales. That’s the first question, please. And then I think the second question, the other thing that some somebody have said today is that the top line guidance is about the same pace as the bottom line guidance. So that would imply then that margins might be about flat.
And then I’ve seen, I think on Slide 6, you said that the — in the medium-term margins will get to the mid-30s. But does that mean margins will be flat this year and then have to have a big inflection in ’25 and ’26 to get there? So thoughts on that and whether there is going to be a lot more OpEx and how that’s going to work, please?
Pascal Soriot: Thank you, James. Great questions. And on you will open the floor, I’m sure. But let me just be very categorical here. Our product sales are going to grow very strongly. So the collaboration revenue, of course, are adding to that growth. But certainly, product sales are very much on track to deliver the kind of growth that is included in the guidance range that we are communicating.
Aradhana Sarin: Yes. I mean if you look at just, for example, the growth in 2023 across the franchises, right, with oncology growing 21%, rare disease, 12%, 18% in CVRM. So we — and all of that is from current products. So we expect that momentum to continue into the coming year. Obviously, different products have different sort of dynamics and so forth. So the growth will come in product sales from both current products as well as some of the new launches that we have, though, again, they’re early in their launch trajectory. I think on your second question, so when we have given obviously a range on both top line and bottom line. But some of the other elements that I mentioned in my prepared remarks, one was, for example, the finance expense that we expect slightly to go up given the transactions that we did towards the end of last year and so forth and refinancing for some of the debt that we have.
The second element is we obviously benefited a little bit from the tax rate last year. So that tax rate benefit will also not be there. So if you look at the totality of the P&L, those will also be elements and we get to the range that we have on EPS. And when you take that into account, obviously, we expect the revenue growth to be pretty strong, but the operating expense growth to be lagging the revenue growth. And that’s what’s operating leverage.
Emily Field : Emily Field from Barclays. I have a couple of questions on oncology. The first on DAX or DXC, the AVANZAR study must have enrolled pretty quickly to be having a readout in 2025. Is that what you were to be positive, would you file based on that study? I know it’s designed somewhat differently to TL ’07 and ’08? And then on HER2 for DESTINY Brest06, how much does the inclusion of the ultra-low population expand the addressable patient set? I think you’ve said before that HER2 low is about 50% of breast cancers. How much bigger does that get with HER2 ultra-low?
Pascal Soriot: Susan?
Susan Galbraith: Yes. So for AVANZAR. Yes, accrual has gone very well, which just I think demonstrates the interest and the potential, not just of data, but the combination in particular data DXD plus immune checkpoint inhibition. As you know, we’ve seen exciting data in a couple of different settings from the TROPION Lung02 and 04 data sets as well as the BEGONIA study in triple-negative breast cancer. I think investigators are very interested in that the potential that this has to further improve the outcomes for patients with first-line non-small cell lung cancer.
Pascal Soriot: The study is progressing very quickly in recruitment, as you pointed out. The second 1 is DBO6 and the low maybe for you, Dave?
David Fredrickson: Yes. So Thanks, Emily, for the question on that. So I think as we — 2 things that I think are important about DBO06. The first 1 is, is that it expands the opportunity if it’s positive, like you highlighted to move into the ultra-low specifically on that question, just to lay this out. So if we look at hormone receptor positive metastatic breast cancer, within the 60% are the IHC 1+ and 2+ so that’s the HER2 low that’s covered by DB04. Then we’ve got 25% that we estimate that’s in this 0 to 1 category. So that’s how much it adds within this. And then you’ve got about 15% that are the true zeros. So first is that expansion outside of the 1+ into the ultra-lows, and then also it’s moving a line earlier. And so by moving the line earlier, there’s two opportunities to see growth, and it will be data dependent, but 1 of those is, of course, a longer duration of therapy you’d hope to get as you move earlier.
The other is, is that if the data are really compelling, you could see that, that puts some pressure on what we see as a lot of endocrine recycling — that takes place within these patients. So again, that will be data dependent. We’ll have to see what the magnitude of benefit is. But there’s 3 different opportunities for 06 to contribute to growth moving forward.
Matthew Weston: It’s Matthew Weston from UBS. Two Questions. And if the first 1 I can stick with in HER2 as well. I think 4Q U.S. sales probably were a little bit light in terms of growth of what people were expecting when Daiichi reported them. So total end-user sales — and at the time, I think Daiichi commented that penetration was reaching plateau in some of the U.S. markets, but with the data expansion coming, there was going to be much more opportunity. I think a lot of investors felt that HER2 low was significantly bigger than suggesting it already plateaued. So, I’d love to understand what’s happening there. But also, Dave, if you can touch on HER2 pan tumor, it seems to fly under the radar may will actually be quite a significant indication.
And then if I rather on the second question, you added into guidance that there’s essentially pointing to a onetime asset sale being something to take into account for 2024. I don’t remember you’re doing that for quite some time, suggesting it might be of a significant size. Is there any way you can help frame it?
David Fredrickson: You want me to start. Matthew, on in HER2, and I made this comment in my prepared remarks, and I think that it’s an important piece, which is I had been commenting in quarters past that we had found that we had hit a 50% really kind of threshold that we were running into in both HER2-positive and HER2 low. But that we knew that there was opportunity to drive continued growth beyond that. And I was really pleased to see and we’ve been really pleased to see that we’ve been putting more effort against our promotional efforts within the U.S. and large markets within Europe. We’ve done that in conjunction with the Truqap launch to really make sure that we’ve got the promotional muscle that we need out there, and we’re seeing movement in the HER2-positive new patient starts.
And so that’s moving in the right direction and going the right level. Now if you think about where we were, basically, Matthew, what I think happened was we had replaced a lot, if not almost all of the Kadcyla use. And now we’re moving into some harder yards, but we’re getting traction against it. We turn to HER2 low, HER2-low is again an opportunity for continued growth beyond where we’ve gotten to. It is, in many respects, a more complicated discussion to be able to have because we’re talking about multiple therapeutic alternatives that exist within the hormone receptor positive space. We’re obviously working on testing efforts. All of this, though, I think that again, I’ve got optimism that we’ve got an opportunity to continue to grow. I think that in HER2 has a lot of growth in front of it with 03 and 04 still in the U.S., still in Europe, and I think that 06, which Emily just asked about, would be further tailwinds to add to that.
Matthew Weston: PAM tumor?
David Fredrickson: PAM tumor. Pam tumor is a spot where right now, we’ve got breakthrough therapy designation in later lines in the highest of over expressors. And so I think that when you take a look at that population, you’ve got several thousands of patients across multiple tumor types that could be addressable for this. And while our early label might be relatively modest compared to, for example, the 03 and 04 opportunities. I think that the more evidence generation that takes place, the more that we continue to do work in this space. And if we can demonstrate in the lower levels of expression, I think pan tumor is exactly that third leg of the stool that Susan and I were talking about to add to HER2-positive breast and HER2 low to be a good growth driver in the midterm for and HER2.
Pascal Soriot: So before Aradhana, do you want to take up…?
Aradhana Sarin: So we talked about the other income, which we expect to decline substantially. And again, last year, remember, there were 2 particular transactions that contributed a large amount. So we’ve not signaled any asset sales. We do expect collaboration revenue to increase substantially. And we’ve talked about milestones and potential transactions we’re contemplating, but we’re not in a position to give more details today, and we’ll see how the year unfolds.
David Fredrickson: Pascal, super briefly, 1 thing that I forgot to mention on this. NCCN guidelines have included now endometrial, cervical and ovarian for and HER2 within the population that we got the priority review for. So I do think that, that’s an acknowledgment that the clinical community is seeing the benefit of that study.
