AstraZeneca PLC (AZN) Q1 2022 Earnings Report, Transcript and Summary

Good morning to those from the U.K. and U.S. Good afternoon to those in Central Europe, and good evening to those listening in Asia. Welcome, ladies and gentlemen, to AstraZeneca's Q1 2022 Results Conference Call and webcast 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 webcast. [Operator Instructions] And with that, I will now hand you over to the company.

Thank you, Martin, and good afternoon, everybody. I'm Chris Sheldon, Head of Investor Relations, AstraZeneca. I'm pleased to welcome you to AstraZeneca's First Quarter 2022 Conference Call. All materials presented today are available on our web page. Slide 2 has the usual safe harbor statements. We'll be making comments on our performance using constant exchange rates, or CER, core financial numbers and other non-GAAP measures. Our non-GAAP to GAAP reconciliation is contained within the results announcements. Numbers used are in millions of U.S. dollars and for the first quarter of 2022, unless stated otherwise. Please advance to Slide 3. This slide shows our agenda for today's call. In a moment, I'll hand you over to our CEO, Pascal Soriot, to begin. [Operator Instructions] Please advance to Slide 4. And with that, Pascal, over to you.

Thank you, Chris. Hello, everybody, and welcome to today's call. We had a strong start to the year, reporting first quarter total revenue of about $11.4 billion, an increase of 60%. Total revenues when excluding Vaxzevria for the quarter grew at 50%. Core EPS was $1.89, an increase of 20% over the prior year's quarter, benefiting from phasing and operational expenses, which our CFO, Aradhana will cover in more detail in a moment. Importantly, we delivered broad-based performance across our diverse disease area. Oncology grew 25%. CVRM increased 18%, R&I increased 4% and rare disease increased 7% on a pro forma basis. Our new consolidated vaccine and immune therapies area, V&I, delivered total revenue of $1.8 billion. This is the first quarter we have reported sales from this new disease area, which includes our COVID-19 vaccine, Vaxzevria and our long-acting antibody, Evusheld as well as Synagis and FluMist and soon, hopefully, nirsevimab. Iskra Reic, Executive Vice President of V&I, who is responsible for leading all V&I disease area activities is joining us for Q&A. We again saw robust news flow in the quarter, including EU approval in lupus for Saphnelo, U.S. approval in gMG for Ultomiris and U.S. Priority Reviews for both on Enhertu in HER2-mutant lung cancer and the combination of Imfinzi and tremelimumab in advanced liver cancer. Last but not least, we are particularly excited with the news from just 2 days ago with the fifth FDA breakthrough designation for Enhertu. This time in HER2-low breast cancer and based upon the data from our DESTINY-Breast04, which we look forward to sharing at the ASCO very soon. We have today reconfirmed our 2022 guidance with total revenue growth expected to increase at the high teens' percentage and core EPS growth to increase at mid to high 20s percentage. Please turn to Slide 6. Performance in the quarter was driven by growth across our diversified disease areas and geographies. Our business mix continues to evolve. And in a quarter, oncology comprised 32% of our total revenues. Biopharma, which includes CVRM, R&I and V&I, makes us approximately half of our revenues. Importantly, with the addition of Alexion, rare disease now makes up approximately 15% of revenues. The U.S., Europe, Emerging Markets and the Established Rest of World total revenues all saw strong growth in the period. And as you can see, the majority of revenues came from the U.S. in the quarter, followed by Emerging Markets. Our diversification in both these areas and geography reinforces our durable growth profile even in the face of industry-wide pressures, including pricing and reimbursement dynamics in developed markets and ongoing effects of the COVID-19 pandemic. Please move to Slide 7. With '22 off to a strong start, we are confident in both the near and long-term outlook for AstraZeneca. Looking ahead, we still have a number of key pivotal readouts that will not only reinforce our industry-leading science but also provide new growth opportunities. Notably coming up, we anticipate the Farxiga DELIVER trial readout in HFpEF and Ultomiris in the CHAMPION trial for NMOSD in the first half of this year. Looking beyond 2025, we are well positioned to continue to deliver industry-leading growth due to our robust lifecycle management, our innovative late-stage pipeline, but also complemented with our strategic business development efforts and importantly, a very durable exclusivity profile across the portfolio of commercialized products. We have multiple earlier stage opportunities to unlock significant potential post 2025 with the best-in-class top 2 antibody drug conjugate with Dato-DXd and our next-generation PARP1 selective programs in oncology as well as eplontersen, our novel TTR silencer in bioharma, and exciting new C5 and Factor D approaches in rare disease. With that, I'll now hand over to Aradhana Sarin, our CFO, who will walk you through our financial performance. Please advance to Slide 8.

Thank you, Pascal, and hello, everyone. As usual, I will start with our reported P&L. Please turn to Slide 9. As Pascal has highlighted, total revenue grew by 60% in the quarter, benefiting from both a full quarter of Alexion sales and higher COVID-19 revenues versus first quarter of last year. Our COVID-19 medicines, Vaxzevria and Evusheld contributed $1.6 billion of revenue in first quarter. The majority of Vaxzevria revenue came from initial contracts. We anticipate to fulfill most of our remaining obligations on initial contracts by second quarter. Our reported gross margin declined by 6.6 percentage points, driven by the fair value adjustment of Alexion inventory, an impact we anticipate continuing for the remainder of the year as previously indicated. Our reported operating expenses increased by 52%, driven by the addition of Alexion expenses. Our post Alexion restructuring plans are progressing according to plan. Total restructuring charges in the quarter amounted to $75 million, but we anticipate a step-up later in the year. As a reminder, we anticipate incurring onetime costs of approximately $2.1 billion until 2025, of which approximately $1.4 billion are cash costs and $700 million are noncash costs and capital investments of approximately $200 million. These activities are anticipated to realize run rate pretax benefits before reinvestment of about $1.2 billion by the end of 2025. Reported EPS was $0.25 in the quarter. Please turn to Slide 10. Turning to the core P&L. Our gross margin increased by 4 percentage points to 79.3%, benefiting from the addition of Alexion sales with a higher gross margin and continuing mix shift to oncology. Q1 of last year was also adversely impacted by some inventory write-offs and valuations. Our core operating expenses increased by 29% in the quarter, driven by the inclusion of Alexion expenses. Our outlook for the full year is unchanged, driven by a full year of Alexion expenses and continued investment in R&D and new launches. While our core operating margin in first quarter was approximately 35%, we anticipate our expenses to increase for the remainder of the year and margins to be lower in subsequent quarters as implied by our full year guidance. Core EPS of $1.89 represented a growth of 20%. Please turn to Slide 11. Today, we are reiterating our full year guidance we issued in February. We anticipate total revenue to grow by high teens percentage and core EPS to grow by mid- to high 20s percentage. As previously communicated, we anticipate China revenues to decline by mid-single-digit percentage in 2022, driven by NRDL and VBP impact. However, we expect total emerging market revenue, including China, to grow by mid-single-digit percentage. We have previously highlighted some headwinds and tailwinds that we expect during the year. Our beta blocker Seloken will be impacted by VBP implementation in China later this year. Diagnosis and treatment rates across disease area are still being impacted by COVID-19. Anticipated tailwinds include demand of our differentiated COVID-19 antibody, Evusheld, which offers protection to some of the most vulnerable populations. Finally, 2022 will be the first full year of Alexion consolidation. Please turn to Slide 12. Our cash flow from operating activities increased by $1.3 billion in the quarter to $3.2 billion, driven by strong underlying business growth and Alexion contribution. The final dividend for 2021, including the $0.07 increase we announced in February was paid in the quarter and amounted to $3 billion on a larger share base given the shares issued as part of the Alexion transaction. During the quarter, we also made the first of 3 payments of $920 million to the former shareholders of Acerta. The 2 remaining payments of similar amounts will be made in 2023 and 2024. We anticipate additional potential milestone payments of up to $1.1 billion relating to collaborations and partnerships, including Daiichi Sankyo to be paid during the remainder of the year should the relevant criteria be achieved. In the quarter, we also announced a settlement agreement with Chugai relating to Ultomiris, which will result in a payment of $775 million in the second quarter of 2022. We currently have a reported net debt-to-EBITDA ratio of 3.6x. If adjusting for the Alexion fair value inventory uplift, which does not impact our cash flow, the ratio is 2.4x. Our capital allocation priorities remain unchanged, and we continue to invest in our business in order to deliver sustainable growth. With that, I will now hand over to Dave. Please turn to Slide 13.

Thank you, Aradhana. Slide 14, please. We're pleased to report that our oncology total revenue grew 25% year-over-year during the first quarter with product sales growth of 18% and a regulatory milestone for Lynparza's FDA approval of OlympiA. Across brands, we saw double-digit year-on-year growth in Tagrisso, Imfinzi and Lynparza and a doubling in revenues for both Calquence and Enhertu. Growth was balanced across regions with the U.S., Europe, Emerging Markets and Established Rest of World, each driving double-digit year-on-year growth. Turning now to greater detail on each of our key oncology medicines. Tagrisso global revenues grew by 16%. Demand growth in the U.S. and Europe continues from rising first-line duration of treatment and increasing adjuvant use, partially offset by second-line use and persistent pandemic impact on diagnosis and testing rates. In the U.S., we saw sales growth of 6% versus Q1 '21, reflecting solid underlying demand, sequential sales versus Q4 were down, owing to inventory movements and a negative gross to net impact typically seen at the beginning of the year as Medicare and commercial plans reset. In EM, Tagrisso grew 33%, with continued growth in EM outside of China and a strong start to the year in China with increasing demand in the front line and a good competitive performance maintained as Tagrisso's standard of care position in second line. Imfinzi grew global revenues 11%. The PACIFIC indication and unresectable Stage III non-small cell lung cancer benefited from further approvals and is now highly penetrated as the standard of care across the globe. CASPIAN in small cell lung cancer is seeing growth from the launches and new approvals around the globe as our commercial team leverages the 3-year overall survival data published last year. Sequentially, Imfinzi has been particularly affected by the pandemic as lung cancer diagnosis and treatment rates have remained 5% to 15% below pre-COVID levels. Across the globe, our Imfinzi teams are preparing in earnest for the launches of HIMALAYA and TOPAZ-1 later in the year, which are important growth catalysts for the brand. Lynparza continued to solidify its position as the leading medicine in the global PARP inhibitor class. Product sales grew 17%, and we were delighted both by the U.S. approval of Lynparza in adjuvant breast cancer and to present an improvement in overall survival in the OlympiA study. U.S. sales were up 7% quarter-over-quarter, driven by greater use in ovarian, breast and prostate cancers. Sequential sales were affected by a similar seasonal pattern in channel inventory and gross-to-net adjustments that we saw with Tagrisso. Growth in Europe is 16% and 32% in Established Rest of World was supported by continued growth in HRD testing and launches in new markets. EM growth of 43% benefited from expanded patient access in ovarian cancer in China and launches in other Emerging Markets. Turning now to hematology. Calquence continues to show excellent momentum with worldwide revenues, up 100% versus the first quarter last year. In the U.S., Calquence has a 55% share of new BTKi class starts in CLL, establishing itself as the clear standard of care. We look forward to those new patient starts turning into TRxs in the coming years given the long duration of patient benefit and treatment in this setting. In Europe, expansion is now in full swing, resulting in 32% sequential growth from Q4 '21 with more approvals on the horizon. And finally, for Enhertu, total revenue was up 117% to $86 million, benefiting from strong momentum in breast and gastric cancer in the U.S. and good growth in the third-line breast cancer in France, the U.K. and Germany. Together with our partner, Daiichi Sankyo, our commercial teams are busy preparing for multiple launches, including DESTINY-Breast03, DESTINY-Breast04 and DESTINY-Lung01. Across the globe, our teams are preparing for an exciting year ahead as we anticipate these launches for Enhertu together with OlympiA and PROpel for Lynparza and the GI opportunities for Imfinzi that I mentioned earlier. I look forward to providing you updates on those in the quarters ahead. And now I turn it over to Susan.

Thank you, Dave. Please turn to Slide 15. Enhertu continued to deliver this quarter, becoming the first treatment to show efficacy in HER2-low breast cancer in a pivotal trial, a historic landmark in clinical development with the capacity to change how breast cancer is categorized. In DESTINY-Breast04, Enhertu achieved a statistically significant and clinically meaningful improvement in both progression free survival and overall survival in patients with HER2-low unresectable and/or metastatic breast cancer regardless of hormone receptor status versus standard of care chemotherapy. With the most recent one received in HER2-low breast cancer, Enhertu is now being granted 5 U.S. FDA breakthrough therapy designations, and a testament to the strength of data Enhertu has generated across several cancer types. It's fantastic to see the transformational nature of the data recognized by the FDA and also by ASCO, while I'm delighted that the DESTINY-Breast04 trial has been accepted as a plenary presentation at this year's meeting. We're motivated by the opportunity to target the lower range of HER2 expression to delay disease progression and extend survival in those with metastatic breast cancer, where chemotherapy is the sole option for HR-positive progressors and HR-negative patients. The outcome of DESTINY-Breast04 makes us confident and excited for the DESTINY-Breast06 trial, which will look at Enhertu compared with chemotherapy in HER2-low and HER2-ultra-low HR-positive metastatic breast cancer patients whose disease has progressed on endocrine therapy. Data for this trial is due next year. Enhertu also continues its expansion beyond breast, affirming its wide applicability across multiple tumor types, as it has the potential to become the first treatment to be approved for a small but underserved category of patients with HER2-mutant non-squamous non-small cell lung cancer. These patients are typically female, never smokers with a poor prognosis and higher rate of brain metastases when compared to those without HER2 mutations. With DESTINY-Lung01, which also has U.S. breakthrough therapy designation status, we hope to bring a new treatment option to the 2% of non-small cell lung cancer cases with a HER2 mutation. Please turn to Slide 16. We had some disappointing news in the quarter with results from the CALLA trial, where Imfinzi did not meet the primary endpoint in the treatment of locally advanced cervical cancer. However, we continue with Imfinzi's comprehensive development program as a monotherapy and in combinations with other interventions. EMERALD-3 seeks to compare the efficacy of Imfinzi plus tremelimumab plus or minus lenvatinib and concurrent [indiscernible] alone in locoregional hepatocellular carcinoma. With this trial, we hope to repeat the positive results obtained in the HIMALAYA trial with the innovative STRIDE regimen for a single administration of tremelimumab added to Imfinzi resulted in a 3-year overall survival benefit in advanced HCC. Earlier this week, we were notified of the U.S. FDA submission acceptance with Priority Review for HIMALAYA, and we expect a decision later this year. Now turning to our small molecule precision medicines. The SAFFRON trial will address MET resistance, one of the most common mechanisms of Tagrisso resistance. SAFFRON will evaluate Tagrisso in combination with Orpathys, a MET inhibitor being developed in collaboration with HUTCHMED to treat EGFR, MET-amplified non-small cell lung cancer patients who have progressed on Tagrisso. Results from both Phase III trials are expected to beyond 2023. Upcoming news flow to look forward to for the remainder of the year includes data readouts for Imfinzi from PACIFIC-2, PEARL and EMERALD-1 as well as the CAPItello291 trial results for our AKT inhibitor, capivasertib. Please turn to Slide 17. It was fantastic to be back in [ New Orleans ] earlier this month with the American Association for Cancer Research Annual Meeting, where we showcase some of our pioneering early signs across a number of modalities. I'll take you now through some of the main highlights. Findings from the PETRA trial showed robust and durable target engagement across all doses of AZD5305, our next-generation, highly selective PARP1 inhibitor. AZD5305 demonstrated antitumor activity across a variety of tumors, including prostate, breast and ovarian cancer with a very good safety profile increasing our confidence in potential combinations within Enhertu and Dato-DXd. Secondly, some Phase I data was presented from MEDI5752 from our bispecific portfolio. MEDI5752 targets both PD-1 and CTLA-4 and produced dose-dependent increases in peripheral T cell proliferation as well as encouraging deep and durable responses in immunotherapy-naive tumors. We are adding to a highly successful ADC strategy across multiple tumor types with our own proprietary platform that's resulted in the creation of AZD8205, a B7-H4-targeted antibody-drug conjugate with a [indiscernible] linker warhead. AZD8205 recently entered Phase I trial in advanced solid malignancies. Its progression brings another step closer to replacing chemotherapy as the backbone of treatment in oncology. I'll now hand over to Ruud to cover BioPharmaceuticals. Please advance to Slide 18.

Thank you, Susan. Now turning to Slide 19. Looking at our BioPharmaceuticals businesses, Cardiovascular, Renal and Metabolism total revenues were up 18% to $2.2 billion. R&I was up 4% to $1.6 billion, and V&I delivered total revenues of $1.8 billion. Farxiga achieved its first $1 billion quarter, a significant commercial milestone with 67% growth driven by strong underlying demand in type 2 diabetes, heart failure and chronic kidney disease and benefiting from updated treatment guidelines from ESC, the American Heart Association and ACC. Looking ahead, we expect to see sustained growth over the remainder of the year, adjusting for the onetime effects and an acceleration in chronic kidney disease driven by new reimbursements. In Respiratory & Immunology, COVID-19 continues to have a material impact across markets and the portfolio. However, there were early signs of recovery towards the end of the quarter. Despite these headwinds, Fasenra grew 22% in the quarter, expanding its total market leadership in eosinophilic asthma. Fasenra is the leading biologic in the IL-5 class in major markets. Moving on to Breztri, with total revenues of $87 million. Breztri continued to gain market share within the fixed dose triple markets, especially in the U.S., China and Japan. Our new launch medicines Saphnelo and Tezspire are progressing well. Saphnelo demonstrated strong performance in new patient starts in the intravenous market for systemic lupus erythematosus. Tezspire made good headway achieving 11% new-to-brand prescriptions with broad utilization across all asthma phenotypes. And finally, within V&I, Vaxzevria total revenue reached $1.1 billion in the quarter. And as Aradhana already mentioned, the majority of these sales are coming from initial contracts. We expect to conclude most of our remaining initial contracts' obligations in the second quarter. Evusheld, our long-acting antibody reached $469 million. We have begun fulfillment of the U.S. government order for 1.7 million units. The remainder of that order will be fulfilled before the end of 2022. Please turn to Slide 20. In Emerging Markets, total revenue was $3.4 billion in the quarter. Emerging Markets growth rate, including the impact of Vaxzevria was 32%, and this was split between Ex-China Emerging Market sales, which doubled versus quarter 1 2021 and China, where sales declined by 6%. Farxiga has continued its remarkable growth across the region, 54% in the first quarter with China demand benefiting from increased patient screening. Heart failure and chronic kidney disease launches have also accelerated across the Ex-China Emerging Markets, which will support sustained growth in future quarters. Pulmicort sales in China continued to be impacted by VBP inclusion, which was implemented in October 2021. We expect the implementation of the seventh VBP round in the second half of 2022. As Dave mentioned, both Tagrisso and Lynparza continued to benefit from increased patient access due to the inclusion on to China's NRDL for March 2021 and from launches across Ex-China Emerging Markets. Total revenue for Vaxzevria in Emerging Markets amounted to $530 million in the quarter, driven by initial and commercial contracts in Latin America and Asia. This included $56 million of collaboration revenue. Evusheld sales of $89 million were from multiple governmental contracts. Rare Disease Emerging Market sales of $115 million were impacted by Soliris or the timing in certain tender markets. I will now hand over to Mene to cover the R&D advancements in the period. Please turn to Slide 21.

Thank you, Ruud. 2022 has started with further expansion of our BioPharmaceuticals medicines. Evusheld and Saphnelo were approved in Europe, and Ondexxya was approved in Japan, which became the first country to approve its use with all of the Factor Xa inhibitors available today. Our cardiovascular pipeline continues to demonstrate progress for potential new medicines with the ambition to change standards of care. AZD8233 underscored its promise as a best-in-class PCSK9 inhibitor for the results from the ETESIAN Phase IIb trial showing that AZD8233 unique mode of action produced a 73% reduction in LDL cholesterol in patients with hypercholesterolemia. As Ionis have disclosed, later this year, we will also have an interim analysis from the Phase III NEURO-TTRansform trial for eplontersen in polyneuropathy. We look forward to the much-anticipated Phase III results from Farxiga, the DELIVER trial in heart failure with preserved ejection fraction. Please turn to Slide 22. Data published from the MELODY and MEDLEY trials demonstrated the efficacy of nirsevimab 150 days after dosing and data published from the PROVENT trial showed that Evusheld antibody concentrations remained elevated 6 months after administration. These results are testimony to the longevity of protection afforded by AstraZeneca's proprietary YTE technology, one of the contributory factors behind Evusheld's success in the prevention of COVID-19. Another factor behind that success is the careful selection of 2 complementary antibodies that bind distinct sites on the virus. This has helped Evusheld retain potent neutralization activity against the BA.2 variant, while many other antibody therapies are no longer effective. AstraZeneca has 20 years of expertise in identifying and enhancing antibodies for the prevention of respiratory diseases, and this continues to be an active area of research for us as we think about future variants. I will now hand over to Marc to cover rare diseases and please turn to Slide 23.

Thank you, Mene. Please turn to Slide 24. Rare Disease contributed $1.7 billion in the first quarter total revenues, representing a year-on-year pro forma increase of 7%. Our leading C5 franchise delivered durable pro forma growth of 6% in the first quarter. Soliris' performance was driven by growth in neurology indications and offset by continued conversion in PNH and atypical HUS. Ultomiris' growth of 25% in the quarter was in line with our expectations. Finally, Strensiq performance in the quarter was impacted by inventory in payer dynamics. However, we observed strong demand and initiation exiting the quarter. Now move to Slide 25. Following the exciting approval we announced just yesterday for Ultomiris in myasthenia gravis, and as we continue to advance our lifecycle management strategy, it is important to understand 2 key dynamics. The first is the revenue impact following the conversion due to Ultomiris lower annual treatment cost. In atypical HUS and myasthenia gravis, we will observe a revenue impact upon conversion to Ultomiris, since the annual treatment cost for Ultomiris is approximately 18% lower in the first year due to the need for a single loading dose, but 33% lower in subsequent treatment years. In PNH, we are reaching conversion saturation in some key geographies after achieving best-in-class conversion over 70% less than 18 months from launch over a year ago. Secondly, unlike our legacy indications, we expect the majority of long-term growth for Ultomiris in MG to come from complement naive patients. While we expect fairly rapid conversion from Soliris in line with what we observed in PNH, the bigger opportunity is to reach a broader patient population estimated between 25,000 and 30,000 of the approximately 90,000 diagnosed MG patients in the United States. Looking ahead, we anticipate an acceleration in Ultomiris growth rates in the second half of this year and over time, growth in complement naive patients will offset the revenue impact from conversion. Please turn to Slide 26. Within the complement space, we continue to advance our innovative lifecycle management and NME programs. Our lifecycle management portfolios consisting of Ultomiris, Ultomiris subcutaneous and 1720, our mini-body C5 inhibitor support the durable long-term C5 franchise growth, given the opportunity for both differentiated pricing and [indiscernible] expansions. Our NME programs developed in-house further enhance our terminal C5 complement portfolio as well as expanding into new complement targets. Looking ahead of key upcoming catalysts, we now expect regulatory submission for 1840 in Wilson disease in the first half of 2023 in order to supply a comprehensive submission data package, inclusive of 2 ongoing mechanistic trials, which will complete by the end of this year. We expect headline results in the CHAMPION NMO trial for Ultomiris in the first half of this year, which presents another opportunity to advance complement inhibition in neurology. And with that, please turn to Slide 27, and I will hand the call back to Pascal for his closing commentary.

Thanks, Marc. And please move to next Slide 28. I will not spend too much time on this slide. The point of this slide is really to show you that we are very busy, and we have a very rich pipeline. And there will be important upcoming news flow across the company in the year ahead. In oncology, we'll be presenting the data from Enhertu DESTINY-Breast04 in HER2-low breast cancer at the ASCO as Susan mentioned earlier. We will also -- we are also looking forward to multiple Imfinzi radars across in lung and liver cancers in the next 12 months. In CVRM, we will have data from the DELIVER trial for Farxiga and HFpEF and in Rare Disease, data from Ultomiris and NMOSD. We also look forward to data from eplontersen in ATTR polyneuropathy through our partnership with Ionis. You can also see we have a rich series of news flows extending into 2023. With that, please turn to Slide 29. We're pleased to have started the year on a strong note and we maintain that we are all well positioned to deliver long-term, durable growth in the years to come. We've committed to double-digit growth on the CAGR basis through to 2025. Beyond 2025, we believe that we will continue to have industry-leading growth from our innovative medicines, our robust internal pipeline, supplemental with smart business development and an attractive exclusivity profile for many of our marketed medicines. As Aradhana mentioned, we are reconfirming our full year 2022 guidance, and we anticipate another year of double-digit revenue growth in the high teens, together with growth in core EPS of mid to high 20s, all at constant exchange rates. Thank you for all joining. We'll now take questions, and I hand you back to Chris.

Thank you, Pascal. Please move to Slide 30. We'll now go to the Q&A. [Operator Instructions]. Thank you in advance. Perhaps now we can take the first question from the conference call, and I'll hand you back to Pascal.

Thanks, Chris. So the first one is from James Gordon at JPM. James, over to you.

Hello. James Gordon, JPMorgan. One pipeline and one geographic please. The first one was on the pipeline, and it was a question your confidence in 2 oncology mechanisms that have had some mixed competitor data. So I know you've got AKT data, so Phase III data in the second half of this year. Competitor data has maybe been a bit mixed there. So bullishness on that product and can we read from competitor data. And then also, you've got your oral SERD [indiscernible] this year, and I believe the Phase III next year, but the [indiscernible] doesn't look so good for that mechanism. So are there important differences? Or should we make some read through? So that's the pipeline question, please. And the other question was geographic on China. It was released to reiterate the guidance on China [indiscernible]. But can you talk a little bit about what are you seeing on the ground? Because some of the reports suggest that people are struggling to access supplies. Is it just that the guidance was quite conservative for China already and so you're able to get this in there? Or is there some risk to China if lockdowns going longer. So what are you seeing on the ground? And is there still some risk around China we should worry about?

Thank you, James. So Chris, I have to tell you, you haven't been more successful than anybody else before you to discipline everybody to one question, but those are 2 great questions to answer with the sub question in the first one. So the first one, I'll hand over to Susan. Susan, can you go ahead?

So for the question on capivasertib, our AKT inhibitor, the randomized Phase III trial that's reading out this year is in ER-positive breast cancer on a background of [ fulvestrant ] in the second line. And we have confidence in this based on the randomized Phase II study, the FAKTION data that we saw. Just in terms of comparison with competitors, I would remind you that we've got an intermittent dosing regimen 4 days on, 3 days off. And we chose that quite carefully based on an optimization of safety, which means that you've then got a lower discontinuation rate. I think that's important for maintenance of efficacy over time. And again, we didn't just see an improvement in PFS but also a trend to OS, which I think is important in this setting. So we're confident in the profile of what we've got with the AKT inhibitor on the dosing schedule that we're using at the moment, and we look forward to seeing the results later. It is, of course, the reason why we do Phase III trials to confirm what we saw in Phase II. On the note of camizestrant, again, just in terms of the principles, it's encouraging that we've seen activity in Phase I and some other data in Phase II now in ESR1 mutant patient population because in this setting of ESR1 mutated patients, we know the sensitivity to both aromatase inhibitors and drugs like fulvestrant is more limited and requires higher doses. We also saw good efficacy in our Phase I data set in this patient population. But remember that the rationale for using oral SERD is to improve the level of degradation that we can see with a drug like fulvestrant. And actually, if you look at the [indiscernible] data that we had in first line, I still think there's room for improvement over that, and the profile of the oral SERDs are important. That being said, not all drugs in the same class are necessarily the same. And we have -- based on preclinical data, we know just based on the chemical structure that there are differences across the class. So we're confident in the dose that we have picked, 75 milligrams, that we want to go forward into the Phase III studies based on the data that we had from expanded dose cohorts in Phase I. I think it's very important to get both the efficacy level right for the dose as well as the safety. And we've seen good efficacy at that level. And we've also seen good safety with a low rate of discontinuation, a low to minimal GI side effects and asymptomatic effects on bradycardia and visual effects at that dose level. So I think actually, the data that we have seen gives us confidence in this class and the potential for them to impact a broader range of patients in the early line, but it also gives us confidence that the SERENA-6 study, which is selecting patients that have got an ESR mutation is also one that has a high confidence of probability of success.

Thank you, Susan. And in the SERD class, as Susan said, you may have differences in chemical structure between agents, but also those may be a factor. So really something to keep in mind. Leon, do you want to cover the China outlook question and the impact potentially of the lockdown on supply?

Yes. I think the lockdown actually created some short-term disruption on the supply chain and import. 50% of AstraZeneca products are import and 50% are locally manufactured. So lockdown has impact on both supply chain and also the process of manufacturing because of the government policy. But I think AstraZeneca [indiscernible] to make sure that the supply chain is smooth. And also lockdown has impact on inpatient and injectable oncology products [indiscernible] like Imfinzi and also hospitalized products, which already [indiscernible] and also nebulized [indiscernible] also largely used in hospitals. So this has been impacted quite a lot in the hospital plus VBP. So -- but we should also remember lockdown is not everywhere in China. It's only in several cities or provinces, and the lockdown will not be forever. So we assume it should be mainly in quarter 2, the impact is mainly in quarter 2. So lockdown has limited impact on oral oncology products like Tagrisso and also has a limited impact on chronic disease products like Farxiga. So -- and VBP this year also has been delayed several months. So our major large product that has been performing quite strongly is Farxiga and also Tagrisso. And also, we remain our next 5-year growth, quite confident because of filing of Evusheld in China and approval of Enhertu [indiscernible] next year. So in '24, we also have [indiscernible] and DS-1062. So we already launched the Breztri, and it's doing quite well. So I think that this year, our shining part for China is Farxiga, Breztri and Tagrisso. So I think we are confident to stick to the current guidance.

Thank you, Leon. Tim Anderson at Wolfe Research. Over to you, Tim.

Thank you. If I could just stay on China for a minute. Last quarter, you were asked if China would grow in 2023. And I wasn't sure if Leon just answered that. Are you guys saying you will have positive growth in China in 2023 and you're confident about that? And then second, China question, just an update on the fraud investigation, please?

So on the first question, actually, Tim, we don't give guidance beyond 2022, except for the fact that we said that over the next few years, we believe the Emerging Markets together, China and non-China Emerging Markets will grow at a high single digit rate. So beyond this, we haven't given any indication outside of '22. The second question, Leon, do you want to cover this one on the investigation?

Yes. The [ fraud ] case in Shenzhen is actually limited to the individual's behavior. And I think the investigation will be soon concluded in quarter 2. So I think the company always have a very high standard on compliance and definitely for [indiscernible] behavior within the company. So we are very confident about our system. And of course, we will learn from this case, try to make sure that this kind of case will not happen in the future. So again, 2022 is a most difficult year because of VBP, lockdown and also the largest product, the Pulmicort that VBP impact plus [indiscernible]. So I think that's why we are quite confident that we will land properly in '22 and start gradually growing in the next 5 years.

Thanks, Leon. Andrew Baum at Citi. Andrew -- sorry, over to you.

A couple of questions. So first one for David and Susan. What percentage of first-line patients with EGFR-mutated non-small cell experience or put on chemo before they determine the results of the biopsy. I'm just interested because obviously, if it's a high percentage, then adding Tagrisso, to that chemo background if the patient is found to have a driving mutation is obviously relatively easy compared to switching to a competitive regimen. And then secondly, in relation to your PARP1 data where you showed some quite intriguing data. Could you just confirm whether or not this is part of the Merck agreement in -- at the time of [ olaparib ] and so on?

Thanks, Andrew. I think, Dave, you could take both questions. The first one, just -- I believe the first one is what is the percentage of patients who received chemo before being -- before we get the results of the EGFR test.

So Andrew, what we're seeing within the adjuvant setting, obviously, we're speaking about here. So I mean, I think with maybe...

I'm actually speaking about metastatic setting, not adjuvant. So we've heard that many younger patients who are nonsmokers, they're put on chemo and not PD-1 looks the assumption they probably have a driver mutation. So it was directed to the metastatic setting, first line metastatic.

Got it. So I mean it's a minority of patients, Andrew, that are falling into this category. What we are seeing here is that there are -- maybe it's 10% to 15% of patients who fall into that category or who have disease that's particularly rapidly progressing for whom they do that, but it is not by any means, the majority of the patients that we see.

Second one, PARP1 and Merck. Do you want to cover that one? This -- did you get the -- the question was the PARP1. And the what's the relationship with Merck and the broad Merck Collaboration Agreement.

Got it. Yes. Thank you very, very much. So Andrew, on the PARP1 and the broad agreement, we've been really pleased with partnership that we've had with Merck, I think together that we've been able to create a tremendous amount of value on Lynparza. And in fact, I think that you can see that we've created the [indiscernible] the leading PARP together with them. We're minded to continue to work with them within the PARP class and it's a matter of finding ways to ensure that it's at the right sets of terms.

Thanks, Dave. Mark Purcell at Morgan Stanley. Mark, go ahead.

Yes. Thank you, Pascal. A question on Farxiga, please. The standard performer again and surprising is the upside very much outside the U.S., which is very difficult for us to model. So whether it's you or Ruud, it would be great to sort of understand in terms of penetration rates for Farxiga and [indiscernible] where we are when it comes to heart failure and the CKD indications in these key regions outside the U.S. You can sort of help us understand level of penetration and how much there is still to go. And then the subpart for many, the timing on the LCM proof-of-concept trials [indiscernible], where are we there? When should we see data and level of conviction? That would be great.

Thanks, Mark, and Ruud is smiling away. Not talking about oncology only, Farxiga is a fantastic product. So over to you, Ruud.

Yes. Thank you so much, Mark, for the question. So regarding CKD, where we have launched CKD across the world. We are already having market shares between 70% and 90%. Of course, competition is coming in that setting as well. But equally, the upside in the CKD population is still very substantial because most of those patients are simply not proper diagnosed and so are not getting a treatment. For heart failure, it's roughly 50-50 in the majority of the markets, but equally, of course, our position versus the competition in the Emerging Markets and Europe is very strong. So in the U.S., it's roughly 50-50. But outside of the U.S., clearly, we have the majority of the share. Crucial is to get good results, hopefully, for the DELIVER results at the moment but primarily in the reduced ejection fraction for heart failure, but hopefully, later in the quarter, we will see the DELIVER results. But all in all, a very promising start of the year, and we expect to continue to see that in the remaining part of 2022.

[indiscernible] combinations, I would say you'll start to see the conviction in those combinations towards the end of this year, first quarter of next year. That's when I think it will become visible.

And DELIVER?

And DELIVER, this quarter.

Okay. Thanks, Mene. Just one additional point, Mark, is that kidney disease is an enormous opportunity. As a reminder, 700 million people in the world suffer from kidney disease. It's -- I mean not relatively, it's very easy to diagnose, as you know. And we have large programs to early diagnose patients who until now we are not diagnosed because there's really -- there was really no treatment for them. In China, in particular, we've made enormous progress in diagnosing those people. And the last point is you have to remember, I mean Farxiga is a relatively inexpensive product in many of those countries. So the price and the access are relatively -- I mean, they're not a big issue. So we should really see enormous growth based on the opportunity in kidney disease and the volume there. So next question is Simon Baker at Redburn.

It's on Tagrisso in China. You mentioned in the press release that the volume expansion has made up for the price reduction that you faced in March last year. I just wonder if you could give us an idea what that means in terms of penetration rates? And then just a sort of follow-up on Emerging Markets. Even [indiscernible] for Vaxzevria, the Ex-China growth was incredibly strong. I just wonder if you could give us a little bit more color on the what and the where in driving that 75% growth?

Thanks, Simon. So the China question, Leon, do you want to cover? And Dave, you cover the Rest of The World, is that okay?

Yes. I think the first question is about Tagrisso penetration. So with an idea of price cuts, and we get the first-line indication also approved in China with a quite significant price cuts. But we get into the first-line market, I think, with a 30%, 40% share in value already. And we are still getting new patients in the first line. And also, even though we are having ADAURA indication in China, and with this price level, even self-pay, many patients can really be affordable. So we are also starting to get into ADAURA patients -- adjuvant patients. So -- and in second line, we are maintaining 2/3 of the patients, more than 2/3 of the patients is still using Tagrisso as the second-line treatment. And regarding outside of China, Emerging Market growth mainly come from a very strong growth in oncology, new product launch and also quite strong -- the base business is actually respiratory Symbicort and even Pulmicort recovering and growing very strongly, driving by many countries. So both TA, oncology and the respiratory are doing very well. And in [indiscernible] leading performance in the cardiovascular part, of course. Across the Emerging Markets, we still are getting order for our vaccine and getting new orders for our Evusheld. So I think Evusheld started in the Emerging Market, which is driving a good growth behind a very good historical Emerging Market outside China performance.

Thanks, Leon, and thank you for taking the second question. I had misunderstood it. So it was about Tagrisso, but it was, of course, broad-based Ex-China. So the next question is Michael Leuchten at UBS.

Thank you, Pascal. It's Michael at UBS. One question for Dave and one for Marc. Then you keep flagging the impact that pandemic has on the oncology market. I just wondered if you could put into context for us why sequentially, though Lynparza and Imfinzi in the U.S. were down Q1 over Q4? Like why would the pandemic have more impact in Q1 than it had in Q4. And then question for Marc in Ultomiris. It's a product that continues to come below market expectations in the quarter. How quickly should we expect the new indication, MG, to make a difference to the product and start to offset the impact that pandemic still has here?

Great. Thanks, Mike. Dave, please...?

In terms of the U.S. and specifically on Lynparza and Imfinzi, there's actually 2 different dynamics that are at play here. So maybe just start first with Lynparza. Lynparza has good underlying demand. We're in the midst of launching the OlympiA indication. We're getting ready for PROpel moving forward. What we have affecting the Lynparza sequential sales is that oral drugs have a fairly significant gross-to-net impact in the first quarter in the U.S. And it simply is coming as a result of in private plans, co-pay resets, and so there's big use of co-pay cards among that population. And in the Medicare population, they come into the coverage gap immediately on the first fill. And so it balances itself out over the year, but you see a bigger impact that hits the sequential, and you see this pretty consistently. With Imfinzi, it's different. We don't have those same gross-to-net impacts. Imfinzi is really where we're seeing quite a bit of impact on COVID treatment, diagnosis. Also keep in mind that these Stage III patients, which is the lion's share of where we get our business, have to go through CRT. There're backups within hospitals to be able to receive it. So Imfinzi is a difficult indication for PACIFIC in the context of COVID and what we're facing, I think that's pretty consistent with what you're hearing across the sector in lung cancer.

Thanks, Dave. Marc?

Yes. So regarding the Ultomiris in myasthenia gravis, so we are delighted to have received the approval 2 days ago. To the question how quickly will Ultomiris go? I think we will have 2 phases. The first one will obviously be the conversion of Soliris to Ultomiris. We expect this conversion to be rapid. And we, in my prepared remarks, I indicated that it should be a pace which is similar to what we have seen in PNH in the key geographies. But this first phase of conversion will be superseded by a greater phase of expansion to a broader population of myasthenia gravis patient in comparison to Soliris. So this is where most of the growth will come. And this will not come in all geographies at the same time. This year, we will expect to get the approval in Japan and Europe. Then in Europe, we need to gain reimbursement in the various geographies and so on. So this will take a bit of time to expand Ultomiris in myasthenia gravis, but this is going to be a long and durable expansion trend for Ultomiris in MG.

Thanks, Marc. Maybe also something that we sometimes wonder whether everybody captures the impact is the price effect. I mean when you switch from Soliris to Ultomiris, you have about a 17% price reduction in year 1 and about 30% or 33% beyond that in year 2 and beyond. So really keep this in mind as you look at the conversion phase from Soliris to Ultomiris.

And absolutely, you have you have, in a way, sort of a value leakage between -- in the conversion. But for -- as I just said, for Ultomiris, there will be a phase of conversion. The most important part for years to come will be the expansion in a broader population in myasthenia gravis.

Thank you, Marc. And the next one is Richard Parkes at BNP Paribas. Richard, over to you. Are you on mute, Richard? I can't hear you.

Yes, sorry about that, Pascal. Hopefully, you can hear me now. Just moving back to oncology. So I've got one for Susan on Dato-DXd. I just wondered if you could update us on where you are in the [indiscernible] Dato-DXd plus chemo and PD-1, where you are in the dose escalation and when you might be able to make a decision on expanding on your current first-line Phase III trials for Dato-DXd. And then just a follow-up, I wondered if you -- if there are any futility or interim analysis on [indiscernible] this year that we should be aware of?

Thanks, Richard. Susan, just as a reminder, we never guide on interim analysis, but over to you.

I was just about to say that. So for Dato-DXd, we are testing in combination with platinum-based chemotherapy as well as with PD-1 and PD-L1 antibodies across the program. We have published already some data for Enhertu in combination with durvalumab in the BEGONIA study last year. And what we didn't see is significant issues with tolerability for that combination. I would expect to see that translate across. We've obviously -- we'll share the data at a congress in due course. But I'll just say that I'm encouraged by the profile overall that we see for Dato-DXd, the activity that we're seeing across settings and the combinability gives us confidence that this is going to be an important medicine among multiple different indications.

Thanks, Susan. Emmanuel Papadakis at Deutsche Bank.

A couple of follow-ups, please. Perhaps one for Susan on the PARP1 AZD5305 [indiscernible] particularly interested to hear your clinical spectrum and clinical potential for that asset from a commercial question earlier. And in particular, the potential is a combination regimen in light of the [indiscernible] failure for Lynparza recently? And then a follow-up on the MG opportunity for Ultomiris. If you could just remind us what proportion of sales you estimate and indeed what number of patients you believe you're currently treating with Soliris in the MG setting? And indeed, can you provide any comments on the early impact of [indiscernible] setting that would also be helpful.

Thanks. Susan?

Okay. So for PARP1-selective, again, we're encouraged by the profile that we've seen. So by eliminating the inhibition of PARP2 reduce the level of bone marrow toxicity. And that means we've seen in the Phase I were ability to dose up beyond the 10-milligram dose level where you see equivalent target inhibition to what you see with the approved dose of [ olaparib ] up to 140 milligrams where you see [indiscernible] for PARP1. So we're seeing tolerability across that. And as we discussed at AACR, we see lower rates of bone marrow toxicity despite this is a heavily pretreated patient population, lower rates of anemia, lower rates of other adverse events. So that's a very encouraging profile for combinability in general. I also think there's an opportunity for it in potentially to broaden efficacy from what we have seen with the currently available PARP inhibitors because some patients that get [indiscernible] mutations actually have a -- not complete reversion of the function of the protein. And in those patient populations, hitting the target harder might actually add efficacy. And so we were encouraged by seeing some activity in patients who had, had prior PARP and platinum treatment. So I think that what we're also starting to understand is the broader array of patients that might benefit from PARP inhibition. So I think this opportunity for broader activity is monotherapy and for broad combinability and that's why we're excited about this molecule in general.

So regarding Soliris in myasthenia gravis, it is predominantly used in the refractory setting. So it's a high disease burden, a refractory setting in most geographies, including the United States, the -- in line with the clinical data that had been completed at that time for the approval in 2017. With the new data that we have just published and presented at medical congress is for Ultomiris, we see that roughly the population is estimated to be 3x larger. So this will increase the base of patients. And then in comparison to other mechanism, what we know of Ultomiris is that it provides a very durable inhibition of complement activation. We have shown primary data at 26 weeks. We have also published at 52 weeks, and we see this continued efficacy over this long period. Ultomiris, as you know, is administered once every 8 weeks. So in 45 minutes infusion. So overall, a relatively practical and convenient dose administration for patients. And we believe the durability of response as well as the predictability for patient will enable us to gain a wider population for Ultomiris in comparison to Soliris.

Thank you, Marc. Adam Karlsson, ABG. Go ahead, Adam.

Just one, if I could. On the beneficial phasing of R&D and SG&A expenses in the quarter, should we take this as implying potentially less favorable phasing in Q2 as these effects reverse or the beneficial phasing effects related to the prior quarter with more costs having been taken in Q4 rather than Q1?

Thanks. Aradhana?

So as we talk about the gross margins, the -- and actually the phasing throughout the year, we're still sticking to the guidance that we gave in the beginning of the year. The phasing is relating to expenses that we do expect to pick up in the later part of the year. So there's really no change in our guidance.

Thanks, Aradhana. Next question is from Sachin Jain at Bank of America. Sachin, over to you.

Two, please. Firstly, on the SAFFRON study, Susan, wonder if you could talk about why you've gone in a refractory setting and not first line. Does that imply a specific view on the likely success of [indiscernible] which is almost equivalent [indiscernible] in first line? And then secondly, just a clarification on the PARP1. I know this is very early and we've only just had initial data at AACR. So apologies for this question, but do you have rough time lines in your mind season for potential Phase III starts and linked to an earlier question when Dave said we're looking to find the right sets of terms, does that need to be sorted before a Phase III can happen and assorting at the right terms of '22 event?

So Susan, 2 questions for you. And [indiscernible] Lynparza -- for PARP1. That's a question you hear every day, I think. So go ahead.

So thanks very much for the question, first of all. So for the SAFFRON study, the reason why we've gone in that setting is because we know MET amplification is seen in around 15% to 20% of patients following treatment with osimertinib. When you think about that in the context of a first-line trial, it's hard to design a study where that the effect is going to be concentrated in that patient group because you're effectively diluting that across the whole group. So that's why we've chosen it to be designed in this way. And I do think we have to wait and see what the results of the competitor trials are. But in contrast to when osimertinib was developed and T790M was the predominant resistance mechanism that was seen from first-generation EGFR inhibitors. What we're seeing is a more heterogeneous mechanism of resistance to drugs like osimertinib that hit T790M as well. And in addition, remember that one of the advantages that we have when we did the FLAURA study is that osimertinib had the blood-brain barrier penetrants compared with gefitinib or erlotinib. So there were different reasons why we saw advantage in that setting. And I do think that represents more of a challenge in the first-line setting in terms of trial design. Moving to PARP1-selective, again, very keen to accelerate our development as soon as we're confident in a dose and the setting. And of course, that's something that we'll continue to do. And we'll be happy to let you know as soon as we've made that decision.

I think just, Sachin, on your second part of that second question, the development efforts can progress along as at whatever pace we're able to move them at and operate all of that on our own and independently.

Yes, absolutely. Thank you, Dave. Matt Weston at Credit Suisse. Matt, over to you.

Thanks, Pascal. I'm going to go for one question, and it's for Aradhana. Aradhana, we recently saw the SEC give guidance around partnership R&D charges and that they should be included in core EPS calculations. I think I'm right in saying that if implemented in Europe, that would have a very meaningful impact on Astra's core earnings given the accounting for the Enhertu and TROP2 relationships with Daiichi. Firstly, can you confirm if I'm right that, that is the case, it would have a meaningful impact? Secondly, do you see any pressure from IFRS to follow the SEC in changing the way core earnings are presented? Or could we even imagine Astra independently following SEC advice in line with the message from the CFO of Roche last week?

So we are, as you know, a foreign private issuer. So we filed both in the U.K. and the U.S. Our principal accounting framework is obviously the IFRS and not U.S. GAAP. So we don't expect -- anticipate any change to that. Obviously, if this is -- this is not unique to us. Actually, all the entire pharma space accounts for milestone payments the same way. So if there are changes, I think it would impact all of us in the same manner.

Thanks, Aradhana. Let me just add, Matt, that I mean, everybody likes to apply a [ P ] to an EPS, but good finance practice with the value of the company on a DCF basis. And if you do this, basically, what you raised as a point really doesn't have an impact, right? Because if you look at the - if you value the company based on cash flow, then wherever that cash outlay is captured basically falls into your DCF calculation. So hopefully, everybody will continue doing DCF modeling. The next question is from Seamus Fernandez at Guggenheim. Seamus?

I'll just go with one. I'm hoping to learn a little bit more about when we might get some additional data from 1062. It seems like [indiscernible], it seems like we could get results possibly as early as late 2022 , although I think you're still guiding for early 2023. Just wanted to get a sense of when we might get more information on 1062 in that setting. And then just as a follow-up to that very quickly, [indiscernible], we know that you guys have been developing data in combination with pembro and with durva, I wanted to just get a sense of when we might see those data presented in a medical setting.

Thank you for the question. So I should have said earlier, and I'll take the opportunity now to say that some more BEGONIA data, which is a platform study in triple-negative breast cancer is going to get presented at ESMO Breast next week, which will include the combination of [indiscernible] and [ durvalumab ] in that setting. And again, I've already referred to the fact that we're comfortable with the combinability profile. So we look forward to sharing those data with you there. In the lung cancer setting, the Phase III study that's already ongoing is obviously event-driven. So we have to wait and whether the events come in on site at the end of the year or the other.

Thanks, Susan. Viktor Sundberg at Nordea. Viktor, over to you.

Pascal. So on camizestrant, I just wondered if you have enriched the trial SERENA-2 for [ ESR1 ] carriers. And if not, what is your level of confidence on a positive readout here given that many patients might have already had [indiscernible] blocking treatment in the early settings and perhaps the tumors are being driven by other factors in [indiscernible] in the later settings. And I just have a quick follow-up on M&A. Do the current biotech [indiscernible] you look more closely on smaller M&A deals, particularly in the U.S.? I, of course, appreciate that interesting signs should be a fire importance, but just interesting to understand your outlook for M&A here.

Thank you. Susan, do you want to take the cami question?

Yes, sure. So the expectation that -- in the second line patient population, such as SERENA-2 [indiscernible] positive breast cancer, you'd expect to see an ESR mutation rate in the range of 30% to 40% in that patient population. So it won't be the majority of patients but a substantial minority of patients that are there. I think there are patients that still have endocrine sensitivity that don't have ESR mutations that are also present in that second line plus population. And again, as I said earlier, in the first line, endocrine, there is room for improvement in the endocrine-sensitive patient population over the currently available therapies beyond ESR mutation.

Thank you, Susan. On the second question, Viktor, I mean, just as a reminder of our capital question policy. Number one is to continue investing in our business, in our company. And as you can see from the presentation and discussion, we have a very rich pipeline. So lots to do across the entire company. So that's really our priority. The other one, of course, is to strengthen our credit rating. Having said all of this, of course, if good business development opportunities present themselves, we will consider them, and we are constantly looking. And it is true that the current environment that is rich in innovation but becoming a little bit more difficult from a funding viewpoint, that environment presents opportunities, but there's really no big change to what we've been doing, really. And again, our focus is really progressing our pipeline and launching our new products, and we're very busy with that. And Aradhana, anything you wanted to add?

No. Thank you.

Luisa Hector at Berenberg. Luisa, over to you.

Thank you, Pascal. I wanted to ask on -- just a quick one on Vaxzevria in China. Roughly -- well, can you share what you're assuming for the year? And is there any upside for China sales of the vaccine based on your original assumptions at the start of the year? And then a second question on the diagnosis rates in oncology. When do you see those returning to a more normal level? And what role can you play in trying to expedite that.

Thanks, Luisa. So the first question maybe, Leon, you could take. But I would expand it, if you don't mind, to Evusheld because here saying this is really the most important product in terms of protecting people who cannot be protected with vaccines. So a lot of people in China are vaccinated already. And the second, Dave, you could take? Leon, over to you.

Yes. In China, our vaccine actually was licensed to [indiscernible] as a sub-license holder. So we are working closely with [indiscernible] in China to really get the clinical trial approval to go ahead with further short-term strategy in China. So -- but it will not reflect in our revenue because it's -- we have a sublicense for the -- it will be a collaboration revenue. So -- and most importantly is we are now filing our Evusheld in China. And Evusheld, I think, can protect the vulnerable part of the population. So with the pandemic ongoing in China, we believe our Evusheld has a position, has a place in China to help the pandemic, fighting the pandemic. So I think we will look forward to our approval in China by the end of the year. And we hope we can [indiscernible] a government tender and also self-pay private market.

Thank you, Leon.

Luisa, in terms of our expectations around recovery in diagnosis and testing rates, I would say that the greatest source of optimism that I've got is, right now, if we look in the U.S., that monthly COVID new cases has declined quite significantly relative to the very high rates that they were at end of fourth quarter, beginning of first quarter from Omicron. I do think that in terms of what comes in front of us on new waves is impossible to understand, but I do think that we've seen a pretty good correlation between new COVID cases and the effect that it has on the diagnosis rate. So we follow that as bellwether pretty closely. In terms of what we can do to address it, we've been working diligently with advocacy groups across the globe on efforts to raise awareness around the importance of making patients -- taking the effort to get themselves to the doctor and to make sure that they follow up on routine checkups. I do think that, that's had a good amount of impact, but it doesn't take away from some of the very, very significant challenges that are faced here across the globe, but we continue to stay as vigilant as we can.

Thanks, Dave. Peter Welford, Jefferies. Peter, over to you.

First one, just on Alexion, I wonder if you could talk a little bit about the potential synergies if you've managed to get out of the product side. I appreciate it's still early days, but I guess, particularly thinking [ for Ruud ] with regard to now AndexXa is into your universe. And also you flagged particularly rare diseases in Emerging Markets. I wonder if [indiscernible] a comment there on whether or not any progress has been made sort of incrementally to what Alexion did already in the Emerging Market area with those portfolios? And then just a clarification, if I can, just on the vaccine. You said for Vaxzevria, you expect to fulfill most of the existing initial contracts by 2Q. Does that mean there is still some potential for profit contracts that you've got already that go beyond 2Q? Or was that meant to mean that we shouldn't be assuming with the contracts you have at the moment any Vaxzevria revenues or any significant Vaxzevria revenues in the second half of the year?

Thanks, Peter. So a series of questions here. So Ruud you could take the AndexXa one? And Marc, the Rare Disease Emerging Market and maybe Iskra will take the vaccine, Vaxzevria question.

Yes. So let me take the first one regarding AndexXa. So since the beginning of the year, the BioPharma business unit is now responsible for the commercialization of AndexXa across the world. We have made some changes to our pricing, especially in the United States to get more formulary listings. It's a little bit too early in order to claim victory. But clearly, we see a positive impact already in the first few weeks. There's a clear need for this product. As we all know, brain bleedings are a devastating moment for patients. So the sooner you can stop the bleeding, the better it is for patients treated with Factor Xa inhibitors. So we are hopeful that these products will be substantial in the cardiovascular unit of AstraZeneca, and we have teams around the world now beefing up in order to make it a success.

If I may add, maybe the AndexXa but also Emerging Market, Rare Disease question, Marc will answer is really a great illustration of the synergies we can generate. I mean, as Ruud explained AndexXa, we are relaunching, and we think our scale in cardiovascular disease will help us. But we're also working on reducing the cost of goods, which has been an impediment. And the AZ and Alexion teams are working very hard together to reduce the cost of goods. Marc has been leading this effort together with Pam Cheng, our Head of Operations. We're making good progress. So a clear example of a very nice synergy between the 2 companies, Marc?

Yes, let me maybe add to what Ruud was saying, I mean, we're also very happy with the recent good news of approval in Japan with a full approval and price negotiations look also reasonable and the latest information I had from physicians and hospitals is that they are really expecting this specific antidote for Factor Xa inhibition bidding. So let's go now to the other question, which was basically the impact of rare disease in the Emerging Market as we see today. Today, if we look at the first quarter, this is obviously on a given year, an increase in the growth -- it has increased the growth rate. But I also want to -- which is basically in line with what has been done by the Alexion company for many years. But I also want to cover a topic that we had addressed when we made the announcement where we said we would accelerate the development of our innovations in China, and I can report that we have made very good progress on Soliris in several indications, and we do expect approval maybe towards the end of this year or early next year in a set of indications for Soliris. And this would be the first C5 inhibitor with the ability to treat several indications in China. We are also now trying to have China participate in global studies so that we don't have the same time line between the Rest of The World. So great progress being made in Emerging Markets. And obviously, as far as Alexion is concerned, we see AstraZeneca has an extraordinary opportunity to leverage this global reach and global presence, and we will take advantage of it.

Thanks, Marc. And Iskra, if you want to cover the question about Vaxzevria sales in the second half.

Thanks for the question. So as mentioned previously, the first and second quarter of Vaxzevria sales represent our fulfillment of the initial or non-for-profit contracts. We do expect some subsequent commercial contracts that will happen. And as we guided previously, that will be on the affordable price that will allow us to maintain the [ growth to ] global access. But I think given the fact that there is no scarcity of the vaccines in the world today, it is reasonable to guide that we will see a significant decline with Vaxzevria sales in the second part of the year.

Thanks. It's a very important point. I think you still read articles about the lack of vaccines doses. Today, the issue is not scarcity of vaccine. It's oversupply, and I'm sure you've seen a number of other companies announcing a reduction in their forecast because there is suddenly oversupply at the present time. Christopher Uhde, I hope I'm not hurting your name actually, Christopher, do you want to go ahead?

Christopher Uhde from SEB. So I guess my first question is on nirsevimab, actually. I just wondered whether you are considering exploring that in immunocompromised patients as you have Evusheld. Obviously, I guess, we see from, for example, Synagis that dose splitting doesn't really happen. So I guess, the limited risk of impacts to the business plan for children. And then my second question, on the PARP1, can you talk about your expectations on how you see its utility in ovarian, breast and prostate compared to PARP2, besides just -- I mean, in terms of are there subsets of patients that might be more or less -- might be less, let's say, susceptible to PARP1 inhibition. In particular, I'm wondering about -- there seems to be some level of controversy in prostate cancer. I've seen a publication in PNAS, for example, saying that it's PARP2 and not PARP1 that mediates the repair in prostate.

So Iskra, sorry, do you want to take the first question on nirsevimab?

So let me first say that we are very pleased with the strong profile of nirsevimab that we saw in the recently published MEDLEY and MELODY Phase III clinical studies. And we are very convinced and feel comfortable that it has a really great profile for the protection of the RSV in infants. But I think you are raising an important point. And I think during the COVID-19 crisis specifically, we did learn the importance of protection of the immunocompromised group of patients. And as we already have experience and with the Evusheld, it is very fair to say that this is important indication to explore. So we are definitely looking at the option how nirsevimab will be -- how we will use the profile of the -- strong profile of the nirsevimab potentially beyond the current indication. And we'll obviously guide and inform the due time.

Susan, the PARP1.

Yes. So we've looked at the activity of our PARP1-selective molecule in a range of different preclinical prostate models, and we see very good activity in that setting. In fact, actually, if you look in the segment of prostate cancers that are driven by ATM mutations and remember the profound data, the level of activity that we saw in BRCA-mutant patients was higher than was seen in the ATM-mutant -- actually PARP1-selective looks better than olaparib in that segment of patients with an ATM mutation, for example. And I would also just point out that in the Phase I PETRA data that we saw at AACR, there was activity also seen in prostate cancer patients that we've seen. So I'm confident about the profile across the range of indications where we already know that PARP inhibitors work. And again, I think there's great potential to go beyond where we currently got indications.

Thanks, Susan. So we have one more question from Mattias Häggblom at Handelsbanken. Mattias, over to you. Mattias Häggblom: I'll be brave and go with 2. Firstly, on the performance of rare disease, I think Marc has previously reminded us of the tough comps for Alexion in the first half, given how Alexion performed last year before being consolidated. So that said, can you confirm that we should still expect the rare disease unit to remain nondilutive to the double-digit growth you see for the group until 2025? And is there anything in particular that will get you back to trend? And then secondly, for the newly formed disease area of V&I, for 2 of the molecules in this area, Synagis and nirsevimab, you don't have global rights. For one of them, there's even 3 business partners. Now this disease area formed, is this a priority to resolve and consolidate the ownership? Or given have you used partnerships in other areas including oncology? Is this a model with split ownership, something we should continue to expect from you?

The first question, I think, rare disease, Mattias, if I may jump in here. We've never guided on Alexion per se. We've said that the 2 companies together would grow at low double digit. And I think that's probably as much as we would want to say at this time. Unless Marc, do you want to add anything?

No. This is the trajectory.

Exactly. The second question, Iskra, do you want to comment on that?

Yes. I can comment. I mean, we are obviously working in different type of partnerships across the portfolio and the similar cases with our portfolio for RSV, for both Synagis and nirsevimab. I think the collaborative partnership -- collaboration in the partnership is something that we always try to foresee. And I think at the end, it's really about the unmet clinical needs and importance of the medicine and the asset and that usually pays off in the different partnerships. As I mentioned before, we are very -- we are very convinced in the strong profile of nirsevimab, particularly, as you know, the unmet need in the RSV in infant space is really huge across the globe. We see the -- quite a number of the hospitalization and that in the infants, but also the huge burden on the health care systems and the cost that goes above $5 billion. So if you think about that and having the molecule that can prevent the medically [indiscernible] respiratory tract infection in the infants is something that will hopefully also help us to drive and lead in these collaborations and partnerships that sometimes can be, as you mentioned, with a number of partners across the globe.

Thanks, Iskra. So maybe we could actually close for today. Thank you so much for all your interest and your great questions. And as you could see from hopefully the presentations, but also the discussions to questions, we have a very busy agenda for 2022, and we are going to continue investing in our pipeline and build long-term growth, we believe we can grow at a pretty good rate, what we've called industry-leading growth rate post '25, and that will really depend on the growth we are driving today but also new growth we generate through our pipeline. So importantly, the message is we are committed to science, and we'll continue to invest in our pipeline. With this, thank you so much, and I wish you all a good weekend.