AstraZeneca PLC (AZN) Q2 2023 Earnings Report, Transcript and Summary

Good morning to those joining from the UK and the US. Good afternoon to those in Central Europe, and good evening to those listening in Asia. Welcome, ladies and gentlemen, to AstraZeneca's Half Year and Q2 Results 2023 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 your hand feature to indicate your wish to ask a question, and please remember to unmute your line when invited to speak. And with that, I'll now hand you over to the company.

Thank you, operator, and welcome, everybody. I'm Andy Barnett, Head of Investor Relations at AstraZeneca, and I'm very pleased to welcome you to AstraZeneca's first half and second quarter 2023 conference call. As usual, all materials presented are on our website. This slide contains our usual safe harbor statement. We will be making comments on our performance using constant exchange rates, or CER, core financial numbers and other non-GAAP measures. And non-GAAP to GAAP reconciliation is contained within the results announcement, numbers used are millions of US dollars unless otherwise stated. This slide shows our agenda for today's call. Following our prepared remarks, we will open the line for questions. We will try and address as many questions as we can during the long time, although I'd asked the participants to limit the number of questions you ask to allow others a fair chance to participate in the Q&A. As a reminder, to ask a question, please use the raise a hand function in Zoom or alternatively, you can click the Q&A button then write your questions. With that, Pascal, I will hand the call over to you.

Thank you. Hello, everyone, and welcome. Please move on to the next slide. Total revenue in the first half of the year increased 4% to $22.3 billion, with 16% growth in our non-core medicines, offsetting a $2.2 billion decline in our COVID-19 medicines revenue. Core earnings per share increased 21% to $4.04. This increase reflects both our robust business performance, as well as a gain following an update to our contractor relationships for before in the US. We continue to benefit from our diverse commercial portfolio and our global footprint. Given our strong execution in the first half, we remain confident in our outlook for the remainder of the year, and we have reiterated our 2023 guidance. Next slide, please. Taking a closer look at the performance of our non-COVID business across our regions in these areas, growth in the emerging markets continue to be strong. In particular, outside of China, emerging markets outside of China collectively grew by 38% in the first half. This growth underscores our confidence that these markets will become increasingly important to our business. We also saw double-digit growth across the EU and Europe in the period. On the right-hand side, you will see that we delivered a robust double-digit growth across oncology, severe RNI and rare disease. And as expected, we saw declines in B&I. This growth reflects strong medicines performance across these areas. Please advance to the next slide. When we look at performance across our portfolio in the first half, we had eight medicines deliver over $1 billion H1 product sales. A broad range of these products are driving our growth, as you can see from this slide. For effective life cycle management, we've seen an acceleration in the rate of growth for several medicines, such as Imfinzi and Farxiga with new indications making important contributions to revenues. Ultomiris growth stood at, once again, and is the result of both successful conversion from Soliris as well as growth in patient numbers. We've also seen promising global growth from some of our more recently launched medicines including an HER2, Calquence, Breast03, Troponin and Saphnelo, all of which are helping to change the course of their respective diseases. Next slide, please. Confidence in our long-term outlook is supported by our robust let stage pipeline, which now has well over 120 active projects. Importantly, we maintain a rigorous approach to R&D development. Setting a high bar for late-stage trial initiations and advancing only the most promising projects. We strive to stay at the front of the innovation curve and we have already progressed 14 new molecular entities into lettuce development. We're making good progress towards initiating 30 new pivotal trials this year, having those nine in the year-to-date with recent additions, including the lithos trial for Breast03 asthma and two next-generation propane trials, which will support the expansion of our PMDI portfolio. As we indicated last quarter, most of the new pivotal trials are expected to dose in the second half of this year. Our pipeline continues to make exciting progress with eight positive pivotal oncology trials already this year. These are shown on the right-hand side of this slide. In particular, we are encouraged by the positive results from the TROPION-Lung01 trial of Dato-DXd and are excited to unlock the full potential of this promising medicine. On the next slide, Aradhana can take you through our financial highlights in the first half as well as provide some further insights into how we are embracing the power of artificial intelligence across our manufacturing and supply chain. Over to you, Aradhana.

Thank you, Pascal, and good afternoon, everyone. As usual, I'll start with our reported P&L. Please advance to the next slide. As Pascal mentioned, total revenue increased by 4% to $2.3 billion in the first half. Total revenue, excluding COVID-19 medicines, increased 16%. Alliance revenue of $627 million includes $475 million of an HER2 profit sharing from geographies where Daiichi Sankyo books product sales. Collaboration revenue of $220 million includes $180 million license fee from Serum Institute of India booked in the second quarter relating to our COVD-19 and anti-body license agreement. Please advance to the next slide, which shows our core P&L. The core product sales gross margin in the first half was 82.9%, benefiting from lower production costs in prior quarters, and certain non-recurring items in the first quarter. As previously communicated, we expect the product sales gross margin in the second half to be negatively impacted, similar to in prior years, by seasonality for Flumis and certain other medicines, the mandatory price reduction for Tagrisso in Japan, as well as the full impact of inflation. We still expect the product sales gross margin on a full year basis to be slightly higher than pre-COVID-19 levels. Looking ahead beyond 2023, we expect product sales gross margin percentage will be negatively impacted by profit sharing arrangements. While we already see this dynamic with Lynparza, we anticipate the impact to increase as we start seeing higher sales from medicines such as HER2 and Tezspire in regions where we book product sales and then pay out a portion of profits to our partners through cost of sales. Over the long-term, we're focusing on driving productivity improvements to counter the impact on our gross margin from inflation, continued growth in emerging markets and more complex and expensive manufacturing of new modalities we're investing in. Core operating expenses in the half increased by 8%, R&D costs increased by 9%, driven by continued investments in our pipeline. The increase in SG&A costs partly reflects spend behind new launches such as TOPAZ and HIMALAYA, which are driving the strong growth of Imfinzi and DUO, for example, as well as existing brands like Farxiga and Breast03 and geographic expansion of the rare disease medicines portfolio. We previously guided for total core operating expenses to increase by low to mid-single-digit percentage in 2023, and we now expect to finish the year towards the upper end of this range. Similar to the phasing we observed in 2022, we expect R&D and SG&A spend to be weighted towards the second half. Other operating income of $1.1 billion includes $712 million related to the previously announced updated agreements on the Beyfortus, which was booked in the second quarter. The increase in other operating income is in line with the guidance set out at the start of the year where we said that other operating income would be higher versus last year. The tax rate in the second quarter was lower than full year guidance due to certain tax incentives and mix of profits and lower tax legal entities. For the full year, we continue to expect this core tax rate will be between 8% and 22%. Core EPS of $4.07 in the first half, represents an increase of 21% at constant exchange rates. Next slide, please. Our net cash inflow from operating activities increased by $400 million to $4.9 billion, and we continue to see improvement in our cash conversion. Net debt increased by $1 billion to $24 billion, driven by the payment of the second interim dividend in March and $2.4 billion in deal payments, which include the second payment to Acerta made in the first quarter. As a reminder, we will pay the third and final payment in 2024. For the full year, we continue to anticipate deal payments related to prior business transactions to be in line with last year, around $2 billion, excluding Acerta. We have paid just under $1 billion in the first half. Our net debt-to-EBITDA ratio continues to decrease and is now at 1.9 times or 1.7 times, if excluding the non-cash adjustment for the Alexion inventory fair value uplift, which will soon disappear as we have now minimal inventory remaining from the time of the acquisition. Today, we are reiterating our 2023 total revenue and core EPS guidance. Total revenues are expected to increase by low to mid-single-digit percentage. Excluding COVID-19 total revenue are expected to increase by low double-digit percentage. Growth in the second half will be hampered by patented expiries, including SynCor in the U.S. and Nexium in Japan, where we saw first generics end of last year. We now anticipate revenue in China to increase by a low to mid-single-digit percentage. And as I mentioned earlier, we now anticipate total operating expenses on the our end of the range, with phasing of SG&A costs towards the second half of the year, similar to prior years. In addition, given that we anticipate starting several new Phase 3 trials in the second half of the year, R&D and associated clinical and new product costs will be higher in the second half. Based on June average FX rates, we now anticipate a low single-digit adverse FX impact on total revenue and a low to mid-single-digit adverse impact on core EPS. Please advance to the next slide. Continuing with the artificial intelligence team, today, I want to highlight global operations and how we are leveraging AI to accelerate drug development manufacturing processes and drive supply chain efficiencies. To share three specific examples here. First, in drug development, with our in-house AI-enabled tool, loop manager, we have reduced in route synthesis lead times from 9 to 12 months to five to six months, and we're striving to further reduce lead times to less than three months. Additionally, with this tool, we have been able to reduce the number of experimental trials cutting lead times and driving efficiencies in case while also providing sustainability benefits through fewer synthetic steps. Next, with AI-powered visualization of data, our operators are able to improve process performance for synthetic and biologic medicine by identifying critical variables that will affect yields and make real-time optimization adjustments. In the future, advanced continuous process verification will drive further robustness and yield increases. Third example, we've implemented AI-enabled enhancements across our supply chain. For example, Sweden is one of our largest global sites, manufacturing over 12 billion tablets and capsules every year. Here, we use AI-powered digital twins that can leverage multiple data sources simultaneously, such as production orders, dispensing stations and cleaning status to optimize production schedules. This technology has already delivered a 90% improvement in scheduling time, meaning we can now develop a dispensing plan in only four to five [ph] minutes worth used to take eight hours. Our ambition is to leverage many of these tools and roll them throughout our manufacturing and supply network. This is, of course, a journey, but the work is already underway to use technology to drive efficiencies. While our operations team continues to deliver on seamless supply and new product launch delivery. With that, please advance to the next slide, and I will hand over to Dave to walk through our oncology business performance.

Thank you, Aradhana. Next slide, please. We're pleased to report our oncology medicines delivered total revenues in the first half of $8.8 billion, an increase of 22% versus the prior year. We delivered double-digit product sales growth across all regions. Turning to individual medicine performance in the second quarter, Tagrisso Global revenues grew 10%, reflecting strong underlying demand for Dora and Flora across all regions. As expected, effective this June, we realized a mandatory price reduction in Japan. And in China, second quarter revenues reflect the first full quarter of -- renewal pricing following reenlistment this March. Following the ASCO plenary presentation of Adora overall survival data last month, we expect expanded use of Tagrisso in the adjuvant setting as well as potential for new reimbursements in certain geographies. Lastly, as we consider the future impact from IRA, our current interpretation of CMS final guidance supports the potential exclusion for Tagrisso under orphan drug protections. Lynparza remains the leading PARP inhibitor globally and delivered -- sales growth of 9%. In the US, we saw sequential demand decline across the PARP inhibitor class following competitor label restrictions in second-line ovarian cancer. We continue to work on opportunities for US demand expansion in ovarian and HR-positive breast cancer, but still expect this to be more challenging. Outside of the US, we saw double-digit product sales growth across the EU, established rest of world, and emerging markets. In Q2, Imfinzi total revenues, inclusive of Imjudo, surpassed $1 billion in a quarter for the first time, up 58% and largely driven by new launches of TOPAZ, HIMALAYA, and POSEIDON. I'll touch on specific Imfinzi growth drivers a bit later, but needless to say, we're excited by what the team has accomplished within a competitive I-O class. Calquence total revenues increased 34% year-on-year, supported by ex-US demand growth, particularly in Europe. And in the US, Calquence continues to maintain leadership in frontline CLL with the majority of new patient starts in this setting. However, we continue to see some new patient share loss in the relapsed/refractory segment. In HER2 total revenues of $322 million in the second quarter increased 176% year-on-year. In the US in HER2 new patient share in the HER2 positive metastatic breast cancer setting remains at a -- and in the hormone receptor positive HER2 low post chemo-metastatic breast cancer share has now grown to above 50%. Importantly, we're seeing strong continued demand across the globe, particularly in European markets. Following the exciting approval for DESTINY-Breast03 in China last quarter, we received approval for HER2 in HER2 low metastatic breast cancer. Also during the period, we received approval for PROPEL in the US and anticipate a potential regulatory milestone to be paid in the second half of the year. And finally, we were granted priority review in the US for Capitala 291. Next slide, please. We've seen remarkable Imfinzi and Imjudo growth, driven by the recent launches of TOPAZ, HIMALAYA, and POSEIDON. We're excited about the current trajectory of these launches and the broader potential of Imfinzi as supported by the suite of ongoing life cycle management programs. First, HIMALAYA and unresectable hepatocellular carcinoma has established a clear foothold for Imfinzi in GI cancers. Last month at ESMO World GI, we presented unprecedented four-year overall survival data, the longest follow-up to-date in unresectable HCC. This sustained benefit, coupled with strong safety will continue to support rapid adoption and the establishment of a new standard-of-care. The launch of TOPAZ represents a step change innovation in biliary tract cancer and the strength of this data demonstrates the transformative benefit of IO in this setting. In the US, TOPAZ has become the undisputed standard-of-care within months. and the EU and Japan much are already outpacing the US trajectory. We're making progress with POSEIDON in the US and in Europe with a crowded and competitive setting. This launch together with our efforts with Pacific and Caspian continue to solidify a strong leadership position within lung cancer. In the first half of this year, we delivered four positive Phase III trials of novel Imfinzi combinations across lung, GI and GYN settings. MATTERHORN and gastric and gastroesophageal junction cancer was the first global Phase III and trial of IO plus flat that demonstrates statistically significant pathologic complete response. In endometrial cancer, we are excited to report that DOE showed Imfinzi + Lynparza and Imfinzi alone significantly improved progression-free survival, and Susan will cover these trials in more detail shortly. Over the balance of the year, we look forward to additional Phase III readouts with PACIFIC-2 in lung cancer and EMERALD-1 in GI. Building on HIMALAYA, EMERALD-1 and EMERALD-2 will enable our leadership in HCC. Finally, we'll continue to advance our next wave of IO with our novel bispecifics, volrustomig and rivagustimig and sabestomig. With that, please advance to the next slide, and I'll hand over to Susan to cover key R&D highlights in the quarter.

Thank you, Dave. Next slide, please. It's been an exciting first half of the year with eight positive pivotal trial readouts. We had a large presence at ASCO with more than 130 abstracts, featuring 22 approved and potential medicines, highlighting the momentum of our pipeline. ASCO highlights include the final overall survival data from the Tagrisso ADAURA trial, demonstrating unprecedented survival in early-stage EGFR mutated lung cancer, as well as the first data from the ADAURA trial, highlighting the potential of PARP inhibition plus immunotherapy in advanced ovarian cancer. Additionally, interim data from the DESTINY-Pantumor02 trial and in HER2 to be the first therapy to show broad activity across a range of HER2-expressing advanced solid tumors. Since ASCO, updated data showed HER2 resulted in clinically meaningful progression-free survival and overall survival. And I'm pleased to share that our initial interactions with the FDA have been encouraging. As mentioned previously, we reported high-level results for eight pivotal trials this quarter. I'll touch on three of those readouts now. First, FLAURA2 demonstrated a strong clinically meaningful improvement in progression-free survival for patients with EGFR-mutated non-small cell lung cancer. Considering the EGFR mutated lung cancer landscape as a whole, we believe Tagrisso monotherapy will remain standard of care in first line, but see the opportunity for FLAURA2 to become a valuable regimen for patients with higher tumor burden. We're delighted that these data have been selected for a presidential plenary presentation at the World Conference on Lung Cancer in September. DUO-E is the first Phase III trial of immunotherapy plus PARP inhibition to demonstrate clinical benefit in advanced endometrial cancer. More than 400,000 patients are diagnosed with endometrial cancer each year and in advanced disease, survival remains poor, with only one in five patients living beyond five years. In DUO-E, both Imfinzi + Lynparza and Imfinzi alone significantly improves pogression-free survival when added to chemotherapy with the greatest clinically meaningful benefit observed with the combination of Imfinzi and Lynparza as maintenance treatment. Finally, over one million patients are diagnosed with gastric cancer each year, 45% of whom are eligible for perioperative chemotherapy. An early read from MATTERHORN demonstrated a statistically significant and clinically meaningful improvement with Imfinzi + FLOT versus FLOT chemotherapy alone in the key secondary endpoint of pathologic complete response, which we hope to see translate into an improvement in event-free survival over time. Please advance to the next slide. We recently announced waited high-level results from the first Phase III trial for Dato-DXd, the TROPION-Lung01 trial. This trial investigated Dato-DXd versus docetaxel in second or third-line non-small cell lung cancer and demonstrated a statistically significant improvement in progression-free survival and an early trend in overall survival. The adverse event profile of Dato-DXd was overall consistent with previous trials, including rates of all-grade ILD. Whilst there were some cases of Grade 5 ILD observed in the trial, we are confident in the positive benefit risk profile for Dato-DXd. These data reinforce our view that Dato-DXd will be an important potential medicine in multiple cancers, including lung cancer. Initial interactions with the FDA have been encouraging, and we are proceeding to file TROPION-Lung01. In addition to TROPION-Lung01, we have three active Phase III trials in the frontline setting, investigating Dato-DXd in combination with immune checkpoint inhibitors, TROPION-Lung07-08 and AVANZAR. Outcomes in these settings remain poor, less than half of patients treated the initial IO for chemotherapy living past two years. Combination Dato-DXd plus IO has already demonstrated encouraging clinical efficacy in the TROPION-Lung02 trial with durable objective response rates of 50% for Dato-DXd plus pembrolizumab and 57% for the Dato-DXd plus pembrolizumab and platinum-based chemotherapy across first-line patients. We'll have further data to support the combination of lung cancer from TROPION-Lung04, which is a late-breaking abstract at the World Conference on Lung Cancer. The combination has also shown benefit in breast cancer with BEGONIA, but we saw a 91% disease control rate with durable responses in first-line triple-negative breast cancer. These results support stronger benefit of the combination of Dato-DXd and immune checkpoint inhibition. Moving now on to breast cancer. Our first Phase III trial is due to read out later this year. TROPION-Breast01 investigates Dato-DXd versus chemotherapy in patients with hormone receptor positive HER2-negative metastatic breast cancer that have received at least one prior line of chemotherapy. Our confidence in this trial is twofold. First, we saw encouraging signals from the HR-positive cohort of TROPION-PanTumor01, with a disease control rate of 85% and a median PFS of 8.3 months in a more heavily pretreated population compared with TB01. Second, we already have proof-of-concept for TROP02 directive treatment in this space. Phase III data for another compound demonstrating efficacy in a late-line HR-positive population. We also have two Phase IIIs focused on triple-negative breast cancer. TROPION-Breast02 investigates where the Dato-DXd can replace chemotherapy in first-line patients not eligible to PD-1 or PD-L1 inhibition. And TROPION-Breast03 investigates the role of adjuvant Dato-DXd with or without Imfinzi in early triple-negative disease. We are on track to deliver on the promise of Dato-DXd in lung and breast cancer and TROPION-PanTumor01 and 03 are generating the data needed to support further investments in the future. And with that, please advance to the next slide, and I'll pass over to Ruud to cover biopharmaceuticals performance.

Thank you, Susan. Next slide, please. Biopharmaceuticals delivered total revenue of $9.1 billion in the first half with both CVRM and R&I posting double-digit growth. Within global CVRM, Farxiga total revenue grew 41% to $1.5 billion in the quarter, driven by continued uptake in CKD and heart failure. Farxiga is now approved in 62 countries for patients with heart failure with preserved ejection fraction. And this quarter, we were pleased to gain approval in the United States for deliver, which means heart failure patients can now benefit from Farxiga regardless of the left ventricular ejection fraction status. Fasenra, Breztri, Tezspire and Saphnelo, continued their strong momentum, delivering combined growth of 48% in the first half. These brands are becoming a larger driver of our overall performance. In the second quarter, these brands made up 46% of our R&I total revenue, up from 36% in the first quarter. Next year, we will add another innovative medicine to our portfolio with the launch of Supra in 2024. In the second quarter, Fasenra grew 16% to $406 million, driven by strong demand in the US and Europe as well as some favorable inventory movements in the quarter. We recently filed Fasenra for its first approval in China following positive high-level results from the miracle trial. Tezspire delivered $81 million in total revenue in the second quarter, up from just $13 million last year. When we look at the combined global sales by AstraZeneca and our partner Amgen, Tezspire reached $257 million in the half, an impressive achievement in only one year since launch. Tezspire is now available in the 11 markets and has enjoyed notable early success in the US, Japan and Germany, with more European launches to come later this year. [indiscernible] total revenue in the second quarter remained stable. However, we still anticipate the entry of generic competition in the United States in the back half of the year. In V&I, we saw the first product sales for Beyfortus, which is now approved in the United States following a unanimous vote by the FDA Antimicrobial Drugs Advisory Committee supporting Beyfortus benefit risk profile. AstraZeneca manufactured Beyfortus and then supplies product to Sanofi for distribution, and we record our sales through Sanofi as product sales. We also booked alliance revenue earned on Sanofi's Beyfortus sales outside the US where we shared profits with Sanofi. We're looking to make Beyfortus available to protect infants in the US and Europe ahead of the 2023 RSV season. Next slide please. The continued growth of Farxiga is the result of a decade long development plan to broaden its use from diabetes to chronic kidney disease and heart failure patients. Our pioneering research has led to Farxiga becoming the leading medicine in its class, bringing its mortality benefits from news of patients globally. We see further opportunities to come for the [indiscernible] molecule and other combination therapies, giving us the potential to address additional unmet needs among cardiorenal patients and other indications. Our Farxiga combinations remain on track which plans for Phase III decisions later this year. With that, please advance to the next slide, and I wind over to Mene.

Thanks, Ruud. This slide and everyone ---- we are on the right slide. This slide outlines our participation at recent medical congresses where we showcased data for tozorakimab, our anti-IL33 monoclonal antibody. We also highlighted the importance of real-world data and patient outcomes across R&I and CVRM. Firstly, the American Thoracic Society Congress, lung tissue samples taken from patients with COVID-19 were stained and analyzed. And the images I am showing you here show localization of higher levels of IL-33 in the airway tissues providing further sign rational for targeting IL-33 in severe viral infections in our Phase III TLIA trial. Also at ATS, real-world data highlighted the importance of prompt intervention with BREZTRI, initiating treatment within 30 days following a moderate or severe COPD exacerbation decrease the risk of future exacerbations by 24% versus delaying treatment by six months and by 34% versus the delaying treatment six months to one year. At the European Renal Association, we presented real-world evidence underscoring the importance of early diagnosis of CKD. Multinational study, REVEAL CKD, demonstrated that 85% to 95% of Stage 3 CKD remains undiagnosed. Data also showed that delaying diagnosis by just one year, resulted in an increased risk of deterioration, kidney transplant or long-term dialysis treatment. The ZORA study supported continued concomitant use of potassium binders in RAASi patients who experience hyperkalemia. In response, we've already seen updates to a number of CKD and heart failure treatment guidelines. Please advance to the next slide. I wanted to also take the opportunity to highlight the broad modalities and technologies we now have in our armory. Over the past decade, we have built these capabilities to provide our scientists with access to the most relevant biological pathways and targets. And as you can see, these are starting to mature and gain momentum. We have a portfolio of antisense oligonucleotides across amyloidosis, NASH and CKD in clinical development. These are precision medicine approaches that target the underlying biology of the disease in specific patient subpopulations. For example, our PNPLA3 AZD2693 dosed in Phase IIb in NASH this quarter bellowing promising Phase I data, which showed a steatosis reduction and positive gene knockdown at 12 weeks. In advanced biologics, AZD8630 is a human anti-TSLP fragment antibody formulated for inhaled dry powder delivery. AZD8630 is currently in Phase I in patients with poly-controlled asthma with data expected later this year. Also later this year, we're expecting dates from our NGF TNA bispecific monoclonal antibody currently in Phase II for the treatment of OA pain and neuropathic pain. In autoimmune disease, we recently announced a collaboration with Quell Therapeutics to develop engineered Treg-based cell therapies for autoimmune combined with our own expertise in this space, we can accelerate the development of this novel therapeutic approach with the potential to be curative in type 1 diabetes and in inflammatory bowel disease. With the acquisition of Alexion, our gene therapy ambitions have also accelerated significantly, utilizing our proprietary CRISPR gene editing platform to address challenging rare diseases, where together building an approach, we hope we will offer better safety margins. We're also working with Alexion teams to optimize the therapeutic window through the use of novel tissue-directed capsids and tissue-specific promoters. The possibility of curative treatment for rare genetic disease becomes achievable when combined with the Alexion rare disease expertise. With that, I'll now hand over to Marc, who will cover the rare disease genomic strategy in more detail, along with rare disease highlights in the period. Please advance to the next slide.

Thank you, Mene. Can I see the next slide. In the first half, rare disease total revenue grew 12%, contributing $3.8 billion. Growth in the period was driven by increased demand and benefited from timing of tender market orders, slightly offset by the onetime pricing adjustment in the international region recognized in the second quarter of last year. Across the portfolio, our global patient numbers continue to grow. And notably, this is the first quarter Ultomiris patients exceeded those of Soliris. Ultomiris grew 60% in the second quarter driven by continued naive patient growth in generalized myasthenia gravis, new market launches and successful conversion from Soliris across the shared indications. As a consequence of this dynamic, Soliris declined 19%. Thought I'm excited by our performance, as I mentioned in the first quarter, we expect some headwinds in the second half of the year. These include pricing pressure related to renegotiations as Ultomiris launches in large neurological indications and potential for Soliris biosimilar entry in Europe. Also, as a reminder, we benefited from tender market order timing in the second half of last year. Timing of these orders are variable throughout the course of the year, impacting growth versus prior periods. Beyond C5, both Strensiq and Koselugo grew 25% and 30%, respectively, reflecting underlying patient demand and expansion into new markets. Please advance to the next slide. During the quarter, ALXN2220 Phase I data were presented at the European Society of Cardiology in patients with transthyretin amyloid cardiomyopathy. As a reminder, ATTR-CM is a progressive and fatal disease caused by misfolding transthyretin depositing in heart tissue. The safety and pharmacokinetic profiles of ALXN2220 were assessed and cardiac imaging studies were performed. As shown, the images detailed remarkable reduction in cardiac amyloid deposition over 4 and 12 months. The observations were supported by change in level of cardiac biomarkers as well as functional measures. ALXN2220 is the first and only medicine to clear amyloid deposition, and it has the potential to reverse the course of disease both as a complementary therapy with other modalities, but also as a monotherapy. We are excited by this Phase Ib data, and as previously shared, we plan to initiate a Phase III trial later this year. Across AstraZeneca and Alexion, we are looking to transform the care of transthyretin amyloidosis through multiple therapy modalities. Our broader amyloidosis portfolio includes silencer eplontersen and stabilizer acoramidis for which we have rights in Japan. Recently, we saw positive 30 months Phase III data for acoramidis. We've demonstrated a 50% relative risk reduction in cardiovascular-related hospitalization building confidence in the meeting ability to stabilize disease progression. Eplontersen met its primary endpoint in regulatory ransthyretin-mediated amyloid polyneuropathy, and we have ongoing Phase III trials in ATTR-CM. We believe this portfolio of medicine this differentiating mechanism of action will address the full spectrum of disease severity. Next slide, please. As you may have seen, we have done a series of small to medium-sized business development deals, expanding our technologies and platform in research. I wanted to take the opportunity to highlight some of these and affirm our long-term ambition to be an industry leader in genomic medicine. Approximately 80% of rare diseases are genetic, driven by inherited or acquired gene mutations. By leveraging AstraZeneca technologies in on-viral [ph] delivery systems and nucleases, such as CRISPR, LogicBio, GeneRide and sAAVy platforms, [Indiscernible] cargo for delivery to the central system or CNS, as well as our own operated platforms, we aim to address a number of genetic diseases across liver, kidney, heart, and muscle and CNS. The agreement announced this morning to acquire a portfolio of gene therapy programs for rare disease from Pfizer accelerates our timeframe to bring this potentially transformative and curative treatment to patients. We look forward to welcoming Pfizer employees who have been driving this program forward, increasing our gene therapy team to over 80 specialists. Together with all my colleagues at Alexion, we are excited to continue our work developing enhanced platform in technologies, leveraging the expertise across a larger group to deliver life-changing medicines to patients where there are limited or no long-term treatment option. And with that, please advance to the next slide, and I will hand over the call to Pascal for closing remarks.

Thank you, Marc. Next slide, please. Before I make my concluding remarks, I would like to take a minute to recognize the important steps we are taking to tackle the climate crisis in particular, our Ambition Zero Carbon program is on track, and we have made significant steps towards achieving our science-based targets. Firstly, we announced our partnership with Vanguard Renewables, allowing us to deliver renewable natural gas, a source of clean hit to all our US sites, manufacturing and R&D sites, by the end of 2026. We also significantly expanded our AZ Forest program with a commitment of $500 million to plant and maintain 200 million trees across six continents by 2030. The expanded program with sequester carbon supported by diversity and deliver benefits to local communities, positively impacting an estimated 80,000 livelihoods. Lastly, our transition plan is verified by the science-based target initiative, which focuses on deep decarbonization, allowing for only 10% residual emissions removals by 2045. Scope 3 remains to be our largest challenge, and we are committed to partnering with our suppliers. Last week, private sector members of the SMI's Health System Task Force, which have convene sent an open letter calling on surplus to commit to join minimum climate and sustainability targets that contribute to decarbonizing the health care value chain. We're playing a leading role in this space, doing our part to limit the impact on climate change while unlocking opportunities to deliver more sustainable health care system. Please move to the next slide. We have an exciting second half of the year ahead with a number of important pivotal trial readouts, including two trials in breast cancer, TROPION-Breast01 and CAPItello-290. Two trials -- we also have two trials of Imfinzi and non-small cell lung cancer, NHCC. We have a trial with Fasenra in EGPA as well as the first results of our next-generation COVID-19 antibody AZD3152. We also have a rich catalyst pass in 2024 which given current even production rates will now include DESTINY-Breast06 and low our results from both of which we are now -- which both of which are now expected in the first half of 2024. The progress that we are making in our pipeline overall is inspiring, and I'm excited for when we have the opportunity to share data -- to share the full data from the many studies we have showcased during this call, at upcoming medical congresses. Now please advance to the next slide. Finally, before we turn to Q&A. Earlier today, we announced that Mene Pangalos will retire after almost 14 years, with the company and a great 35-year career. Mene will be succeeded by Sharon Barr, currently Head of Research and Product Development at Alexion. When Alexion joined AstraZeneca two years ago, a key priority was ensuring that our shared organization would benefit from the world-class talent as Alexion brings. From day one Sharon stood as an exceptional Scientific Leader. Sharon brings tremendous experience that with potential to advancing our biopharmaceuticals pipeline, along with a strong track record for driving productivity and fostering innovation. His experience coupled with our leadership's talent, passing for developing people, places how perfectly to take over the reins from Mene and help us, provide the next chapter of success. Over the coming months, Mene and Sharon will complete an extensive handover, supporting a smooth transition of responsibility and ensuring there are no delays to the advancements of projects, which brings me to Mene, someone who's always quick to praise others, but must not take credit himself for all it has done to transform how we approach R&D, delivering a greater than five-fold improvement in productivity, driving deeper collaborations with academic, biotech and key organizations, pioneering programs to promote open innovation and championing the use of new technologies and mortality. And last but not least, leading our contribution to the U.K. life sciences sector and in particular, building a very important presence in Cambridge in the U.K. Mene, thank you for your contribution to our company, and I wish you, only the best in your retirement. Personally, I will miss your wonderful sense of humor and your intellectual with. But the quality of the medicines you brought to patients and the pipeline and capabilities you've built will be your legacy for many years to come. With that, I will hand the call back to Andy, for our Q&A session.

We will now go to the Q&A with all of our executive members participating shown here. As a reminder, you can raise your hand on Zoom or type your questions in via the Q&A button. We will try and answer as many questions as we can during the call, but please do limit the number of questions you asked to allow others a fair chance to participate in the Q&A. And with that, we move to the first question.

Sachin Jain, Bank of America. Over to you Sachin.

Thanks for taking my questions. It’s Sachin Jain from Bank of America. Two topics, firstly, Dato in first-line lung, if I may so part of the reaction to TROPION-Lung01 was investor fading confidence in first line on both efficacy and safety, so I wonder if you could touch on that. And could you remind us how you interpret the eight months of PFS we saw from TLA2 in ASCO just the competitor, [Indiscernible] nine months. And if Susan, you could frame expectations of what our focus should be into TL04 that you flagged at word Lung? And then the second question is on breast cancer, a lot of news flow in breast cancer in the next 12 months. So we've been particularly focus, so I wonder if you could just touch on two reads. Firstly, TB01 which you talked about but the potential for that to be better than TROPICS-02, you noted the eight-month PFS, are you confident that can repeat and better the trade by 5.5 months? And then secondly, you didn't mention DB09, but you pulled that forward into 2024. So again, just talk to the confidence you've got there, prior data suggest potential for double the PFS comparator receptive data? Thank you.

Thanks, Sachin. So easy question for you, Susan?

Thanks for the question, Sachin. So let's start with data in first-line lung. First of all, I would say that given the TLO1 is a positive study, there were things that we can learn from that. The first-line lung studies are ongoing. We've, obviously, got TROPION-Lung07, 08 and AVANZAR, which are complementary trials in first line, predominantly in patients without genomic alterations versus the respective standard of care. AVANZAR is investigating patients regardless of PD-L1 status of gene histology. So they're complementary segments of first-line lung. What I would say is that we've now treated across all of these studies, together with TLO2 and TLO4 over 200 patients on the Dato-DXd plus immune checkpoint inhibitor combination. And we're comfortable with the safety profile that we've seen across that patient population. So I think it's important to just remember that from an ILD perspective, we know that some tumor types have a higher risk of ILD than others and that later line patients, you've had multiple prior lines of chemotherapy or high risk of ILD. And so I think it's important that that ongoing safety profile that in first-line lung is underpinning our confidence there. When you look at TROPION-Lung02 data that you highlighted, we're encouraged both by the response rate and the durability of response that we’re seeing from TROPION-Lung02 for both the combination with the doublet of Dato-DXd plus pembro and also the triple when platinum-based chemotherapy is added. What you'll see in TROPION-Lung04 is that's a Phase Ib study that also looks at the combination of data plus immune checkpoint inhibition in cancer. So, it's an additional data set to TROPION-Lung02. And again, we're happy to talk to you after the data presented at a World Congress on lung cancer. For breast cancer, you asked 2 questions. One is about TROPION-Breast01. Again, the confidence in TROPION-Breast01 is based on the data that we've seen that you've already highlighted and you've already mentioned. I mean, I'll just say that for the design of Dato-DXd, we think is a best-in-class ADC. It's got excellent stable linker and a proven roll head already. And so when we look across cross-track comparisons with all the caveats those have, and we've seen numerically higher response rates across a number of different settings and that really underpins our potential to have better efficacy and have a best-in-class profile in that setting. But, obviously, we have to wait for the actual readout of the trial. For DESTINY-Breast09, I think actually, the readout turns not -- it's hugely shifted here. Obviously, all of the -- and HER2 trials are accruing rapidly and that helps with the time lines, but these are also event-driven trials that we look for the outcome. So I don't think there's anything more than that to insert in the shift in the timeline. I hope that addresses all your questions.

Thanks Susan. Tim Anderson. Go ahead, Tim.

Hello. Great. Thank you. So just staying on the topic of Dato-DXd in the light of what TROPION-Lung01 has shown. I know you guys say you're enthusiastic much program. Is your enthusiasm less or tempered at all by how TLO1 read out because the benefit -- I mean, you guys pretty much said is modest. So, I'm wondering if that those kind of temporary expectations for that program overall, what that could deliver in other tumor types or even other settings for lung cancer. And then a second question, where are you with the retrospective biomarker analysis of TLO. Is there anything you can say yet within results by TROP-2 expression levels?

Thank you, Tim. So, let me just reiterate that, we're confident in the data that we've seen for TROPION-Lung01. As we've shared already, we've had initial conversations with the FDA which has been encouraging, and we're moving to file. So we're looking forward to sharing the full data, which I think will be helpful for everybody at an upcoming conference. And that will obviously provide a more complete picture. We're confident that the data that we've seen really, really enforces that Dato-DX is going to be an important potential medicine in multiple cancer types, but also including in lung cancer. In terms of the biomarker analysis, work is, as you say, ongoing. And obviously, one important source of data is going to be the TROPION-Lung01 data set. So, I look forward to updating you with data once we've had the chance to complete that announcement.

The next question is from Andrew Baum at Citi.

Thank you. So, couple of questions. One for Susan and one for Marc. So you filed or you plan to file the TROPION-Lung01 data with the FDA. Can I ask, which population presumably, given you've got modest PFS, the OS is a mature. One would imagine that the sub group in the second line that is persuadable third line for the FDA. So, could you just comment on, which indication you are speaking, which population, is it third line, second line, histology knowing the likely response, but I'm interested anyway. And then second to Marc in relation your amyloid monitor, where we share enthusiasm. When we think about the outcome trial, are you going to mirror that that to bridge bio with a sort of embedded six-minute work as well as an outcome for mortality or will be what have -- or do you think you can get it approved solely on six-minute work in order to expedite the danicopan market?

Susan, do you want to start?

Yes, sure. Thanks for the question, Andrew. So obviously, in the top line results, we've not specified performance by patient subsets, that's entirely in line with our normal practice. TLO 1 was stratified by the most immediate prior therapy, including anti-PD-L1 or PD-1 immunotherapy, geographical region, histology, squamous versus non-squamous. It did include patients with actionable genomic alterations so that was a later protocol amendment, and it's a minority of the patients that are included. I can't really comment on ongoing dialogue with the FDA at this point.

Maybe the one thing that we could add here is that, from what we've seen, I think this agent is going to be useful in a large population of lung cancer patients. Marc, do you want to cover the second question?

Yes. Thank you, Andrew, for your interest in 2220. So we are planning this Phase III, and we are in ongoing discussion with the FDA to confirm the protocol. You ask a very precise question on whether we were going to include the six-minute working cash in our endpoints. And the answer is no. we are probably going to finalize the endpoints on mortality and cardiovascular morbidity, possibly with the addition of the third tier endpoint, but it won't include 6-mintute walking distance.

Thank you, Mike. Mark Purcell, Morgan Stanley. Mark, go ahead.

Thanks very much, Pascal. A couple of questions. Firstly, on Calquence and one for Dave. Dave, could you help us understand the sales split for Calquence and for the BTK market in CLL between first-line and second line to refractory patients? And if you can help us on the second line side to understand the sort of share dynamics there that could be really useful. Secondly, on the TROPION-Breast01 market opportunity, obviously, a large number of patients, I guess, in the -- just the third line setting loan, 85,000 patients in the G8. Could you help us understand how this fits within HER2 and the HER2 low setting as well. So trying to think about the market opportunity before you get the data themselves. And then lastly, for Susan, just to follow on towards TROP-2 testing questions. Could you help us understand going forward, the importance of TROP-2 testing for TROP-2 ADCs. And from a regulatory standpoint, the acceptance of retrospective data on TROP-2 expression and the potential to incorporate TROP-2 testing into trials, which have recently started such as TL07 and TL08? Thank you very much.

Dave?

Yeah. Thank you, Mark for the question. So starting first with your Calquence question. In terms of just the overall new patient starts within the BTKI class, we see about half of new patient starts of total BTK starts are happening in CLL in the front line. And then you have about half of those starts that are happening in the relapsed/refractory setting. And then you can split that half in the relapsed/refractory setting into about half of those, so 25% are in patients who are naive. And the other balance of that is in patients that have been pretreated with BTKI. So that gives you a general sense for how the class splits out. In terms of our share of those classes. I've been very pleased with the US performance in the second quarter as we've seen in the frontline setting. Our share position has held strong as we've seen the entrance of new competition within the class. In the second-line setting, as I mentioned in my prepared remarks, we have seen erosion of our share in that relapsed/refractory setting, particularly within the naive. We remain, as we see it, still the leaders within this space. That said, it is a pretty tight share split among the three players as we see it within that space. In terms of now switching to the commercial opportunity for TROPION-Breast01, I think that maybe the primary thing that I'd lay out here is that I think what we're really seeking on this is category leadership with in breast cancer. I think that as you quite rightly point out, across the G7 countries, there are a large number, over 35,000 fourth line and beyond patients treated across the G7 in hormone receptor positive and HER2-negative disease. And I think that what we'll really be looking to do is understanding how patient selection and sequencing can create opportunities both for in HER2 as well as for Dato-DX. And I think that an important part of the approach that we're taking is to try to have an AstraZeneca medicine that is appropriate for patients with various different subtypes. And also in various different sequence over time. And I think that I would look at the opportunity to replace chemotherapy across late-line breast cancer as a category is how we're thinking about the portfolio of medicines.

And so to answer the question about biomarker development for Dato-DX -- so in principle, antibody-drug conjugates are targeted medicines. And I think as a general principle, we want biomarkers to identify the right patients for targeted medicines across that class. And so as we've indicated, we are working on a biomarker for the TROP2 program, and we will use the data that we've got from TLO 1, to help with that effort, and we can update you on that once the analyses are completed. I think your comment about retrospective versus prospective. Obviously, in an ideal world, you want prospective selection in order to make sure that you've got a balance you often stratify for that presence in such trials, but there are multiple examples of retrospective analysis based on the prospect of definition of that have enabled an approval in that setting.

The next question is from Gonzalo Artiach with ABG. Go ahead Gonzalo

Clear..

Yes, we can hear you, go ahead. We can’t hear you. So let’s move to the next…

Yes. Now can you hear me?

Yes. Gonzalo, go ahead. We can hear you now.

Okay, great. So first one, it's regarding your yesterday's news on DESTINY-Pantumor02. And with the data presented yesterday, improved PFS and OS in line with what you showed at ASCO. How much does this help for a potential tumor-agnostic approval? And here, what is your view on this debate of the use of HER2 grades of an expression levels as the market for potential treatment approach? And specifically in IHC 3+, where did you -- you didn't see any major improvements in terms of ORR, but could you share anything on how does this new parameters PFS and OS look like? Thank you.

Okay. Thank you for the question. So as we shared at ASCO, what we've seen with NHAI in the Pantumor02 study is impressive response rate and durability of response across multiple tumor types, particularly impressive in the gynecologic cancers of endometrial cancer, ovarian and cervical but also encouraging data across multiple other tumors. And of course, what we saw in that study with an enhanced response rate in the IHC 3+ compared with the IHC 2+ populations. So it's important just to remember that there's a mix nature in this trial, you've got multiple different genotypes with different lines of therapy, but generally heavily pretreated patient population. And what you saw there was a response durability response, which is beyond what you would readily expect and certainly in the IHC3+ population for a standard of care chemotherapy in that setting. So I think it's encouraging now that we've got the progression-free survival and overall survival to back up that response rate and durability of response. And I do think there are differences in this setting between IHC 3+ and 2+, which is something we've also seen in other settings as well. And that, if you like, establishes the differentiation from the standard of care. I also think it should you say, though, that there are patients beyond the IHC3+ that are clearly benefiting beyond what you might expect from that 1 of the care chemotherapy. So what I would say is that a conversation with regulatory authorities, including the FDA, are ongoing. As I said, initial discussions are encouraging. And as those develop, we can provide more details.

Thanks, Susan. Next question is from Richard Parkes of Exane. Richard, over to you.

Hi. Thanks, Pascal. Yes, just a couple of questions. Firstly, just to push a little bit more on TL01 just to help me understand the difference and level of optimism at the time of the press release and what you're communicating now, because as you'll know, your mission of the words clinically meaningful is what's caused nervousness. But clearly, given the decision to buy your optimism today, you do see the overall benefit as me. So can you just help us understand a little better the context that contradiction somewhat in the communication? Is it additional doses to readout? Or was there some other reason why you thought you couldn't include that word in the press release? Second question, simple just could you update us on progress for us to make to Phase 3, I know we're waiting for the durability of response data at the lower dose to be presented. And I just wonder, will that be an ESMO or worldwide? Thank you.

Susan?

So the definition of clinically meaningful in terms of what clinicians are looking for will take into account not only the difference in medium, but shape of the KM curves. Obviously, the hazard ratio, which is what the trial is often designed to power together with the response rate, durability response and the safety profile as well as the patient population that's included. So I think -- what I would just reiterate really is that when we look at the data, and we find out now that it's encouraging, and we've had discussions with the FDA and on the basis of encouraging response we are proceeding to file. I can't go into more details today, but we'd be happy to have more conversations when we've actually been the opportunity to present the data as an upcoming medical congress. With regards to your question on volume, the program is advancing at pace we have indicated that we've got a number of Phase 2 trials in planning. We're proceeding again at pace with those. And as we initiate those and as we have more mature data, we will share those data, but not necessarily on the time lines that you're asking for. So at the appropriate time, we will share the data in the public Congress.

Thank you, Susan. I mean, Richard, just to add, I mean, our partner, Daiichi Sankyo and us, actually, we have a policy of only disclosing high-level results, as you know, and not the details. So what you saw is the announcement relative to the high level results. What we have seen is the detailed results and not probably also explain some of the discrepancies, but you'll understand better when you see the results of future Congress. And the next question is from Christopher Uhde at SEB.

Hi, there. Christopher Uhde, SEB. So I have a question on SUPERNOVA and the COVID antibody update in general. So obviously that so -- I saw that the time line seems to be reiterated. But we're moving toward the latter part of the half not so much time to get it to patients before the end of the year. So, perhaps could you just remind us a little bit about the factors determining the time from topline to EUA? And can you also talk a little bit about how you're planning to brand it? It seems that it won't be -- have you shelled, but I guess that has advantages and disadvantages. So perhaps you could talk about that. And then in terms of Fasenra, the growth levers going forward and also thinking about -- I thought GSK has an ultra extended half-life IL-5. So what are your thoughts around competition? Thank you.

Thank you, Christopher. Aradhana, do you want to take the first one? And Ruud, do you take the next one?

Thanks. Christopher, thanks for the question and also thanks for your continuous interest in this area. So, we are continue to rapidly advance AZD3152, which is a new long-acting monoclonal antibodies for prevention and treatment of COVID-19 for immunocompromised patients. And I'm pleased to say that SUPERNOVA trial is on track. As you are mentioning, we did updated the trial and that was a result of the trial design. And that was a result of the consultation and agreement with the FDA, because we believe that is the fastest way how to achieve emergency approval for the patients in US. And currently, the trial is updated with the sub-study or immunobridging data. As a reminder, this is a President-study design and will allow us to have the data late this year. Obviously, as we are moving from the beginning with the 8th phase, we will do our best to deliver AZD3152 to the immunocompromised patients in US by end of this year. Equally, we are continuing the SUPERNOVA trial with efficacy endpoint, and we believe that efficacy data readout will happen in the first quarter of next year. That will allow us to have the approval globally outside of US. On your branding question, thanks for that. I do agree that not having shelled the brand name for our new next-generation monoclonal antibody has its good and bad side. We are currently in discussion both with FDA and EMA, and we will provide the update on the brand name as soon as we get agreement from those agencies.

Okay. Thank you so much. Chris, quickly, the growth drivers for Fasenra in the foreseeable future. There are three big ones. First of all, by far, the biggest one is still biopenetration is at the low side for biologics in severe uncontrolled asthma, depending on where you are, it's everything between 15% and 25%. So there's still a huge room to maneuver in a positive way. The second one, what I said in my remarks is that China is an important growth driver. We have filed in China based on the outstanding miracle trial. So hopefully, next year, we will see the results. And last but not least, later this year, we will see the outcome of Fasenra and EGPA. It's another very important growth driver for the brand. So all in all, we truly believe that there's still a very bright future for Fasenra. Quickly, your remark about long-acting, of course, we have our own Fasenra is every 2 months. So we don't foresee a major impact of our molecules. The class is very competitive. But once again, bio penetration across the board is still at a very low level. So more competitors will also make -- we grow the market in an acceptable and good way.

Thank you, Ruud. James Gordon, JP Morgan. James, over to you.

Hello. James Gordon, JPMorgan. Thanks for taking the questions. Firstly, a question on at Dato, which would be, is the plan to change anything on the back of the recent Dato update? And what might change? For instance, could you tweak any of the trials to enroll patients that you think are going to show stronger efficacy in some sort of subpopulation -- and is it Trop02 or is it something more sophisticated that you're actually looking at? Because a Trop02 expression is like a pillow on the slide is laying out the Dato program. But is this something else where you might end up stratifying -- and will you kick off any more Dato Phase III trials from now? Or are you going to wait until you've got a bit more data from other trials to work how were the strongest efficacy is going to be generated? And then just one other question, which was Imfinzi, so very strong growth today. But is there anything one-off here that help performance? Or actually, if we put Dato aside, is Imfinzi and a HER2 really going to be the two key growth drivers from now and to the end of decade. Can we really extrapolate the strong growth forward for Imfinzi today?

Susan?

Okay. All right. So in terms of Dato-DXd new trials, let me start with that one. Yes, we are continuing to planned new Phase III trials with Dato-DXd. As we had indicated at the end of last year and we continue to be excited about the potential for this molecule in multiple different settings. In terms of the biomarker, Trop02 is highly expressed across many different tumor types, including lung cancer. I think in general, about ADCs and prediction of outcome, receptor expression is one element, receptor internalization and another element and sensitivity to warhead as a third element. So the there were multiple elements to consider about predicting the patients that are most likely to respond and of course, we’re looking at those different elements in what we're working on from a biomarker perspective.

Thanks, Susan. James, on Imfinzi. I mean I think the first thing I'd note is that we double-clicked into it into the prepared remarks because we think that the opportunity for Imfinzi going forward is an important one. We've made a series of investments into the life cycle plan in the clinical development plan for Imfinzi. And those now are paying off in terms of positive readouts, and we're commercially taking advantage of that. I think that to go a little bit more specifically, somewhere between 20% and 30% of the Imfinzi growth that we're seeing is coming from the established portfolio, so the PACIFIC and Caspian indications where we're seeing strength in PACIFIC across the globe as we kind of get further away from some of the COVID-19 challenges. We're continuing to progress against Caspian in parts of the globe where we have opportunities. But really, it's the new launches of TOPAZ, HIMALAYA and POSEIDON that are making up the balance of that. TOPAZ has rapidly gotten to a place in the markets where we've launched, where we have market share that's well north of 50%. And I'd say, HIMALAYA has had a nice uptake, but still quite a bit of opportunity to continue to move with HIMALAYA. It is a competitive context. And it's one where we are certainly coming up against therapeutic alternatives, but we like the uptake that we've had. Maybe the last proof point just to offer on this. While with TOPAZ and HIMALAYA, we have regulatory approvals in over 50-plus markets across the globe. We only now today have reimbursement in just around 10. Now they're 10 of the largest. So, it's the US and Japan, and we have early access that exists within France. But we still have a number of countries within Europe and a lot of countries within international, which yet to come on board. So we think the outlook for Imfinzi forward is strong.

Thank you, Dave. Emily Field, Barclays. Emily, go ahead.

Hi, thanks for taking my questions. I just have two. The first one, just on Lynparza and maybe digging in a little bit more to the dynamics going on in ovarian, how much of sales is second-line ovarian? And just kind of were aware of the registration being pulled for the competitor asset, but sort of why is this impact leading over into Lynparza, do you expect to return to growth in the US for this asset? And then just a question on the raised guidance for China. I was just wondering, is this truly based on sort of improving demand in the region. Is this impacted in any way by some of the price adjustments that are happening with the product from the NRDL, just any incremental color you can give there? Thank you.

Dave, do you want to cover the first one and Leon could cover the second one?

Yes. Emily, thanks for the question. So, first part of this is that if we take a look at PARP class starts across lines in ovarian cancer. Over the course of the year, the starts are declining, and that is predominantly a phenomena of lower desire on the part of medical oncologists to treat in the second line setting in ovarian cancer as there's been, as you know, I think, quite a lot of changes that have been happening there with respect to competitor labels and discussion and dialogue with the FDA. Within the context of that, we've been doing a good job to continue to drive our Pala and solo indications. Solo, we really have probably fully penetrated though there is opportunity to continue to drive HRD testing rates in the front line. Unfortunately, a bit of what's happening is that those gains are being offset by some of the second line declines. Now, today, in terms of where we stand, the second line represents a significant minority of our ovarian cancer business. And so I'm hopeful that even with a narrower PROPEL label, that we have an opportunity to continue to drive growth in Lynparza with PROPEL and some of the other populations that I've mentioned, but it is going to be slower progress that we're making. I will say, outside of the United States and Europe, we're making nice progress with PROPEL within Germany. We're continuing to drive growth opportunities that we have in breast cancer and also within ovarian cancer ex-US, but I think that the growth rates that we'll see on Lynparza, while still in front of us, will be a bit slower. I do, though, look forward with optimism to hopefully having a regulatory path forward with DOE. We'll see how things net with DOO and those would certainly be enthusiastic areas for us to launch into.

Yes. Regarding China guidance, I think China is -- this year is -- we have some headwinds on oncology price cuts because of NRDL renewed last year, major oncology products get a cut. And also silicon getting to VVP, which is a large product. But actually, we should also focus on a lot of opportunities because we're launching rare disease and also Enhertu in China, [Indiscernible] in China. So a lot of new products are being launching a little bit lagging behind the global pace, but I think we are looking forward to a lot of new launches. We haven't yet launched Imfinzi, Topaz and also Himalaya. And we also have launching strongly into dollar indication and the FLAURA 2. And for inflation business, Symbicort is a very strong growth and [Indiscernible] second year now. So is it also embracing very strong growth? And Pulmicort, after last year's VVP, we digested and this year, we to growth now. So Forxiga is also one of our very major important growth driver and together with roxa also all the other CDM portfolio doing extremely well. So I think in the next one or two years, three years, we are launching a lot of new indications and new products. So a little bit behind global, but also we also need to digest the VVP impact and some price cut off NRDL. Government in China is treating innovation better than before. So I think this is also a very good sign for NRDL policy, some of the transparency and also bring quite a good policy.

Victor Sanders, Nordea. Victor, over to you. Victor, we can't hear you.

Yes, okay, can you hear me now?

Yes, go ahead.

Sorry. So, I have two questions, if I may. Thank you for taking my questions. So on the outlook for 2023, I just wanted to get a bit more details on the headwinds that keeps you from raising or refining the guidance. So in China, you seem to be more optimistic that the parameter is going against you that you mentioned here seems to be quite well anticipated perhaps in the beginning of the year. So in the core generic situation in the US and an LDL impact from China in the second half. So are there other things here as well that keep you on the sideline or guidance upgrade or refinement that have surprised you a bit during the year. You mentioned inflation. So maybe a quick comment on that would be helpful. And the second question I have is on Imfinzi. Very strong growth across all geographies, as you said, but especially in your Rest of the World category. Can you just elaborate a bit more what is driving that and how we should extrapolate in that geography and why the uptake has been so quick here? Thanks.

Thanks, Victor. Aradhana, do you want to take the first one and David, the second one?

Yes, sure. Thank you, Pascal. Thank you, Victor for the question. So, we are reiterating guidance for the year. And I think it's a bit of phasing and dynamics between first half and second half. In the second half, we are going to experience, as you just mentioned and I mentioned before, the Symcor generic in the US Nexium [Indiscernible] started to see the impact. And again, it's a progressive impact, again, more in the later part of the year and decline in various other legacy brands deals. So if you look at some of the other -- the brands that are the other of the legacy category. The trend that was mentioned by Dave around [Technical Difficulty] produce from a clinical supply standpoint, a lot of that is weighted towards the second half in R&D costs. So again, it's more phasing than anything else, and we are reiterating our guidance for the full year. And then Dave, on Imfinzi, Rest of World.

So Victor, it stems back to the answer to the question that I gave previously to James. Established Rest of World is made up predominantly of sales from Japan. I think that if you take a look at a lot of the other international markets, they sit within emerging markets. So the success that you see in the quarter for Imfinzi and Judo is really driven by very rapid uptake that's been happening over the course of the half with TOPAZ-1. And then also within the last quarter, we've had reimbursement from Judo that's allowed us to be able to move forward with HIMALAYA.

Thank you, Dave. Steve Scala. Do you want to go ahead, Steve?

Thank you so much. Two questions. First for Dave. In the third quarter of 2022, you said that in HER2 could be one of the largest medicines in oncology. Are you willing to say the same for Dato-DXd based on what you now know? And second, for Susan, does AstraZeneca plan to alter the study design of TROPION-Lung07 and TROPION-Lung08 based on the results of TL01? Thank you.

Thanks, Steve. I continue to believe that in HER2 has the opportunity to be one of the largest medicines and certainly one of the most transformative medicines in the treatment of cancer. I will just come back to -- we've talked a lot on in HER2 about three important pillars. And the PanTumor02 data, and Susan talked about that in greater depth earlier, really does begin to open up the opportunity to take an HER2 into areas outside of breast gastric in lung cancer, and I think it's really promising for that. And with Dato, I would say, similarly, that I confirm my enthusiasm for Dato's opportunity to be potentially as big as in HER2. And I think that it's going to be an important medicine. Certainly, also relative to last quarter having a positive Phase 3 readout reinforces confidence in the ability to be able to take a program forward, and I think that that's a big driver of it. And I think the last thing, when we did the deal on data, we knew that there was a big opportunity to replace systemic chemotherapy in lung cancer and also in breast cancer. The real opportunity for Dato to be bigger than in HER2 would be if we can take it into tumor types outside of those two areas. And so that's really what we look forward to seeing if we're able to effectively do.

Thank you, Dave. Just also will state the obvious, which is -- we have a lot more data points for HER2 than we have for that or we need to keep this in mind, of course, but the potential is indeed very large. Simon Baker…

The second question…

Sorry, there was the second question, sorry.

So thanks for the question again. So I think I said before, TROPION-Lung on, I expected that we were going to learn some things from that trial. And indeed, there are learning's in TL01, as you expect from any clinical trial, particularly the first pivotal arm trial. So it's normal practice for drug development that as you go along and you learn, there may be adaptations trails. So I think that's just a normal part of drug development. And I just – I'd say, look we remain confident that that is extremely important medicine in lung cancer, including in the first-line settings of the trials that are already ongoing.

Thank you.

Thank you, Susan. Simon, do you want to go ahead?

Thank you, Pascal. Yeah, two questions, if I may, please. Firstly, on the Pfizer deal. You did allude to it on the slide a little bit, but I wondering if you give us a bit more color on what you're buying. Is this more technology rather than specific products? You highlighted selling capsids on there. And specific to those, are there any characteristics that Pfizer brings that are differentiated in terms of selectivity and payload capacity. And then secondly, a question on brazikumab and inflammatory bowel disease. Now that you've written often terminated that project, I just wondered what your level of interest in that space still was. I see you've done some work with NLRP3 inflammasome inhibitors. But is this still an area that is under active development. Thanks so much.

Thank you, Simon, to take us away a little bit from data. But Marc, you can go ahead and Mene?

Yeah, so, happy to -- Simon, thank you for the question. I'm happy to talk a little bit about in gene therapy. So basically, the agreement with Pfizer concerns about a dozen preclinical construct and assets and also a large number of capsid that have been developed over the years, and that can be probably further refined to get the best possible capsid for both CNS or cardiotropic assets. So it's a combination of a dozen projects we could start clinical probably from next year over the next one, two or three years, plus other technologies, including capsid, which could be further refined, but we need to work on those to get the ultimate topic for the right issue – on the right issue.

Thank you, Marc. And I think -- I think, I look forward to the day when we can actually show you the progress we are making in the election portfolio in the pipeline. It's very exciting, but it's also true for the cardiovascular aspirator immunology portfolio. And at some point, hopefully, in the future, we can spend more time on those products because many of those are exciting. Also making progress in VM, even though it's much more at an early stage. But with that Mene, you want to cover the question that Simon had, right.

It's a great question. And the answer is we have an interest, both in terms of building our immunology capability and autoimmune disease and specifically in diseases like IBD. And I'll give you two examples. And again, this -- I'm sure it's something that Sharon will be talking about over the coming year. The first program is the anti-CCR9 antibody that's in Phase I, which has demonstrated really dramatic lowering of T-regulatory cells in the gut. And it looks like a very interesting mechanism and antibody, and we're looking to see how we can accelerate that. And you may also have read about a deal we did with a small company called Quell in the Treg space, and I talked about it today in my presentation. They have a real interesting way of locking Treg cells to maintain their anti-inflammatory state. And one of the indications that we were pursuing with them is IBD.

Thank you, Mene. We have a few more questions, so we'll maybe extend by five minutes. But if you don't mind, if you could ask one question each. Seamus Fernandez, go ahead.

Yes. Thanks. So, just a quick question on the change in leadership and Mene's retirement, it's interesting to see that Sharon is coming from Alexion. Is this a directional move away from sort of more primary care type opportunities? I know this is something Pascal you have talked about before, but there's a lot of interest in opportunities to treat metabolic disease. Just interested if there's -- this is a strategic shift away from diabetes and metabolic disease, perhaps obesity opportunities or if we're going to see AstraZeneca continue its efforts along those lines or perhaps even accelerate those efforts through business development going forward? Thanks.

That's a good question. Actually, what it is, is very simply the appointment of a very talented scientist and a very -- an exceptional leader. It's not reflecting a change in strategy, certainly not reflecting that we want to consolidate rare disease and the biopharm business because Sharon he is being replaced in our role as Head of Research and Product Development at Alexion, and it's also not reflecting a move away from -- or this engagement from primary care. I mean I'm sure you've noticed that looking at ourselves, but also our portfolio, you've noticed that certainly over the last few years, naturally, our portfolios move to more specialty care, but primary care remains important. And that's why a few minute we're saying we look forward to the day when we can talk about what we have in NI, but also in cardiovascular medicines, we have quite a few projects. And Mene, maybe you want also to comment there on the portfolio we have, in fact.

Yes. I mean I think when we have a chance, hopefully, in the next six to 12 months to talk about all of the assets, both early, mid- and late-stage assets across CVRM across respiratory immunology, B&I, I mean it's a very rich and deep portfolio with many, many opportunities, many of them significant. We are moving more to specialty, but there's still a place for the primary care. And Sharon, I can just second what you're going to say he's going to be a fantastic leader for us. It doesn't reflect any change in strategy, more continuity with hopefully going from strength-to-strength and building on what we have already built.

One thing that certainly Sharon can help us do is continue building this focus in immunology, sorry, that many started and that will be an important chapter of our future. Matt Weston at Credit Suisse.

Thank you, Pascal. Can I ask a question about IRA Part D Reform? So at face value, Astra's oral oncology business is going to face significant headwinds over the coming years as farmers contribution to catastrophic cover in Part D steps up significantly. But offsetting that was also the potential for volume uplift on lower co-pays and reduced foundation support. I wonder if Dave could walk us through the pushes and pulls for the oncology business and whether he sees it as a meaningful net negative, something that washes its face or maybe even a net positive. And if I am a lot, Pascal. I know you said one, can I cheat Susan on TLO 1, when do you expect the OS data to be mature? And will you present the PFS data before the OS data is available?

Thank you. So, thanks, Matt. So, on the IRA, it is in terms of co-pays, et cetera. I think it's probably a small positive for primary care products and a big positive -- bigger positive for oncology, not only oncology but more expensive oral medicines. And with this, I’ll hand over to Dave, who can comment more specifically on oncology.

Yeah. So if we take a look at the first part, Matt, of the question, we haven't shared now for quite some time specific product level breakdown of percent of business that's within Medicare Part D, what we have shared that across the AstraZeneca complete portfolio, the 25% to 30% of it is Part D. And you're right that the oral oncolytics are above that average relative to understanding the magnitude of the exposure here. So certainly, you can model out what the impact of having to pick up catastrophic looks like. I will say though that it is an important offset that comes with the ability to be able to have co-pay capped, and also smoothed over the course of the year with these expensive oncologics, really the co-pay exposure that patients in Medicare plans face on the affordability is quite significant. There is no mechanism for industry to be able to help in the way that we do with programs in the commercial side of things. So while $2,000 of co-pay may be a barrier for a number of patients still within the United States, particularly within some of the elderly populations, we do think that there's an important reduction that's going to happen here. Overall, we'll have to see how much we're able to actually get patients off of free goods programs as a result of this, and we'll keep that -- we'll keep you updated on that as it unfolds, and we'll start to find out next year, actually as co-pay moves down to a 3,500 cap on January of 2024.

Susan?

So thanks for the question, Matt. So as you're aware, we've not indicated when the final analysis are going to be conducted for TL-01. When we've got -- it's an event rate driven as expected and when we've got the projected event rate we can update that. But just for you, in the meantime, when considering the outlook in the maturity, just bear in mind that this is the second, third-line non-small cell lung cancer patient population. And unfortunately, for those patients median OS is still not long. So with those attacks, obviously, it's 10 to 12 month range is typically what you would expect. So, it's not hugely prolonged versus progression-free survival.

Thanks Susan. So Eric Le Berrigaud. I ask everybody to stick to one, and not cheat. Please Eric.

I would like to try. First was on HER3, actually as it target in ADC still continuing to see good data coming from your partners product, and some physicians would like you to embark into this partnership as well. Is there any option? And are you still discussing to get access to it? And if not, are you nonetheless interested by these targets? And are you then considering doing one proprietary product with any kind of construct? And maybe if I can try a very, very short one in rare disease, putting together Soliris and Ultomiris until the R&D deliveries will represent probably 80% of sales for the next two or three years with some biosimilars coming in Europe first and competition growing. Can you maybe give a little bit of confidence into the ability to maintain, or slightly grow sale for the two together for the next two or three years? Thank you.

Thanks for the question about the HER3. You're talking about datopotamab deruxtecan. So obviously, there's going to be some data presented at the upcoming World Congress on Lung Cancer. Obviously, we've got an ongoing clinical collaboration with deruxtecan on this as part of the ORCHARD study in patients with EGFR mutated and non-small cell lung cancer, looking in combination with osimertinib in that setting. When we're looking at ADCs in general and making some of the choices that we've made in recent business development in that space, we're looking at the overall benefit risk ratio versus what we've already got with our internal assets and already partnered assets. So we'll look forward to seeing the updated clinical data both as monotherapy and in combination with osimertinib, which we get access to. And we -- I'd also just say that we're excited about our internal portfolio that's progressing. We have 784 [ph] ADC. We now have the EGFR bispecific ADC and alpha-targeted ADC or with our proprietary link warhead with the [indiscernible]. So these decisions are made in the context of that internal portfolio that we've got as well.

Eric, thank you for your question on the future of the C5 franchise. So if you refer only to Soliris and Ultomiris, there will be a continued growth and it will be supported by both regional expansion, but also by expansion of indications. But I want to take the opportunity to also signal or remind you of the 1720 the minibody, which is our C5 third generation, which is presently undergoing Phase III trials, which could also provide some further options to physicians and patients.

We'll take two more questions, and then we'll have to close for the day. Peter Welford, over to you, Peter.

Thank you. I will just stick to one question. So we'll start with China. I wonder, given the changes that you mentioned with regards to the NRDL and some of the recent sort of reforms we've heard, just wondered AstraZeneca’s attitude towards China and investment there has changed at all. I mean, recently, you've sort of called a little bit with the expansion of spend and investment in the country and even perhaps pulled back on some resources. Just wondering your current thoughts on investment and further investment in China from here and whether there's any change at all in how you see the longer-term market there with the changes? Thank you.

Let me call this one, if I may Leon, because, of course, it's going to be positive, right? Yes. I mean actually, we are very committed upturn and China is, and we remain a very important country for -- I think, for the industry, but not only for AstraZeneca. We are very committed. We are building our presence in rare diseases. We have just approved the build of a very important factory in China, in Qingdao to make inhalers for China and potentially export out of China to some emerging markets. So we are definitely committed. We have a strong R&D team. We also, as I said before, leveraging our connections to partner with local biotech companies and help them develop and commercialize their products globally. So it will remain a very important country for us, not only because we have products to sell to help patients there. And there has -- there are lots of patients, but also because it's a source of innovation. And it is, for us, becoming -- or has become some time ago already actually a strategic center. Anything you want to add there, Leon?

Yes. I think Pascal mentioned quite completely. I think, I really hope that you can pay also more attention to outside China, because outside China, emerging market is larger than China now and are growing much faster. And I think there will be a lot of opportunity in untreated, undiagnosed patient opportunities there. And within China, we still have a lot of products, like biologics for OSTARA and all these important new launches. We're still very exciting and look forward. And it's a source of innovation and it's a manufacturing center, and it's also a big market.

That's a good point. I mean outside of China, the growth was 38% first half. So I'm sure you noticed that. Every region of the emerging market regions is growing very strongly. We've been accelerating -- the catching up on the approval of new products and launching them. So a lot of growth today and also to come. So maybe the last question, Luisa Hector with, Berenberg. Luisa, go agead.

Thank you, Pascal. And maybe a chance to say thank you to Mene for sharing his insights over the years and discussions around the productivity. So Mene, maybe a question for you on that to your slide on the breadth of platforms in place in biopharma, my question there would be that actually much of Astra's success has come from the simplicity of small molecules and antibodies. So with these novel platforms there, does it change anything in the R&D decision-making processes? I think you're at 6 hours maybe more now, but how does anything change in that decision-making given the complexities of these exciting platforms? And do they carry more risk? Thank you.

Thanks. Luisa, first of all, thank you and the reason I wanted to show the platform is because we have been building them for a long time. And of course, monoclonal antibodies and small molecules remain a very important part of the pipeline. And you know many of the molecules that we have across the pipeline across both oncology and biopharm, but these next-generation platforms are important because the reason why we failed today predominantly is because I signed the hypothesis is wrong, as we go into more genetically validated targets, quite often, you can't target them with a monoclonal antibody or a small molecule. So having access to gene editing, oligonucleotides, advanced biologics gives you a chance to attack more complicated pharmacology and disease and hopefully improve our probability of success. And that's what we've been trying to do. So it's not that we're not interested in small molecules or biologics. I don't think our decision-making changes. It just opens up more opportunities in terms of the biology that we can attack.

Thank you, Mene. Such a beautiful question to finish with. Thank you for this. So we'll end the Q&A here. Thank you, again for all your great interest in our company, and I wish you all a great weekend.