Good day, and welcome, everyone, ladies and gentlemen, to the analyst call for GSK fourth quarter 2021 results. I will now hand you over to Nick Stone, Head of Global Investor Relations, who will introduce today's session. Please proceed.

Thank you, operator. Hello, everyone. This is Nick, obviously, the operator's just mentioned. Welcome to our full year and Q4 2021 conference call and webcast for investors and analysts. The presentation was posted to gsk.com and it was also sent out by e-mail to our distribution list earlier today. Please turn to Slide 2. This is the usual safe harbor statement, and we'll be making comments using constant exchange rates, or CER, unless otherwise stated. Please turn to Slide 3. This is today's schedule. We'll plan to cover all aspects of our full year results. The presentation will last around 35 minutes to maximize the opportunity for questions. [Operator Instructions]. Today, our speakers are Emma Walmsley, Luke Miels, Deborah Waterhouse, Brian McNamara, Iain Mackay and Hal Barron. The Q&A portion of the call will be joined by Roger Connor and David Redfern. And with that, I will now hand the call over to Emma. Please turn to Slide 4.

Thanks, Nick, and a very warm welcome to everyone. I am delighted to announce our 2021 full year results. They demonstrate strong financial performance and continued progress against our strategic priorities. For the full year, sales increased 5% and adjusted EPS increased 9%. Excluding the contribution from COVID solutions, we exceeded our raised guidance with adjusted EPS stable for the full year. Sales growth was driven by first-class commercial execution and strong uptake of new products. Pharma delivered 10% growth, New and Specialty Medicines growing 26%, double-digit sales in Immuno-inflammation, Respiratory and Oncology, together with sales from Xevudy for COVID-19, all drove this performance. Vaccine sales increased 2%, and Consumer Healthcare finished the year with 4% growth overall, notably accelerating again in the fourth quarter with sales up 11%. Alongside this, we increased investments for key R&D pipeline programs, expanded support for new and ongoing launches and maintained a strong focus on cost optimization. This has also reflected in adjusted operating profit growth, which increased 9% for the full year. We see these results as very encouraging and a demonstration of the accelerating momentum we now have at GSK. As we said, 2022 marks a step change in growth for the company and is underscored by the guidance for new GSK, the biopharma business we're giving today of 5% to 7% sales growth and 12% to 14% adjusted operating profit growth of CER. This includes the anticipated benefit of Biktarvy-related royalties, but excludes any contribution from pandemic solutions, and Iain will provide more detail on this and our overall financial performance in his section. Turning to Slide 6. 2021 was a year of excellent progress across all 3 of our long-term strategic priorities. In innovation, we delivered 3 major product approvals: Jemperli for endometrial cancer, Xevudy for COVID-19 and Apretude,…

Thanks, Emma. Please turn to Slide 9. Let me start with New and Specialty, where we made remarkable progress driven by excellent commercial execution. Excluding Xevudy, we delivered 14% sales growth for the year and 10% in Q4, maintaining our double-digit track record. I'm incredibly proud to report that 2 of our assets exceeded £1 billion in sales for the first time, Trelegy and Nucala. And as you've seen, we were able to respond quickly to the strong demand for Xevudy, delivering close to £1 billion in sales of this crucial COVID treatment. Trelegy had a fantastic year despite growing competition, and our unique dual indication in COPD and asthma continues to drive higher demand in the U.S. and Japan. We've also seen very positive trends for our launch in China, where the single inhaler therapy class is growing rapidly and we are winning share in Tier 1 and Tier 2 cities. For Nucala, sales were up 22%, and it remains the leading IL-5 for EOS-driven disease as a key market. We're pleased to see that our robust approach to life cycle innovation is driving incremental growth opportunities with the launch of 3 new indications: EGPA, HES and nasal polyps in Europe. Benlysta also benefited from label expansion with sales up 29% as we reach more new patients with lupus nephritis. And against the backdrop of COVID, we continue to see the importance of having a subcut formulation available for at-home use. And as expected, with competitors entering the market, we've seen an overall increase in biologic use, benefiting Benlysta as the leader. In Oncology, we continue to make steady progress. BLENREP remains the only off-the-shelf anti-BCMA therapy, and we've expanded our presence for 13 markets. In the U.S., we're driving use in the community setting where most multiple myeloma…

Thank you, Luke. Our goal is to remain innovation leaders in HIV, achieve a mid-single-digit sales CAGR to 2026, and digest the loss of exclusivity of dolutegravir at the end of the decade through the changing mix of our portfolio and the success of our pipeline. Our Q4 and full year results demonstrate positive momentum towards delivering on these objectives. Sales grew 3%, both for Q4 and for the year. Within this, we achieved a noticeable acceleration in our innovation sales, which now stands at 34% of our portfolio and all regions reported growth. This acceleration in growth results from strong commercial execution behind our 2-drug regimens and Dovato in particular. Sales of Dovato more than doubled to £787 million and are fast approaching 20% of the total HIV sales. Dolutegravir-based regimens now hold the #1 position in the share of the switch market across the U.S. and Europe. Based on this strong momentum, we believe Dovato is on track to deliver £1 billion of sales in 2022 with further significant growth potential beyond. Please turn to Slide 12. Turning to our injectable portfolio. Cabenuva is our first-in-class, long-acting regimen for the treatment of HIV for which we received FDA approval last week for every 2-month dosing. As with any new class of medicine, sales of Cabenuva will take time to build and the COVID environment is constraining switch activity, particularly where a patient needs to visit a physician's office. Nevertheless, over 4,500 people living with HIV are already taking Cabenuva/Vocabria/Rekambys and the outlook for this important new medicine is strong brand recognition and market access exceeding 80%. Moving on to prevention. We ended 2021 on a high with the FDA approval of Apretude, the world's first long-acting injectable for the prevention of HIV, dosed every 2 months. HIV prevention is a huge unmet need as current medical options are associated with stigma and adherence issues. Apretude not only addresses these concerns, but it has demonstrated superior efficacy over daily oral tablets. As a new paradigm, we need to educate physicians, patients and payers. So this year, our focus is on building awareness and access for Apretude. The early signs are encouraging with positive feedback from patients and prescribers and with political will supportive of HIV prevention. Consequently, we remain confident that Apretude will deliver significant benefits to patients in the years ahead as well as significant commercial value beginning in 2023. And with that, I will hand over to Brian, and we will move on to Slide 13.

Thanks, Deborah. Now turning to Consumer Healthcare. Sales for the full year, excluding brands divested under review, increased by 4% at constant exchange rates despite a negative 1% impact of COVID on cold and flu sales, building on the 4% growth we delivered in 2020. International grew 9%, with emerging markets performing particularly well, including China, Middle East and Africa growing double digits. U.S. sales increased 2% and Europe was broadly stable with both regions building momentum through the year. Q4 growth was strong, up 11% at constant exchange rates albeit against a weaker comparator of 1% growth in 2020, with all categories performing well. Cold and flu sales rebounded in Q4 with European sales above 2019, and U.S. sales only slightly below. From a category perspective for the full year, oral health sales increased 5%, with broad-based growth in key markets, reflecting brand strength, strong execution and successful innovation. Pain relief grew high single digits. This was primarily driven by Panadol, which benefited from seasonal demand in the second half of the year. Voltaren delivered mid-single-digit growth despite the expected introduction of U.S. private label earlier in the year. Vitamins, Minerals and Supplements grew 4%, continuing the momentum on a very strong year-over-year comparator. Centrum growth in the second half was particularly strong due to increased capacity and retailer stocking. Respiratory declined 1%, with strong growth in allergy offset by a mid-single-digit decline of our cold and flu products. Q4 rebounded, delivering 40% growth due to a return of a more typical cold and flu demand, although it fell just short of offsetting the unprecedented market declines in Q1. Digestive health and other sales were up mid-single digits with broad-based growth across skin, digestive health and smokers health. On e-commerce, year-to-date sales grew in the high 20% range and…

Thanks, Brian. As I cover the financials, references to growth are at constant exchange rates unless stated. On Slide 16, there's a summary of the group's results for the full year 2021 and I'll focus my comments on the full year performance. Turnover was £34.1 billion, up 5%, an adjusted operating profit was £8.8 billion, up 9%. Total earnings per share were 87.6p, down 13%, while adjusted earnings per share was 113.2p, up 9%. Pandemic solutions contributed approximately 9 points of growth in adjusted earnings per share. On currency, there was a headwind of 5% in sales and 11% in adjusted earnings per share, in particular, due to the strengthening of sterling against the U.S. dollar relative to 2020. Turning to the next slide. This slide summarizes the reconciliation of our total to adjusted results. The main adjusting items of note for the year were in disposals and other, which primarily reflected profits across several divestments, including the gain on disposal of rights to royalty stream for cabozantinib in Q1, the gain on disposal of the cephalosporin business in Q4 and a significant positive revaluation of deferred tax assets in the U.K. resulting from the Q2 enactment of the 2021 U.K. Finance Bill. And finally, in transaction related, the main factor was the movement on the ViiV CCL, which included the impact of the settlement with Gilead. My comments from here onwards were adjusted results unless stated otherwise. Turning to Slide 18. Key drivers of revenues and profits for the group in 2021 compared to 2020 are set out here. Revenues grew 5% overall. Revenues from our COVID solutions contributed around 4 percentage points of that growth. Positive operating leverage from higher sales in the year was supported by continued focus on cost control and the benefits and synergies resulting…

Thanks, Ian. I'll provide a short update on our progress in R&D over the past year and highlight some of the key upcoming pipeline milestones. Please turn to Slide 26. As we set out last June, the transformation of our R&D [indiscernible] in 2018 has resulted in a significantly stronger pipeline and improved productivity across multiple metrics. And in 2021, we continue to build on this momentum. In terms of late-stage pipeline achievements -- advancements, we achieved the first regulatory approval for 3 new medicines in 2021: Apretude, Xevudy and Jemperli, as well as 7 regulatory submissions. And as Luke mentioned earlier, our approach to life cycle innovation is also delivering with 5 additional approvals in 2021 for Nucala and Benlysta. We also reported positive pivotal data on 3 assets, including daprodustat, which I'll cover in more detail in a moment and started 8 new Phase III trials. In total, we have delivered 13 major regulatory approvals from 2017, which is top quartile performance for the industry and 4 of these assets have already achieved so-called blockbuster status. As a reminder, we expect the medicines and vaccines approved between 2017 and 2021 to contribute around 60% of new GSK's '21 to '26 sales growth with the anticipated pipeline approvals contributing another 40%. We're also bringing forward the next generation of innovative assets into our pipeline, driven by our focus on the science of the immune system, human genetics and advanced technologies. In 2021, we moved 19 assets into Phase I or Phase II trials, which are the direct result of our focus on human genetics and functional genomics with our overarching vision to use the human as the model organ. An excellent example of this is our anti-IL-18 neutralizing antibody, so-called GSK'806, which is being developed to treat patients with…

Thank you. So let's move to Q&A, please. Operator?

[Operator Instructions]. The first question is coming from the line of James Gordon from JPM.

James Gordon, JPMorgan. I just have one question, a question about specialty pharma. So specialty pharma sales were a little bit light versus consensus expectations today. And growth is going to be approximately 10% in '22, which sounds a little bit more cautious than the double-digit medium-term outlook that you issued in June last year. So have things got any tougher for these assets? Is there going to be a bit of a back-end weighted for specialty pharma? And what could drive an inflection, particularly in oncology? Do we need more data? Or is it really about just COVID diagnoses or COVID getting better and then more diagnosis for these conditions? And if I could another question, just a clarification. If I look at the guidance, the 5% to 7% core EBIT headwind for COVID-19 product contribution, it looks like it's effectively assuming that you sell the 1 million doses for Xevudy that you've already got an order for, but there's no more sales at all for the rest of the year. So just a clarification, is that right? The assumption is that beyond builders you've already got, you won't sell any more Xevudy this year.

Well, I'm going to ask Iain -- thanks, James, for that one question and then clarification, and I'll ask Iain to pick up exactly, first, on the forecast forward for COVID solutions. Just remembering it's not in any of our guidance either for this year or for the year ahead. And obviously, there's still some uncertainty about how that market will play out. We'll come to Iain first. And then just more broadly on the total outlook, obviously, we've guided more than 5 top line on a 5-year outlook. And as you said, double digit for Specialty, and high single digit for Vaccines. We're very clear that, that isn't at an overall level, something that we're expecting anyone to wait for, which is why we're starting strong and starting now in '22 with 5 to 7. But clearly, the mix of that is dependent on some of the pipeline both coming and recent launches maturing into more scale contributions in Specialty. But I'm going to ask Luke to comment a bit more on some of the shape of that and then perhaps how we can come back to you to talk about some of the pipeline catalysts further out in Specialty Medicines more broadly. But first of all, Iain, on...

Yes. Yes. No, easy answer, James, pretty much exactly what we wrote in our earnings release, which we expect Pandemic sales were around £1.4 billion from Xevudy. That reflects binding agreements that we have in place at this point in time. And to the extent there are any further binding agreements that would inform any updates, we'll provide those on a quarterly basis. Okay?

So Luke, in terms of momentum and outlook on Specialty.

Yes. Thanks, James. Look, I think the momentum, for example, on Trelegy, is very strong. We're getting 5 scripts for every one that Breztri gets. Benlysta is very healthy. I think the primary challenges, and we've placed this in the backup in the appendix is just the continued slow recovery of ovarian cancer diagnosis, which is still down by 22%. And debulking surgeries are down by 17%. So that's taking longer to resolve than we were expected, which is obviously very sad. And we expect that when those women present, their disease is going to be more advanced and so that is having an impact. There was also some pricing pressure emerging in the IL-5 class in Q4.

And perhaps Deborah, but before we go to Hal, obviously, one of the areas that's going to continue to build in contribution is the innovation in HIV. So Deborah, to you first?

Yes. So I think at the Business Investor Update at the end of November, we committed to mid-single-digit CAGR between now and 2026, and that's an acceleration of growth where we've been over the last few years, where if you remember, we've had kind of over the last 3, 1% and then obviously, in 2021, we're at 3%. So you can see that progressive growth acceleration, and we feel very positive about our ability to deliver that mid-single-digit CAGR on the back of the tremendous progress that we've made with Dovato, but also the fact that you'll get more material contribution from Cabenuva certainly 2022 and beyond and Apretude 2023 and beyond. So I'm feeling really excited and confident about the future in the HIV part of Specialty.

Thank you. Hal, and things to add on catalyst to follow.

Yes, there's been a lot of catalysts in the last 12 months, as I pointed out, with the 3 regulatory approvals and the 7 major filings, 3 pivotal data readouts in the Phase III starts. I think it's also important now that we have 64 medicines and vaccines in the pipeline, 22 of which are in late-stage pivotal studies, so you're going to be seeing a lot of readouts. Most importantly, in 2022, we've talked about the 11 key assets. And in 2022, we're hoping that up to 7 of those will actually have readouts, including RSV OA in the first half; otilimab, as I mentioned, in the second half; BLENREP DREAMM-3 in the second half; RSV maternal, which we should get data in the second half; the meninge pentavalent, ABCWY, in the second half; Jemperli will have a readout both in the conversion of the GARNET study as well as data in RUBY. And as I mentioned a little earlier, Phase IIb epirubricin for the CLEAR study in HBV. And that, of course, complements the wonderful data that we received earlier with Apretude and the recent approval. So really a lot of -- quite a lot of catalog.

And I think fundamentally, James, it's just worth reminding ourselves that in New and Specialty, our growth last year was 26% and even excluding the contribution from Xevudy at 14%. So there's a lot of reasons for confidence in strong executional performance of growth and then, of course, all the pipeline to add to that.

The next question is coming from the line of Keyur Parekh from Goldman Sachs.

I have two questions, please. The first one for Deborah, just following up on your comments about the HIV. And I see that you're guiding to about £2 billion in kind of revenue contribution from the long-acting regimens by 2026. But what I would be interested in, Deborah, is your perspective on how do you see that long-acting market developing beyond 2026 into the kind of the 2030s given the news flow we've had from islatravir and kind of just the early feedback you've had on the prep launch? So just kind of how are you framing that longer-term outlook for that business? And then secondly, Hal, many congratulations on all your successes and kind of best of luck in your new role. But as you sit here today and look at the progress kind of Glaxo have made from an R&D perspective over the last few years, how much of what you set out to do at the start have you achieved so far? How much more kind of you think you -- the kind of Glaxo the company needs to achieve? And what role do you think you might be playing in that from a nonexecutive perspective?

Okay. We'll go directly to Deborah and then Hal, please.

Yes. So thanks for the questions. So I mean we see the long-acting market from a treatment perspective to be about £4 million to £5 million in value by the end of the 2030s. And actually, by the end of the 2020s, we see a £4 billion to £5 billion in value for the market. So both the same kind of value from a long-acting study for the 2020 [indiscernible]. I think despite the fact that we've seen islatravir have some challenges, we've seen that Gilead are also extremely committed to long-acting themselves with lenacapavir, and they outlined in their results, obviously, all the partners that they're looking at for lenacapavir. So I think what you're hearing from both of the big players in the market is that there is a big opportunity to serve the needs of patients by delivering innovative new medicines into both the prevention and the treatment part of the market. The other thing that I find encouraging, so obviously, Merck will continue to look at islatravir, but the piece that I think is really encouraging is the real energy around the evolution of the prep market in the United States. So if you remember, ending the epidemic is a commitment that there will be significantly less new infections as the decade progresses, the point at which there is a 90% reduction by 2030 and the government in the U.S. is extremely energized at the moment around how they're going to deliver against that target. There's a lot of dialogue occurring, and there's a lot of encouraging sounds about how we could see that prep market evolve, given that only 23% of those that could benefit from prep are actually getting a medicine today. So I think the numbers that we talked about at BIU in June and again in November are still what we were expecting in terms of long-acting treatment markets, long-acting prep market, both each being around £4 billion to £5 billion by the end of the 2022.

The other thing is, I mean, and maybe worth mentioning is the very exciting next-gen pipeline that's coming through in longer acting that you and Kim covered off in November, where when we get into longer-acting, longer-acting is beyond the near term where we're launching.

Yes, we're really excited about that. So we have, if you remember, 3 areas where we're really focusing: an at-home treatment; an ultra long-acting treatment, which will be clinic delivered; and then obviously, we're focusing on cure. And so where we are today with Apretude and Cabenuva, we're absolutely not stopping there. That's why we're so confident about our ability to move past the dolutegravir loss exclusivity and still replace a lot of that revenue that is lost and have a very vibrant HIV business at the end of the decade and beyond. So obviously, we've got integrated at the core, both with cabotegravir and then the next generations that we've agreed to in-license from Shionogi. And then we've got the partner options that we're looking at, and we should be able to pick a partner for cabotegravir for at-home and long-acting in 2024 as data reads out and informs our choices. So really excited about the pathway, which is very clear before us and the choice points and when data will be available are also very clear, and we'll keep you all updated.

Thank you. Hal?

Thanks for the comment question, Keyur. First, let me say I'm actually very proud of what we in the R&D organization have accomplished over the past 4 years. There's so many different metrics one could use to highlight that. Today, the pipeline has 64 medicines and vaccines, 22 of which are in pivotal studies. We have 13 novel assets in Phase III. As Emma mentioned earlier, we've doubled the number of Phase III assets over the last couple of years. Probably the most important metric that I look at is how much of the R&D success and the pipeline are driving the CAGRs that we are proposing, which are top quartile relative to our peers. And when you look back, there's been 13 new medicines and vaccines approved over the last 4.25 years or so, and that's driving about 60% of really terrific performance that we've committed to. And importantly, on a risk-adjusted basis, the late-stage pipeline. And this again excludes all of Phase I and Phase II is expected on an adjusted basis to drive another 40% of that growth. So I think those are really important metrics. There's quite a lot of other metrics. But I think we've made quite a bit of progress. You asked what's not finished. Well, I think if you think about being the head of R&D at any pharma company or biotech company, you never leave the job finished. The job -- there's always more assets that you can progress. There's more programs. There's more life cycle innovation. As long as the success rate is where it is, there's still an enormous opportunity to transform how targets are discovered. And I'm very excited about how much progress we've made on using the human as the model organism, using human genetics, functional genomics and machine learning to evolve our strategy. In fact, if you think about what's coming, we have around 40 collaboration projects with 23 and me on genetically validated targets. We have 10 synthetic lethal programs that were internally developed. We have 3 with IDEAYA. We have programs with the Broad. We have programs with [indiscernible], a number of collaboration programs, the anti-sortilin program. So a number of genetically validated targets that over the next 5 to 10 years are going to evolve. I'm looking forward to my transition from being the CSO to the Board member to help Tony Wood, who is an outstanding leader, an outstanding scientist and outstanding person. And I'm hoping that I can play some role in helping him evolve our strategy to be able to accomplish all these things that we're hoping to do.

And I would just reiterate that what matters most in these transitions is extremely well-planned and strategic and thoughtful succession. We are all very confident we're going to accelerate the momentum of the execution of this strategy that objectively and quantitatively can really be seen to be bearing results already. And we're absolutely thrilled that how it's still going to be part of that adventure as a Board member, as a Science Committee member and with some additional commitments that I know he's more than happily made to support the R&D organization, its advisory boards some connectivity in his part of the world. And we are obviously very proud of him for his next steps, too, and excited for the path ahead.

The next question is coming from the line of Graham Parry from Bank of America.

So firstly, on the RSV vaccine, it looks like Pfizer is on track to publish RSV older adult vaccine data Q1 or Q2, possibly ahead of GSK. Are you seeing that the hurdle rates for both their vaccine and yours is the same level of protection you saw in J&J's CYPRESS Phase II trial? And how confident are you that your vaccine can match those levels? And do you see that by not waiting for a full RSV season that Pfizer could gain any sort of time advantage to the market to you? Or is it just a seasonal issue? And then secondly, on COGS, that was negatively impacted by both Xevudy and write-downs in the quarter. Just wonder if you could quantify how much for each basis points than just the right sort of longer-term COGS ratio ex pandemic we should be thinking about?

Right. So briefly, Iain, could you comment on COGS and then Hal on RSV?

Well, Graham, again, we provide a little bit of a steer in terms of the impact of Xevudy, in terms of operating margin. We participate in about 27.3% of the economics from sales in Xevudy, so when you sort of translate that through to the overall profitability. We provide some steer in our earnings release in terms of what that means. There is, within the team, a very strong focus on continuing to drive productivity and efficiency across the supply chain through COGS. And as we talked about in the investor update in June, that focus remains consistent and is part of what informs our progress in operating profit growth in 2022 and beyond.

Hal?

Yes. Thanks, Graham. Our RSV program is actually ahead of schedule, as I mentioned, enrollment is completed, and we expect the data for the trial to read out this half, H1 '22. In terms of -- it's important to keep in mind that we have a pretty unique vaccine because we, as you know, have the protein with the AS01 adjuvant. And we think this is a very important component because, as I mentioned earlier, the elderly who are obviously at risk for the complications of this infection over time lose their both adaptive and innate sense of being able to combat this infection. And particularly, you see an abnormality in their T cell response. So we're optimistic that the combination of the right protein in the RSV-A, which neutralizes both the RSV-A and B isoforms of the virus as well as having the T cell modulatory component with the adjuvant, will give us the highest chance of success in this -- for this vaccine.

The next question is coming from the line of Simon Baker, Redburn.

Just going back to Graham's question on COGS. Iain, you pointed out the impact of Xevudy, but also in the press release, you discussed other headwinds on the gross margin in 2021. Presumably in light of the comments you made on R&D, SG&A and the guidance for operating profit, they will fall away in their entirety in 2022. But I just wonder if you could give us any other non-Xevudy tailwinds and headwinds we should be thinking about for COGS in '22?

What I was referring to in '21 was specifically some higher inventory costs within COGS and lower demand, particularly within the Vaccines business. That was one key driver. Another factor, which was possibly more noticeable within our Consumer business, but as well as it was managed there, equally managed within the biopharma business was around input costs. So freight, as an example, where I think the team was incredibly successful in driving productivity to offset some of that inflationary pressures, that focus and we believe capability continues through 2022. So there are a couple of factors that were unique to '21 that I've mentioned that we do not see at this point in time recurring in 2022. And then just our overall focus on driving efficiency productivity through the commercial cycle across our businesses in managing cost of goods sold overall where we felt a good track record over the course of the next -- over the last couple of years, we expect to be able to sustain over the coming years. So it's just -- it's good old-fashioned productivity through the supply chain, the procurement channels, good linkage with commercial cycle in terms of understanding demand in market and managing inventory accordingly.

[Operator Instructions]. And the next one is coming from Tim Anderson, Wolfe Research.

I have a question, just a pipeline question. Otilimab, you called out the Phase III readout in RA in the second half as an important 2022 catalyst. To me, that Phase II data always looked a little questionable. And I know Glaxo is the only company chasing this mechanism. Sometimes that's a red flag because most of the time, other companies crowd into new and exciting areas. So my question is your confidence in that readout and in this being a commercially meaningful asset, I'm trying to figure out how much this sort of thing is in your kind of longer-term forecast and how much risk adjusting you do on this particular asset?

Hal?

Yes. Tim, thanks for the question. So Tim, it's a pretty interesting pathway. It's very novel. So typically, when you have such a novel pathway, you don't see the so-called crowding until, of course, the data reads out positively, which then results in crowding. I'm pretty optimistic this trial will hit, to be honest. You have to remember that there's a design where it's against placebo for the first 12 weeks and then active comparator against IL-6 in one study and the JAK class and the other. The signal for efficacy, I think, was pretty clear. But your point is well taken that not every endpoint in the Phase IIb was positive, but quite a few work. I think the area that is a little more speculative, but again, I'm cautiously optimistic is where we saw signals to a more significant reduction in the clinical pain scores than one would expect for the reduction in things like Fed rate and CRP levels that are biochemistry measures of the disease severity. We read that data carefully and overlaid it with the preclinical data where we had mouse data with the CCL17 knockout, which as I mentioned earlier, the most overexpressed protein when GM-CSF is applied to monocytes. And in that CCL17 knockout mouse study within an osteoarthritic neuropathic pain model, there was a dramatic reduction in pain with the knockout. And so that gave us more credibility that, that signal, if you will, in Phase IIb might be real. And again, we're going to have readout from the CCL17 MAB data this -- actually probably in Q2, maybe Q3. And I think that will give us further confidence in the program. But again, just to highlight, I'm reasonably optimistic that this will actually benefit patients. It will be a novel class. And hopefully, we'll see some important reductions in pain. Maybe I can just turn it over to Luke to comment on his interest in the commercial component and how he sees this sitting in the landscape of RA patients.

Sure. Thanks, Hal. Thanks, Jim, for the question. I mean the numbers of patients here are enormous, right? I mean there's about 1 million in the U.S. on biologics from JAKs. Many of them are cycling as we know. What's interesting if you look at the new data with JAKs, we have market readouts that indicates about 65% of doctors want to reduce their usage of JAKs and that there could be an opportunity for alternative non-JAK, non-TNF mechanism for about 40%. So there's clearly a demand for patients. I think the generic association and biosimilars are also going to move patients on to targeted therapies earlier and, therefore, will cycle earlier. I think for the other programs, there's been GM-CSF in the past and a number of them have had some issues in preclinical nonhuman primate models, et cetera. So again, hopefully, we can thread the needle here as Hal said, contrast 3, I think, is really interesting against the IL-6, which is naturally a primary competitor. And then, of course, we've got contracts 1 or 2 against [indiscernible] and methotrexate by itself. So I think an interesting program.

Next question is coming from the line of Emmanuel Papadakis from DB.

Maybe I take a question on vaccines, please. Flu market outlook has been pretty topical of late. We've heard market leaders talk at length about reasons to believe in the Brazilian outlook for based [indiscernible] vaccine. In fact, I would love to hear your perspective on the room for mRNA-based vaccines to improve upon both the production aspects and risk benefit current-based vaccines over the coming years, given you have some involvement in both sides to that equation. Perhaps you could also take the opportunity to give us a quick update on 2 of our partnership on both the second-gen COVID and lead programs.

Sure. Well, why don't we hear from Roger, just on the more strategic outlook for flu. I know we also covered that at the capital markets update briefly and then, Hal, come back to you in terms of the mRNA approach.

Thanks very much for the question. I think as we covered last year, the update, what we see is flu is a real opportunity area, to be honest. There's significant disease burden, as you well know. But also when you look at a plot of vaccine efficacy -- it's the one area that stands out that's crying out for innovation to move an on average efficacy level of 50%, some way higher. I think mRNA is a very exciting technology. It's one that we are investing in significantly. It's one that we think could potentially differentiate us as well. I think the opportunity is that differentiation and our CureVac partnership with Hal, which I will go into, we're looking at both blue and also looking at a universal flu option as well. I wouldn't forget Ag, is something that's going to be a long as a technology for a number of years, and we'll continue to maximize that. But we're allocating significant capital into the mRNA play to ensure that we look to differentiate. Obviously, the challenge with mRNA in a multi-deal in vaccine, which flu is, is trying to solve this reactogenicity ceiling actually that you can hit with mRNA and I think it's going to take a little bit of time to optimize any mRNA platform to be able to deliver that as well. But our strategy is clear: continue to maximize flu in the [indiscernible], develop our PS and mRNA platform that can get a flu solution to deliver a higher-performing flu efficacy.

Yes. Thanks, Roger. Thanks, Emmanuel, for the question. I think it's pretty clear to the world now that mRNA is a disruptive technology that's really going to transform, to some extent, how we think about vaccines, both because of its advantage in terms of speed from sequence of a virus or the knowledge of what virus is going to be endemic at that phase like in flu. But the longer you have to figure that out, the more likely you are to get the right valence in your vaccine. And so that will be a unique opportunity. And as alluded to by Roger, the other thing is that if you can have a polyvalent vaccine, the efficacy is likely to go up relative to a monovalent vaccine. So mRNA is -- has a significant potential in flu, and we should be in the clinic with a multivalent mRNA vaccine in 2022, and we're proud of that with CureVac. I think the key thing with multivalent vaccines and mRNA is, of course, the more transcript you put into a patient, the risk is higher reactogenicity. Some of that's somewhat solved by modifying the basis. But even with that, as we saw from some of the Moderna data, we're going to have to continue to work on that. And one of the strategies that we're pursuing that we're excited about is whether we can lower the dose of the transcript by optimizing its stability and how effectively it's translated, more protein for a given amount of mRNA. And we think that the proprietary technology developed by CureVac with this optimization of the flanking the transcript, the 5 prime and 3 prime regions that were done through some pretty sophisticated machine learning, we think this will allow us to lower the dose or if you could think of it as keeping the same dose, but with a larger number of valents and have both immunogenic and well-tolerated, limited reactogenicity to be able to develop a best-in-class for vaccine.

Thanks, Hal.

I should also mention just to complete this, we'll have 2 other mRNA vaccines in the clinic this year as well for COVID. So at least 3 mRNA vaccines in '22.

Yes. And great under new Vaccine's leadership.

Yes, yes.

We're confident.

Next one is coming from Jo Walton from Credit Suisse.

I'm afraid I'm going to go back to the margin question. On Page 24, you tell us that you're going to have 5% to 7% top line growth, 12% to 14% adjusted growth, all excluding COVID, and we know that, that includes 2 points from Gilead. On Page 36, you tell us that SG&A and R&D are going to go up in line with sales, and it's the COGS that's going to go up less than sales. So there's a very big COGS improvement that we should expect in 2022. So my question is, if we were -- and we obviously don't have this data to look at just the COGS of new GSK, how far adrift of your peer group do you think you are so that we can get some guide as to whether the majority of the margin gains that we're expecting, not just in 2022, but in '23, '24, et cetera, are going to come from COGS? And how much are going to be able to come from a winding down of SG&A? I'm assuming that R&D will continue to grow strongly.

Yes. So we said and we say again, Jo, is that we'd expect to grow SG&A and this is very much customer-facing SG&A. So it's focused on supporting top line growth and engagement with patients and customers. So the, if you like, the component that is oriented around functional support still has a trajectory that is flat to down. SG&A, we'd expect to be similar levels, but slightly below revenue growth. And the same is true from an R&D perspective, although it will continue to grow. It's going to be similar too but possibly slightly below revenue growth. In terms of productivity coming through cost of goods sold, part of this is driven by top line. So we're seeing a change in the mix in the portfolio over the period 2022 to '26 moving to about 75% of the revenues coming from Specialty and Vaccines, moving to 25% coming from the General Medicines portfolio. And that mix change is an important part of the change overall. Now when you talk about geographic mix, we remain broadly stable to where we are. So we've got about 40% of our revenues in the U.S. now. By '26, we'd expect about 40% of revenues to be U.S. as well from a biopharma perspective. But that change in mix of new -- of specialty medicines and vaccines to 75% versus 25% is an important component of the overall gross margin story, notwithstanding the continued delivery of productivity and synergies coming through the supply chain. So those are key dynamics that are coming through there.

We're also having a bit of a 1-year recovery of COVID T&A. I know we're keeping costs very much under control on that, but we are expecting to go back [indiscernible].

Absolutely, but very much within the guidance that we provided today, Emma.

The next one is coming from the line of Steve Scala from Cowen.

It looks as though the ContRAst 1, 2 and 3 trials of otilimab are well past their primary completions. They have conventional endpoints, so there's no events to wait for. So is the data in-house and how I have to say you do sound more confident today than you've been in the past? Or is there a delay? And why won't the filing be earlier than 2023?

Thanks, Steve. No, I have not seen the data. Love to see the data, but I have not. And the reason is -- and you're absolutely right, that it's a 12-week endpoint. It's not event-driven. So that shouldn't be the problem. The issue is the data remains blinded with all these studies to -- for the 52-week follow-up because of the interest in secondary endpoints of being -- having the active inverter phase of the program. So in order to maintain the integrity of the trial at line for a longer period of time.

Question is coming from the line of Andrew Baum from Citi.

A question on BCMA to 2 parts. Firstly, DREAMM-5, your -- yes, can you hear me?

Yes, we can hear you.

Hello?

Hi, Andrew, we can hear you. Yes.

Hello? Hello?

Right.

Terrific. Terrific. I can hear you too. So here we go. The questions on BCMA and DREAMM-5 with the gamma secretase, you recently expanded that cohort. It's an open-label trial. GSK has of late talked more about scheduling dose fractionation and less focus on the benefits of GSI. Given that is open label, given you've expanded the cohort, perhaps you could share what you're seeing? And then secondly, also on BCMA, there's been some recent data published with the CAR T fee suggesting that BCMA CAR-Ts were associated with Parkinson's type syndrome with BCMA expression on substantial nigra. So the question is, do you have any evidence that belantamab crosses the blood-brain barrier? I'll stop there.

All right. Hal?

Well, thank you, Andrew. Let me try to address that. It's a really interesting question about the Parkinson's. We have no evidence to suggest, and I'm reasonably confident that it doesn't, the antibody crosses the blood-brain barrier. So to the extent that it is a nontarget effect, we're not observing that clinically, and I wouldn't expect us to. I can look into a little bit more detail about that later, but I'm pretty confident it's not crossing the blood brain barrier. But it's an interesting point you make about the CARs. As you know, the rationale for the combination of the GSI [indiscernible] it should be able to increase the density of BCMA on the plasma cells or maybe any cell, but the plasma cells of interest and therefore, be able to obtain responses at lower doses. And we hope that at lower doses, there would be less ocular toxicity. It's 1 of the 4 levers that we're using to try to improve the benefit risk ratio, and I'll go into the other 3 in a second. We have seen some open-label data. And as we said, it is encouraging. It's small numbers, and I think we've all seen examples where small numbers of encouraging data doesn't always translate, but the data was definitely encouraging enough that we moved into a randomized setting. So using the DREAMM-5 platform to begin a more robust program where we both have a larger number of patients, but also a control arm to make sure that it's not confounded by baseline covariance that can occasionally happen. But I can say that our optimism was based on seeing data. And we -- as you know, we're using doses at the milligrams per kilogram level, which at least in the DREAMM-1 and 2 studies, was inactive.…

Next one is coming from Laura Sutcliffe from UBS.

Could we go back to HIV, please? There's been some commentary in recent days in Gilead talking about a tougher first quarter 2022 than 2021 based on co-pay scheme reset in the U.S. and other gross-to-net dynamics. Is there anything we should be thinking about along those lines for your portfolio in terms of it being more aggressive this year than it was last year? And then just related, given the wider importance of the Access to Medicines piece at group level, is there anything you see changing on your ESG profile or external rankings, whichever ones you consider to be most meaningful when consumer leaves the group later this year?

Thanks. Well, on the broader ESG and then we'll come to [indiscernible] to see us continuing to seek, make leadership in the SGA priority for GSK, and we will be updating our reporting on that, frankly, to make it ever simpler, more transparent and easier for us to be held to account across the 6 key areas we've identified as priority for ESG, whether that be in access environment, in diversity and inclusion. And so we're really looking forward to discussing that with you. You'll also be familiar with the fact that this is, I would say, a focused level it's included in the accountabilities from an incentive point of view as well. It really is something that has long been at the core of who we are as a company. It never replaces TSR, but I'm hoping that we are able to continue to get the recognition for our very much leading rankings we have, but also transparency and simplicity of reporting in a way that is, of course, validated by third parties as opposed to us just making our own homework. But maybe I'll come back to Deborah, please, for the HIV question.

Thanks, Laura. So if I think about the prep market and treatment, 2 separate markets. So in the treatment market, it continues to be guideline-driven for choice and accesses at the core. In the prep market, it's a little bit different to that. And we see that market as continuing to be relatively stable. Obviously, the Build Back Better Bill will affect the whole industry. So let's see how that plays out. But in terms of what -- if you assume that's taken to one side, the treatment market looks fairly stable and continues to be guideline-driven choice and access at the core. In the prep market, it's a little bit different to that. So obviously, we've got a generic of Truvada in the market. Gilead has moved quite a lot of the market away from Truvada into Descovy, but I think that's taken, obviously, some negotiation with payers to make that happen. And we're in dialogue with payers at the moment over ensuring that we can get broad access to Apretude at a price that rewards our innovation. So I think you should look at treatment and prep as a little bit separate. But in the main, the treatment market is 5x bigger than the prep market. So the core of where our revenue and our profit comes from remains stable.

And the other core is having truly differentiated medicines and medicines to get approved and stopped in their trials for being so significantly better than existing standard of care deliver a value that is worth paying for.

Absolutely.

Next one is coming from the line of Seamus Fernandez from Guggenheim.

So my question is actually on HBV. Just wondered how -- if you could give us your thoughts on the HBV ASO versus antibody-based approaches as well as just your general thoughts on how we're likely to ultimately see a real break in HBV cures? Is that going to require a combination of a treatment-based approach followed by a vaccine in your view? Or when we see these data later this year, do you think that either an ASO or perhaps RNAi-based approach will really be viewed as the preferred way to then pursue cures?

Yes. Thanks for the question. It's really good question. It's really hard to predict the future on this. But it is likely that what we'll see with the ASOs is a couple of things. First, I think it's pretty clear that not all ASOs are behaving the same way. So I think over the next 6 to 12 months, we'll get more clarity on the value of the various approaches of ASOs, GalNAc or unmodified. I think we'll get a good sense, and I'm optimistic from our 2Adata that the ASO approach will deliver efficacy as it relates to lowering the surface antigen. One of the hypotheses is that this -- as far as it makes a massive amount of surface antigen and one compelling hypothesis that's pretty well supported from preclinical data. that, that overwhelms the T cells and it results in T cell exhaustion. And that by lowering the HBV surface antigen levels, the immune system may be able to kick in. My guess is that, that will work in some people, but probably a very small minority. And what's going to be needed is combinations, whether that's a combination with a [indiscernible] or possibly even something like a checkpoint blockade like PD-1 or maybe even a sting agonist, things that are going to increase the interferon production from the cooper cells and other cells responsible for the [indiscernible]. I do think, though, that in the end, after we figure all this out, and hopefully, we'll have some compelling data midyear with the CLEAR study that we'll be able to embark on these combination studies in a thoughtful manner and ultimately reduce the really enormous burden, 250 million people living with chronic hep B and, as I mentioned, 90,000 people dying from it annually and if we can make a dent in the functional cure rate, which is a very high bar. That will be one of the more significant advances in medicine.

The next one is coming from the line of Kerry Holford from Berenberg.

Just a follow-up on RSV on older adults, please. How you mentioned targeting the June ASB meeting. So I guess you're working on the assumption of a launch next year. And I would just like to understand what gives you the confidence that the regulators accept it to package from 1 RSV-C only, given your competitor studies will continue further? Is there a risk that the regulators want to see more data across more seasons before moving to approve a vaccine here? And do you think that decision will ultimately be influenced by the clinical efficacy you and your peers deliver?

Thanks, Kerry. I think we're pretty confident in our strategy. But of course, any approval and any recommendation for use is going to depend on the risk benefit. We're expecting a reasonably high success rate and effectiveness rate for this vaccine and being able to show it works well in the various subgroups of interest as well as determining whether this is going to be effective in an equally significant way across the season. In other words, how effective the duration of efficacy relates. So when we have all that data, I think we'll be able to have a better sense, but we're pretty confident in our strategy of the trial design, the sample size, the effect rate and the risk benefit that, that would endure. I should also mention that, of course, that the ASO is something that we have enormous amount of experience with in a very, very large safety database with. So it's really going to be driven by the efficacy and probably viewed by ASIP in aggregate all the data as well as how the regulators will be reaching individual company.

Question is coming from the line of Mark Purcell from Morgan Stanley.

Just again on RSV, or auto, so getting a bit perspective. I wonder if you could sort of help us understand how we can assess whether the ASO1 adjuvant will provide a potential durability advantage from the initial data sets, your own data sets, so Renoir and Evergreen. What should we be looking out for which suggests you might have a sort of T-cell restoration benefit? And then just a related question. Are there any IP considerations around the prefusion F subunit target? Clearly, you were a first-mover when it came to HPV and you secured a royalty stream. Is there something such that we should think that, that situation could occur with RSV?

Yes. Thanks, Mark. Why don't I tackle the first part. And I don't think there's any IP issues that we're unaware of. But I'll let Roger jump in if he knows something I don't. I think it's going to be challenging to figure out the impact of the adjuvant on duration as it relates to multiyear because, of course, well, we won't have a multiyear and back when you look at Shingrix, it obviously took 8 years to figure out that it worked so well for 8 years. I do think there is going to be hints potentially. One could look forward to be underpowered for these, but I think they might be directionally useful. First of all is the point estimate of benefit greater than other trials. I think that's one thing to look for. That would suggest that the adjuvant is doing something unique. It could also be that in subgroups, particularly the older 75 and particularly immunosuppressed patients, one might see a signal that looks more prominent than nonadjuvanted. That might give you a signal. And as I said a few minutes ago, there is a way of looking at the duration of efficacy of the season. So if the efficacy with a non-adjuvanted vaccine, for instance, is pretty significant in the beginning of the season, but wanes during the end of the season, and for instance, ours would have a treatment effect is impressive and constant over that period of time, one might be more confident that there could be a duration effect one looks longer. But at the end of the day, we're going to have to look for longer-term follow-up. And we have studies already underway that I'll explore then. Roger, did you want to add any?

Yes. Just on the IP, there's no IP restrictions on the pre-F nor is there any IP direct ownership from our perspective that would generate income. So that's not something which we have be thinking of or worrying about .

Okay. I'm not sure if we've got time to go through one more question. And we have one more question. So maybe, Brian?

Our last question for today's call comes from Peter Welford from Jefferies.

Just a question just on RSV back again in the older adults. Can I just ask -- when we think about the COVID data, have we all been spoiled the hospitalization and decreases that we saw there at 90% plus in some cases. And perhaps could you give us some sort of idea of what we should be thinking about for the RSV Phase III with regards to what is a reasonable higher reduction in hospitalization? Is inosevumab, 80% or so reduction, a sensible sort of ballpark that we should regard as clinically meaningful. And perhaps just a comment, I think you probably should probably an award for sort of the massive of understatement. From my calculation, it seems as though your strong double-digit growth is probably over 40% machine grid. Can you just remind us if the £2.5 billion, if that's roughly where I get to from your guidance, is entirely can be met with existing manufacturing? And should we then consider future growth from that? Again, are you confident that you can sustain that level of growth and that level of demand with your existing capacity that you have without the new facility?

Yes. So let me be extremely -- well, utterly unequivocal. We are not supply-constrained, and we're very confident on doubling our sales from the 2020 levels in terms of the outlook that we gave the update last year. We feel very good about getting a bounce back. Obviously, there's been a bit of COVID disruptions. But as Luke outlined, the momentum is very good. I don't know, Hal, if there's anything further we want to add.

No, I'll just say that, of course, it's very hard to predict the efficacy. But as we look at our own immunogenic data and the aggregate packages that have been presented, I think we've -- and in discussions with clinicians, we're pretty confident that any effect, more than 50% is clinically meaningful. An effect, greater than 70%, is a very good response and it will be a very successful vaccine. And should we get efficacy above 80%, that's outstanding.

Great. Well, with that, thank you very much, everybody. We shall look forward to gathering with some of you over the next few days. And we're really looking forward to an extremely exciting year ahead for GSK. Whether that's doing everything that we said we were going to do, the delivery of the step-change in growth, reading out on some of these very exciting pipeline milestones, continuing to accelerate the execution, all that we already have in hand and plan for very competitive execution of what's to come, and of course, the tremendous unlock of value that's going to come with the creation of a completely unique FTSE leading world leader dedicated to consumer health care. And I know Brian is enormously looking forward to the long Q&A session on that at the end of this month. Thanks, everybody. Catch up soon.