Good afternoon, ladies and gentlemen, and welcome to the Analyst Call for the GSK Third Quarter 2022 Results. I will now hand you over to Nick Stone, Head of Global Investor Relations, who will introduce today's session. Nick, please go ahead.

Thank you, operator. Hello, everyone. It's Nick, as just mentioned. Welcome to our year-to-date and Q3 2022 conference call and webcast for investors and analysts. Earlier today, the presentation was posted to gsk.com. And it was also sent by e-mail to our distribution list. Please turn to Slide 2. This is the usual safe harbor statement, and we'll be making comments on our performance using constant exchange rates, or CER, unless stated otherwise. As a reminder, the Consumer Healthcare business was demerged on the 18th of July to form Haleon. And as a result, we are today presenting continuing operations for GSK. Turning to Slide 3. This is today's agenda, where we plan to cover all aspects of our year-to-date and Q3 2022 results. The presentation will last approximately 35 minutes, with around 40 minutes for questions. [Operator Instructions]. Today, our speakers are Emma Walmsley, Tony Wood on the phone, Luke Miels, Deborah Waterhouse and Iain Mackay. The Q&A portion of the call will also be joined by David Redfern. Turning to Slide 4. I'll now hand the call over to Emma.

Thanks, Nick, and hello to everyone joining our Q3 conference call today. Please turn to the next slide. I'm very pleased with today's results, which demonstrate that our strategy is driving the step change in performance and landmark year we committed to. Year-to-date, we've delivered double-digit sales growth of 19%, adjusted operating profit growth of 16%, adjusted EPS growth of 20% and strong free cash flow of GBP 2.5 billion. This broad-based momentum and our continued pipeline progress support my strong confidence heading into 2023 and in our medium-term outlook and growth through the decade. Based on these encouraging results and our excellent momentum, we're again increasing our full year guidance, which excludes COVID solutions. We now expect sales to increase by between 8% to 10%, with improving outlook in all 3 product areas; adjusted operating profit growth between 15% to 17%; and adjusted EPS growth around 1% below adjusted operating profit. Please turn to Slide 6. In Q3, we delivered another quarter of growth, with sales increasing 9% to GBP 7.8 billion; adjusted operating profit growing 4% to GBP 2.6 billion, an increase of 2%, excluding COVID solutions; and adjusted EPS growth of 11% to 46.9p. This performance was driven by consistently strong commercial execution all across our business as we build our broad portfolio of scale medicines and vaccines, with Specialty Medicines growing 24% to GBP 2.7 billion and by 11% excluding Xevudy. Here, we continue to benefit from demand for our HIV medicines, particularly Dovato and Cabenuva as well as Nucala in respiratory and Benlysta in immunology. Vaccine sales grew by 5% to GBP 2.5 billion and by 9% excluding pandemic vaccines. This strong performance reflected another record quarter for Shingrix, with sales exceeding GBP 750 million. And lastly, General Medicines sales grew 1% to GBP 2.6…

Thank you, Emma. Next slide, please. Our shared purpose within GSK is to unite science, technology and talent to get ahead of disease together. I want to spend the next few minutes explaining how R&D will support this objective and how I expect the organization to evolve under my leadership. First, it's essential to recognize that GSK has changed. We have developed a unique operating model based on the science of the immune system, human genetics and advanced technologies. With this, we delivered a much more competitive performance in new drug approvals. This is encouraging and something our organization can be proud of, but there's more to be done. I'm confident we can further strengthen our pipeline of innovative and practice-changing new vaccines and medicines to deliver long-term competitive growth. To achieve this, we will rigorously prioritize R&D capital allocation in our 4 therapeutic areas. To achieve these objectives, I have 3 key priorities for R&D. My first priority is to execute flawlessly on our pipeline, today consisting of 23 vaccines and 42 medicines. Flawless execution means prosecuting the development of our late-stage pipeline, bringing new vaccines and medicines to patients as quickly as possible, organically and through business development. It also means accelerating our development of our most promising preclinical and early-stage research projects. Our guiding question will be: Can this meaningfully improve patient outcomes and deliver a new standard of care? My second key priority is exploiting new and existing platform and data technology to identify and accelerate clinical development opportunities. We already have a broad set of platform technologies, including an unrivaled suite within Vaccines. We'll continue to add to this, augmenting our capabilities. To illustrate this, we leveraged our world-leading protein adjuvant capabilities to deliver a best-in-class RSV vaccine candidate for older adults. Likewise, through complementary…

Thanks, Tony. Please turn to Slide 15. So in Q3, we saw strong execution across commercial operations, with total sales growth of 9% in the quarter and increasing demand from all product groups. 2 percentage points of growth came from Xevudy, so the ex pandemic overall sales growth of 7%. Based on this good performance and our ongoing momentum, we've increased our full year sales guidance Specialty Medicines to low double digits, excluding Xevudy. As usual, Deborah will comment on HIV, while I highlight a few key dynamics. In immunology, Benlysta continues to be the leader in lupus, with sustained growth across major markets, including the U.S., where we're getting 80% of new starts. We're also making good progress with the lupus nephritis indication, now reaching around 15% of patients in the U.S. with plenty of room to grow. For Nucala, we continue to be the first and only biologic approved for 4 eos-driven diseases and are leading the IL-5 class across all major markets. In the U.S., we have now had more than 50% market share for all our approved indications, and we're on track to potentially add a fifth, with our Phase III COPD trial due to complete in the first half of 2024. In oncology, our in-line and launched brands delivered double-digit growth, achieving GBP 164 million in the quarter, including Zejula, which was up 11%, and Blenrep up 32%. In General Medicines, we continue to lead the single inhaler therapy class with Trelegy and saw an increase in demand for Augmentin due to the postpandemic rebound of the antibiotic market. As a result of this performance in the quarter and year-to-date, we now expect full year sales for gen meds to be broadly flat, which compares to the slight decrease that was previously signaled. Turning to…

Thanks, Luke. We delivered another good quarter with HIV sales of GBP 1.5 billion, up 7%, taking year-to-date growth to 9%. Performance benefited from strong patient demand for our innovation portfolio, which comprises Dovato, Cabenuva, Juluca, Rukobia and Apretude, and now accounts for 44% of our sales. Strong growth of 11% in each of the U.S. and Europe was the result of excellent commercial execution behind our 2 drug regimens and Dovato in particular. For the first time in a quarter, Dovato sales exceeded those of Tivicay, with Dovato accounting for almost 25% of our total HIV business. Turning to our injectable portfolio. Cabenuva, also known as Vocabria/Rekambys in Europe, is our first-in-class long-acting treatment regimen for HIV. Sales for the quarter were GBP 101 million, reflecting strong patient demand. At AIDS 2022, we were pleased to present new data from the CARISEL study, demonstrating successful implementation of the Vocabria/Rekambys across a range of European health care settings. More than 80% of study [indiscernible] supported that the complete long-acting regimen was less stigmatizing than daily oral treatment. The outlook for this innovative medicine is compelling, with strong brand recognition and high levels of market access and reimbursement across the U.S. and Europe. Moving on to prevention. Apretude is the world's first long-acting injectable for the prevention of HIV dosed every 2 months. Launched in the U.S. in January, Apretude delivered GBP 10 million of sales in the quarter. HIV prevention is an area of huge unmet need as current medical options are associated with stigma and adherence issues. Apretude addresses these issues and has demonstrated superior efficacy over daily oral tablets. In the last week, has accepted our application to make Apretude available for people who would benefit from PrEP in Europe. This is an important step forward in offering expanded options for HIV prevention. And finally, we were pleased to present more than 50 abstracts across the recent scientific congresses ID Week and HIV Glasgow. The highlight, as Tony mentioned earlier, was the positive proof-of-concept data from the bNAb study of N6LS, our investigational, broadly neutralizing antibody. In conclusion, our Q3 results demonstrate continued positive momentum towards delivering our 2026 outlook and successfully evolving our product mix to the end of the decade. I will now hand over to Iain. Next slide, please.

Thanks, Deborah. As I cover the financials, references to growth are at constant exchange rates unless stated otherwise. As Luke has covered the main revenue drivers, I'll focus my comments on the income statement, including margins, cash flow, capital allocation and guidance. Please turn to Slide 19. Whilst my comments will focus on continuing operations, I will start by covering the effect of the demerger in total results. Total earnings per share were 255.9p, of which earnings per share from discontinued operations were 237.1p in the quarter. This reflected GBP 9.6 billion profit after taxation for the gain arising in the demerger of Consumer Healthcare. This was comprised of a GBP 7.2 billion gain on demerger and a GBP 2.4 billion gain on the retained stake in Haleon. Turning now to continuing operations. For the third quarter of 2022, Commercial Operations turnover was GBP 7.8 billion, up 9%, and adjusted operating profit was GBP 2.6 billion, up 4%. Total earnings per share were 18.8p, down 35%, while adjusted earnings per share were 46.9p, up 11%. The main adjusting items of note between total and adjusted results for continuing operations in Q3 were in transaction related, which primarily reflected ViiV contingent consideration liability movements, the majority of which related to foreign exchange, and in divestments, significant, legal and other, which reflected a fair value movement -- sorry, fair value mark-to-market loss on retained stake in Haleon. Pandemic solutions increased growth of adjusted operating profit by approximately 2 percentage points and growth of adjusted earnings per share by around 3 points. The Q3 currency impact was a favorable 9% on sales and 14% in adjusted earnings per share. Turning to next slide. The Q3 margin of 33.3% was stable and aligned with 2021's delivery. The positive margin dynamics reflected the sales growth…

Thanks, Iain. And turning lastly to Slide 25. We continue to be guided by our purpose to unite science, technology and talent to get ahead of disease together. Integral to this is running a responsible business, which builds trust and reduces [indiscernible] health impact, shareholder returns and supporting our people to thrive. This quarter, we advanced our environmental leadership by launching our Sustainable Procurement Programme at Climate Week in New York. The recently announced S&P Corporate Sustainability Assessment also recognized our sustainability leadership. And we were also delighted to gain World Health Organization prequalification for our malaria vaccine, a key step in making this groundbreaking vaccine available to more children. In closing, I want to thank our people for delivering this tremendous performance momentum. I'm deeply committed to GSK being a company that helps our talented people thrive, and we recognize the significant pressures many are experiencing due to the unprecedented context and the practicalities of the rising cost of living in many parts of the world. And this quarter, we invested in supporting those most affected as well as in company-wide enhanced benefits and well-being support. Together, we are delivering our landmark year, also with another quarter of strong performance, upgraded guidance and excellent momentum as we look to the years ahead as a focused global biopharma company. We are well on track to meet our bold ambitions for patients and our commitments to competitive growth for the decade ahead. With that, operator, can we please move to the Q&A?

[Operator Instructions]. And with that, our first question comes from James Gordon from JPM.

James Gordon from JPMorgan. First question was on older adult RSV vaccine. So we now have the GSK and the Pfizer data in the public domain. What can we say on the comparative efficacy and tolerability? Are you still seeing GSK taking the dominant market share? Or could these end up being similar products with the same ACIP recommendation because maybe you've got better efficacy but not so good on tolerability? And what could a product like this -- what might the ramp look like? Is Shingrix a proxy? And if I could also just squeeze in a follow-up question, which is a more general one on the pipeline. So a question for Tony, which would be, how are you thinking about peak sales potential for the pipeline? It seems like oncology is a bit less of a focus than before. And there were some quite plenty targets set before. So Blenrep Zejula, Jemperli, they're multibillion dollar products [indiscernible] forecast? Or might those be under review? And are there other areas maybe outside oncology where you see higher peak sales potential?

Thanks, James. Well, 2 quite chunky questions there. I'll come to Tony first, and let's deal with the RSV question. But then I think, Tony, you can talk about the data, both on efficacy and tolerability, and Luke, perhaps you can pick up on the ramp. And then we'll come back on your question on overall pipeline strength and prospects. I just want to reiterate, James, what I said in my comments, which is compared to where we were just a year ago when we presented both our outlooks for growth and the 5-year horizon and a snapshot in that moment of time of the risk-adjusted pipeline, we are in a better and stronger position when we look across those 3 periods on a net basis. Obviously, some things go away. Other things have matured. And as you know, we've added business development and maturing early pipeline in a fairly material way as well. So we would always expect that to keep adjusting. But first of all, let's deal with RSV in the round, and then we'll come back. Tony, if you want to comment on -- building on your presentation on some of the pipeline assets. But RSV first, please.

Yes. Thank you, Emma. And James, thank you for the question. The first thing I would stress is that we're confident that our vaccine has a best-in-class profile. And that really is anchored on the consistent high vaccine efficacy, particularly against RSV lower respiratory tract disease in the 70 to 79 population and in those with comorbidities. And we know from the CDC that 94% of adults hospitalized with RSV disease are in those comorbid populations. And just to remind you, there, we have consistent 94% vaccine efficacy across the board. I'd also highlight the data that we have with flu coadmin, which serves to show no impact on efficacy of either vaccine, again, important in that population. And the fact that we have a high vaccine efficacy against both A and B strains, with an overall vaccine efficacy of 82.6%. So we're confident in our best-in-class efficacy profile. As far as tolerability is concerned, then the data we have shows that reactogenicity is mild to moderate. It resolves within 2 days. And it's entirely consistent with the level of reactogenicity that is seen for a majority of adult vaccines. Emma, I'll leave it there in terms of the RSV answer.

Sure. And I think just to build on Tony's point, I mean I would expect at this point that ACIP would take a relatively conservative position, but we have until June of next year. And as they get more evidence and more reflection, benefit from, obviously, the exchange that occurred with both companies, let's see how that position evolves. We've done early market research [indiscernible] presented by both companies. So that has actually enabled us to do some depth in terms of tracking. What's interesting is in terms of , you only see 1 in 4 of their 60-plus patients is actually healthy. So I guess, 3/4 are perceived to be unhealthy. And it's in that population that you actually see the difference start to emerge in terms of perception of these 2 products for the reasons that Tony has said when you look at the efficacy. But I think also critically, again, these are scientifically fluent individuals. They're practicing doctors. They understand confidence intervals. They understand consistency, and they understand and see which of their patients go to hospital each year. So I think that's something we can build on, and we're certainly looking forward to that scientific debate. In terms of the ramp, again, there's low levels of awareness amongst potential subjects to be vaccinated. But that will change with 2 companies, obviously, vigorously explaining that. I think some of the press coverage around the results is a good indication of that. Physicians obviously are aware that there's been no solution beyond antibodies in kids. So we expect this understanding will grow. But the ramp will be more consistent and steady over time. I think the Inflation Reduction Act will also help in terms of co-pay reduction, in terms of a single-digit effect, in terms of willingness to get vaccinated. So there's a build over time, but I think it's exciting. And I can imagine this is a class of vaccine that's going to grow over the next 15 years consistently year-on-year globally.

Great. Thanks, Luke. And then I don't know if -- Tony, would you just want to give a very quick view to James' second part of the question on the sort of shift in the portfolio and your priorities there? And then we'll move on because we've a long queue of questions.

Yes. So look, I mean, this is really for me about a focus on allocation of capital where we see data driving the potential for meaningfully different contribution to standard of care. And I would point to the RSV results we've just been discussing, the emerging profile we have for bepi and, of course, the exciting opportunity we have within the pneumococcal vaccine opportunity based on the Affinivax acquisition. I expect momentum to continue in that part of the portfolio. And that's why you see that 2/3 of our development portfolio is now coming from infectious disease and vaccines.

Our second question comes from Simon Baker from Redburn.

On COVID in two parts, if I may, please. Firstly, one for Deborah and for Luke, if you could just give us an update on where we are in terms of treatment and diagnosis rates across the key therapeutic areas at this stage in the endemic phase. And then on Xevudy, it was a very strong performance in the third quarter in contrast to a number of other antibodies in the space. So I just wonder, Tony, if you could update us on the data on efficacy that you have for the latest circulating variant of the Omicron variant. And set against that, you appear to be indicating Q4 sales for Xevudy of close to nothing. I just wondered if you could explain what that was, whether there were orders for Q4 that essentially came into Q3. Just a little bit of color on that would be very helpful.

Sure. Well, Simon, look, I'll come to Luke first to give you a shape of the Xevudy business, what's happened and what we don't expect ahead. And I think you were asking for commentary from Deborah also. Maybe Luke, you can add to that, what's happening in the overall market in the context of COVID, and we know that that's hit a few areas. And Debbie, you might give a sentence on HIV. And then if there's anything further to add, Tony, on variant switches as this becomes more endemic. Then we should have that at the end. But Luke, first to you.

Sure, I'll take them. I mean Tony will cover the debate about in vitro versus in vivo activity. But our feedback from physicians actually using the infusion is they still see activity. And so we are still seeing volumes employed and, in some markets, actually [indiscernible]. Now in terms of extra orders, we're not expecting any in Q4 because governments have stockpiles. The shelf life is 2 years. We're working to extend it to 4 years. So we see it essentially as a saturated market at this point unless there's evolution of the variant. In terms of impact on other areas, I mean, the primary area of suppression remains the ovarian cancer diagnosis, surgery and treatment. It's still down by about 9%. And some signs of recovery but still suppressed. The rest of the markets, with the exception of China, are essentially starting to revert to the mean, which is encouraging and gives us confidence in terms of the outlook.

Thanks, Luke. Deborah, any...

Yes. So in terms of the HIV market, so the overall TRx market in both Europe and returned to prepandemic levels and is growing between 1% and 2% overall. If we look at the dynamic part of the market, in Europe, you can see that the dynamic part of the market is pretty much back to where it was pre-COVID. In the U.S., the NBRx is weekly. We're around 5,500 to 6,000 prepandemic. They seem to have settled now at about 4,500 per week. So suppressed versus where we were before the COVID pandemic, but I do think this is probably where they've settled. So a slightly less dynamic market. And obviously, we work very hard to create that dynamism with our new portfolio of medicines, which, as you can see, are being very well accepted and have a rapid uptake, both in Europe and in the U.S.

Great. Thanks. Tony, anything to add, just on variants?

Yes. Just a quick one. The latest real-world evidence from an independent group demonstrates clinical effectiveness of Xevudy through the BA.2 wave, which we believe can be extrapolated to BA.5, which is the currently dominant global subvariant. That's all I have to add.

Okay. Well, I mean, I think just to remind everybody -- I think everyone knows, that no -- that COVID solutions is completely excluded from our guidance in this year and in our 5-year outlook. We've been very proud to contribute billions but mainly the impact for health care through -- and primarily through the pandemic. We're still watching to see what happens endemically. We've got our platform in mRNA, including potentially there, but the world has plenty of COVID vaccines. So this is not at the core of our development plans going forward.

Our next question comes from Richard Parkes from BNP Paribas Exane.

Got a question for Tony. Just wondered if he could discuss his thoughts on R&D capital allocation in oncology R&D going forward. There's been quite a lot of focus on rebuilding Glaxo -- GSK's presence there over recent years. But it sounds like investment is going to be a bit more selective going forward. I don't know whether I'm interpreting that correctly. But maybe you could just discuss what you think GSK needs in order to compete effectively in oncology, whether it be in terms of technology or capabilities, and how you'd achieve that over time rather than just fully deinvesting.

Great. Thanks. And just as a reminder, we'll come to Tony, and then maybe, Luke, you might want to add something commercially. But our priority has consistently been to grow GSK through innovation in Vaccines and Specialty Medicines. As Tony did say, 2/3 of the pipeline are in infectious diseases and in HIV, but we see oncology as part of what will drive growth at the end of the decade, but I'll let him comment more specifically within oncology. And then Luke, you might want to add on that in terms of commercial, as I know we're excited about what momelotinib might bring next year. So Tony, first to you.

Thanks, Emma. So we're committed to oncology because of persisting medical need and scientific opportunity. And for us really, oncology is in emerging therapeutic area. So you can expect in terms of capital allocation our approach to be a pragmatic one, through careful business development, such as exemplified by the Sierra Oncology deal, and as I mentioned earlier, a focus on assets in the portfolio where we see an opportunity for a meaningful contribution to standard of care. For example, our focus on immuno-oncology in the case of dostarlimab, where we have a number of interesting data sets starting to emerge, and in the CD226 axis, where access to CD96, PVRIG, TIGIT and other members gives us an opportunity for full blockade of that access. So we will continue then to deploy our capital into oncology, driven in the data set -- driven by data, which suggest that we could expect to see meaningfully different clinical contributions. As far as the later-stage pipeline is concerned, we're continuing to evaluate Blenrep's potential to make a difference in the treatment of patients with multiple myeloma. And as I mentioned, we expect to be able to report data from D-3 before the end of the year and in DREAMM-7 and DREAMM-8 in second line in 2023. Perhaps I'll pause there and pass over to Luke to make any additional comments.

Sure. Thanks, Tony. I mean, I think, this theme of discipline in terms of competitive profile is something that we spend a lot of time on. I think to build on Tony's point, I would direct you all to the ESMO I-O PERLA publication for the dostarlimab at the end of this year. I think it's got a very intriguing read across the COSTAR study, where there is a chemo dostarlimab arm. And then momelotinib, if you look at the awareness and early market research that we've got, it's very high. There's clearly a lot of enthusiasm around this product. And so we're excited about the filing involved with that product and the potential uptake.

The following question comes from Stephen Scala from Cowen.

This is a big picture question for Tony since I believe this is your first quarterly call. But over the past 25 years, GSK has tried many different R&D structures and programs to infuse energy, accountability, creativity. But other than in Vaccines and HIV, none have been particularly successful when compared to leading competitors. Hal made some positive steps, but still outcomes such as otilimab have been far too frequent. So why do you think this has been the case at GSK? Without identifying the root cause, it would seem very difficult to fix.

Thanks, Steve. Well, I'll let -- perhaps, Tony, we go straight to you on that. I just would remind everybody, again, on a net basis, we are -- when we look at our outlook for growth, we're in a much better position than we were 5 years ago. We did -- overall, in terms of number of approvals, I think we got to 13. We doubled our number of late-stage assets. And our current momentum as well as our prospects of growth haven't looked stronger. Obviously, we have failures because that is the nature of the industry, and I'm really pleased that we call what we don't think we can bring meaningful differentiation. But in terms of your core, big picture questions on operating model, Tony, it would be great to have your reflections at this stage on that, and I'm sure the conversation will continue on the quarters ahead.

Yes. Thank you, Emma. So let me start by just reiterating that together with Hal, I was a co-architect of the strategy that focuses reiterating the term -- together with Hal, I was a co-architect of the strategy that focuses on science and technology and culture in terms of transforming our business performance. And as Emma has mentioned, we have substantial momentum in that context, particularly our performance with regards to our late-stage portfolio. Our performance of the past year is better than our past, and it's in line with our peers. So what you can expect to see from me and the priorities that I've delineated is a continuing of that focus. I might pick, in particular, on an aspect of culture associated with decision-making, and in particular, improving late-stage . And there, the focus that you will see on investing capital into assets which have a meaningful opportunity to change standard of care, and that is going to continue to shape our late-stage development portfolio. And the way that you can see it evolving today with us, greater than 60% of our assets now focus on vaccines and infectious disease. So we will continue to focus them. My priorities again, in terms of technology then, building in additional capabilities and platform technologies. I would remind you that we already have a substantial suite of powerful platform technologies in vaccines. Our adjuvant technology recently added technology for MAPS. And in our medicines portfolio, the growth and effectiveness of a build-in -- build-out and capability in biologics, underscored, for example, by the performance that we demonstrated for Xevudy in bringing that monoclonal quickly to the market. Nucala is an example of a monoclonal and leading in the IL-5 class. And a growing focus now on oligonucleotides, exemplified through the bepirovirsen and other cases in our portfolio. So I'm confident that based on our focus on science, technology and culture and a build-out in technologies, both in platform technology and data technology, you should continue to see the momentum that was built under Hal continue and accelerate.

Great. Thanks, Tony. We're going to move to the next questions, and we'll try and speed through as many as we can.

Our next question comes from Graham Parry from Bank of America.

Just that you gave us some interesting details on the Zantac litigation and the number of cases. So I just wanted to clarify because I think there might be a bit of confusion out there that you essentially have over 110,000 claimants now. And so 33,000 in the MDL, those are the unfiled claims, and the 77,000, those are filed claims. And can you give us a feel for exactly what the proportion of those are the 5 cancers are outside the MDL? And then secondly, on daprodustat post the data, is that something which you would consider as worth launching in dialysis-dependent only? Or is that an out-licensing candidate given that GSK doesn't really have a cardiorenal franchise? And do you think that is something on which you would be able to make an economic return on the R&D that is invested in it through an out-licensing deal?

Great. Thanks, Graham. So I'm going to ask Iain, who, alongside our general counsel, both from a governance and a disclosure point of view, is on point for the Zantac work. Just to reiterate, we will always prioritize patient safety. Scientific consensus on this is clear. We're vigorously defending our point, and we're focusing very much on delivering the fundamentals whilst keeping you updated. But Iain will comment on that, and then we'll ask Luke. And we were pleased with latest feedback from AdCom, but Luke, comment on plans for that. Iain?

Yes. Graham, thanks for the question. So overall, if you look at where we are presently, we've got just over 4,000 cases filed across state and federal. The federal cases are consolidated within that multi-district litigation in the Southern District of Florida. At a state level, what we have seen developed over the course of the last few weeks is about 70,000 claims filed in the state of Delaware. And based on the data available, a couple of things. One, the vast majority of those claims have not been vetted at this point in time. So we don't really know much about the claimants' circumstances, whether it's Rx, OTC or anything else actually about the claimants. But what seems to be quite clear is that a significant amount, if not the majority of those, are transfers from the MDL case on the actions of the plaintiffs' lawyers to pursue 5 as opposed to 10 cancers. Now clearly, what is quite important in terms of the MDL case or the Daubert hearings which took place at the end of September and beginning of October, we are hopeful of hearing Judge Rosenberg's decision either later this month or into the month of December. And I think that's quite important in terms of informing how this case then proceeds certainly in the multi-district litigation to federal level, but certainly would also, to some degree, inform what might happen at a state level, most notably within the state of Delaware, where -- which is where the majority of the state cases are now filed. In terms of the 33,000 cases sitting within the MDL, those address multiple defendants, including GSK, there are other codefendants within that case. And again, in terms of the numbers of claimants within that class, again, that will be informed…

Great. Thanks. Luke?

Thanks, Emma. Graham, so the short answer is yes and yes. So if we do it ourselves, it's financially attractive. We can also do it with a partner and I think make that work. I think our preference is to do it ourselves because of the synergies with Benlysta and various other [indiscernible]. I mean in the U.S., we are -- if we do get dialysis, and assuming we don't have an onerous REMS program, and I think you're going to see the product evolve in 3 phases. The first phase, which is about 9 months based on CMS cycles, is pre-TDAPA. I don't think you'll see much volume at that point because you're competing with EPOs, which are embedded in the bundle. Then the TDAPA period which will run for about 2 years, and that is essentially where the cost, of course, of the medicine is removed from the bundle. And so there's a strong incentive deliberately created by CMS for the large dialysis organizations, which dominate about 80% of the market in the U.S., to utilize this drug because, of course, the allowance that they have for EPO will be removed from the bundle. The amount they receive for the bundle will not change. So there's a heavy volume incentive for them. That period will run from -- based on our timelines, October 1, 2023 to September 31, 2025. After that, when it goes back into the bundle, it's very much going to become a volume contracting game in direct competition with EPO, biosimilar EPO. So a tougher game. Now all of these elements with dialysis don't require large field forces. This is going to be a very concentrated group of people that I could probably count on 2 hands, maybe take one of my shoes off. So a very small infrastructure involved there, for what is net-net from a P&L point of view, quite an attractive asset. For Europe, we expect to get the broader label. And of course, that's more of a classical non-dialysis build profile. But again, we can embed that with the Benlysta team. And I'd just direct you towards the performance of dapro in Japan, where there's 5 HIPs. It was not the first to launch, but has captured 60% and growing market share. So we think we've got a very competitive profile versus roxadustat in Europe.

Our next question comes from Andrew Baum from Citi.

First question to Iain. Iain, you and I have spoken previously about the potential for the MDL to exclude multiple expert witnesses, leading you up into including the MDL being shut down its entirety if all the experts are excluded. Could you tell us from the background knowledge, which I'm sure your Chief Legal Counsel is aware of, any significant prior cases in drug liability litigation where the MDL has been closed that have resulted in significant settlements, including to address the plaintiffs and the state courts. That's the first question. And the second question to Tony. You've taken your TIM-3 cubotumab into Phase III development on the basis of prespecified hurdles for the expansion criteria per protocol. Could you just tell us what those expansion criteria were. And when you referenced the per protocol analysis, is this relation to tax or is this just patients advancing and therefore not being able to take their drugs?

Thanks. Iain, can you take that and then...

Yes. Thanks, Andrew. Look, I think as we've talked recently on this topic, there is a range of possible outcomes that Judge Rosenberg will inform in her decision. But the likelihood of it being -- all evidence being excluded and the MDL effectively stopped, we think, is probably very, very low to 0 probability. And frankly, probably unwise of us to try and guess. Rather much more wise to sit and actually await Judge Rosenberg's opinion. In terms of precedent, there are clearly instances and other product liability cases where Daubert hearings and other forms of hearings, like the Sargon hearings in California, narrowed the scope of the possible prosecution and evidence that can be submitted both interestingly by plaintiffs and defendants lawyers. So there is a range of practice in this. I don't think we have any expectation that the MDL all evidence will be excluded when the MDL suppressed. I think that would be unlikely. But we are going to save our counsel and await to hear from Judge Rosenberg. I think that's the best approach here.

Thanks, Iain. Tony on [indiscernible].

Yes. So thank you, Andrew. First of all, I would say I'm happy with the progression of COSTAR into Phase III on basis of the IDMC recommendation. I don't want to disclose the details of our clinical trial, I'm looking forward to wait and see what the data is.

The following question comes from Keyur Parekh from Goldman Sachs.

Two, if I may, please. The first one, just on the kind of ramp for the RSV vaccine and how you anticipate kind of launching it U.S. and ex U.S. With Shingrix, we saw kind of a staggered launch due to supply constraints. But just wondering kind of when you see this -- how do you see the trajectory of launch? And what should we be anticipating as regards to kind of the length of time it takes before you get to kind of your peak sales outlook for the molecule? And then separately, Tony, kind of big picture for you. Again, kind of coming back to R&D and culture and organization. What are some of the things we should expect from you that might be different to what prior GSK management have done from an R&D perspective? And what's kind of your broader picture for how you would define success for GSK R&D over the next 12 to 24 months?

Right. So look, what you recognized, it's a competitive situation. Over to you first on RSV [indiscernible].

Sure. Thanks, Keyur. We have no supply constraints within reason. So unlike Shingrix, where a delivery decision was made to impair launches to direct supply to the U.S. in earlier launch markets, we will go for a full global launch. There is some gating, of course, just from a resource point of view. The ramp, I would expect to be quite steady. It's -- the peak for the U.S. is after 5 years. Globally, it's going to be closer to 10 years just because of building the market. But as I said, I would expect that this product grows throughout its life cycle. It should just continue building and building as we see penetration in markets across the globe.

Yes. And the last point on this one is, of course, we will still see the data prove out how long the duration of efficacy is and the frequency of re-protection. Tony.

Yes. Thank you. So 2 points on that one. First of all, I would point again to portfolio decisiveness and decision-making. In particular, you should expect to continue to see a focus on those assets whose profile is consistent with a material contribution to standard of care, an acceleration of early-stage assets based on data and the continued focus on business development. As far as impact on the broader R&D culture is concerned, then it's doubling down on technology in particular to drive performance within R&D. And you should expect to see examples of how that technology deployment, be it against platform or data, is improving the overall characteristics of the portfolio.

Thanks, Tony. And the measures of success, let's be clear, are the strength of the pipeline and the prospects for growth -- profitable growth it generates. So right, next question, please. By the way, our proposal is for anyone that's worried about not getting through all the questions that we will extend the call by an extra 10 minutes so we can get to everybody. So next one, please.

Our next question comes from Jo Walton from Credit Suisse.

Thank you. I'll respect the one-question rule here and ask a little bit more on Shingrix. Could you give us an idea of the level of inventory at the end of the third quarter in the U.S.? I believe it was 1.9 million doses in the second quarter. And if you can tell us a little bit about the penetration in other markets. You've talked in the past about Germany and Canada as being the main 2 markets, but you're in more than 30. So can you talk about where you've got good penetration? What sort of level of annual cohort you might expect to be able to be getting to in some of these other non-U.S. markets?

Great. Over to you, Luke.

Sure, Jo. So I mean, yes, 1.8 in Q3, which compares to 1 in Q3 last year. But you would have seen the latest TRx as we just hit 200,000 last week. So good in-market demand. In Q3 in actual dose is about 6.3 million sold. So consistent demand which is very deliberate. We wanted to smooth the process over the year and not have it aggressively concentrated around the flu season. I think we're proving to do that. Because if you look, Q1 was 6.6, Q2 was 6.5, Q3 was 6.3. In terms of outside, you saw on the slide that I presented that you've got this growing European and international presence. And a critical point to make here, if you look at price variance globally, it's around 5% from the U.S. on average. So we've been able to preserve this pricing power so far at this point in the life cycle. So German demand remains very strong. We're starting now in Spain, Italy. We're about to announce a major contract in one of the key European markets. There are full reimbursement. And so, yes, we continue to see very positive signs. And the aim of course is to have this market completely treated with a 10-year plus and evolving efficacy before anyone else gets close to launching. Now, I spent time in emerging markets in August. It's quite encouraging what we see early days with Brazil. Obviously, we don't expect to see levels of penetration that we may reach in the U.S. over the next couple of years, but we also have the flexibility to adjust that price down in the back end of the life cycle to catch those patients who may not be seeking vaccination at this point in the out-of-pocket markets, in emerging markets as well. So there's plenty of flexibility in terms of the structure and how we're positioning this vaccine for multiple year growth.

Next is Tim Anderson from Wolfe Research.

My question is kind of cash flows and business development. So one of the challenges Glaxo faced your past is weak cash flow, limited business development activity. That improved after spinning out consumer and cutting the dividend. But I'm wondering if business development in the form of acquisitions specifically could get put on hold again, given uncertainty around Zantac. Because it's not inconceivable that at some point, you have to take financial reserves seeing that the drug was pulled off the market. So if the answer to my question is there's no change, it's business as usual, maybe you can bracket the upper end of deal sizes you'll continue to look at.

Right. Well, first of all, I want to be absolutely categorically clear. We will, as always planned, continue to pursue business development with agility, ambition and appropriate aggression and due discipline from a financial point of view. There is absolutely no change to our intentions there, as articulated also by Tony, and from a capital allocation point of view from Iain. This is, as you rightly acknowledged, exactly why we went through significant structural reset of the balance sheet of GSK. But I'd also point as to the improving operating performance generation of cash flow as well as continually competitive distribution but also some of the pay down of debt. And of course, in brackets, we are helped by currencies. And it's really important that this is understood that we are absolutely focused with support to keep prioritizing BD as part of our pipeline development mainly for continued profitable growth in the end of the decade. We're very confident in our outlook. We'll stay disciplined on it. But that is the very clear intent and plan forward. Iain, I don't know if there's anything you want to add.

I'm not sure there is much I'd actually add. We've got a stronger balance sheet. We've got strong cash flow. We did a reset on the dividend, with good cover of that dividend from '23 onwards. Strong focus on cash generation, cash management across the business. And to Emma's point around business development and M&A, continued focus around there's bolt-on acquisitions of [indiscernible] that we've done over the course of the last few years. So absolutely no change. And there is not a Zantac overlay at this stage for the obvious reason that we believe there's a very strong consensus of scientific evidence supporting our position. And we're going to -- we're going to defend our claims very vigorously in that front. So absolutely no change in capital allocation priorities. None.

Moving to Peter Welford from Jefferies.

Just a point of clarification really on Zantac, which is just given the commentary you made with regards to the MDL and how Daubert decision will inform how it proceeds. Just curious, is that an event that the auditors or I guess, Iain, consider then the time to consider a provision? Or will that likely wait for the bell weather? And then if I could just ask just on RSV, coming back to what Luke was saying with regards to competitive positioning. Obviously, we've also seen data from Pfizer now and in their meningococcal vaccine. I guess curious any view on that? And particularly how that potentially could impact your positioning of the product in the retail segment in the U.S., which I think you said is very important on the prior call, given obviously that now has 2 populations potentially that could be addressed in the U.S. with that vaccine.

I suspect [indiscernible] be on the press release on Zantac, but Iain might want to add to that. And then on other people's vaccines, but Luke may want to talk about the commercial prospects there.

Yes. On Daubert, Peter, it informs what test [indiscernible] can be submitted in evidence both by plaintiffs and defendants' counsel and possibly the scope of the MDL that will take place in the middle of next year. It doesn't inform anything else. And therefore, viewing that as definitive. Or it absolutely isn't definitive. We have to go to court to try the case and we'll defend ourselves vigorously in that matter. Depending on the outcome of it, then we'll consider whether or not any provisioning may be appropriate at that time. But no, I don't think Daubert is an inflection point in that regard at all.

Yes. I think these 2 populations are going to be separated. Again, it's going to come back to the efficacy in the group's most at risk. And I think the numbers are quite illustrative, it's about 80 million people who were 60-plus who are either co-morbid or 65-plus versus the birth cohort of about 4 million in the U.S. each year. So I think it's quite manageable, and that's assuming that it's approved, of course.

Our next question comes from Kerry Holford from Berenberg.

My question is on your meningitis vaccine franchise. So your competitive Pfizer has announced positive Phase III headlines for its bivalent vaccine and aims to file before the end of the year. You're confirming today that your Phase III data is due by year-end. If that is positive, how quickly can you move to file? Obviously, you have more to lose in this market and Pfizer has more to gain. So how comfortable are you that you can protect and indeed grow your position beyond Bexsero and Menveo. And slightly different but related question, perhaps you can also remind me of the difference between your Generation 1 and 2 pipeline candidates in Cervarix.

Well, Tony, perhaps you can comment on timing to file and Gen 1 and 2. And then Luke will come to you on, I know, very strong ambitions and prospects there.

Yes. So thank you, Emma. Look, as I mentioned earlier, we're confident the program is on track with regard to the data, and we're preparing to move to file post that as quickly as possible.

Yes. And I just built, in terms of the first generation asset, I think the important component is, and we published on this, is the 110 strain coverage which is -- we believe strongly in terms of provide better protection. The generation 1 is really a U.S.-targeted vaccine. We don't see the -- because in Europe, it's largely an infant population we see Bexsero being preserved and used in a mono setting. The pentavalent is very much targeting U.S. adolescents, college-age kids. And the penetration of Bexsero in there is still relatively early days. So we think the shift to the pentavalent and the better be embedded there will be a very competitive opportunity. So it's not cannibalistic. It's an opportunity to grow the aggregate business there in the U.S. Then the Generation 2 has the potential to be utilized more broadly. And then the final thing I would direct you to, which we need to build the evidence for this and ultimately find a pathway for a label, is the activity around gonorrhea. And I think there's an excellent analogue with Merck's excellent work with Cervarix around HPV and genital warts. And again, when you look at gonorrhea, I think it's about 85 million, 83 million new cases in the U.S. every year. College-age kids, of course, by nature of the lifestyle point of age at high risk. So we think these elements combined are very compelling. And that last activity around gonorrhea, we don't believe is accessible to the Pfizer meningitis vaccine.

Great. Thanks, Luke.

The following question comes from Michael Leuchten from UBS.

Just a quick follow-up, just going back to Shingrix and the stocking levels. I think in Q2, you were pointing out that inventory levels were running quite high. It sounds like they still are, but you're comfortable with that going forward? Or should we expect there to be a work down as we go into the flu season?

Yes, Michael, comfortable. I mean, they kept ordering. And I've said this in the past, and it remains true, they order it because they're confident in using it and the script trends are certainly pointing that way. And actually, we've seen a strong jump in non-retail utilization, which is not as visible to you guys. So the volume growth are very encouraging. So not concerned with the Q3 inventory level.

We've got two more questions.

Our next question comes from Emmanuel Papadakis from Deutsche Bank.

Perhaps a question on mRNA. You highlighted several times in the Q3 release the priority investment in mRNA. And I assume that would be principally into the flu partnership and COVID partnership with [indiscernible] but perhaps you can correct if that's otherwise. And are we still expecting Phase I data for both modified and unmodified through assets by the end of this year? And what's your degree of confidence both in seeing an improved risk benefit profile relative to competitive data sets we've seen over the last 12, 18 months, particularly as regards to reactogenicity and your confidence that you've got the right external technology partner for that platform. And then a very quick follow-up on royalties, if I may. Big step up this quarter. Apologies if I missed it earlier. Is that the kind of run -- didn't seem to call out any one-off, is that the kind of run rate we should be thinking about going forward?

Right. Well, Iain, can you just pick up the royalties one. And then Tony, we'll come to you on mRNA.

The Royalties is the principal combination of Gardasil and Biktarvy settlement. Those are the 2 key elements. And obviously, the Biktarvy settlement took effect in February of this year. So we're probably hitting an appropriate run rate, but it's informed by sales of Biktarvy.

Yes. Thank you, Emma. So in flu, our studies remain on track. I would remind you that we have a suite of clinical studies aimed at assessing optimization of sequence and the incorporation of modified basis in both the context of COVID and in the context of flu as well as an internal build, which is continuing at pace. So I'm confident that when you put all 3 of those together, we are well placed to be able to solve the equation associated with getting to an appropriate reactogenicity versus efficacy proposition for a multivalent flu vaccine. We'll know clear how that stands, certainly by the end of the second half of next year -- sorry, the end of the first half of next year.

Thanks, Tony. Okay. Last question, please.

Our final question comes from Emily Field from Barclays.

Hopefully, first, it's a very quick clarification on Zantac and the impact of Daubert. You mentioned that a number of these cases in Delaware where plaintiffs moving jurisdiction from the MDL to Delaware. I was just wondering whatever comes out of Daubert, will that have any impact on any other jurisdictions like such as these state courts? i.e., if cancer is reduced in the MDL via Daubert, would that then have any impact on state cases? And then I actually just wanted to ask a question on the recent -- looks like recent decision to move the anti-TIGIT asset into Phase II. If you could just comment sort of on the thinking behind that sort of as we're all awaiting the [indiscernible] updated [indiscernible] data, and it does look like an interesting trial design given that you also have a pembro arm in there sort of in the context of the PERLA study. So just any color or commentary around that would be helpful.

Right. Thanks. So Iain, swiftly on Daubert again. And then Tony to finish up, please.

Sure. Emily, thanks for the question. At a state level, they're not bound by decisions at federal level. And Daubert is informing the scope [indiscernible] district litigation in the Southern District of Florida. So the states can take a different view. What is interesting based on history is that Delaware has tended to follow precedents set by federal -- by federal courts. So it is possible that the Daubert hearings would have [indiscernible] specifically related to multi-district litigation in the Southern District of Florida in federal court. It is possible that the output of Daubert could also have a read across to state cases and at state level, probably notably in Delaware, where we currently have about 70,000 claims filed, of which the vast majority is yet unvetted. So we know little about them other than the fact that they probably relate to 5 cancers that the plaintiffs [indiscernible] in the MDL decided not to pursue. So that's probably all -- that's all I can add on that point at the most, Emily. Hopefully, that's helpful.

So Tony, TIGIT.

Yes. Thanks, Emily. Obviously, TIGIT is an incredibly competitive class with more than 20 assets in development. And for that reason, it's going to be important for us to move at pace since the change that you see. It's likely that certain assets are going to have dominant positions in certain indications, given combination partners and others. I don't really want to disclose about where we may compete. But the movement that you see is consistent with that. And also building out a Phase II platform capability to be able to evaluate not only doublet in the PD-1 TIGIT access, but other alternatives in combination, as I mentioned earlier, like CD96 and [indiscernible].

Right. Well, a big thank you to everybody. I hope you got to most people's questions, we will certainly be following up in coming days. We are delivering our landmark year with this another quarter of strong performance, upgraded guidance and great momentum, including on the pipeline. So we're very much on track to meet our board ambitions for this year, for our 5-year outlook and the days of the decade ahead. Thank you very much, everyone. Speak to you soon.

Thank you for joining, everyone. That concludes your conference. You may now disconnect. Please enjoy the rest of your day. Goodbye.