Rogers Corporation (ROG) Q1 2022 Earnings Report, Transcript and Summary

[Operator Instructions] One last remark, if you would like to follow the presented slides on your end as well, please feel free to go to www.roche.com/investors to download the presentation. At this time, it's my pleasure to introduce you to Severin Schwan, CEO of Roche Group. Mr. Schwan, the stage is yours.

Thank you very much, and welcome to everybody to our Q1 briefing today. So let's go right into the slides. Here we go. Yes, overall, a strong start into the year, sales overall up by 11% at constant rates, good growth in both Pharma and Diagnostics. And what I should point out is that this is not only a sign of strong COVID sales, but what we also see is a strong growth of the underlying sales. I'll come back to that in a moment. Actually, the underlying sales on a group level grew by 9%. The second key element here is the progress we made with our portfolio. So it's really good to see that we successfully launched 2 important medicines for CBI diseases, Vabysmo and Susvimo at the beginning of this year. And we have the upcoming launches for Polivy biospecifics in hematology. And there is a lot more to come. As you know, Tecentriq in adjuvant, tiragolumab now with non-small cell lung cancer in the second quarter and a number of new platform launches on the diagnostics side. So a very critical year for us in terms of the clinical news flow. If we turn to the next slide, you can see a 6% growth in Pharma, 24% growth in Diagnostics. And Bill and Thomas will comment on that in more detail good growth, good continued growth on a quarterly basis. I should say, however, that we expect that to come down as of now, actually, as we expect slowdown of our COVID-related business for the remainder of the year. So here, again, the bridge across the different businesses. And you can see a still very important impact related to the diagnostics COVID test and Ronapreve. But again, if you exclude the business last year and this year. And if we exclude the erosion effect on Avastin, Herceptin and Rituxan, we have an underlying growth of 9% of our newly launched medicines and diagnostics, which is pretty remarkable. And we expect a high single-digit growth of the underlying business for the remainder of the year. What you can also see here on the right-hand side of that slide is how the structure of our portfolio has changed, where EHR still plays a role, and we still have an impact with the continued erosion, but we are now entering a phase where we have overcome that specific loss of exclusivity of our major legacy cancer medicines. If we look at the outlook, we confirm the outlook for the full year. And this is very much based on our planning scenario for COVID. So we have assumed that we will still see strong demand for COVID in the first quarter. We did assume that we see less of an impact for the remainder of the year, and that is outlining scenario. There's, of course, the potential that during the winter season in the fourth quarter, we see again an increasing demand for COVID solutions, but that is not what we have planned. So on the one hand, as I pointed out earlier, very strong growth of our new products and the base business. And on the other hand, we do have continued headwinds from the biosimilars with roughly CHF 2.5 billion for the full year. And we see a decline of COVID-19-related sales from CHF 7 billion last year to CHF 5 billion this year. A lot to come on the pipeline side. So we have the ongoing and upcoming launches just recently got also the CHP -- CHMP positive opinion on mosun, in hematology. And there's a lot of important trials to come for tiragolumab, Tecentriq and also gantenerumab later this year. Likewise, on the diagnostics side, rich portfolio where we have important launches ahead of us. May I also take this opportunity to do a bit of advertising for our first Roche ESG event where we focus on access to health care. This is actually taking place in May next month, on May 16. Right. Let me conclude with this. Again, outlook confirmed, stable to low single-digit sales growth, low to mid-single-digit growth on the EPS side. And on that basis, we expect to further increase dividends also for that year. With this, over to you, Bill.

Thanks, Severin. Hello, everyone. Great to have a chance to talk about our results so far this year. So starting out with the revenues and the global picture, as Severin mentioned, we grew pharma sales 6% year-over-year in the -- around the world. And the parts breakdown as follows, United States, we had 2% growth. So good to see another quarter sales growth in the U.S. and that was driven by a number of things. But basically, the pipeline offsetting or more than offsetting the biosimilar impact. In Europe, we were minus 1%. That was affected by the COVID sales. So for example, without Ronapreve, that, you'd add about 5 percentage points to that year-over-year because we had higher sales of Ronapreve last year than this year. So good healthy demand in the core portfolio. Japan, very strong growth based on a number of factors, but in particular, a large government order for Ronapreve in Japan. And then international markets. We had growth in our pipeline, our new launches across the world, offset by biosimilar impact, primarily in China. China was down about 9% based on AH&R biosimilar impact. If you look at it from a product standpoint, again, you can see Ronapreve at the top with the large yellow bar. This is the Japanese government order. The total sales were approximately CHF 600 million for the quarter. And as we mentioned before, we think that the total sales for Ronapreve this year will be around CHF 1.6 billion. So a good chunk of it happened in Q1, and we believe the great majority of it will actually happen in the second half. So there should be lower Ronapreve sales in Q2. And then you can see the -- again, the newly launched products driving the bulk of growth. If you look down at the bottom, you see the impact of biosimilars, which was somewhat less about CHF 580 million in Q1, a bit lower run rate than we've had partly because of the general slowdown and the impact of biosimilars, but also because of sort of ordering patterns in the U.S. So we still think that the overall impact of biosimilars this year will be around CHF 2.5 billion. So in oncology, just a couple of things to point out. So we actually grew the HER2 franchise again, which is a new thing because in recent quarters, it's been affected quite significantly by the Herceptin biosimilar losses, whereas now with continued growth, particularly with Kadcyla and Phesgo; Phesgo is the fixed-dose combination of Perjeta and Herceptin. We were able to move into growth territory and hope to will continue that for some time. Also, I'd point out on here, a couple of things about hematology. So in Polivy, we had an 89% growth, which we think is sort of some early potential use in the first-line setting sort of experimental use. But I think it's also now going to be reinforced by the approvals. We have the positive CHMP opinion for DLBCL now for POLARIX in EMA, and we look forward to additional approvals in China and the U.S. later this year. Also in hematology, I wanted to point out that we received a positive opinion for mosun and from the CHMP. We just received that on Friday. So we're really excited to bring a new molecule, another new molecule to the world and this time, starting with EMA and starting with Europe. Going a little deeper on Phesgo. So this is the fixed dose combination I mentioned. And basically, this is a subcutaneous formulation that's given with the device, and it basically cuts the overall administration and monitoring time for patients from between 2 and 8 hours down to 20 to 40 minutes. And as you can imagine, that's a very popular option for patients, but also for many health care facilities that have limited capacity. This is a great way to help patients come in and get out, and this has been a really popular option, and we think that the growth is going to continue for some time. Now let's talk about Tecentriq. So as you can see, the curve here is looking a little flat, and I want to explain that. There's a couple of factors that are most important in driving this. One is that, as you know, we withdrew voluntarily the labels for bladder cancer and TNBC. And so from a year-over-year basis, that's certainly an effect, but also that's basically washed out now. We think that there are very few patients left on Tecentriq with bladder cancer or TNBC. So actually, if you look at the U.S., we had a quarter-over-quarter gain in Q1 as we see that washing out and starting to build momentum with the adjuvant lung cancer launch. In Japan, it was the other major factor. They had a significant price cut in Japan that was mandated because of the rapid expansion. They've reached a threshold where the government required a price cut. And so that's baked in there. We've also now achieved pretty high penetration with the small cell lung cancer indication. And so further growth with Tecentriq is basically going to come from additional penetration in liver cancer as well as launches that are now happening around the world in adjuvant lung cancer. Now in the U.S., we had really, I think, encouraging results. We just received the approval in Q4 in the adjuvant setting. And in the Q1 tracker, we had 72% testing rate for adjuvant patients. So 70% -- 72% of the patients that are getting adjuvant therapy are eligible, are getting tested for PD-L1 positivity. So that's sort of a first step. And then we have 49% penetration in that patient set with Tecentriq. So really, I think, a strong signal of early uptake and we should see the revenues proceeding from that in the quarters ahead. And also proceeding from Europe and countries around the world as we launch. Hemophilia, I think a very strong picture for Hemlibra. If you look at the chart here, starting with the U.S., you can see continued growth of Hemlibra, and we believe we don't see a flattening of the U.S. growth. I mean we think we're going to continue to grow in the U.S. for some time, even though we're above 30% patient share now. Likewise, in Europe, we had nice growth, international markets continuing to gain a bit. And then in Japan, the quarter-over-quarter result was down a bit, but we believe that's basically on ordering pattern where the wholesalers sort of did stocking at the end of the year. So we're not particularly concerned about that, and we see continued growth through this year and beyond for Hemlibra. Immunology is more or less stable, minus 2% year-over-year, with gains from Actemra offsetting losses from Rituxan. The Rituxan immunology indications that have been impacted by biosimilars. And basically, we think this will potentially continue to climb a bit. As COVID wanes, we should see Actemra sales for COVID waning as well. MS franchise, I think a really strong quarter. You can see nice gains in the U.S., in Europe and international markets. So 18% year-over-year growth overall, some really strong momentum. And this is in the context of a continued impact of COVID on switching. So we've had the Omicron wave in the U.S. and Europe that hit quite hard in the U.S., particularly in December and January and in Europe through -- even through March. And so this has affected the switching of patients but despite that, we continue to see strong gains, and we look forward to sort of getting beyond the pandemic so that we have maybe a return to a more normal switching rate and accrue more patients for OCREVUS. Turning now to Evrysdi and SMA, I think, a pretty good picture. In the U.S., as we reported in Q4, there was a small decrease year-over-year -- or sorry, quarter-over-quarter in sales. And we speculated that this was due to sort of a bolus of patients who had come on, especially older patients who had come on and sort of we're trying it and testing it and some of them dropping off, what we had a return to growth in the U.S. in Q1, and we see that continuing strong growth in Europe as well. And then in international and Japan, this is a little lumpy right now but we see good dynamics overall and look forward to continued growth of Evrysdi. This is one of the reasons we're quite optimistic. So this is data that we've shared at the MDA clinical conference. And this is basically on the presymptomatic babies, so babies under 2 months of age. And we've now filed this data to extend our indication back earlier to these presymptomatic babies. But essentially, what it showed was very strong results on the things that matter, things like sitting without support, being able to crawl, being able to stand unaided and walking. And so we're really encouraged that we see these patients essentially achieving maximum scores in most cases, which means that they are on a very similar curve to normal babies, babies who don't have the mutations that cause SMA. So really good news for these patients and their families and for Evrysdi. Turning to ophthalmology. I think another really set of good news. So this is the data in DME on 2-year data. So previously, we had shown the 1-year data, which is shown on the left in the pie charts. And importantly here, this is a measure of what proportion of the patients were able to extend dosing beyond the monthly dosing, which is where they start. And what you can see is at 52 weeks, approximately 50% of patients were able to go to Q16 week dosing, so approximately 3 times a year. And this is really unprecedented in the history of treatment for DME. And so we were anxious to see would that advantage be maintained at 2 years. And essentially, what we've seen is really encouraging that actually the percent of patients who can benefit from dosing is seldom as 3 times a year, actually increased from about 50% up to just over 60% on average. So again, the folks that we've shared this data with and we were able to present it at the big Angiogenesis meeting in February, they were ecstatic about what this means for their patients. And so now Vabysmo has launched in the U.S. It's going to be -- it's approved in Japan. We'll be launching soon with reimbursement and coming to Europe and other countries later this year. So really exciting times. We've seen a very strong uptake. We have initially about CHF 21 million of commercial sales, but also a high amount of interest in samples. And so again, we see this really getting momentum. We've also had a lot of reports back from physicians who've said patients who were on other therapies, and they weren't able to get dry, that once they gave them Vabysmo, they saw them drying in as soon as a month, which is really important and really impressive news for us. And we've also got now 11 paid claims in the U.S. which basically means different plans, making their first paid claim which is really important because that gives physicians confidence that they can prescribe Vabysmo and be reimbursed. And so while we'll be getting a permanent J code in probably end of Q3, early Q4, this kind of news gives doctors reassurance now, and we believe we'll see continued strong uptake of Vabysmo. This is data that we also shared on Susvimo, which is our long-acting implant device and basically shared that 2-year results looked very similar to 1 year results. And again, it's just an additional boost for our ophthalmology portfolio. Now I want to finish with the key news flow from the late stage. So as I mentioned, Vabysmo has now been approved in the U.S. and coming soon in Japan and Europe. Glofit, which is one of our T cell biospecific antibodies. We now have the Phase III data in third line, the pivotal data in-house. And this data -- sorry, I said Phase III, it's the pivotal Phase Ib. This data has been filed in Europe and will be filed in other jurisdictions soon. So we'll be sharing that data at ASCO and look forward to presenting that. We did mention last quarter that the small cell lung cancer study for tiragolumab had failed, so we were sorry to see that. There's only been basically 1 breakthrough for small cell lung cancer in the last 30 years, and that was Tecentriq's first Phase III study in small cell lung cancer, but it looks like we're going to have to wait for some other developments for the small cell lung cancer patients. But we remain very confident in our Phase II data in non-small cell lung cancer and look forward to a readout of the SKY 01 program in Q2 and an ability to share that data with all of you and the scientific community coming soon. We also mentioned in the press release, I'm sure you've read that our Phase II study in late-line ER-positive breast cancer with giredestrant was negative. While we missed on the primary endpoint, we saw an encouraging signal that gives us, I'd say, continues to bolster our confidence in both the first line and the adjuvant setting, and we can talk about that more in Q&A, if you'd like. And then finally, I wanted to mention that with the Alecensa program, that we think that we will go to the final analysis in 2023 on the adjuvant program. So this has to do with event rates, and the event rates were lower than we had projected. So hopefully, that's good news, but it means we'll have to wait a little longer for the answer. And with that, I want to hand it over to Thomas.

Thank you very much, Bill, and good morning, and good afternoon, everyone. I'm very happy to present the Q1 Diagnostics Division results. And with sales of roughly CHF 5.3 billion, we had really an excellent growth across our businesses, which then results in a 24% overall growth in constant exchange rates. Now this growth was driven by COVID-19 testing sales of more than CHF 1.9 billion on the one hand, but also a very strong underlying base business growth that was in a double-digit range. But I've also mentioned last year a couple of times after every quarterly call is that we had a positive effect last year in Q1 in Diabetes Care with a onetime payment due to resolution of a dispute of rebate. Now without that onetime positive effect last year, which picked us negatively this year, the scale would be growing at 1%. Now looking at our regions. Growth is really driven by all regions, and I would like to especially call out Asia Pacific and North America. And in the U.S., this was primarily driven due to the approval of the COVID-19 rapid antigen test. We actually got approval on Christmas Eve last year, and we were able to deliver the first products into the U.S. in the end of January. So that was definitely a very good impact for us in the first quarter. Now looking at the different businesses in closer detail. Core lab is growing very strongly at 8%, and this is due to a very strong base business growth in all regions actually, and that's despite a very high base last year in molecular lab is growing at 21%. This is still driven to a certain degree by SARS-CoV-2 PCR testing. But actually, if we strip that out and we look at the underlying base business in molecular lab, then we're actually growing in the low 30s, which is really showing significant progress and penetration in that space. Now point of care growing 84%, this is mostly driven by the rapid antigen test sales. Very strongly also by the U.S., as mentioned. And what's also exciting to see is pathology growing 14%. Again, a very strong quarter in that franchise for us. Now looking at the base business versus total sales growth. You see that in Q1, the 24%, you see that the base business was growing at 10%. Now I was mentioning this effect in Diabetes Care. Now if we would take Diabetes Care out, actually, the effect is that we're growing 13% in our Diagnostics underlying business. I mentioned that the CHF 1.9 billion -- and this is really pretty much spread across the entire COVID portfolio. What we do expect in Q2 and Q3, we do expect as we go into the summer months in the Northern Hemisphere, they will see a very strong decline in testing and especially as some of the governments now easing restrictions. And what we currently don't have in the plan is that we see another spike in Q4. That's something that we can't answer right now, but it's absolutely possible that we'll see immune-escape variants, maybe even reemergence of older variants like Delta, and that may be also that people won't get vaccinated before the fall. So there may be some effects that will drive positive results in Q4, but we don't know that at this point in time, and that's why it's not in the plan. Now we continue to drive our menu on our molecular platforms, which are really best-in-class in terms of automation and the ability to consolidate all of the testing on this one platform. We are launching a number of new parameters this coming year and the years to come. We've had now more than 1,900 placements of 6800, 8800. We started with 750 prior to the pandemic. And at the end of last year, as you know, we launched the cobas 5800, and we already expect more than 500 placements this year. 5800 really targets different segment than 6800 and 8800, and we don't see any reduced interest in those platforms because 5800 is available. So we continue to see very high demand across our molecular portfolio. And this is, as I mentioned, the broad menu, but especially the high level of automation. And as we build out our menu, this will continue to drive our base business growth, and as mentioned, in the first quarter, in the low 30s, which is really exciting to see. Now let me pick one of those tests that we're going to launch very soon. Actually, this test, we're going to submit to the FDA this week for emergency use approval. It's a SARS-CoV-2 DUO test. And what does that mean? It actually detects the virus in a qualitative way, but in a quantitative way. So really measuring the patient's viral load. A lot of times, you hear people talk about CT values. You are the cycle times or the number of cycles that it needs until it detects the virus. And according to certain studies, if you're above 30 cycles, you may have the virus, but it may be dead virus or it may be dead and you're not infectious. The problem with that is, though, that a cycle time for 1 instrument versus another instrument can differentiate between 3 to 4 cycles. So how do you really quantify that? And this will be the first, on the market available, truly quantitative test, incentivized to the WHO standard. Of course, available on all of our platforms. So I think that is very important as this will help really determine the infectiousness of people, therapy selection and monitoring of therapy response. Again, the first 2 quantitative tests. On the variant testing site, we have now a number of tests, actually, more than 10 different tests with which we can detect all of the variants. In fact, we can detect Alpha, Beta, Delta, Gamma, Omicron, all the sub variants of Omicron. The reason why I don't mention all of them on this slide is because these are the ones that are relevant right now, all the different Omicron sub-variants that you see here actually existing in the market or in the world with patients. But also Delta is still there, right? So Delta has not disappeared compared to some of the other variants, which means that if Delta -- reappearance of Delta is still possible, right? And so we'll see how things develop. But these are the ones that are very important right now. The good thing about these variant tests is that we can detect the variants actually in a matter of hours instead of a week or weeks for sequencing. As we all know in this pandemic, a week is like a month, a month is like a year, you don't have that much time. So you need to really be able to track the spread of these variants in much more real time rather than waiting so long. You can see we have varying tests for all the different Omicron sub-variants. We have XE and XF. XE is actually a crossover variant. So X stands for crossover between BA.1, BA.2; and the XF is actually the Deltacron, famous Deltacron variant, a crossover between Omicron and Delta. So you see that the virus is still mutating. So we'll see more mutations of that coming up, and we are able to respond very quickly here. Now we also continue to build out our menu in the Serum Work Area platform. Here, we also saw extremely good growth in the first quarter. We have more than 240 assays available on an installed base of more than 100,000 instruments. With that, we have the most assays. The most differentiated assays of anyone in the industry. And there are a number of upcoming launches. And let me just highlight 2. One is interferon gamma release assay for SARS-CoV-2, really measuring T cell response. And another one, which I'm going to cover on the next -- or let me first talk about HCV Duo. HCV Duo is actually a combination test antigen and antibody to be faster and more precise in the diagnosis of hepatitis C. But let me cover a couple of other tests that I think are going to really be essential this year but also the years forward. We are developing blood-based Alzheimer markers, and we have pTau 181 and ApoE4 in the development. And based on clear performance robustness, this data will be presented at the AAIC. These markets will be used as a triage, really selecting from those patients that are potentially having Alzheimer's, selecting those with a very high likelihood. And with that, you can actually reduce the amount of people that have to go through a PET or a spinal fluid test by about 65% to 70%, so about like 2/3, which is essential because PET is extremely expensive, and you have to wait months and months to get actually a slot for PET testing. So the more you can improve that kind of patient flow, you can also make sure that these people get their medicine much, much more quickly. We already have the CSF tests approved, which is then the confirmatory test outside of the U.S. We plan to have it approved in the U.S. We have breakthrough device designation from the FDA from that. And we've shown PET concordance, meaning that in a cheaper, faster way, we can deliver the same results as a PET scan. So we're really excited. These markets are also used in the SKYLINE study, and we do plan to launch the amyloid plasma panel, in addition to what we already have on the market to support the launch of gantenerumab on the pharma side. Now just 2 more slides, 1 is on our analyst event at the AACC, which is going to be in Chicago on the July 26, where I'm happy and hopeful to see you there. We will have a presentation and a Q&A and there will be a number of members from my leadership team actually also present there. So very much looking forward to seeing you there. On the launch side, we have really a number of very important launches ahead in the next month as expected. On the instrument side, Severin mentioned those, the BenchMark ULTRA PLUS; DP600; also the Digital LightCycler; amongst the test launches is the Alzheimer's CSF tests in the U.S. with the FDA approval and many others. And all of these new launches will continue to drive our strong growth in our base business. And with this outlook, I hand over to Alan to take us through the financials in more detail.

Yes. Thanks, Thomas. Yes, let me be brief today. Hello to everybody from my side as well. A couple of highlights. I will talk about the sales on the slide. I will talk about the currency impact on sales on the slide. I will have a slide on the share repurchase of Roche from Novartis, we want to give you an update about the financing. I won't have a slide on the patent settlement bullet point that you have on the slide. So let me make a couple of comments about this one. This is coming from Chugai and the topic is the product Ultomiris, and it is the Ultomiris patent settlement between Chugai and Alexion/AstraZeneca that has been negotiated for a while, and then I think an agreement was reached. The impact in the group accounts is USD 775 million. In Swiss francs and constant rates, this will account for CHF 765 million. And this is revenue, and we'll record it as income from out-licensing agreement as part of core net income. So it will be recorded under royalties and other operating income. So it's not sales, but it is revenue. Yes. Let me put that a little bit into perspective because the $775 million, respectively, $765 million are not just falling through. There are a couple of effects here. And first, this revenue is taxable, at Chugai's tax rate, which is considerably higher than the group tax rate. Let me remind you, in Japan, that's roughly 30.5%, that's the tax rate over there. The group tax rate for this year is assumed to be around 18%. So that's significantly higher, the tax impact. The other piece is certainly, as you know, we just own 60% of Chugai. So when it comes to a core EPS impact that plays a significant role. So with that, let me go to the sales. I promised the slide on sales, and here it is. And let me cut that short because Severin, Bill and Thomas talked about that. So really, a good quarter. You see on the Pharma division sites the plus 6%. You see the major upswing coming from Japan, that's certainly -- Ronapreve is EUR 506 million. And you see the Diagnostics division with plus 24%. And what is perhaps also important on that slide is the currency impact, which is minus 1 percentage point. And with that, let me go back to the bridge that Severin has talked about already, which I think is also a great explanation for what's going to come. I think it was really a very good Q1, partially driven by COVID as well. And I think Severin mentioned it, underlying growth without AHR and without the COVID sales, 9.3%. So not a lot of impact from COVID here. But let me say, that's exactly what we expect to come, that the COVID sales will reduce over the next quarters and even the sales growth will significantly reduce over the next quarters, which then substantiates the guidance moving forward. With that, let me talk about the Novartis share repurchase and the financing situation. Why do I say this? Because, well, we are all in a very volatile environment at the moment, with all the geopolitical risks surrounding us. And certainly, there is a question with inflation in mind, where do interest rates go? And the earlier we lock in on the financing related to the bridge, the better it is. And let me tell you today that we have roughly 70% of the CHF 19 billion of the initial bridge loan refinanced with bonds in the market, and you see the bits and pieces here. In December 2021, we refinanced USD 6 billion; in February 22, CHF 3 billion; and in March 22, another USD 5 billion, which leaves us with a [ CHF 5.9 billion ], which we, on one hand, potentially can refinance in the market if reasonable, but we can also refinance it very well with our operating cash flow. The only point to mention here on top is that the yields that we have achieved in the markets are really great. We have an average initial yield of 1.56% for an average maturity of 8.8 years. So that's, I think, really a good number, and it's well below to what we told you what our assumption is for the interest rate that we achieved for 2022. And we said for this and the refinancing, we think it will be around 3%. So, so far, we are significantly lower. So that's certainly a nice uplift for the year 2022. Here, you see once again, the exchange rate impact on the sales very quickly, I think certainly still minus 1 percentage point. You see really there were some headwinds coming from the euro, some from the Japanese yen and some from the Turkish lira, that's other Europe, and you see really there was an uptick really a tailwind from the U.S. dollar. Good. Then our normal currency impact slide. I think I refrain from talking about the left-hand side. Let's go directly to the right-hand side of the slide. And here, you see the projection for the full year, assuming that all the rates that we have had at the end of March remains stable until year-end, which is certainly very unlikely, but at least it gives us a directional view on where we could land in 2022. And you see really for the full year, on sales, there might be an impact of minus 2 percentage points on the core operating profit of minus 2 to 3 -- minus 3 percentage points, and the same applies to core EPS. So the impacts, especially for the full year are smaller compared to what we have seen at year-end. Here as well, I think a little bit of promotion for the ESG event. I think Severin framed it well. And that leads me to the outlook, Severin confirmed the outlook. Let me add to this. I think you're all aware, we were assuming that from 2021, we had COVID-related sales of roughly CHF 7 billion. We still assume they will come down to roughly CHF 5 billion, so we lose CHF 2 billion on the COVID-related sales. The other point we have assumed once we brought that guidance up was the point about the biosimilar impact for AHR. And there, we said we will lose around minus CHF 2.5 billion in sales. And then the other one, which was not mentioned so far is the group core tax rate, which is assumed to be around 18% in 2022. In 2021, you remember that well, we ended with 14.5%. Good. With that, I hand over to Severin and to the team, and we're happy to answer your questions. Thanks.

Great. Can we have the first question, please?

Yes. The first question comes from Wimal Kapadia from Bernstein. I think there's a technical issue. I will move on to the second one in the row. Richard Vosser from JPMorgan. Richard, please?

Hopefully, you can hear me. Excellent. So just a couple of questions. Firstly, on China, we can all see lockdowns around Shanghai, and you've mentioned AH&R biosimilars. So just thoughts on the impact of the business from lockdowns and also how we should think about the biosimilar penetration, where it is today and where it can go in China for those brands. And then second question, just on the SERD. So just obviously potentially a powering issue for a smaller Phase II trial. Given you didn't see statistical benefit, how do you see that playing out in terms of the Phase III first-line trial? Do you need to expand the trial? How should we think about that on the basis of the SERD data that we saw today?

Very good. On China, perhaps, Thomas, if you want to comment from your side and then AHR, if you take over Bill, and the question on the SERD.

Thank you very much for the question on China. And you're right. I mean the impacts -- there are impacts in China due to the lockdowns, but what I can say is it's nowhere near to what we saw back in March, April of 2020. So the impacts are smaller. And given the strong underlying performance of our business, we do believe we can compensate those effects at this point in time. But of course, we'll need to see how things develop in China. What we don't know yet is impacts on other components that we need. We'll see how things develop there. At this point in time, we believe we can manage it, but the situation in China will be something that will impact, I would say, the world if these lockdowns continue for many months to come.

And I would say on the Pharma side, Richard, we've seen minimal impact to the shape of the business from the lockdowns at this point. But I guess we -- as Thomas mentioned, I think we look to see what the effect is over a longer time. And hopefully, the long -- over the longer term, the lockdowns won't be as strict and there'll be a new regimen and way of dealing with it. But in terms of biosimilar impact, we had about $100 million impact, negative impact on AH&R in Q1. And we see that continuing because there will be an increased biosimilar competition in China as time goes by. But we think that there will also be quite a draw for the innovator molecules, just in terms of the quality, reputation and the arrangements we have there. So we don't know exactly how that's all going to play out, but we've been counting on other medicines for growth in China already over the last couple of years, and our major growth drivers are medicines like Perjeta and Alecensa already. And so we're looking forward to continuing to have a strong business in China. You asked about the SERD and yes, and about the power calculation. So let me explain a little more about it. And then hopefully, that will answer your question. So the Phase II acelERA breast cancer trial, which was in second and later lines of ER-positive breast cancer did not meet its primary endpoint of PFS. That being said, it did show a numerical improvement versus a physician's choice of endocrine therapy, but that numerical improvement wasn't statistically significant. I mean in patients with the baseline ESR1 mutations, the PFS benefit was more pronounced. And the response rate was also greater in giredestrant compared to the control arm. I mean at this stage, the OS is still immature because of the small number of events, less than 10%. But giredestrant was well tolerated during the trial. Basically, we saw things consistent with what we've seen from earlier studies of giredestrant or endocrine-targeted therapies. So no unexpected safety signals. And I think those efficacy signals we saw, in other words, that greater impact in the ESR1 mutation patients gave us pretty good confidence in our overall plan. Because basically, the first-line patients in the first-line study that we have ongoing and the adjuvant patients in the adjuvant study that we've commenced, one would surmise that they should have a greater impact of endocrine blockade. And so since we did see that signal in the ESR1 positive patients, that gives us quite good confidence. That also, as you recall, Richard, we gave the results at San Antonio Breast Cancer from the neoadjuvant study, which also showed superiority on several measures versus the aromatase inhibitors. So basically, we're quite confident in the program. The negative study notwithstanding, it was sort of the best kind of a negative study I think you could have.

Richard, did we answer all your questions? I hope so. Then I will give a second try to Wimal from Bernstein. Wimal?

So can I just first ask, please, on the new OCREVUS subcu trial. So being 6 -- every 6 months, if successful, is your assumption that the current over 50% share of switches and new starts going to CD20s will actually be dominated by Roche, given you have the longest duration subcu product? And if you don't dominate, why would you not dominate? And then just tied to that, maybe a quick comment on IP extension from the subcu and/or high dose would be great. And then my second question is just on the filing time lines and the approval time runs for the CD3, CD20s. One of your peers has talked about FDA requiring more data for filing. So and I see that you filed glofit in Europe. But what additional data is required for the U.S.? And how long would that take? And then for mosun, I know you filed in the U.S. and it's a rolling submission. Is that to allow for additional data to be added over the coming months?

Great. Yes, in terms of OCREVUS, yes, I mean, we think we already have really the outstanding product in the category. I mean -- so we have the only medicine that's been approved for primary progressive disease, and it's been shown to delay progression and primary progressive. We also really have outstanding data on disability progression, on relapse rate prevention and on all the MRI findings. And so -- and basically, we have the 6-month dosing today. So we're working on a subcu formulation similar to what I described with Phesgo that would be once every 6 months. But I don't think we have to wait on that in terms of having the leading product because, as you know, our market share today in new and switch patients is about double of our next closest competitor. And I think -- I don't expect that to change. We hope to bring a subcu formulation to patients. But with or without that, I think OCREVUS is going to be the leading therapy for a long time. I think the other thing not to forget about is we're doing the high dose studies of OCREVUS, and we have that quite intriguing analysis of the Phase III studies, which showed that especially in patients at high risk of progression or primary progressive patients, we saw a more pronounced effect in the patients with the highest exposure to OCREVUS. So I think lots to come. And in terms of -- I think you asked about IP extensions and such, but we don't comment on that. So don't really have much to say about it. In terms of the filing time lines, let me see, we've -- okay, so we've got the -- obviously, mosun has now been recommended for approval by the CHMP in Europe, in the U.S. the filing's on track for mosun, but we still expect U.S. approval as well as Europe approval in 2022. And that should be up to 18 months ahead of our closest competitor. We have breakthrough therapy designation in the U.S. as well, and we look forward to getting the data package together and submitting to FDA. In terms of glofit, the data is in-house, and it's been submitted for presentation to ASCO in June. We've already filed in the EU, and we'll be filing in the U.S. in the coming months. So that's hopefully answering your questions. We think we've got the data that we need to submit, and we're looking forward to bring in another important therapy in hematology.

The next one in the row would be Simon Baker from Redburn. Simon?

Two, if I may. Firstly, for Bill. I noticed that both Lucentis and Activase were a little weaker than we were expecting. I just wondered if there are any one-off effects within that. And a similar question for Thomas on Diabetes Care. You talked about the ongoing pressure from continuous monitoring, but I just wondered if there were any one-off factors within the quarter. And the second one on Diagnostics. I was wondering how sensitive the Alzheimer's test is. I'm asking really from the potential for population screening at a much earlier stage than we're currently seeing with Alzheimer's. So effectively testing potentially people at risk in their 50s rather than waiting for the first signs of cognitive decline.

Bill?

Sure. Thanks, Simon. In terms of Lucentis, my understanding is that there were some ordering patterns in the U.S. that account for that. There was a little dip in demand in Q1, seen that largely return in the early weeks of April. So I think there's that, plus we expect to see weakness in Lucentis over time because of Vabysmo, the ability of Vabysmo and then ultimately, Susvimo. It's just superior alternatives. So probably more of that to come. On Activase, I think there was some movement of the business from Activase to TNKase, and so that phenomenon is sort of playing out, but we're keeping an eye on it. But that's obviously, yes, one of our smaller products at this point. I'll hand it over to Thomas.

Yes. Thanks for the questions. On Diabetes Care, you're right that there is a technology substitution ongoing. People are moving from blood glucose monitoring to continuous glucose monitoring. However, in Q1, we also had one very big special effect last year, that without that effect, we would have been growing at 1% for the quarter. And this was a resolution of a dispute over rebates that we booked last year in the first quarter. Nevertheless, we will continue to see a certain level of replacement of BGM through CGM as we continue throughout the year and into the near future. When it comes to the Alzheimer's assays, yes, so there are 2 steps that you will have to take. And what we did is we actually looked at somewhere around 20 different markers to really identify the markets as the best suited to detect people with Alzheimer's and blood. Now as you see, those are different than the ones we are looking at in the spinal fluids. And in blood, obviously, the amount of these markers is much lower. So what we have done is looking at the different markers, picking the ones that show the highest level of robustness and sensitivity. Now with that, you will actually reduce the amount of people that have to go through a PET or a CSF test or spinal fluid test by approximately 70%. So it's a huge relief to the burden in the health care system from a cost perspective, but also from just a sheer work perspective. I mean PET scans are very expensive, but that's only one part of the problem. The bigger part is even that you don't even get one. So by reducing the amount of people that have to go for PET or CSF by 70%, you already have a significant impact. And we've shown that and we'll show that data also later in the year. But you still will need to do a confirmatory test. And with that, you will select out even more people, right? And you can do that through a spinal fluid test or through PET. What we have shown is that we have PET concordance. And based on that, we actually got FDA breakthrough device designation. So you can replace PET through these tests, which is not only cheaper, but also much faster to get the answer to the people and to the clinicians who then have to treat those patients.

The next one would be Emmanuel Papadakis from Deutsche.

Perhaps I could just take one on the Alexion settlement. Just the question really is, why are you including it in core? It seems somewhat contrary to the spirit of core conceptually. Presumably it represents some upside to the original guidance. If so, can you quantify how much? Why hasn't the core EPS guidance been raised accordingly? Question on TIGIT. Just your latest perspectives on SKYSCRAPER-01, I'm thinking more clinically and commercially here. What's your current view of the percentage of PD-L1 high patients that are getting KEYTRUDA monotherapy? Are we likely to hear anything on OS with that initial headline result you're telling us will come in Q2? And what is the median overall survival hurdle in particular, that you think you need to show for doctors to switch from using KEYTRUDA monotherapy in that front line, PD-L1 high setting.

Thank you. Alan, you want to comment on the accounting treatment?

Yes. Sure. Yes, why is it core? I think because -- we follow a policy here, standing policy for quite a long time in the meantime. And under this policy, it is clearly core. So that's reflected here. So we want to make sure that you can really compare apples-to-apples every quarter and every half year and full year. With that, the other piece, which I think is supporting our view is the point that the SEC at the moment is even discussing whether these IP and patent and settlement things are anyway to be reported more on the core side, really in the P&L. And therefore, I think we feel very supported that this is the right view that we take here. Let me also say in the magnitude, and that's why I've said, that's why I've talked about the tax effect, that's why I've talked about it's a 60% participation that we own in Chugai. I would argue the impact overall, when you look at our numbers, it's not minimal, but it's also not very substantial, let me say that. And you've heard my colleagues talking about other risks that we have. The geopolitical risk, I think we talked about China. And it's really still an early point in the year. So we decided to stay with the guidance. The guidance has also a certain range that we cover with it. And certainly, we will update you once we get to the half year.

Yes. And so the questions around tiragolumab and SKY 01, I mean, our confidence in non-small cell lung cancer is basically -- that's pinned on the CITYSCAPE results. So that was our Phase II study where we looked at a broader patient population, but then we also had a prespecified analysis looking at the patients with high PD-L1 in their tumors. And basically, in the high population where we sort of posited to see the major effect, I mean, that's where we had the really large PFS benefit initially. And then in the follow-up analysis, we saw a hazard ratio of 0.23 on OS. So basically, we're as confident as you can be in a program where we have 130 Phase II with a 58-patient subset. It looks excellent, but we all know that these things don't always convert. And so we have high hopes for it, but we're going to know in Q2 what the answer is. I think you asked the question about whether the OS is likely to read out on the initial readout. I think that all depends on how big the OS benefit is. If it's anything like what we saw in the Phase II, then I think we probably would hit in the initial. And I haven't conferred with the statisticians around that, but I'm assuming with the curves the way they looked in the Phase II, that we would. So again, we'll see that soon. And you asked how much of a benefit is enough. I mean when we're talking about OS, if it's statistically significant, I think that's probably going to be enough. And let's see what we see. But I'd just remind you in the CITYSCAPE results, the patients with high PD-L1 or -- yes, high PD-L1 that were treated with tiragolumab, even after 3 years, there was a vast majority of patients were still alive, which is quite incredible in this setting. So again, let's all cross our fingers for the lung cancer patients of the world that we have a new therapy to announce very soon.

Next question comes from Richard Parkes, Exane.

Firstly, on Phesgo, you've obviously flagged that, strong performance in terms of share of Perjeta-treated patients. So I just wonder how optimistic you are that those gains can be sustained when biosimilars to Perjeta launch, how sticky that -- those sales will be. And how your experience with subcu Rituxan has set to impact your optimism on that? Maybe you could just remind us around patent protection for Phesgo as well, that would be helpful. And then second question, you're expecting to report results from the IMvoke010 trial of Tecentriq in head and neck cancer in the near term, and it looks like a potential meaningful opportunity. But I think based on your data, it looks like only about less than 50% of patients get adjuvant therapy post-surgery currently. I just wonder if you could talk about the potential for that penetration rate to improve with availability of new treatment options and your thoughts on the overall commercial potential in adjuvant head and neck.

Thanks, Richard. So in terms of Phesgo, well, first off, let's be clear. I think we see a benefit even now ahead of biosimilars because when we're selling Phesgo, we're selling Perjeta plus Herceptin versus Perjeta alone. And so we have an opportunity, and there's very different pricing regimes in different countries, but there's definitely upside opportunity for us in terms of -- whether it's versus the price of Herceptin today or whether it's versus where the price of Herceptin is going in the future. And so I think there'll be plenty of benefit from a standpoint of company benefit in addition to the patient benefit that's obvious. And then I think if you look at the impact of biosimilars on subcu, Herceptin and Rituxan, I think there's a couple of ways to think about that. For one, in the case of Herceptin, often those were metastatic patients and they were getting -- because that's where Herceptin was used largely because H plus P had become standard of care. And those metastatic cancer patients may have been getting other therapies IV. So there wasn't as much of an advantage whereas in the adjuvant setting, having that for the patients when they're post chemo, being able to go purely subcu is quite a market advantage. And I think it will depend somewhat on the countries, but it definitely gives us leverage and some pricing flexibility as well. So I think it's a win all around. And you asked about IMvoke, which is the adjuvant study of Tecentriq in head and neck cancer. And yes, we hope we're able to bring a benefit in that adjuvant setting. It's another -- it's one of a number -- I think we have 6 adjuvant studies of Tecentriq overall and a number of which we hope to read out this year. I think right now, there's not great options for those patients in adjuvant, but what we're hoping is that we'll show a clear benefit and that, that will lead to conversion. And I think we've seen that in other settings where if you bring an adjuvant therapy to market, then you can create basically a new way of treating patients.

The next question would come from Matthew Weston, Credit Suisse.

Two questions for Alan, if I can, please. Alan, you mentioned the change in the SEC attitude recently. I wonder -- and that was particularly, I think, to do with how companies deal with in-process R&D charges. I wondered if you saw any potential change looming from IFRS as to how companies adjust out collaboration milestones or opt-in money. And then secondly, it's a question about Russia and Ukraine. I know it's a modest amount of revenue. But I think I'm right in saying that the cash collection time in Russia is significantly longer than we're used to in a number of years. I wondered whether you could tell us how much your Russian receivable was in rubles and what tests you're going to have to put on that as to whether or not it needs to be written down in due course. Or are you still confident that you can receive that money?

Yes, it's a great question. Yes, first of all, the first one is easy to answer. I think we see now a starting of the discussion coming from the SEC. No reflection yet under IFRS. We will see, but our expectation is clearly that there will be a spillover effect at a certain point in time. And that's why we think, we really feel with that argumentation coming for the SEC very supported in how we apply our core concept with Roche, especially when it comes to the settlement that we've discussed. And the other point about Russia and the Ukraine and the cash collection, and let me say here that we certainly have an exposure. And certainly, our Russian business is way larger than our Ukrainian business. I can say so far, there are 2 triggers for risk, as you know. One risk is the currency rate, and that's certainly the ruble. You have seen the volatility in the ruble recently. I think it weakened significantly, then came back, and it's pretty volatile. So we will see how that pans out. For the time being, that seems stable. And when we look really for how do the collections look like, certainly, we monitor that basically on a daily basis. Very clearly, I think while we cannot expect anything significant to happen in the Ukraine itself, but let me also say the exposure here is rather low. On the Russian side, interestingly, what I can say is that the cash collections that we have are pretty much in line what we've experienced so far historically. So far, I would argue, not a major concern yet, but we all know that these circumstances can change every day.

So the next one would be Michael Leuchten from UBS.

Two questions, please, Bill. Just going back to giredestrant. You talked about the adverse event profile. I was wondering if you'd be willing to tell us whether there was any bradycardia in the Phase II, I think you said in line with what are earlier studies. And then the second question, you have any slides mitigation plans for MS programs in Russia. I just wondered why you saw the need to call that out. Does that refer to your BTK program? Or is there anything else?

Yes. Thanks, Michael. Let's see, in terms of the side effect profile, I'm not sure there's much more I'm going to say at this point. But we -- I think if you saw the data we provided at San Antonio Breast Cancer, I think we didn't see anything new. So it's -- yes, I don't think there's anything exciting to highlight there, which is good. In terms of mitigation, yes, so I think we mentioned also on the media call this morning because we were asked about it. Actually, in multiple sclerosis, it's common that relatively high proportion of patients come from Ukraine and Russia. That's been true for why I remember 20 years ago studies that I was involved with that it was the same. And that was also true in our pivotal studies for OCREVUS. So our major MS studies that we have ongoing right now are the Phase III studies with high-dose OCREVUS in primary progressive and relapsing MS and also for fenebrutinib, our noncovalently binding BTK inhibitor. And so I think the percentages from Ukraine and Russia are up in the sort of 20% to 30% range. And so essentially, what we're doing for those studies is having to open new sites in other countries or to enroll more patients from existing sites from other countries to offset it. So those are the mitigation plans. And in the meantime, we're doing everything possible to make sure that we can continue to treat and monitor the patients that have already been enrolled. But in terms of new patient enrolls -- new patient enrollment, that's a challenge.

Next question would come from Tim Anderson, Wolfe Research.

Yes. A few questions, please. On TIGIT, is the next readout likely to be non-small cell lung? And does that likely occur in Q2? On China, the biosimilar rate of erosion, how is that compared thus far to Western markets in Europe and U.S. And then on the HER2 franchise, you mentioned that coming back to growth. What are your expectations about the impact that -- in HER2 from AstraZeneca will have on Kadcyla?

Yes. Thanks, Tim. And yes, the answer to your questions on tiragolumab were yes and yes. So it's -- non-small cell lung cancer is likely to be the next readout and will happen in Q2. In terms of biosimilar erosion in China and how it compares with other markets, it's a little mixed. The AHR in Western Europe and the U.S., the 3 molecules, the erosion profile was very similar, whereas in China, it's a little different. I think HER2 -- sorry, Herceptin has been a little less impacted and Rituxan and Avastin a little more, I think, if I remember that right. It's a much more complex situation. There's not as many biosimilar competitors because there was a sort of window where some companies filed and then they had a change of legislation about what type of data was required that made it more stringent. So there's a limited number of companies. And I think there are concerns amongst the prescribers around the quality, perhaps and a desire for the innovator products. So that's why I say it's a little unpredictable for us, but we've baked that into our estimates for this year with our $2.5 billion estimate for biosimilar impact, and that's all been kind of calculated in there. And then in terms of the impact of competition on the HER2 franchise. So I think as you saw from the quarter, we still had 9% growth in Kadcyla. Good growth with -- if you look at Phesgo plus Perjeta together, solid growth there. I mean, we're largely penetrated with P + H in the adjuvant setting now. So we don't see a lot more growth there. And we do think that new competitor molecules will have an impact on Kadcyla in the later lines, for sure. But in the meantime, we're penetrating in early breast cancer setting with Kadcyla. So we see those kind of balancing to some extent this year. So hopefully, that answers your questions, Tim.

So next one would be Keyur Parekh from Goldman Sachs.

Hopefully, you can hear my questions, okay. Two, please, if I may. The first one is for Thomas. I'm just wondering, Thomas, you can give us an update on kind of any time lines associated with either your next-generation kind of sequencing efforts. I know you previously said you expect to be on the market pre-2025, and you were in kind of the beta phase, but anything incremental on that end? And associated with that, kind of I think Illumina has been talking about their recent efforts kind of on the -- kind of blood diagnostics side. So just wondering if you can give us a sense for where the Roche efforts lie on that end as well. And then separately, Severin, kind of interested in your thoughts on kind of how you see the environment from capital allocation/M&A perspective for Roche. Obviously, a lot of collection from an XBI perspective. You previously mentioned high valuations. Just wondering if kind of there's any change in your perception of values associated with early to mid-stage biotech assets?

Right. So perhaps I can start on the latter question. I'd say the following. On the one hand, as I've said earlier, valuations have been really extremely high, and they have gone even much higher over the last 2 years. So the collection we have seen in the market brings us back to very high levels we have seen 2019, beginning 2020. So from that perspective and already back then, I was worried about the high valuation. So even though there was the collection, I still think we have to be very selective also for economic reasons for any M&A activity. Having said that, what we do see is that -- many companies are now very interested in working together with us simply because the IPO route is more limited. So we see more interest in doing deals with the life science industry, big companies in general and certainly also Roche and the focus is on early-stage opportunities, rather late-stage opportunities. Also because of valuations, which are still very high. So I'd summarize, not much change in our overall strategy.but certainly, increased interest of biotech companies to work together with companies like us. Thomas, do you want to comment on the sequencing side?

Sure. So when it comes to launches, we talk about the launches of this year. And then at the end of the year, we'll talk about what launches we have next year. I'm not going to go into the exact time lines of any of those programs we have ongoing, like mass spec and sequencing at this time. What I can say is that we are very committed and we're investing significantly into the space. When it comes to your question around early cancer diagnostics, and you are mentioning the activities with GRAIL and Illumina. It is an interesting space. We've made an investment in this space as well. We're also with FMI in this cancer diagnostics space, quite active. There is a movement towards that direction. I think that in that space, we still see a lot of developments ongoing. I think the solutions that are on the market right now or going to be on the market, that's not the end of -- and the final answer. So there is, I think, quite a big opportunity that we are interested in and that we are going to continue to monitor as well with our activities.

Next one would come from Sachin Jain, Bank of America.

Three, if I may. First on SKYSCRAPER-01 for Bill. Any broad visibility at this stage as to how the control arm is performing and whether you expect to repeat at the beta CITYSCAPE where the comparator arm underperformed? Just trying to get a sense of how focused you think docs will be on any absolute OS and PFS relative to prior KEYTRUDA in the Phase III setting. And secondly, on SKYSCRAPER-06. I understand there may be a trial upsized decision and shift to pivotal on a blinded interim in the back end of this year. Just wondering if you could confirm if that's correct. And any color you can give on dynamics of the process and how dependent on SKY-01 that is? And then just a final one on Vabysmo. The J-code you noted in 3Q, early 4Q was a little later than I had expected. I wonder if you could just give a bit more color on paid claims process that you referenced and how we should think about the cadence of sales in the coming quarters prior to a permanent J code. You previously noted confidence in exceeding consensus at around CHF 300 million. Does that remain the case?

Thanks, Sachin. Let's see, SKY-01 control on performance, I really couldn't comment at all because we don't typically look at that. About all we know is something around how events are coming in compared to how we assume they would come in. And I think -- yes. You could -- if you wanted to read the tea leaves on that, you could look at how the study is coming in time-wise compared to when we thought it would. But of course, then you never know whether it's -- which, by the way, is not very different than what we always assume. And then, of course, you never know whether it has to do with the control arm or the treatment arm. Second, I don't think -- I think when you have a result that's not clear, then people will speculate about control arms -- but I think when you have an unequivocal result, then people aren't very excited about control arms. And so for example, if you look at the CITYSCAPE study, where the comment is that the control arm underperformed, well, actually, it's sort of irrelevant because whether or not the control arm underperformed, the treatment arm looks amazing. So I just don't -- if we had a result like that with SKY-01, I don't think there would really be much talk about the control arm. SKY-06, yes, I can confirm the change that you mentioned in terms of going with a full -- increasing the size and going with the full pivotal. And we'll -- yes, we'll be better informed about the molecule and all the programs as the readouts come along. So we're very much looking forward to that, starting with SKY-01 soon. In terms of Vabysmo, yes, I think people make a lot of the permanent J code because it's simple. But I think the more significant step is paid claims. And the permanent J-code by the time it comes along, it's helpful. It reduces administrative burden. But basically, once physicians start to have paid claims, then they start to have some degree of reliance that the claims are going to be paid, and they won't be hung up in some pile of paperwork on somebody's desk somewhere. So I think the fact that we have paid claims, and you can see launches like -- take a launch like OCREVUS, which was a fantastic launch, but we didn't have a permanent J code for some time after launch. And it's not -- yes, the lack of certainty is more of an impact in the first few months because claims aren't being paid. But once the claims start being paid, then that takes a lot of the suspense out of it. So in terms of my confidence in Vabysmo, it's definitely undiminished.

Sachin, did we answer all your questions?

Can I just have one clarification on SKY-06? Just so I understand, the decision to upsize hasn't happened yet. You just simply put in place a protocol. Just to clarify your comment there, Bill.

Yes, maybe I can jump in. I think what we have communicated is that we can upgrade the current Phase II study, that's the chemo combo we talked about to a Phase, and this decision will be taken at 1 point. This is depending on an IDMC look, and we remain, as a company, blinded to the data, but there's not more, what we would like -- what we want to share at that point in time.

Yes, yes. Yes, to clarify, we decided that we would do this on a gated approach. And so that's what we're waiting for.

The next one would be Luisa Hector from Berenberg.

So a couple of follow-ups. On Vabysmo, could you share with us any color on which patients are the early adopters? And then just thinking about the ex-U.S. launch, it's a new market for you, but we still have approval reimbursement negotiations. So is this more of a 2024 revenue story? That's the Vabysmo ex-U.S., but maybe just to think a little bit about the relative potential U.S. versus ex U.S. there? And if I may, the DMD gene therapy, the comment was you've announced the Phase III. So any more color on that and maybe time lines on when we could see some data?

Great. Yes. Thanks for the question, Luisa. So Vabysmo, in the U.S., what we're seeing so far is what we would expect. The first patients are patients who are inadequately benefiting from the available therapies and so -- including the market leader. And so that's the main source is switching patients because if you have a new therapy and you're not sure whether you're going to get reimbursed or when the claim is going to be paid, the first patient you're going to put on probably isn't the naive patient who's just been diagnosed, but you're basically going to start with a list of patients who have inadequate benefit. The other group is patients for whom the more frequent injections is a real hardship. And there are many patients that live in locations where they have to drive 2 or 3 hours as often as monthly to get a dose. And in many cases, with the current therapies, it's taking that monthly dosing to try to get their disease under control. So that's the pattern we're seeing. And as I mentioned, the anecdotal reports from physicians, they're really delighted with what they're seeing. Ex-U.S., the launches are happening. So for example, in Japan, we've got approval. We're looking to launch this summer with reimbursement. So in Japan, this will be very much a 2022, 2023 event. For the U.S., it's obviously 2022, 2023 event in terms of the impact. And then in Europe, we expect the approval yet this year. So the impact will begin to happen in 2023 and then you'll have the full impact in 2024. But yes, Vabysmo should start to be a major factor for us already later this year. Let's see, sorry, and you asked about Sarepta in Phase III. So yes, we're really excited. The early signs from the open label experience and from the Phase I continue to be positive on the Phase Ib. And so we've initiated the Phase III study. We hope to have it accrued this year which means it's a 12-month endpoint, which would mean we would have a final result from the Phase III by the end of 2023. So yes, very exciting, and we hope to have the opportunity to bring real hope for these boys with DMD all around the world in 2024.

Our next question would come from Emily Field, Barclays.

Just 2, please. Firstly, just on the SERD, I was wondering your level of confidence that you'll still see efficacy in the broader all-comers population in early breast cancer in first line, given your commentary on the benefit in the ESR1 mutants in Acelera. One of your competitors have stratified their first-line trial to only include those pieces in? And then just on Polivy, I believe you mentioned approval in the U.S. this year. Has POLARIX been filed in the U.S.? If you could just confirm that? And then sort of any initial thoughts on what that launch curve could look like next year in the U.S.?

Great. Thanks, Emily. So let's see, from the SERD, yes, I think it'd be great for you to come to our ASCO presentation because you can ask more questions of our scientists on the science around estrogen blockade in ER-positive patients. But my understanding of it is essentially, the patients who've gotten to second and third line, which is the Acelera study patient population that they've basically already been on estrogen blockading therapies for some time in perhaps in adjuvant in first line or first and second line, and their tumors essentially have basically figured out how to overcome the estrogen blockade and basically are now fueled by other mechanisms. The ESR1 mutation positive patients are patients who are in later line, but are distinguished as patients whose tumors are still highly dependent on estrogen. So the fact that we're seeing basically a superior response to the physician choice of estrogen-directed therapies in the patients where estrogen still plays a major role is what gives us confidence that we should see a benefit -- a superior result in first line or adjuvant. And that's probably the simplest way for me to explain it. But I would, again, encourage you to come to our ASCO presentation, the IR event, and you can ask more questions about that. In terms of the pull of the U.S. filing, we haven't filed yet, but we've been in close communication with FDA about it. They were aware of our schedule of additional readouts and just said, "Hey, in the first-line setting, we'd just like to see more PFS data." People have asked, "Oh, are they waiting for OS?" and that's not the case. The standard here is PFS because you're basically giving patients a chance for a cure, and we all know that having later line DLBCL is not a good prognostic. So essentially, we're gathering more data right now like sort of a next data cut, and we'll be filing that with the FDA in the middle of the year and still looking to have a full approval by year-end. And I think, we would anticipate quite a rapid uptake because it's a well-tolerated regimen. As you know, we take out the Vincristine, which is one of the chemotherapy elements that's not particularly pleasant. And we've got a significant benefit, a 27% reduction in progression to later recurrent disease which is very significant in a curative setting. These tend to be younger patients, and we think there'll be a rather rapid uptake. So thanks for the questions, Emily.

Next question would come from Peter Welford, Jefferies.

I'll be brief. A few quick ones. So just on diagnostics, first of all, you've talked about the impact on your outlook for the COVID-19 diagnostics for this year as a whole. Just curious, given the changes you've done to the booking of the sales in this, should we think about the majority of the decline coming from that what you call Point of Care, which includes the Liat. Perhaps just talk a little bit about how much of Liat use at the moment you think is driven by COVID-19 use. And so is molecular under the new definition now, do you think likely to be more sustainable? Or do you also see significant declines already in 2Q as you talked about in the ordering of the PCR diagnostic tests or, I guess, more lab -- central lab testing with COVID-19. And then secondly, just coming back here again, should we understand then that the detailed data for Mircera will be presented at ASCO by your comments or not? Or are you just saying it's an opportunity to ask more questions? And the other point of fact there, I think you said that there was more pronounced PFS in the ESL mutant patients, as I guess we expected. But also you said increased response rates versus best standard of care. Just thought is that increased response rate also in the ESR1 mutant or is that increased response rate also in the Acelera patient population you were talking about? And so actually, you did see higher response rates also in those patients who are not ESR1 mutant?

Thank you. Yes. So thank you for those questions. Yes, so if we look at the rapid antigen business, which is the -- under the point-of-care franchise, this is pretty volatile because there are a very few customers. It's usually governments that make very big orders. And I think you can really draw basically some comparison to the number of cases, the number of hospitalizations. And then you can see that during the summertime, we'll see a lot less customer or government orders for residents. So I think there will be a lot of volatility. When it comes to PCR in general, may be in point of care or in the lab, we have many, many, many customers, right? So the volatility is a lot less but we do see a decline in overall testing because people don't have to get tested anymore in the travel, et cetera, et cetera. So you see that decline. When you come to rapid antigen in Q1, we were completely sold out. When it comes to Liat, we were completely sold out, right? When it comes to Liat, we will continue to have more expansion in terms of our manufacturing capacity, which is important because we'll also continue to build out the menu on Liat so that we can bring this platform to more parts of the world. It's a very good platform with real lab-like performance in the 15-minute time window, which is not isothermal PCR, which is not as sensitive. This is really true PCR, which most other point of care systems are not. So we do believe that, that will sustain a bit longer as well as the lab PCR business, but at a lower level, right? Because simply, we have a lot more customers there.

And then, Peter, your question about giredestrant, -- so let's see, first off, as to where it will be presented, the timing is very tight for ASCO. So it's probably safer to assume that the full data presentation will be at ESMO, but it's not confirmed yet. We'll see. We'll try to get it submitted and presented as soon as possible. In terms of the question you had about the response rate and such. So yes, my comment there was that the -- so the PFS was numerically in favor of giredestrant over the investigator's choice -- and that was also true over the response rate. And it was also true that the response rate was greater in the ESR1 or the magnitude of the difference was greater in the ESR1 positive patients. So hopefully, I answered your question, but if I didn't, maybe you could -- yes, let me know.

I think we have 3 more speakers. [Operator Instructions] Stephen Scala from Cowen.

Okay. So I'll pick 1 question. And that is, can you remind us if there are futility looks at the gantenerumab graduate trials? And if yes, have any already occurred?

Yes. There was 1 futility look, and that happened some time ago.

Okay. This was an easy one.

Yes, you should ask 2, Steve. Just kidding.

We'll move on the road. Next one would be Andrew Baum from Citi.

So a question on giredestrant. ESR1 expression increases with time and as the tumor becomes more advanced, am I assuming that if ESL1 is a basis of giredestrant treatment in the refractory setting, presumably, you're going to have to show superior tolerability to enhance compliance in the early-stage setting. Is there any plan for dose modifications in order to enhance tolerability for prolonged dosing, particularly in the adjuvant setting compared to aromatase inhibitors, if it's going to be driven by that variable?

I'm glad you asked that question because I remember, I forgot to ask, I think it was Emily's earlier question about one of the competitor molecules narrowing the focus to ESR1 mutation positive patients and whether we should do that. And so let me clarify on that. So for example, the neoadjuvant study that we showed at San Antonio Breast Cancer Conference in December was -- that's the earliest patient population show. These are pre-adjuvant, and we showed, again, on a couple of important markers, we showed a superior result to aromatase inhibitors. So we don't believe that we have a molecule that is only capable of showing a superior benefit in the context of ESR1 mutations. Rather, it's the other way around, is that in the later line patients, the broad population, they may just not be very affected by estrogen blockade. So even if you have a superior estrogen blockade, you don't show a benefit, which would be why we might see a benefit in the ESR1 mutation positive patients where estrogen still plays a large role. But we would hope in first-line and adjuvant that we would see a result similar to what we saw in the neoadjuvant in sort of that -- sort of warm-up study that we would see a significant advantage versus the standards of care in those settings. So hopefully, that makes sense.

The neoadjuvant, I think, was only Ki-67. There was no clinical data in terms of when you reference superiority. So I mean, given how unpredictable Ki-67 has been from other trials, it's open question whether that's going to translate in the clinical setting.

Yes. But I think it's also fairly broadly understood that patients in their early lines, they really struggled to get the full blockade because of the tolerability issues and the dosing issues. So yes, I guess you could look at it as an efficacy difference, you could look at it as a tolerability difference, but the practical import of it is that we should see a more thorough estrogen blockade and that, that would hopefully lead to a superior result. I mean, that's basically the whole hypothesis for pursuing SERDs. And that's why we and others have been pursuing them. So I just -- I mentioned that because while we're disappointed and we would have loved to have seen a positive in this study, it's hardly unexpected the result we saw. If we had seen something different, if we hadn't seen that stronger signal in the ESR1 mutation positive patients, we'd really be scratching our heads but the results we saw are very consistent with our scientific hypothesis.

And the final question would go to Mark Purcell.

It's Mark Purcell from Morgan Stanley. I mean, thank you so much for the useful color on giredestrant, and I guess it explains, as Andrew was just talking to, sort of resistance pathways. If we think about tiragolumab and there appears to be redundant in T-cell exhaustion pathways as well, are there sort of any early observations from SKYSCRAPER-02? And while it failed to show a significant survival benefit in small cell lung cancer? And just related, the cervical cancer trial has dropped off the kind of key readout slide for 2022. There was a primary analysis indicated by clinicaltrials.gov in December 21. So has there been an interim analysis on cervical cancer and tiragolumab. And did it pass that through to the full completion in the second half of this year?

Yes. Thanks for the questions, Mark. So on SKY-02, we really don't have any analysis yet beyond the primary endpoint in terms of answering that kind of question about the why. So we will hope to learn from this and also pass on our learnings to the community at large because obviously, there are additional -- yes, additional unmet needs for sure in small cell lung cancer. And in terms of cervical study, we don't have an update at this point on it, but hopefully, at some point this year, we'll have an update on the cervical study.

Yes. Thanks, Bill. And I think with that, we are at the end of our Q1 call. I want to thank again all the management for taking the questions and also the IR team for all the hard work in putting the presentation together. And if there are any open questions, because I think there are still 2 or 3 people in the row, then please reach out to the IR team and give us a call, and we can take care of them. Bye.