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Investor Day 2014
Nov 18, 2014
Can you hear me? All right. Good afternoon, everybody, and welcome to this meeting. Last time we were together was about 2 years ago. So it's really great to have you here.
Nice to see a full room too and such an impressive audience. My colleagues are so impressed. They're all wearing a tie today. And our CMO got himself a new hair little let me tell you a little story because we've been last time we met was almost 2 years ago actually, a little bit less than that, 20 months ago or so. And I started with AstraZeneca late 2012.
And before doing this, as you can imagine, I talked to quite number of people. I talked to a number of people in this room actually just kind of get to get some advice. And I, of course, went and talked to a large number of visiting one of the top oncologists in the world in Boston and having breakfast meeting with him and asking him questions about AstraZeneca in general, but in particular about Olaparib because I had been looking at this product from the outside and I was wondering actually what exactly is AstraZeneca doing with this product. And I went to him and asked him, what do you think? What should we do?
And am I missing something? And we he told me what he thought. And I will always remember, at some point he looked at me and he said, what you guys are doing is wrong. This product should already be treating patients. You absolutely have to do something to bring it to patients.
And a couple of days ago, one of our major investor told me that a friend of his who was an ovarian cancer patient with a BRCA mutation and was running out of options was treated by Olaparib and actually gained 2.5 years of life out of this product. And I'm telling you this story because for me, this product has had a huge impact on me. I'm telling you this because the work we do matters. The reason we come to work every day, my colleague and I, is because we make a difference for patients. I'm also telling you this because this is only 2 years and time flies very, very quickly.
2 years ago, we were writing off this product. Today, we are getting ready to launch it and time has gone very, very quickly. And the same is true for the next 2 years. And that's one of the messages we'd like to leave you today is that time goes quickly. Our pipeline is progressing quickly.
The value of our company is changing every day. And the rerating of this company will continue at an accelerated pace we believe. And hopefully what we can do at the end of today is convince you that we're not going to make a big announcement today, but convince you that we're on track. We're on track with our strategy. We're focused on execution.
We need to be absolutely focused because those products do matter. Those products matter for patients. They matter for the company. We've developed 9,291, our new product for lung cancer in record time. I know some people when we mentioned that in the last few months, some people were a little bit cynical about this.
The truth is we've gone we will have gone by the time we filed from 1st in month to filing in less than 2.5 years, one of the fastest development ever in the cancer world. And so we are focused on our work, and we hopefully will show you today that we're making good progress delivering on our strategy and in many ways ahead of our plan. So no big statement, no big announcement, but we'll show you that hopefully we are focused and delivering. So this is the agenda we have for today. And because we just went through the Q3 call and we gave you an update on our progress from a commercial viewpoint if you want, we thought we would try to focus the discussion today on the future.
And again, as I said, the future will come very, very quickly. So it's not a distant future. It's a future that will become reality relatively soon, at least from the point of view of the valuation of the company, we believe. But so the first session will be around some of our commercial drivers, our growth platforms. We'll go through this.
We'll stop and we'll answer any questions you have about these growth platforms. And from there, we will move truly through the pipe to the pipeline. The late stage pipeline to start with, with our respiratory inflammation team, the cardiovascular diabetes team and the oncology team showing you what we have in development. And then we'll stop and have a series of Q and As on these therapy areas. Then we'll move to the next step.
What we wanted to show you today is that what we have is not a one off, a few projects in late stage development. What we have is an R and D engine that is productive and a sustainable model. So Bahija and Mene will share with you what we have in our earlier pipeline, essentially in the clinical phase though. We don't we didn't want to go all the way to preclinical, but we wanted to show you what we have in the clinical stage that will rapidly also move to our late stage pipeline. And finally, Mark will close with a financial picture for you.
So we showed you this before. We are on a journey. And then hopefully you will agree with us that the first phase of this journey, which was 2012 to 2014 until today, we've been rebuilding our foundations. When we were here to not here, but we were together last time, essentially, people were expecting us to keep declining and to be a $20,000,000,000 company by 2020. I will always remember this.
Many of you actually forecasted us to be a $20,000,000,000 on a permanent decline by 2020. So the good thing is today the debate is about whether we will be able to achieve €45,000,000,000 by 2023. So there's still a big debate around this. I accept it, but at least we've sort of moved from €20,000,000,000 in 2020. So essentially, in the last 2 years, we've been rebuilding our foundation and we are engaged we're starting the 2nd phase of this journey, which is 2015 to 2017, managing the transition, managing those patent expiries and continuing to build our growth platforms and preparing for our new launches.
And finally, post 2018, we intend to deliver sustainable growth and increasing profitability because of the shape of our portfolio. The $45,000,000,000 that we communicated back in May, we didn't pull out of a hat. As we said at the time, this was essentially the result of our long term planning. We are redoing our long term planning at present like we do every year, and we can reconfirm that this is still our ambition. So we had 3 strategic priorities that we presented to you 2 years ago.
And as far as Scientific leadership, our goals were to focus on 3 courtyards, which we have done and rebuilt to accelerate some of our pipeline and to transform our culture. And essentially, we showed you this graph at the time and I told you that I thought AstraZeneca was a company that has quite a unique position in terms of our capabilities in biologics and small molecules, in immunology, but also in protein engineering. In the meantime, we've added a 5th capability around devices, essentially inhaled devices through the acquisitions of Pearl and the Almirall devices. Almirall devices. And so that really positions us very well in terms of managing those products and potentially combining them.
And we've also been working very hard on building our personal health care capabilities, and you'll hear more from many about this. So the last 2 years have really been full of hard work rebuilding these 3 core therapy areas. Internally, we told you we would be accelerating a number of projects, and we've done that. And also externally through business development, and you've heard about those quite a bit. I wanted to say a few words about these 2 therapy areas that we called at the time opportunistic, neurosciences and infection.
Opportunistic doesn't mean they're not important. They are very important, but it means that we have to be focused on what we are going to do ourselves and focus our resources. And there's a lot we can do in oncology, in autoimmune, respiratory and also in cardiovascular diabetes. But we have a lot of great science in neuroscience and also in the anti infective fields. You'll hear from Bahija a little bit later, for instance, about our monoclonal antibodies for the treatment of some infections.
And we want to create value out of those products and the science. So essentially our business model is made of therapy areas where we will develop and commercialize ourselves. We might do alliances, we might collaborate, but essentially we want to do the majority of the work ourselves and to therapy areas where we will partner and create value by licensing out, partnering, sometimes divesting public private partnerships also would be considered. So essentially, it's part of our business model to create value out of these products even if we don't do it completely ourselves. And so fundamental that I'd like you to keep in mind because you will see us do more of those partnerships like we did with the base inhibitor.
There will be more coming. And of course, some of this monetizing of our assets, the profit generated out of this will be reinvested in our core CRP areas. We told you back in early 2013 that we would have 10 projects late stage development by 2016. And I can tell you something at the time, we internally debated quite a bit whether we would tell you we would double the number of projects because we had 6 and we said maybe we should double. And we were so nervous that we might not be able to achieve this that we in the end ended up with this 10 you've got there even though our original ambition was to reach 12%.
In fact, we've reached 14%. So from a pipeline viewpoint, you can see we've made more progress than we certainly anticipated at the time. Importantly, and that's what hopefully today we'll show you is that we have a Narengi engine that is sustainable, that is productive and will keep producing new projects and refilling the pipeline. And I could go through many of the things that are on this slide. I just want to do to say 2 things.
1 is we have fantastic scientists in this company. We have scientists that have been historically with the company and have some of the people who've joined us recently from many in Bahija and some of the people who've joined us recently from many in Bahia in particular. So it's really a tremendous achievement. And the second is we have an organization that is extremely good at collaboration together to collaborate on the site internally, but also externally with the great science that exists in the Cambridge area. And if you look at our network, in fact, our R and D network, we've simplified it from what it was before.
A lot of money has been saved, and many will show you this, improving our productivity, but also we've saved a lot of money that was invested in concrete and mortar, and we've redeployed these 2 projects. So we essentially have now 3 strategic R and D sites. 2 of those in Europe, Mandal and Gothenburg and Cambridge, we intend to really run-in an integrated manner. In fact, we will even have a daily flight going from Cambridge Airport to Gothenburg. So we can actually attract people who may be willing to come and leave in Cambridge, leave their family in Cambridge go to Gullberg.
So we have the ability to run those 2 sites in an integrated manner and have, again, the best possible talent working there. So if I shift gear now and talk to you a little bit about our return to growth agenda, and we had 3 goals at the time. 1 was to focus on our key growth platforms, Axaris for business development and start the transformation to a more balanced specialty care, primary care portfolio with more biologics. And I'd just like to say one word on the first line, the focus on the key growth platforms. Simple example with Symbicort is actually quite incredible.
The progress we've made, simple example with Symbicort is quite extraordinary. You'll hear people tell you that we're doing well with Symbicort because we are cutting prices, we are discounting, we're doing this, we're doing this. And I'm sure during the Q and A, we'll talk more about it. And Paul Hudson, the Head of our U. S.
Business is here, and you can grill him about what we are doing in the U. S. And of course, it's a competitive field. But the truth is we have actually focused the organization. We've put great people behind the commercialization of this product, the They
are doing very well.
We've built our pipeline also behind this. They are doing very well. We've built our pipeline also behind this. I was at a meeting in Barcelona not long ago with several 100 physicians, and one of the top KOLs respiratory physician in the world looked at me and said, you guys have disappeared from respiratory medicine for a few years. It's nice to see you being back.
And this investment we've made in the pipeline also pays back because physicians want to be involved with companies that invest in science and invest in new medicines for their patients. So essentially, this is the shape of our business and it hasn't well, it has improved tremendously. But what hasn't changed is we still have a transition to go through over the next couple of years. The good news is the trough is not as low as it used to be because we've been working hard to refill and manage this transition. And the other good news is that, as I said a minute ago, the debate now is about the €45,000,000,000 no longer €20,000,000,000 by 2020.
But we reconfirmed that by 2017, our ambition is to have sales that are in line broadly in line with 2013, and we do reconfirm the €45,000,000,000 We have the pipeline that will enable to achieve this. If you look at the launches that will take place over the next 2 to 3 years, we have quite a lot and those are the submissions that we are planning for next year and for 2016. And as you can see here, there's a lot of new products, but also a lot of line extensions. Importantly, now is the time to identify oncology for us as a growth platform. That would be our fixed growth platform.
And the reason we didn't do it earlier is because to be a growth platform you have to grow and to grow you have to have products that are launched and generate sales. It was too early. And we were not sure how quickly we could actually progress those products. Now we are just about to get approval for Olaparib. We are about to file 9,291 and then a number of other products.
And you will see throughout the presentations, we have a very, very rich portfolio of products in oncology. And we believe this will be an important growth platform for this company. I want to say 2 words about this slide, which is an important one because I want you to understand the change that is taking place and fact that our business is going to have a different shape and different look. First of all, there will be more biologics in our portfolio. About 50% of our pipeline is in biologics.
And if you have biologics, you tend to have a higher probability of success with these products, number 1. Number 2, when you lose patent protection, you don't collapse, you don't evaporate like with a small molecule. So you have a more durable asset. The second thing you see here is more devices, in particular respiratory, inhaled devices. And again, those have greater durability.
So better probability of success, greater durability after patent expiry. Of course, you lose price power. That's clear. We see it today with Symbicore. But you can still defend part of your franchise and turn it into an annuity if you're committed to it.
So this is really important when you think of the long term of the company. And finally, there will be a more balanced specialty care, primary care and therefore over time an increasing profitability. We've also done a lot of work around our culture and the engagement of our people and ensuring that everybody shares the same ambition and the same passion for what we do. And I wanted to show you those numbers because we run a survey like many companies do every couple of years. We run it in 2012.
We run it in September 2 months ago. And these are the results. And essentially what we do like other companies, entire population of the company, and we track level of entire population of the company. And we track level of engagement, the belief in our strategy, our people relate with their land managers, their leadership, etcetera, etcetera. And you can see here is the favorable ratings we got are very, very high.
We have 5% engagement, for instance. And we compare ourselves to, of course, 2012. And you see here, we've made progress. For instance, we went up 8 points on this engagement dimension since 2012. We compare ourselves to the pharma norm.
Those surveys are done independently and we are 5 points above the pharma norm for this one. And we compare ourselves across industry to the what they call the high performance norm, the best companies in term of engagement and cultural a places where we can do better, but certainly a very engaged organization, very dedicated. We've simplified the structure. We have simplified a number of layers. We've worked on decision making accountabilities.
We still have a lot of work to do. There's no doubt about it. We've also worked on our systems. So there's a lot of work for us still to do. But generally speaking, we've made quite a lot of progress simplifying the organization, delivering it and providing our people with better systems and support.
And essentially, at the end of it, it comes down to this TSR, which we tracked since we rolled out our strategy early 20 13. And if you look at where we stand, we are suddenly above the FTSE 100, but also above our peer. And importantly, if you look at the peer group that we compare ourselves to from a TSR viewpoint on this graph, you see the global peer group, global pharma peer group, we are number 3 in ranking behind AbbVie and BMS. And if you look at the FTSE and you take the top 15 companies, early 2013 from a market cap viewpoint, the top 15 largest market caps. We have a TSR that is ranked number 1 ahead of number 2 for the Fund by quite a bit as this chart can show you.
So I'll just close here and I wanted to leave you with only a few key messages. First of all, I just wanted to make sure you see by the end of today that you agree with me that we are on track with our implementation. There's no big announcements. Simply, we are focused on our work and we are making progress with the implementation. 2 is we're building a different business, more sustainable, more durable with durable assets and more profitable.
The third one, hopefully by the end of today you'll get a sense for it is the pipeline value is rapidly increasing. And that's what I call the future is coming to us very, very quickly. And the rerating will continue. And I think investors need to understand that because of course the value of the company will be reflected faster than some can believe. And finally, we are we continue to work to accelerate our return to growth.
And our ambition is, as we said before, to reach the $45,000,000,000 by 2023. So I'll ask Luc to take you through the next phase of the rest
of the embed that and give you a Mark's role and my role is to try and embed that and give you a little bit more color in terms of the commercial consequences if we are successful 3 therapeutic areas. You can see starting from the bottom there, CVMD, cardiovascular and metabolic disease. You have the business in lipids, which is Crestor, which continues to grow in emerging markets. You have Bydureon, which along with some other products represents our diabetes business. And we also have Brilinta, which is growing nicely as an antiplatelet.
The respiratory business today is essentially small molecules, which are loaded onto devices. And oncology is an area that we have not been that active recently. However, we are beginning to reengage for obvious reasons and we see some opportunities to grow compounds such as Fasolex and also Aressa. Geographically, we're also nicely balanced. You can see there the U.
S. Is a good proportion of our business. So we have critical mass in our operations there. That's attractive for our respiratory business, our CV business. But also in the future if you look at immuno oncology this is where you need to win 1st as a geography.
Balancing that as well, we have a very competitive position in emerging markets. We're number 2 in China and Mark will cover that in more depth. But essentially the key message of this slide is that we are well balanced between emerging and established markets. The pipeline in the commercial business is really built as we look forwards in respiratory based on these inhaled molecules which treat asthma, but we also have an emerging pipeline in inflammation autoimmunity. Just staying with respiratory, essentially the attractive components of a respiratory business, if you look at it from the position of the customer or in small molecules.
We also have some aspect is combinations, the capacity to have combinations which can be used in devices. And underlying that is the technical ability to put these compounds together and place them on devices. And then you also have the access parameters that come from having a strong portfolio in this area. And then ultimately and this is a point which is often under looked, having competitive devices has a lasting benefit on our ability to compete. And it's interesting established markets, there's been a long term focus on the treatment of asthma and also COPD.
You can see from these charts, the left hand side shows evidence of patients' control and treatment in the G7 market. So this is the U. S. And top five EU as well as Japan. And the same is a measure of the control or progression of the disease in COPD, chronic obstructive pulmonary disease.
And the key point of these two sets of information shows that firstly, even in established markets, lots of these patients remain undiagnosed. And secondly, of those patients who are undiagnosed, many of them despite intensive treatment and a lot of investment on the part of governments and health care providers remain relatively uncontrolled. So there's clearly an opportunity here for new compounds which can improve patient care. COPD is another area as well when you move from established markets and look more closely history of smoking. The key parameter of COPD of course is a history of smoking.
And this is an interesting chart here. You can see the level of smoking by geographical region globally. And you can see Russia and countries like China. I mean one statistic just to keep in your mind is 1 in 3 smokers live in China. So you can imagine that consequence on the likelihood and the prevalence of COPD.
If you add on top of that, the other risk factors for COPD are pollution, either indoor from burning fuels to cook or an environmental pollution, which exists and obviously societies which are rapidly industrializing. And on top of that the other factor is aging. So if you look at a country like China or Russia, they have all three of these parameters together. And that's ultimately when we look at these inhaled compounds and also in the biologics which we're developing in this area, you'll see a continuing growth of the number of patients. In addition, we're not standing still.
We continue in the middle box there to expand the number of patients in established but also emerging markets who can benefit from our compounds either through label expansion or the generation of new evidence. And then ultimately, we have a number of new devices that we're developing that will make these compounds more accessible to patients. And many people often ask us, why do you continue to invest in devices? And this is a critical component because what's interesting about respiratory is it's both growing, physician to have the time to teach a patient how to use a device, get them using it properly, get them under control, that's a significant investment of their time, time that they often don't have. And what this chart here shows that if you switch patients who are controlled onto a different device, they subsequently have a degrade in their quality of their control.
And you can see that by the difference of the green bar. And then also you can see this little acronym, SABA, which is a short acting control that asthmatics use. So the higher that use, the less control their disease is. Also on the right hand side, less robust data, but this is surveys that we conduct and also third parties conduct amongst physicians. And clearly the use and presence of the device is a key factor in treatment.
So the point here is, if all other parameters remain the same and we're able to be competitive on pricing, we have competitive molecules on devices that physicians know and trust. Looking forwards, we have a high quality portfolio that Bing will cover shortly. We have an interesting agreement and collaboration with Amgen, which is a very productive interaction and we're looking at developing compounds there, which are potentially best in class for psoriasis and psoriatic arthritis. Also we are actively engaged in the development of Phase 2 of compounds in Crohn's disease and ulcerative colitis. And we have some interesting compounds in lupus, which I'll show you shortly along with RA, there is some unmet need.
This is the commercial projection. It says future. It's a 10 year timeframe. You can see today the bulk of this business is driven by the biologics and rheumatoid arthritis. This is the TNF compounds.
Many of these patients are cycling through these agents and are not controlled. So is an opportunity for a compound like MAVI to come in and change the way that these patients are treated. The yellow bar shows psoriasis. This is a debilitating condition for patients, a very visible condition for patients and the treatments are substandard and we have the potential to change how these patients treated. And then ultimately we have lupus there.
You can see today it's a very small business, a relatively small number of patients, but they really do have profound consequences that are associated with this disease and there's not very much available out there that is effective for these patients and we have compound that could change these patients' lives. And then ultimately the inflammatory aspects of disease that impact the bowel, we have competitive compounds. So this is an element which the investor community hasn't really had a lot of opportunity to see and get a sense of. With CVMD, ultimately it is a combination of diabetes and cardiovascular disease. And I start here with slide on diabetes and the numbers here are striking.
And it's interesting if I go back 20 years ago when I entered the industry, people were starting to discuss the impact of diabetes and no one really believed the numbers in every single conference that we now see and every single type of report like this, which is from the International Diabetes Foundation shows that this population of patients continued to accelerate as in the West, obviously people eat McDonald's, they're less active, they sit in rooms like this and look at PowerPoints all day. And so these are the elements that we've got a very healthy break food for you. But you can see that there's a lot of change here these markets. But also critically you start to see populations such as the Middle East which as they become more wealthy and you combine that with a genetic predisposition disease, you start to see significant burdens for these patients. But also the Western Pacific, dollars 100,000,000 of that 138,000,000 is China.
And these are diagnosed patients. There's a whole set of patients who sit out there right now who are in a pre diabetic stage who may not have been attract or discovered by healthcare systems. What's interesting about this picture before we go into our compounds for diabetes is we have a product for kidney disease. Many of these patients will ultimately end up in kidney disease. That's a compound called roxadustat and there's elements of this product which we think will be very competitive.
In addition, Brilinta, we have a program to explore these patients, explore the efficacy of Brilinta in these patients. And one of the other risk factors for diabetics is triglycerides. And with EPENOVO, we have a program to explore whether we can lower the risk for these patients. With our business in diabetes, what's interesting is ultimately physicians are looking for drugs which can lower glucose. So whilst most patients in diabetes actually die of cardiovascular disease, the short term complications come through high glucose and what physicians are looking for increasingly are compounds which are effective in low in glucose but also don't negatively impact the weight of the patient.
And that's what you see in this picture here. You're starting to see classes like the DPP-four which can lower glucose without raising weight, but more importantly compounds which sit in the classes of SGLT2s and GLP-1s growing strongly on the back of efficacy. And we're well placed with these classes. We have Onglyza, which is also now available in combinations with metformin, which is attractive to patients because they get 2 drugs in one pill. Pay is also like this for many reasons which I think are obvious with Farxiga which was the first SGLT-two launch globally.
We also now have fixed dose combinations. And injectable business dominated by Bydurean, which we've now launched in a new pen, which is doing extremely well after the few first few weeks of launch. Brilinta also has received a lot of attention. I won't go into depth on that, but to really comment on this slide is essentially say we've had a series of good sets of news or evidence which have built the momentum around compound and the meeting which is actually going on right now has further focused clinicians on a study which is PEGASUS which will ultimately show if we can expand the population that can be treated by this drug and also should have some impact in terms of how long patients are treated Brilinta as a compound to lower the risk for patients. Oncology is a fascinating area.
There's a lot of activity naturally in the industry around this disease area. It's very clear if you look at these statistics, this remains a massive burden for healthcare systems. This chart is a combination of data sets, but what it shows is you can see on the bottom of each chart, the burden of these 3 tumor types in the U. S. And EU.
And then we've also added some data here on China. Naturally, the Chinese data is less robust, but even if it's even if there's some error that you can see the scale of the challenges, which are faced by China's markets such as China in terms of disease. What is also interesting though is these patients increasingly have the capacity to access these compounds and fund access to these compounds. And ultimately, if we're able to successfully commercialize this exciting pipeline, we will see a fundamental shift in our business. We'll go from being essentially a primary care company today to what we believe is the optimal mix between primary care which is dominated by very focused diseases such as diabetes and respiratory and also a specialty care business which has a very healthy component of biologics and which we think overall is very robust and should grow considerably.
So in conclusion, our core therapeutic areas are aligned with our pipeline. We believe that geographic structure that we have enables us to maximize these opportunities in a very competitive fashion. And then ultimately, if we are successful in commercializing the pipeline that you're about to hear a lot more about, we should be able to generate significant value for shareholders and also patients. Thank you.
Thanks, Luke and Pascal. I'm pleased this morning to give you an update on how we're progressing on 2 important growth platforms, emerging markets and Japan. I will start with emerging markets and then cover Japan. I think all of you are aware that we've set an ambition, a target to grow markets business in mid to high single digits in this planning horizon. And in 2013, we achieved that with 8% growth and year to date, we're actually exceeding that ambition with 12% growth.
What I'd like to do is share with you why we're achieving those results and why we believe these results are sustainable. And so the first slide here is I think a critical one for all of you to understand. Of course, I think you're aware that we've had a history of long success in China and we continue to drive very significant growth there with most of the recent quarters being actually at 20% or above. But critically, outside of China, we are actually now seeing emerging markets return to growth. And in fact, in the Q3, we're achieving our ambition of the mid to high single digit growth excluding China from that business.
We've as we said at the last time we were together that we've made, I think, very smart and targeted investments in both commercial and medical in emerging markets and those investments have paid off. In fact, we have particularly in Russia and Brazil, which I'll share with you, we've seen strong growth this year. But actually we have 17 markets, 17 markets excluding China that are growing at or above the high single digit growth area. And this growth is certainly driven by our focus on these key markets, but it is as Luke highlighted about having the right products in the right disease areas. This is another way to look at, Luke was sharing some of the patient numbers, this gives you a sense of the size and the opportunity from a business perspective in several of the key disease areas in emerging markets.
Some estimates actually take that up to 100,000,000 or more patients. In the Middle East, the prevalence rates in some cases of more than 20 percent. So huge unmet need and we're having a very significant success. We've launched Forexiga in 10 markets so far, emerging markets. And in 8 of those 10, we're actually setting a benchmark for the best launch of a new product in diabetes.
In terms of respiratory, particularly with COPD, just an enormous challenge. Luke shared with you some diagnosis and treatment rates in some of the major development markets. If you think about China and the numbers of smokers that were highlighted, actually only a third of the patients, COPD patients are even diagnosis and only 5% are treated. And so there's just enormous need to make a difference here and we've got a fantastic portfolio for our emerging markets in respiratory. We're very pleased this year in the maintenance market.
We've now become the number one company in emerging markets driven behind the growth of both Symbicort and Palmacort. And in particular, we've seen really strong growth this year in the last 2 years really in China, where we're now over 40 percent market share and continuing to gain share. Brilinta is also critical product for us in emerging markets. We've launched it in all the major emerging markets. And this year our growth for Brilinta will be over 100% in emerging markets.
I mentioned when we were together at the previous conference that scientific leadership and medical leadership is also critical for emerging markets. And so we've substantially increased our investment in that area. As one metric, in 2012, we had 140 MSLs across the emerging markets and we've actually almost tripled that now in 14. But what's even more exciting is the impact that these scientific liaisons are having. We've seen a 9 fold increase in the coverage of KOLs with highly experienced, highly qualified medical leaders, medical liaisons in our core areas of respiratory, diabetes, ACS and also oncology as we're also preparing for our future portfolio.
And what this translates into is actually generation of evidence in emerging markets, really beginning to at a much bigger scale be able to share with physicians how disease is progressing in their countries, how it's being treated and how our products could fit in and make a difference. In 2012, we just had a handful of investigator sponsored studies. 2013, we had over 100 that were in process. And today, we're now over 200 investigator or externally sponsored research projects in emerging markets. If you look at real world evidence studies, we had in 2012 about 44,000 patients in the emerging markets in real world evidence studies.
That number is now approaching 90,000. So a major change in a relatively short amount of time in the science and the evidence that's being generated in emerging markets. And actually we're now starting to work with leading KOLs and opinion leaders in emerging markets to really push the boundaries of science even. As an example, we've started the iDiscover study which is a very large 19,000 patients study looking at how diabetes is really being treated and now actually across the globe. It was originated in Japan and international to basically understand where the gaps are and help physicians do a better job of treating their patients.
And so we're really proud and excited about the progress we've made on our medical platform and scientific platform in emerging markets. Now I'd like to just take a look at a couple of key countries. And of course, we start with China. AstraZeneca continues to be the number 2 pharmaceutical multinational pharmaceutical company, 2 company overall in China. We have the largest sales force in China and we've expanded our hospital coverage in the last year by 40%.
The fastest growth right now in China of course is coming not necessarily from the biggest cities and the biggest hospitals, but actually moving into what we refer to as emerging hospitals. These are maybe smaller hospitals, county hospitals or hospitals in midsized cities. And it has really been impactful in getting medicines to patients that needed and driving our business. We're also very committed to making sure that we take advantage of that full portfolio of products, new medicines that will be coming out of our R and D organization, which you're going to hear about over the rest of the day. There is a significant drug lag today in China, which is a challenge for the entire industry.
But we're absolutely committed, as I said, to make sure we get these our new medicines into China as fast as possible. And today, we have over 70 clinical development projects underway. And we've just opened our 2nd underway. And we've just opened our 2nd major manufacturing facility in China to make sure that we have the capacity to meet what has been really strong growth and that we intend to continue to drive. And to put that in context, you can see that the combined commitment and strong commitment and investment with a really strong leadership team in China, local leadership team in China and our overall capabilities is we're able to drive really outperform the market by a significant way.
Russia is another critical emerging market for 1, one that we do believe continues to hold growth opportunities now and will in the future. It's a large market with a middle class where people and with significant health challenges in the country. And one way to think about this, in each year about 600,000 people die from an ACS event in Russia. If you were able to treat those patients like the way we treat them in the Nordics in Sweden, you'd only have 150,000 people dying. That's a massive opportunity to a difference.
And given that need, you can see again we've returned to double digit growth strongly this year in 20 12. That's been driven by our performance in the retail segment, which is the largest segment of the Russia market and we're the fastest growing MNC in that segment. We are expanding access to our products. We now have patient affordability programs running in 27 different regions across the country. We're investing in clinical trials.
Russia is participating in most, if not most of our overall global programs and we're looking to continue to expand that. And we're making a significant investment in manufacturing with a major new facility under construction. Another exciting accomplishment for us this year is in Brazil. In the 2010 to 2012 timeframe, Brazil was impacted with the launch of generics for Crestor and Nexium and several other key brands. We've worked through that and actually have done a great job of stabilizing that business and have now through the launches of new products returned Brazil to growth.
This is a chart that looks at retail market sales and you can see that not only are we growing again, but we're actually now growing faster than the reference market, which is the multinational companies that are promoting innovative brands. And as I mentioned, this is driven this turnaround is driven by our new products Prasagril. And if you look at Forxiga, significant success with Brilinta in Brazil, you can see we're tripling performance of prasagrel. And if you look at Forxiga which was launched this spring, Forxiga is on track to be the best launch of any diabetes product ever in Brazil. I'm really excited about the possibilities for this franchise there.
And I could give you a number of other examples from across emerging markets, but we're not only good at continuing to support and drive our established brands, which are still growing in many markets, but we're showing that we be fully successful with our new products as well. So now I'd like to move over to Japan where we will have another example of great ability to drive performance of our products. We're seeing half of it for the last couple of years and we're seeing continued success with our primary care portfolio in Japan. Crestor and Nexium are already number 1 and have been in their category. Crestor, Nexium and Symbagrut are all growing strongly and have helped move AstraZeneca from being outside the top 10 in 2012 to now in the top 10 ranked 8th within the market.
But our business in Japan is not just about primary care. We have a very sizable oncology business in Japan. We have been a leader for many years actually in Japan and we're still in the top 3 companies there. We have leadership in breast cancer, in lung cancer, a very important position in prostate cancer, one of the largest sales forces where we're seeing an erosion of our sales because of generics in for rimbinex and Casodex. But we have the really the strength, platform and capabilities both commercial and from a clinical and medical perspective to really take advantage of the oncology portfolio you're going to hear about later today.
And as just one example, I wanted to think about the opportunity that AZD9291 represents in Japan. As you probably know, the EGFR mutation is quite prevalent in Asians, maybe a third of Asians have that mutation. ERISA is the number one product in non small cell lung cancer with really a dominant position in the Japanese market. And to be able to launch a product like AZG9291 into this product can make a real difference for patients. We've done a great job in Japan in diagnosing people with the EGFR mutation and they've gotten very good treatment with many of the patients on TKIs.
And so the number of patients that are either resistant already or going to become resistant to the TKIs is very significant. And so the potential to make a big difference for patients is huge. And we absolutely have the right team and capabilities to make that fully possible. So in summary, we are continuing to see strong growth in our emerging markets and through our key brands in Japan. And we believe that we can continue to drive this growth based on the underlying need of patients, especially in the emerging markets and also based on the products and capabilities we have.
Our as Luca has highlighted, we have a very diversified presence across a broad range of geographies and a broad range of products and we're having success in a broad range of geographies products. We've invested significantly over the last 2 years to strengthen our commercial and scientific capabilities and I think you can see from the results we're having that those investments are really paying off. Thank you.
Thank you, Mark. So we as I said, we try to give you an overview of where we are with those growth platforms. We could not cover everything, of course, but we are here to answer any questions you have about what you saw, but also any other products that was not discussed today. I hope there is a microphone close to Paul because I suspect, Polio, there's a number of questions that are going to come your way. So who wants to get started?
Yes, I'd like to invite James Fusia and also Tom, are you joining us? Sorry, Montel is joining us. Alexandre?
Alexandra Halter from UBS. I have two questions. Starting with you, Pascal. Since 2018 is obviously quite an inflection point for sales. So just trying to put your comment into the improving profitability from the new portfolio.
Should we expect the inflection point for profitability also to come in 2018? Or is that going to come later given that 2018 may start with a relatively depressed cost base, and therefore, required investment. The second question is for either Mark or Luke. Just on I mean, of course, the numbers which you're giving us about COPD opportunity in China is staggering, particularly given that it seems looking at the data you just said, 30% diagnosed, 5% of those treated.
And it will get
those who are treated
probably don't even get And is there is what we've seen
happening on
insulin in the last And is there is what we've seen happening on insulin in the last 15 years anything like a guide? Or can you just tell us of how quickly this opportunity can be tapped?
Do you want to get started, Marc or Luc? Sure.
We'll take the second question. So I think the first thing is that we're doing is that we're not seeing the challenge really for COPD as a China challenge. We're actually seeing it as a global challenge. And so we're going to be marshaling the resources of the full respiratory commercial and development capabilities to think about how we can expand education, expand diagnosis of COPD in China. I think the best example actually to look for is in our own company what we've done with Pammacort Respirals and the use of nebulizers in hospitals.
We've got almost 4,000 hospitals now that have nebulized centers that have been built up over the last few years in a very rapid fashion. And it's making a difference, a huge difference for children primarily that are suffering from asthma. And so in a short amount of time, we've demonstrated that we can really get our messages out and get centers set up in hospitals. And I think we're going to take this challenge on getting the right type of diagnostic equipment, doing the training with primary care physicians and really drive that forward.
It's very much a a question of investment in shaping the medical paradigm in China in particular. Often people say, we've been told, oh, you do well in China because Glaxo is not doing so well or whatever. I mean Glaxo is really not the issue. The issue is, in fact, we need to shape medical practice. And in fact, having 2 companies doing it will be far better.
China, you visit hospitals China, you visit hospitals or doctors that don't even have spirometers, so they can't even diagnose patients. So very simple things like making sure they have the right tools in place and they're trying to diagnose COPD and etcetera. This is really the priority. So those patients can get diagnosed. And when they are diagnosed, they will be contracted.
It will take some time, but we'll get there. To address your other question, Alexander, you would our plan is that you would see a steady increase in profitability starting in 2018 in the ADS. I mean there's a heavy period of launches as you saw from the graph we showed you. But in particular, if we're successful with our oncology pipeline, we'll see starting in 2018 to 2023 profitability improvement over time. Sachin sorry, Andrew first and then Sachin.
Thank you. It's Andrew Baum from Citi. Three questions please. Firstly, I understand that in the U. S, you're marketing Farxiga with 0 co pay to some patients.
How should we think about transitioning away from that in terms of given the extraordinary launch you have, how much is price sensitive? 2nd, could you talk to how you expect Symbicort to be impacted by the increased focus on Advair given the rebating plus the Bria marketing next year? And then finally, you referred to spirometry as increasing diagnosis rates for COPD. The industry has been phenomenally unsuccessful in getting spirometry used historically. Clinicians?
What's the barrier here? And then one clinicians? What's the barrier here? And then one final thing is just so I understand is SimbaCore on the NDRL in China, if you could remind me? Thank you.
So Paul, I knew you were going to get some questions. So do you want to address the first two and then Luc and Marc may address the other 2.
Okay. We'll do Pascal. Thank you for reminding people they can grill me at any point. It's very kind of you today. So there's a couple of things.
Firstly, the diabetes market is incredibly competitive, I think, as you know. The SGLT2 market, even more competitive. We've taken a stance to make the co pay 0 as have the competition quite frankly. It is not an indefinite promise to the market. It really gets blended into whatever rebates we decide to offer over time.
We'll see we'll wait and see how the market plays out. We'll wait and see how well SGLT2s are adopted. At the moment, they're the fastest growing class in type 2 diabetes in North America. Thank you by the way for recognizing it's the number one launch in Geneva and it's the number one launch in the U. S.
Of any product this year. So thank you for that. As for Symbicort, it's been an incredible year also, high 20% plus growth in Q3. We've worked very hard making sure that we've got we're in good shape for next year. There is competition.
I can't comment on GSK's decisions on rebates. We make assumptions across our portfolio. The average level of rebate or price decline over 2015 and it will be low single digit. The interesting point I think for everybody to watch is what happened after we were unsuccessful in claiming United at July mid year this year. And in fact, if you look at the data as recently as yesterday Symbicort's at an all time high on Neutr combinations.
So the team the level of investment stepped up, the level of prioritization has stepped up and we're at an all time high on all leading indicators for Symbicort for SYMPAKO irrespective of competitive moves in the marketplace.
Thanks. Paul, James, do you want to comment maybe on COPD in general and Mark specifically in emerging markets?
Yes. I mean, I think the issue overall is COPD is poorly diagnosed in a number of places. We see that in the debate which is taking place at the moment with the overlap syndrome and people trying to diagnose better asthma, COPD and the levels of reversibility of the airways. There is a group of patients who are both COPD with asthma like symptoms, and that is an area where we indeed need to generate more evidence and help physicians better understand where they should be treating patients. I think in China and I have a little experience as you know of China myself, I think we are planning an integrated campaign.
So it's not simply a spirometry. Nebulization has been immediately effective, as Mark has said. But we're planning a massive coordinated integrated campaign with the national members of the associations, respiratory societies, generating more RCT evidence, so demonstrating where you need to have maintenance therapy, investing clearly in MDI type devices, so patients can leave hospital when they've been treated on nebulizer and they may have issues with continuity and they can use a spacer, for example, for the younger population. So it's not one element that we're looking at in China. It's a sustained integrated campaign, which we're planning over the next 3 to 5 years.
Matt, go ahead.
So two quick points. Symbicort is on the NRDL and on the all of the province reimbursement list. And I think the other key thing that we're going to do differently or need to do differently is we need to go where the COPD patients are. Historically, ourselves and our competitors have focused primarily on the big city, big hospitals, but actually COPD patients tend to present more in the midsized to smaller hospitals, county hospitals, emerging hospitals. And we now really have the scale to actually go after and educating those physicians and combined with the integrated program that James has talked about, I think we can make a difference.
It is something we have to stick with. It is a harder change process than the asthma where you can get a more sort of an immediate impact. But we believe we've got the resources in the let's say the package of integrated resources to make a difference
there? There's a lot of patient a lot of work that needs to be done with patients, and it will take a lot of time. It's a bit like diabetes. 20 years ago, diabetic patients were told by their physician, if you don't lose weight and if you don't take your tablets, I will put you on the needle. And so essentially people felt guilty and they felt fearful of the needle.
Oil. And it's of course the wrong way to approach the treatment of diabetes. And COPD patients, they feel sort of a bit guilty and hopeless, guilty they've been smoking. They think it's their fault and hopeless because they don't think there is a solution for them. In fact, their life is quite miserable and there's a lot we can do to help them.
But it really takes a lot of work to shape this. So it's not going to happen overnight, that's for sure. Sachin?
Sachin Jain from Bank of America. Three questions please. First you've reiterated your 2017 targets today. When you first published them, I think there was limited pipeline contribution within those. Given the pipeline progress you've had this year and understanding launches question, you've referenced 9,291 as first patient.
Question, you've referenced 9,291 as first patient to filing in 2 years. You've also talked about 6 filings in oncology. I just wonder if you could touch on what your stretch target may be. Is there anything in the early stage pipeline that you see faster market strategies for? And then the last question is on Brilinta in China.
Memory serves me right, Plavix selling €400,000,000 €500,000,000 in China. You're clearly not. So we understand the hurdles in the U. S. Well.
Just what are the additional hurdles in China? Thank you.
Thanks, Akshay. So Mark, should we start with Brilinta and then we'll move to Mondele?
The key it's a very actually very simple barrier. Brilint is not on the NRDL. Probably many of you are aware that China, there has been a delay in the updating of the NRDL. The last NRDL was published in 2,009. China.
It's actually one of the best launches in the last few years. Even China. It's actually one of the best launches in the last few years, even though we haven't had the reimbursement. Really well positioned with KOLs, really strong coverage of the 1,000 plus PCI centers in China. We're hopeful that in 2015 that the government will in fact update the NRDL.
There's a real unmet need, a number of products, not just with AZ, but a number of important products that need to be accessible to Chinese patients. But I and I believe that once we get that NRDL, we'll be able to really rapidly progress in China time. As you know, after you get the NRDL, you have to then get the 30 plus provinces provinces, it's a 2 year to 3 year process, but that's basically the barrier. The acceptance by physicians has been really good.
Mondher, any
Yes. So we'll have, after the break, more deep dive on the oncology pipeline and the different dates. But to your question about 9,291, yes, actually the submission during Q2 next year will basically make 9,291 the fastest in the United States. That speaks to the value of the drug itself and the benefit it brings to patient and of course the excitement that the physician and the community and regulatory agency have about it. Beyond 9,291, I think for the rest of our late stage pipeline, our strategy is really to develop first to market strategy and to be the 1st and or best in class.
So in each and every asset that you will see in the afternoon, we are thinking about a smart and in the same time, a fast approach to the drug approved in a smallish indication before we expand into the other line extension and maximize the value of the
We could revisit your question if you want Sachin when we get to the oncology pipeline a bit later. Luc, do you want to cover the Yes, I think
in 2017, it's broadly what we signaled
in the past. I mean, there is some movement
within the classes. But again, we're very confident that the oncology opportunity as well as the diabetes opportunity in compounds such as Saxodepo.
There's not a huge amount of sales coming from the pipeline by 2017 as you can imagine starting to ramp up after that of course.
James Gordon from JPMorgan. Three questions, please. One was about the base oncology business. So I saw the comment in the release this morning that you could have 25% of sales from oncology by 2023. If I look what that implies, it implies about RMB11 1,000,000,000 whereas your previous risk adjusted oncology contribution was about SEK 7,000,000,000.
So does that mean that the base business in oncology could actually grow from now to 2023?
Mande, do you want to cover this one?
Yes. So again, maybe we'll have a better sense once we have the oncology presentation. But clearly, we have ambition to become a leader in this field. The number of NME we plan to launch in the next 6 years is quite unique and unprecedented, 6 NMEs in 6 years. And clearly, for assets like 9,291, Olaparib, but also, of course, the IO, we have adjuvant.
So if you think of this potential first, and in the adjuvant. So if you think of this potential first and in the same time, consider that immuno oncology is there is a consensus today among physician experts and analysts that immuno oncology will represent the mainstay of cancer treatment in the 20 years to come. In theory, it's a treatment that could work in any tumor type at any stage of the disease. So there is clearly a potential that can range probably from 20.25 for the more conservative $20,000,000,000 to probably up to 40,000,000,000 for
the more ambitious forecast that you can think of a
market potential. Is considered as behind in terms of the late stage advanced disease, but when you think of other new indication, in particular when you think of earlier stage of the disease, we are the 1st mover and you will see more of this in detail. So overall, if we think of a market that has roughly €30,000,000,000 to €35,000,000,000 and if oncology if 4,736, our immuno oncology is a market in some of these assets, yes, I think we are ambitious about the oncology franchise in the 2023.
You also consider that we have now more data around our new product pipeline. So the value of the new products in oncology, we see more value there simply by the fact I mean, the numbers we communicate to you, they are risk adjusted numbers. And of course, from 1 year to the other, the change because if we have more data, then we become more optimistic. The risk the probability of success goes up. So, the risk adjusted sales go up.
And it's clear that with a number of our products, we are more confident. I mean, a year ago, when we did our long range plan, nolaparib was not approved. It's not yet approved, but almost will soon be. And then 2 numbers progress. So you should not compare numbers from last year's plan to this year's plan.
So if I understand correctly on that part, it is an upgrade on the pipeline aspiration for oncology rather than you have high aspirations for the oncology based business does?
Yes, yes. Thank you.
And then the second question was just you were talking about the stickiness of devices within respiratory and how it sounded like having newer devices could be a protection against generics. But does what we've seen in the U. S. In terms of the speed with which patients have moved from Advair to Symbicort argue against that as it seems the patients are quite fluid in the device that they'll use?
Yes. And maybe, James, you want to comment on this. But the general comment I would make on this one is that I didn't necessarily mean stickiness. I meant durability. And because for me, a device, the inhaled device is similar to a biologic or closer to a biological than it is to a small molecule.
Of course, you can lose your business if it goes to an analog. But generally speaking, what happens is that if you are ready to compete, you lose price power. So you lose price, but you don't get to pennies and cents like small molecules. So you can actually compete and maintain your share, your volume. And you lose some volume, of course, but you don't lose 100% of the volume, and you lose price and you lose some volume, but you retain a share of the business.
So essentially the point is instead of collapsing like happens today or will happen with Nexium or Crestor in the United States, you have a slower decline, which enables you to redeploy to new products. So you don't have those cliffs to face like Nexium and Crestor. But there will be some shifts, of course. Having said that, and maybe Rod could comment with his experience in Europe because in Europe we're facing analogs left, right and center as you know. And so maybe you want to share some of the experience we have with Symbicore there?
Yes. So we have as probably most of you know 2 analogs available in Europe, one product from Teva, the other one from Orion. We clearly see that there is pricing pressure. But so far at least we see from a volume market share perspective that it is very limited what the competition is doing. So it does mean of course moving forward that that is a sustainable position, but we are defending ourselves quite hard to maintain the availability of the product in the marketplace.
Wherever it is necessary, we're willing to decrease our price to a reasonable level. And so far the strategy is working quite nicely.
You have to assume three things. One is that we are ready to compete and we don't let the business go including on price. 2 is we stay focused and committed to the product. And 3 is we have good devices because they also help us in this competition. And in that context acquiring Almirall suddenly is very useful for the DPS because the device, Genworth Device, is very well appreciated by patients.
And the Pearl technology on the MDI front is also a very attractive formulation. So that certainly will help us.
Thank you. And then just a final question, which was on emerging markets. So very strong growth, but presumably your spend in emerging markets is growing quite strongly as well. And with the bottom line EPS targets in the medium term, are you going to be able to continue to grow your emerging market promotional spend at the pace you have grown for the last few years? And if not, could
that mean a slowdown?
Yes. I think you should see this year as a year of I mean, it's a very big investment year. It's like we're launching several things at the same time. We are, of course, continuing to launch Brilinta or relaunch Brilinta. And we all know that relaunching costs you typically more than launching a product.
But finally, we are getting traction, including in the United States. In the last few weeks, we've seen some nice pickup with Brilinta, so we're all very excited about this. But we're launching Brilinta Steel. We're launching diabetes. We're still relaunching Symbicort because we had been divesting.
And with the results we saw, we're launching or we're accelerating growth in the emerging markets. Now next year, certainly, we will have to start optimizing our investment, and we'll gain traction from some of our products. So we don't expect that we'll keep investing to the extent we do over the next 2 to 3 years, that's for sure. But in the emerging markets, we're also growing and generating profitability, improvement market. I don't know if want to comment on
this one. Yes. So last year we said that we would basically broadly maintain our profitability and I think we're still confident we can do that over the planning period. A lot of the investment and the spend in the last 2 years has been really catch up or getting the platform in place. And if you look at the MSL example, so I don't think we need to get to 18,000 KOLs.
We've made the investments and significantly expanded the coverage And now it's going to be about sort of improving what we do with those platforms. In a number of countries, we've also we're not at scale from a sales force. We scaled up and then we should be able to moderate the cost growth over the period. But yes, so
And really see it as a a launch mode because we have those 2 massive headwinds coming our way with Nexium and Crestor Generics in the U. S. So we've been trying to kind of move the rest of our business as fast as possible. So it is under a strong momentum by the time we face Nexium and Crestor expiries.
Thanks.
Maybe the last question, Thomas, I'm looking to you to tell us.
Thank you. It's Matthew Weston for Credit Suisse. Just one question, please, and it's a big picture one. You set out your targets and effectively reiterated 2017 being flat and then clearly the very aggressive aspirational target for 2023. But you've also set out is a lot more pipeline success than you had previously anticipated and also some very high levels of investment in the in market franchises.
I guess for me the question is going forward in the medium term, so during that 2017, 2018, what's your priority as Chief Executive? Because for me, it's either about investing for the commercial success of the product effectively irrespective of earnings and investors should be very comfortable with that potentially because of the long term possibilities Or is it about being able to pay the dividend? Or are the 2 actually completely disconnected because we don't need to worry about dividend cover during that period because you can pay the dividend out of the balance sheet? I'd just love to understand where you see the real priority being about investing for
commercial for success or holding
back to make sure you have
for me, it's the story is pretty simple is that we're asking our shareholders to be patient because we have a couple of years of transition when unfortunately, as I said, we're facing Nexium and Crestor patent expiries. So despite our best efforts, we cannot overnight replace Nexium and Crestor. Those are tremendous products. They're very profitable. When they go, they really leave a big hole in the tier, if you want, in our wallet.
So essentially, we're asking people to be patient. And the deal as part of this is we are going to secure the dividend. And so we are very committed to the dividend. We're going to secure this. And as managers, we always have this challenge to manage the long term and the short term.
And so all of us have to do this. Of course, this challenge is a little bit more acute in our case because again losing Nexium in Crestor is challenging. But essentially that's what we're going to do. We are to protect our profitability. As we said, we're going to deliver the dividend and we are going to redeploy our resources and launch our new product successfully.
And I think we should be helped by a few things to do this. 1 is we'll continue focusing on productivity improvement. 2 is we certainly will monetize some of the science, some of the assets that come of our pipeline. We've started with the base. We'll do suddenly more of this and reinvest this money and partner when it's required and suddenly make choices and redeploy resources, reprioritize as we go.
But to me it's part of the same story is be patient, we're managing this transition, but we'll protect our profitability, we'll protect the dividend and redeploy for future growth. Okay. So we'll go ahead. Thank you very
much.
Okay.
Good afternoon. So glad to be here to see many of you here again. During the Investor Day last year, we shared with you our strategy and our pipeline. And since that time, we have made tremendous progress. So I'm really pleased to be here and to give you an update.
As Pascal mentioned earlier, respiratory is one of our core therapeutic area. We continue to focus on asthma and COPD and we are building in IPF. These are the diseases with high unmet medical need. Mark and Luke discussed that just earlier today. Our strategy is threefold.
1st, in the near term, is to deliver in health therapies. Then we're going to expand, expand with the innovative precision therapies. In a longer time frame, it's to transform the disease management. We aim for step therapies in the patient outcome. So that strategy is supported by a very robust pipeline that you can see from here.
If you look at the bottom right, there are 3 marketed products for respiratory. Above that, 6 FE3 P3 programs all progressed since the last Investor Day. The AMRO and PRO acquisition brought in 3 inhaled therapies and we advanced 3 biologics into Phase 3 over the last 18 months. If you look at the Phase 2 in the middle, there are 11 programs in Phase 2. So this slide here tells you a story about our inhaled therapies for COPD.
So our portfolio has a potential to cover all disease severities from mild to moderate to severe and the patients with different risks of exacerbation. I would like to walk you through here. So for patients who are mild to moderate, in need of maintenance therapy and are still at lower risk of exacerbation, so we can start them with a bronchodilator, the Sonoma, you see the green box. So when the patients get severe, symptoms get severe, it's still uncontrolled. So you need more bronchodilations.
So dual bronchodilators, LAVA, LAMA combination can be offered to this patient population. For patients with high risk of exacerbation or healthy exacerbations, so they need anti inflammatory, the ICS. The saliva and ICS, the Symbicort, currently used for patient of that patient population for most severe population. Severe symptoms also frequently exacerbators. You need all three classes with LAMA, LAMA and ICS.
We are developing a triple combination. Your one device with a unique formulation from PRO, that's PD-one hundred and ten. The device platform, as also discussed earlier, provide choices to our patients. So we're developing both gut powder inhalers as well as the metered dose inhalers are more active device. The DPI, dry powder inhaler is commonly used for patients who are mild to moderate.
The more active ones, MDI, preferred by elderly, also by the patients with more severe disease. It's all about the choices. We're the only company have both DPI and MDI. For LAVA and Lava Lama, we have a range of different DPIs. So this way to ensure we have a better chance to meet the need and the preference for those patients.
Now for asthma. The story is very similar for our inhaled portfolio for asthma. This can potentially cover all disease severities. We have a leading brand of the market today. There's Symbicort, Laba and ICS.
There's in the middle box, there's red. We're looking to expand that Symbicort in a mild population where as needed can benefit the patients. Our portfolio have options for LAMA and ICS. The evidence for LAMA in the treatment of asthma is strengthening. And this opportunity also for triple therapies in asthma, in particular in patients who are not well controlled with a LABA and ICS alone.
So we have that option also for patients with asthma. Devices, same story, while developing both DPI and MDI for patients with asthma, provide choices to the patients. In terms of severe asthma, we have a number of innovative biologics. We are targeting distinct patient subsets with diagnostics. I'm just showing you one example here.
That is from our own data analysis. Using 2 biomarkers, one of them is pyrastin that predicts that TH2 disease that's shown on your y axis or bloody snuffles to predict eosinophilic asthma, 2 biomarkers you can segment the severe population into 4 segments, 4 subgroups. A and C, patients have higher snafields and MB have higher TH2 disease. Barinezumab tracking new SNF fields could be potentially used for segments A and C, while telokimimab and IL-thirteen could be used for A and B with 2 who can cover potentially 70% of the severe asthma population. But we have others, for example, anti TSLP, we're co developing with Amgen, they're upstream.
So our portfolio has the potential to cover all the patient subsets for severe asthma. We're quite excited about one of the molecule in the portfolio, the spironezumab. It's in Phase III for severe asthma and diagnostics targeting patient subset. This is the only IL-five receptor antibody. We have now published our Phase II data in Lancet Respiratory Medicine just recently.
Marinizumab induced postnatal reduction in snafels and that translate into clinical efficacy. Not only of reduction of exacerbation, but also improvement in lung function and also asthma control as measured by SAQ 6. So the readout reduction is shown on your right side. It correlates really well with a baseline eosinophils. The higher eosinophils, the higher reduction of the exacerbation.
That's fit pretty well with how the molecule works. If you look at the cutoff of 300, with the 300 cutoff, we see about 43% to 57% reduction in asthmatic exacerbation in this patient population we tested, which included both patients on medium ICS and LABA as well as high dose ICS and LABA. When you go higher, you move to 400 cut off. Now we saw 70% reduction in the exacerbation. You go even higher 500 cut off, 78% reduction.
So the range is 43% to 70%
to 80% reduction of
asthma exacerbation. The Phase 3 is ongoing, is on track. We expect to complete Phase 3 in 2016 with 3 in 2016 with a regulatory submission. Peronizumab is also in 3 study for COPD. I would like to highlight that there's a new biology here.
This is the first antibody to show you synophilic inflammation reduction. Traditionally, people think about COPD, they think about neutrophils. What we and others found that one perturbation population have elevated eosinophils. Therefore, we tested that in our Phase IIa clinical study. Berenizumab was the first antibody to demonstrate it can improve lung function in those patient population.
So that data along with the strong proof of concept in asthma led us to move this molecule into Phase 3 in We are actually recruiting patients in Phe3 clinical studies. Was advanced tranukimimab to FEED3 for severe asthma. This molecule has a potential to attract a different patient subset that's a Th2 driven disease. In our Phase 2 clinical study, we believe that we have identified a potential responder patient population and also promising biomarkers. In that responder population, we have seen efficacy across from exacerbation reduction, lung function improvement, asthma control and quality of life.
So Phase 3 will further characterize the response in that patient population and is on track for completion 2017 and tranucanumab is also in Phase 2 clinical study, ongoing study in IPF. So that's our respiratory portfolio. You can see from here equally robust here AOinflammation and autoimmunity portfolio. We have not publicly discussed this portfolio a lot in the past. What you see here to your right side, 3 Phase III programs and 7 Phase II programs.
But most importantly, we have had a number of data from this portfolio, positive Phase IIs and positive Phase IIIs and recently. So I'm going to highlight 4 molecules that we have had more recent data. Starting here is nisinurag, that's for gout. Gout affects about 15,000,000 people in the major markets. Of those 40% to 70% cannot achieve the treatment goal of uric acid less than 6 milligram per deciliter.
The disease is associated with the elevation of uric acid. Uric acid accumulate from crystals and deposit into tissues in a joint, for example, kidney causing damage. The semi red offers a new mechanism for action. It is inhibitor. It increases the expression of uric acid, which is different from a standard of care.
Standard of care controls the production. So we believe that the most appropriate way for treating gout is through a combination approach. So that was tested in Phase 3 and the top line data is shown on your right. KR1 and KR2, lacinilirate was used as an add on therapy, 2 doses, 200 milligram and 400 milligram as an add on therapy to our alopurinol. Both doses met the primary endpoint and you can see significant higher proportion of the patients can achieve the treatment goal.
We added on to the amapirumor versus amapirumor alone. ADOMAS event profile was very similar including the Alo, Rado at Adverse event. For the 200 milligram plus allopurinol and with since allopurinol alone, we do have observation here to see serum creatinine increase in some patients. However, most of the patients result and without interrupting the study drug. So the plan is to file before the end of the year for lisinurad as an item therapy.
In lupus, this is a disease where the unmet medical need is extremely high. We have 2 innovative molecules. First one, ciphenimimab that's on your left, tackling soluble interferons and neutralize the interferon alpha, block their functions. We have completed a Phase 2b clinical study. This has achieved the primary endpoint and also met multiple secondary endpoints.
What you see on your right side is enafranimab, which is broadly more broadly targeting. Interferons, not only alpha, but also beta and omega. We have completed the Phase 1 study, open label study, looking at the pharmacodynamic impact of PD markers. Indeed, as we expected, we saw a 70% to 90% suppression of the gene signature with anafranumab versus 30% to 40% with siponimab. So this has given us a potential.
So potentially, anafurnumab could have even better efficacy than siponimab. Want to get into some more details with the siponimimab Phase 2b data, the primary endpoints and also some of the secondary endpoints. The primary endpoints are looking at SLE responder index as well as some secondary looking at organ specific improvement. The green lines highlight the primary and secondary endpoint SRI 4 as well as secondaries SRI 6 and SRI 8. SRI 6 and 8 are more stringent endpoints.
We saw a statistical significant improvement for SRI IV, SRI VI as well as SRI VIII. And also in the current study, the diagnostics, companion diagnostic incorporating the study looking at the patients who have increased gene signature, those are interferon alpha positive genes. We saw a numerical increase in the effect size ranging now from 15% to 21% for SRI 4 to SRI 8. Once again, they are statistically significant. Right side shows you the organ specific improvement that's quite obvious.
Day 1 before treatment and 6 months after treatment. The skin improvement is measured by Class E4 score. We saw a preliminary differences of 24.5 percent. These are for the high dose, the 12 milligram dose. Again, this is significant.
The more detailed data will be shared today at a scientific conference, that's our American College of Rheumatology in Boston. It's going to be a later breaker oral presentation by our investigator. In rheumatoid arthritis, we have a 1st in class anti GM CSF antibody. So despite the fact that there are multiple biologics antibody. So despite the fact that there are multiple
biologics on the
market today, the remain unmet medical need is high. For example, if you look at ACR50, ACR50 is 50% improvement in signs and symptoms, 45% to 74% of patients could not achieve ACR50. So mabranumumab has a novel mechanism of action. It blocks the function of macrophage and block inhibits the functions and also block the survival. Macrophage is one of the major drivers in the disease.
Phase 2b in dMART IR has been completed with positive data we met core primary endpoint. You saw your right graph ACR20 dose response highly statistically significant. Also met the co primary endpoint that states 28 and all of the secondary endpoints ACR-five thousand and fifty and ACR-seventy. The onset of actions are quite fast. After single dose, after 1 week, we begin to see efficacy.
We also saw significant improvement in patient reported outcome. Moving from RA to psoriasis. Just last week, we and our partner Amgen announced the second positive V3 for prodemymab in psoriasis. Prodemymab talks in a looking at the receptor. So by binding to the receptor, you can target multiple cytokines at the same time.
In addition to psoriasis, rutemimab is also in clinical studies, Phase III studies for psoriatic arthritis, 2 trials ongoing remain on track and also in Phase II for asthma. So both Phase III trial clinical studies achieved positive results. You see on your left, there's a 1st Phase 3 clinical study, OMAGEN-one. OMAGEN-one compares bordamimab with that of placebo. Primary endpoint is PASI75 and secondaries PASI90 and PASI100.
I really want to draw your attention to PASI100, the blue bar 200 milligram dose. 41.9 percent of patients achieved PASI-one hundred, the total skin clearance. So this suggests bazimimab may offer a new level of skin clearance. That's what really patients needed. The second study, IMAGEN 3, top line results is shown on your right side.
This is a head to head study with Stelara or istiketimimab. The reason we choose Stelara because up to now Stelara appears to have the best efficacy the market drugs. 2 doses was 210 and140 demonstrated superiority of the Stelara and with the PASI 100, the total skin clearance. The study also met the primary endpoint, the co primary endpoint, which is PASI 75 comparing with placebo and other key secondary endpoints. There's a third study, it's going to read out before the end of the year.
So we report the as soon as we have them available. Our portfolio molecule also have a rich lifecycle opportunity. I'm showing you some of the example here. That's because for immunology, for respiratory inflammation, autoimmune diseases, they often share biology, they share common disease pathway once you demonstrate proof of concept in one disease that you can rapidly expand into other indications. So in addition to a leading indication that we're pursuing for some of the molecules you see on the blue column, we're also pursuing some of the secondary indications and some other ones that are in the gray is we're considering for the future.
So this can significantly add the value to our portfolio. So looking to 2015, it's going to be another exciting year. We're looking forward to many milestones with the potential launches to clear as well as potential approval and regulatory submission and multiple potential Phase III starts. So all in summary, we have a strong respiratory portfolio that has been further broadened with Pearl and Admiral acquisition. We're making progress.
We're making great progress with positive data from our Phase 2 and Phase 3 portfolio and also validating the novel pathways with our clinical studies. We believe that we have probably the most comprehensive probably the most comprehensive portfolio of personalized healthcare for the increase in the benefits to our patients. So with that, I'm going to conclude. Thank you very much for your attention. Now I would like to introduce Elizabeth Bjork.
Thank you, Bing. And I'm really looking forward to giving you all an update on where we are within the cardiovascular metabolism disease area. Starting with the strategy, so we have a strategy within our TA aim to reduce the cardiovascular mortality, morbidity and organ disease. And we are doing that by addressing cardiovascular risk factors within 3 areas. Starting from the left with patients cardiovascular disease and here we have a long standing history.
We have been here for quite some time and developed drugs, anti hypertensive drugs and more recently drugs like Crestor and Brilinta. In the middle, we have the diabetes franchise and in my opinion, we have the best non insulin franchise in the industry. And to the right, we have CKD, chronic kidney disease and we are now moving into that area because these are patients with high unmet needs and many of them also have cardiovascular disease. So there is a huge overlap in disease spectrum amongst these three patient populations. Underneath, we have ongoing research activities focusing on really transforming disease progression proceed and not only their symptoms.
One part there is focused regenerations, but there are also other efforts ongoing. So what our focus is and what our aim is within the ongoing late phase development phase development is to change how patients with diabetes are treated. I'm now starting with the diabetes area and we'll get back to Belinta and CKD later aggressive combinations. So it's a strategy where you don't wait until patients are failing their treatment, but instead much We are also having a science led, science focused approach in how we are expanding our portfolio beyond type 2 diabetes and we have just started with the launch of the Phase 3 development program in type 1 diabetes with Forxiga where we dosed our first patient last week. We have a strong ongoing R and D commitment for our broad diabetes portfolio.
And it was not my intention with this slide for you to be able to read all the individual studies, more to show that we have lots of clinical trials ongoing that will deliver clinical data over the next coming years including the 2 ongoing cardiovascular outcome studies, 1 for Forsythia and 1 for BIJURAM. BIJUREN. Lifecycle management program for the Saksadapa combination, regional programs, lifecycle management for Bydurean and one specific trial I really want to highlight which is a combination trial in diabetic patients that will be treated both with exenatide and Forxiga and it has the possibility to show good effects both on HbA1c reduction and also on weight. So I'm personally very much looking forward to the results of that study. In total, we have around 40,000 patients right now in this moment in clinical trials.
But what is next? I will try now in the next couple of slides to give my perspective on why it is good to have a portfolio versus individual brands and how we can capitalize on that. Type 2 diabetes is a progressive disorder. So over time patients will deteriorate and they will need more treatment. We have a portfolio of drugs that can be used across that spectrum.
So regardless of if you are early on in your treatment or later on and on insulin, we had drugs that alone or in combination can be used. If you look at the current guidelines and here you can see the guidelines issued last year by the American Association of Clinical Endocrinologists. They advocate that you should have more early and aggressive combination treatment especially in certain cohort of patients. That is not followed by patients and physicians today. We have the portfolio to enable to help and make that happen.
I will now benefit of earlier combination. So here are the results of the one study with SaxaDapa, the combination of saxaglutin and dapagliflozin. It's in patients failing metformin treatment and at baseline they had very high HbA1c levels around 9%. That's a level where most or at least many endocrinologists including myself when I was still treating patients considered to use insulin instead of oral treatment. Here and that's the red bar up there, if you treat them with combination of Saxa DAPA you will be able to have a magnificent reduction in HbA1c here almost 1.5% and to be able to get around 40% of the patients to goal.
We are working very hard at this moment to put the file together and hope to be able to file the NDA for this fixed dose combination by the end of this year. And we are also developing a SaxaDapaMet formin fixed dose combination to be able to give that as a once daily pill and that work is ongoing. This is another study showing the results, the 2 year results of Forxiga, dapagliflozin on top of patients treated with insulin and also oral. So patients here are for example also on metformin around 80% of them. Just to remind everybody, Type 2 diabetes is a progressive disorder and over the 2 year period, we expect patients control.
That's also what you can see on the upper line which is the placebo controlled patients. They had to increase their insulin dose over the 2 year period here. The patients treated with Forxiga not only did they keep their HbA1c levels sustained over time, they lost 3 kilograms in weight during these 2 years and they did not have to increase their insulin doses. All this taken together gives us hope that it is actually possible to not only keep patients at a good glycemic control, but indeed to hopefully impact the disease progression per se. This is just an illustration, but it's one that many top endocrinologists are very in exploring further and it speaks to the notion and tries to summarize what I've been speaking about so far which is that if you treat patients aggressively early on with combinations, you could be able to keep them under better control for a longer period of time.
Moving beyond what we are thinking about doing within the Phase 2 area, We are also using a scientific approach trying to understand how our drugs can best be used also in other patients outside the core Type 2 area. As I mentioned, we have started the Phase 3 development program for Type
or indeed
combinations of our drugs can be used or indeed combinations of our drugs can be used for example in patients with NASH, fatty liver disease, heart failure, obesity or renal disorder. We are there using a scientific platform or you can look upon this at the toolbox of methods that we have in order to understand how our drugs or combinations of drugs are being used. I will not go through this in any kind of detail, but we are looking at functional data, body composition, insulin sensitivity and effects on beta cells. Just as an example looking at sort of the second one there, the body composition, this is the toolbox that we used when we try to understand whether the weight decrease seen with Forxiga treatment was due to fat, bad fat, water and we were able to show that the weight reduction you see there is a reduction in bad fat, visual fat. And the same kind of technology we are now using looking at lipid contents in the liver and see if there is a platform that we can use then for development of drugs in NASH for example as I
described.
Moving from the diabetes area into chronic kidney disease and CKD and the very exciting ongoing development we have in collaboration with FibroGen and Acelat. The compound is called roxadustat and is currently in Phase III development. It has the potential to be the 1st oral erythropoietic treatment for renal anemia in patients with chronic kidney disease be they on dialysis or in pre dialysis. What you see here to the right is the Phase 2 results and you can see a clear dose dependent increase in hemoglobin when these patients were treated. The doses we are bringing forward to Phase 3.
The 1 milligram per kilogram in the middle that's what we are starting with with the opportunity to increase the dose to get sort of the full aspects of the hemoglobin increase that you need. The Phase 3 program includes around 7,000 more than 7,000 patients and is designed to show cardiovascular safety versus the current erythropoietin treatment that is offered today to patients. And I will get back to why I think we have The treatment that is today offered to these patients is recombinant erythropoietin, ARPO. And as you can see on this slide here, if patients are given higher doses of erythropoietin, there's a higher risk of cardiovascular events and higher risk of cardiovascular mortality. Renal anemia and CKD.
It is not absolutely clear why you have this increased cardiovascular risk when treated with EPO. But some of the topics that are being discussed are indeed the EPO levels per se that are very high and supra normal when you treat with injectable erythropoietin. But there are also discussions around how fast you increase the hemoglobin level to which levels you get and also the fact that you have a small increase in blood pressure when you treat them with EPO. Based on the mode of action with Roxas which is very different compared to EFO, we aim to avoid these things and we have designed the program to show that we have a drug that is efficacious which we believe based on the Phase 2 data I showed you, but also safe from a cardiovascular perspective. One of the key reasons why we believe that there could be a difference in cardiovascular risk is the first point here, the supraphysiological physiological ARPU levels you see when treated with injectable erythropoietin.
And what you have here is the comparison of the erythropoietin concentrations in blood in patients when they are treated with EPO, that's the red one and when they are treated with Proxa. And the blue one there is the 1 mg per kilogram dose I showed you the efficacy of before and with the potential to go up to the 2 mg per kilogram which is the red one there. So taking all of this together, we think again we have a drug that works and that we will be able to show cardiovascular safety based on the mode of action and the program we have designed to show that. Moving then to the last part of my presentation and that is Brilinta Ccagrelor. We have an ongoing clinical development program for Belinda called the Parthenon program.
It's our biggest ever outcome study supporting one drug and it is designed to show the clinical effects of ticagalore across the spectrum of cardiovascular disease and atherosclerosis. Total and we have 4 major cardiovascular outcome studies ongoing right now that will deliver data every year over the next coming 4 years. The next one being Pegasus that will deliver results hopefully early next year. Following that, we will have Socrates in patients with prior stroke, then Euclid in patients with peripheral artery disease and then THEMIS in patient high risk patients with diabetes. But the next one is PEGASUS and that is in patients that have had a prior myocardial infarction 1 to 3 years before being included in the PEGASUS trial.
Taking you back to the PLATO data and reminding everybody about the unique clinical profile we have with Welinta Anticagulor. On the left hand, you see the MACE results which was the primary endpoint in PLATO, the composite of cardiovascular death, myocardial infarction and stroke. And you see a continuous benefit over the year of the treatment. So you see the curves separating over time. And it's in the end of the 1 year that's when the inclusion in PEGASUS happens.
On the right hand, you see the mortality benefit which is also unique for Bolint and Ticagrelor and the same pattern, the curves are separating over time. We think that this unique benefit or this unique clinical profile might be linked to the fact that we have a dual effect. It's not only a P2Y12 inhibition, but also an ENT1 inhibition giving a low local increased concentration of adenosine and this has been recognized also by regulators and has just been included in the European SMPC. The patients included in PEGASOS are patients at high cardiovascular risk. This is data that we presented at the ESC Congress earlier this year.
It's a real world evidence study that we conducted in 5 different countries and these are the results from the U. K. And you can see that in patients like the patients in PEGASUS that did not have an event the 1st year following their myocardial infarction are still at a very high risk having a patients had another event within the next following 3 years. And that's exactly the kind of patients we have in PEGASUS. We are working very hard on closing that study right now and I very much look forward to sharing that data with everybody early next year.
So that brings me to concluding the cardiovascular metabolism side of this. Our strategy is to reduce mortality, mortality, morbidity and organ damage by addressing the cardiovascular risk factors across these different patient populations treatment and we have a science led lifecycle management and extension strategy. We see a real opportunity to impact and change the lives of patients with chronic kidney disease with treatments like roxadustat that the spectrum throughout our delivery of the clinical data that we have in the Parthenon program. So with that, thank you and we look forward to the questions.
Thanks, Elizabeth. We're going to focus now on the CVMD and respiratory therapeutic area questions. So we'll take the first I'd like to go to the phone line actually. We've got Seamus Fernandez. So give the guys on the phone lines a chance to ask questions.
Hopefully, Seamus, you can hear us.
Yes, I can hear you fine. Can you hear me?
Yes, got you.
Great. Thanks. So maybe my first question for being a couple of things on the respiratory and RHEA space. First off, when I look at the data for CEPHA and compare it to the FDA documents for the effect size versus BENLYSTA. The drug's effect size looks relatively similar to BENLYSTA.
So can you please just kind of correct me where I'm wrong on how this drug is differentiated on efficacy from Benlysta? And I do recall looking in the abstracts at ACR seeing a little bit of a higher adverse event rate at the 1200 milligram dose. Can you walk us through a little bit of the side effect profile of CIFA? And then also how again remind us again how anaprilumab might differentiate on efficacy and safety? And then the respiratory space, we did have some recent data from a competitor product, basically making a lot of the same claims that you make on the anti IL-five.
Can you just walk us through how the your strategy on anti IL-five and anti IL-thirteen will differentiate from the anti interferon or sorry, the anti IL-four alpha? And then my last question, as we think about the cardiovascular cardiovascular side your thoughts on the recent safety questions that were raised very specifically around long term use of antiplatelet therapies. This was just published at the American Heart Association meeting and met with a safety warning from the FDA. I believe it was specifically associated with DAPT study, which did not involve Brilinta. But just wondering how you're going to respond to that safety question?
Thanks so much.
Thanks. So I think there's at least 7 questions in there, but if we start with lupus and cifolumab and nifrolumab. Ben?
Sure. First of all, thank you for the question. I want to remind everyone that for lupus, that's really high unmet medical need, 50, 60 years now only 1 output drug. So clearly patients need options. For sevalimimab, this is a novel MOA.
In fact, we're the first one to demonstrate clinical efficacy, targeting interferons, can translate into clinical efficacy in autoimmune disease. Crossfire comparisons in front of the efficacy is going to be very tough, but what we have seen with our Phase 2b is consistent results. Based on according to our knowledge, conditions opinion. This is one of the most consistent Phase 2 results Phase 2b for Phase 2a in lupus. Not only we saw the SLE index for and higher of 6 and 8, but also organ specific improvement, the 6 and 8 as well as the organ based BILAC also.
So it's most consistent results. The more data is actually is going to be shared today in probably a few hours, 4 hours at ACR oral presentation. So we're really encouraged by that results. For if you have to compare to see Impella Banlista actually failed in the Phase II clinical study. In Phase III, you see without a cross trial comparison the effect size for SRI 4 is 9 to 14.2.
So additionally I mentioned that with aniforamimab because of the MOA targeting more than the interferon alpha, beta and omega, there's even opportunity for greater enhanced efficacy with the second approach. So that's for the efficacy. So then in terms of safety profile, so far, I think once again we're going to disclose in details in the ACR. The signal we have seen for sevanelymab is increased herpes zoster infection. Higher doses appears to be drug related.
However, all the patients responded really well to antiviral therapy. So for enafarumab, we'll have data next year, mid next year. We expect to share the data in conference.
Thanks Bing. Let's go to cardiovascular safety Tom and then come back to Bing for the respiratory positioning with the Enfelukin Biobiologicals.
Yes. So the question relates to ADAPT study, which is actually the long term use of pinupiridines. It did not include Brilinta, but it was presented at the in Chicago on Sunday. And I won't go into the detail of the results, but essentially what they say is if you treat 1,000 patients beyond the 1st year, actually out from 12 months to 30 months, you see a significant reduction in cardiovascular events, a 50% reduction in MIs. So out of 1,000 patients, you would save you would not see 20 CV events.
You would reduce stent thrombosis, 9 cases, but you would increase overall mortality by 5 deaths and see 10 see 10 increases in moderate or severe bleeding. So the debate on Sunday was very much around the risk benefit of that in the population. Obviously, a lot of focus on those imbalances in death. But the initial hypothesis is that was an imbalance in terms of the number of patients randomization in the two arms that had cancer. So the hypothesis is that's not treatment related.
I think the DAP study in many ways is the perfect curtain raiser for PEGASUS Because if you think historically, I think beyond 1 year, physicians have systematically underestimated long term cardiovascular risk. And to a certain extent, they've treated the wrong disease. They're focusing on preventing stent thrombosis, where we believe for high risk patients, they should be focusing on the long term treatment of the underlying arthrothrombotic disease. So I think overall, it raises the clinical debate. This is the reason why we're doing the PEGASA study, and we very much look forward to
the results early in January. Ben, quick comment on strategy and then relative data from our competitors.
Yes. I think, Seamus, I would assume you refer to the dupilumab from Regeneron and recently we announced 12 week interim data. Have to see that with the 12 week data is really how to make a comparison across trial. But again because we are targeting the IL-four, IL-thirteen, the Th2 pathway, I think this approach further validated the approach we are taking and others are taking, which is targeting the Th2 pathway for a subset of patient population. We remain to be confident of our the profiles for our molecules.
I mentioned for barenezumab for eosinophilic asthma, we this molecule is engineered. It has potent property depleting eosinophils. We have in multiple trials, we have Phase Ib, Phase IIa, now Phase IIb consistently deplete very permanently eosinophils hitting the target. So that translate into really good efficacy. Population we tested in Phase IIb quite broad because we included patients with a medium ICS as well as high ICS.
We saw a reduction of 43% to 78% depending on the cut level. In P3 clinical design, the way we designed it, we will be able further characterize the range of eosinophilic cutoffs. So this we see which population would be best response to berninezumab. So that's for our trial design. For trilukimimab, we have 2 biomarkers incorporated into our clinical study.
Based on our learnings we have is also we really enriched for the responder population. What we found in Phase IIb clinical study, the patient needs to be reversible and needs to be not on oral corticosteroids. This will be a separate study. So in that responder population, we saw efficacy across all the different parameters, including asthma control and quality of life has not seen by other molecules. So FEED3 once again will confirm the efficacy in population.
We have 2 we do have 2 potential diagnostics incorporating the design too for our fellow.
I'll just add, Ben, if I may. I mean, I think there's four elements to this story. One's pure efficacy and the data we saw in our Phase II in both Benra and Trello was extremely good, both in terms of exacerbations and all on the asthma and COPD, other functions for for for all comers. We think it's important with these biologics to focus on specific patients, be most relevant to physicians and to payers. And the third one is also convenience.
And clearly, we believe with benralazumab with 4 weekly up to 8 weekly dosing, we can have a very convenient and easy to use administration. IL-five receptor, trilikinumab and IL-thirteen and also the T SLIP and future biologics. So we can provide a range of a portfolio really giving a definitive choice and selection and direction to doctors to understand which patient is going to benefit most. Just remind people on the phone lines, you can ask questions on the WebEx, but with no more questions, we'll go into the room. So let's take one from the back, so we have some variety.
This gentleman here please.
Hi. It's Mark Clark from Deutsche Bank. Just wanted to ask about lisinurad. The study showed the reductions in serum uric acid as you targeted. But the secondary endpoints, which were mean gout flares and TOFUS resolution showed no significant difference.
Reductions in gout flares as the primary endpoint. Could you speculate as to why you didn't see those symptomatic improvements? And secondly, does that represent a potential problem with the regulators? Thank you.
Briggs, maybe you're the best person to answer. So Briggs, do you want to take that question?
Yes. Thanks very much for the question. I think the ability of agents that lower serum uric acid to impact both flares and TOFI is an area of it's still sort of evolving science. So nobody has really been able to show with agents that lower uric acid that you get a dramatic decrease in flares until you probably treat for a longer period of time. So the studies that we've done so far probably weren't of long enough duration to see the decrease in the incidence of flares and the decrease incidence of TOFI.
I think your question about whether that causes any challenges with regulators, I think it's a very fair point and one that, of course, I think they'll raise during the
review. Interestingly, Mark, there is a hypothesis that as you start to break down the crystal burden, the flare rate typically when you're treating gout goes up. And so it's one of these perverse ironies that as you're reducing your serum creatinine and getting the crystals actually into the blood stream, your flares may go up. So as Briggs said, I think we need to look at extended studies for that. The TOFI resolution, we had a tough target.
Our target was full TOFI resolution. In other words, 0 evidence of TOFI. We weren't able to hit that endpoint, but there was significant reduction Martin, maybe you want to comment from a rheumatologist perspective? Martin, maybe you want to comment from a rheumatologist perspective?
Yes. I want to make a small comment. So the other thing is that the lisinarab trials, because if you change treatment, patients are very prone to flare. So the patients with the Coccasin maximally controlled to actually keep their flares down. So that actually that design well, the trial wasn't designed to actually pick up flares.
Actually, it was actively treated against it.
Thank you. Yes, gentleman in blue.
Thanks very much. This is Geoff Holford from Jefferies. So on PEGASUS, which you've talked about quite a bit today, how much have you sort of factored in, eluting stents to 2nd generation drug eluting stents, the data that we've seen around shorter durations of therapy being as optimal as longer generations in those and how that might impact the outcome? And then I don't know if you care to comment or not, but if Pegasus were not to read out positively, how much of an impact would that potentially have on your thoughts around where Brilinta could get to in your long term planning? Thank you.
Tom?
Yes. Thanks for the questions. We're trying to position Brilinta independent of the stent platform. That market moves extremely fast. And so the PEGASUS study hopefully will deliver results as the PLATO did across a variety of stent platforms.
The second part of the question was? Really just if PEGASUS did not read out as a sort of convincing positive commercial study, what kind of impact would that have on your longer term guidance around or long term management guidance around sales for
Brilinta? Yes. I think it depends a little bit of what you mean by readout positive. I think there are various scenarios. Scenarios.
As you know, it's a 3 arm study. We have a 60 milligram and a 90 milligram arm. And we'd need to look at the data from both of those arms and the data together in terms of statistical significance and also whether we think the data is consistent with what we saw with PLATO. And obviously, there are a range of commercial scenarios which would reflect that. Over the course of the long term, if you put ACS, PLATO and post MI PEGASUS together, because of the timing of launches, they do together represent the largest part of our 2023 forecast.
So we're going to need to take a look at that in the light of the PEGASUS results early next year.
Thanks very much.
So take the risk and see if Sachin you can ask one question because we're it's between you and the brakes. No, one question. Wait, wait, wait. We need to get the mic working. Still not working.
We have a live mic.
Sachin Jain, Bank of America. I'll focus on roxadustat then. So CKD is a big enough opportunity in itself, but I wonder if you could discuss potential Phase III programs beyond CKD in terms of chemotherapy induced anemia, other anemias? And then any color on differentiation you perceive you have versus the bio and Glaxo molecules?
You want me to yes.
So clearly, the first indication is CKD. But in the life management, it will all depend if the compound deliver on its promises, which is the CV safety. So if there is no I mean, as we expect, no issue the city safety, other anemia, chemotherapy induced, anemia or inflammatory origins are clearly part of the life cycle management. And your second question was the differentiation. So as you know, we are ahead of the competition.
Clearly, if you look at the design of the program, we are giving the drug 3 times a week. And we do believe that the way this class of compound is administered will impact the clinical response. So we can provide you more insight when we have seen more data. But to the best of our understanding, I think 3 times a week is probably optimal dosing regimen.
Thank you very much. Appreciate it. There's a lot more questions in the room. We're going to have a break. The management team will be around for questions.
Obviously, there's more time for questions later. Please be back at 3 o'clock sharp, so we can stay on track. Thank you.
Okay. If you could take your seats. I believe we have the phone lines and WebEx up and going.
So for those of you
that don't know me, my name is Susan Galbraith. I'm the Head of the Small Molecule Oncology Innovative Medicines Group. And I'm delighted to be here today to talk to you about the updates that we had in our oncology portfolio. So our oncology vision is to redefine the cancer treatment paradigm to bring novel medicines that will restore patients' lives and increase the potential to eliminate cancer as a cause of death for an increasing proportion of patients. We're very confident in the ability of our pipeline to deliver, sufficiently confident to promise that we'll be delivering 6 new medicines to patients by 2020.
We're focused on 4 key biology areas, tumor genetic drivers and resistance mechanisms, DNA damage response, antibody drug conjugates and immuno oncology. We're also focused on 4 core disease areas lung cancer, breast cancer, ovarian cancer and hematologic malignancies. And our strategy is focused on 3 key areas. The first is around combinations. Now many novel oncology drugs first get approved as monotherapies.
But the real progress in terms of improving the survival of outcome of patients with cancer over the last 50 years has been through the development of combinations and that will continue. We need to put together carefully individually effective drugs to drive the combinations that will dramatically improve the outcomes for patients with cancer. So this is really important part of our strategy and one that we'll be heterogeneity. We used to define cancer by its site of origin, lung cancer or breast cancer. But now we know that actually there are many different subtypes of cancer within those terms.
And by understanding which patients are most likely to respond to treatment because of particular understanding of the genetic drivers in that cancer, we can tailor the right treatment for the right patients. And again, you'll hear that we have developed multiple different diagnostic tests associated with different compounds in our pipeline. And the final element is that we need to be smart about how we develop our compounds. We need to understand quickly how to combine them together with the other agents to drive those efficacy efficacious regimens. We need to be nimble and agile in terms of understanding how we develop the diagnostic test to go along with them.
And we also need to move early into early stages of disease where the potential for cure is highest. So this slide just shows on the left hand side, the power of combinations. You see combinations. You see 3 different preclinical experiments looking at combinations of 2 agents together, where you see better efficacy than you can see with either agent alone. We can do this by putting together different mechanisms that individually kill cancer cells in different ways.
And so you end up with a greater cell kill that you can achieve with either agent alone. We're doing it also by understanding the mechanisms of resistance
that can occur to one
element of the combination or the other. Combinations that will overall improve the benefit profile compared to monotherapy. So I said the second element of our strategy is personalized healthcare. Our approach is to have freedom to access to the right diagnostic test by partnering with the right company our individual agents. And so you can see on this slide, we've got a variety of different platforms.
We're using an immunohistochemistry test in partnership with Ventana to identify the right patients to treat with our PD L1 antibody MEDI-four thousand seven hundred and thirty six. We're partnering with Myriad to have BRCA mutational testing available for patients with for Lynparza. We're the 1st company to get a circulating tumor DNA diagnostic test as part of the label for ARESSA in partnership with Keyagen. And we're also developing this technology with AZD9291. We're also partnering with Illumina for our next gen sequencing platform, which is going to be the future of genetic testing, the ability to look at multiple genetic mutations simultaneously thousand We've been able to move AZD9291 as Pascal told you earlier very fast from the first time in human in March to the earliest filing, potentially 2.5 years from the first dose.
And we've done that by having we started off with a parallel Phase 1 going in Asia and in the West. And you heard as well from Mark that the prevalence of this of the EGFR sensitizing mutation is much more common in Asia. That enabled us to go very quickly. We also selected patients with the T790M mutation early on in the study. So we're very early to get efficacy signals.
And we've had a seamless transition into Phase 2 and in Phase 3. And we've had the right commercial formulation to go along with that. All of those pieces of development are critical to enabling this very rapid move to filing and getting this drug to patients. With our PD L1 antibody, the PACIFIC study in Stage 3 unresectable lung cancer has been able to move this very early into the early stages of disease where the potential for cure is highest. I've mentioned the circulating tumor DNA test already.
Let me tell you why that's important. It's important because not every patient is able to have a tumor biopsy. If you can't have a biopsy and you can't work out and what's the right the genetic mutation in your particular tumor, then some patients will get denied access to drugs that might be effective for them. So having access to circulating tumor DNA enables access to a broader range of patients and also can be used to actually monitor response to treatment during treatment. And finally, to put combinations together that are going to make effective regimens, they have to be individually safe and tolerated to be combinable.
Mohammed is going to tell you in a moment about the MEDI-four thousand seven hundred and thirty six combination with the BRAF and MEK inhibitor. Other people have tried to do similar combinations and some of them have failed because they weren't tolerated. This just emphasizes how the good combinability is critical developing novel triplet combination that will hopefully deliver better efficacy. This slide illustrates the strength and depth that we've got across the 4 biology areas that I outlined, the area of tumor drivers and resistance, DNA damage repair, immuno oncology and antibody drug conjugates. You can see that we have great strength and depth, which enables us to develop those combinations, which are a core part of our strategy.
So now I'm going to tell you a bit about 4 different programs that come under the classification of tumor drivers and resistance. The cartoon on the left hand side of this slide outlines some of the signaling pathways that occur in cancer. Cancer is a genetic disease and the mutations that happen in cancer drive abnormal signaling through these pathways. They basically switch on permanently the on switches for growth. And so cancers can become addicted to that on switch.
By understanding that, you can develop inhibitors to switch the switches off and that causes the cancer cells to die and leads to tumor regression. But because these pathways are often interconnected, some of the cancer cells can have resistance mechanisms and they can subsequently regrow and repopulate the cancer with those resistant cells. So if you can understand potential resistant mechanisms, you can help develop drugs with combinations that can overcome them. So great example is AZD-nine thousand two hundred and ninety one, which is the first of the 4 programs I want to highlight today. This is our EGFR mutant selective inhibitor in lung cancer.
We know that a subsegment of patients with lung cancer have mutations in the epidermal growth factor receptor, which drive that addiction to the on signal that this provides. Drugs like our own ERESSA have a high response rate about 60% to 70% response rate, but patients ultimately develop resistance, which often shows after about 10 to 12 months on drugs like ARRESSA. And by biopsying those tumors at the time progression, we now understand that about 60% of those patients develop a second mutation in the epidermal growth factor receptor, so called T790M mutation. What that does is it alters the kinetics of the binding site, so ERESSA doesn't bind as well. And that's why the on switch is then switched back on again and the cancer grows.
What our chemists have done is design a molecule that binds potently both the original sensitizing mutated with the resistance mutation presence as well. And it does so with a potency that's 30 fold greater than the potency with binding to wild type or normal receptor. And that's important because that normal receptor is present on your skin and your gut cells. An inhibition of that normal receptor leads to the side effects that you get with drugs like Aretha of Russian diarrhea. So the graph on the left of this slide shows the waterfall plot that was presented at ESMO earlier this year.
Each bar on this graph represents an individual patient and the bars that go down represent tumor shrinkage. At the 80 milligram dose we're taking forward, we have a 70% response rate in this patient population, which is highly durable. And the impressive response rate and the depth and durability of the responses have led to the U. S. FDA giving us breakthrough therapy designation.
We're continuing to move very rapidly with this program. We have ongoing We're starting our first line Phase 3 very shortly. We're starting our first line Phase 3 very shortly and data readout is expected from that trial in 2017. And we're intending to start rolling U. S.
Filings in January 2015 with completion in the Q2 of 2015. So these data were also presented at ESMO. On the left hand side is the waterfall plot now from the first line patients treated with 9,291, which also shows an impressive disease control rate and response rate. And obviously, we'll be waiting to see the durability of those responses and the progression free survival as those data mature. On the right hand side, I'm quite excited by the anecdotal data we've currently got in the clinic of patients with brain metastases.
That's important because the current EGFR inhibitors don't penetrate well into brain. We have preclinical data suggesting 80 milligram dose we do get good brain penetrance and this is backed up by the currently anecdotal data and we'll be continuing to look at this patient population which represents a growing unmet medical need since other EGFR inhibitors don't treat this patient population well. So now I want to move on to the 2nd molecule out of the tumor driver class I want to talk to you about. This is AZED-two thousand and fourteen. This is a dual TALK1, TALK2 inhibitor.
Now TALK1 is a clinically validated target. Everolimus is a TALK1 inhibitor and TRC1 inhibitor and is approved in estrogen receptor positive breast cancer. But the issue with currently available therapies is that you get feedback activation of the pathway actually within hours. And so one differentiation that we have from everolimus is that by inhibiting both TORQ2 and TORQ1, you can overcome some of that pathway reactivation. The second point is another example of our smart development.
We understand that pathway reactivation is a common issue across all PI3 kinase pathway agents. And so we've developed intermittent dosing schedules with this drug so that you can hit the cancer once, kill some cells, allow the pathway to reset and come in again with the next doses to overcome that feedback inhibition. What we've seen preclinically is that this leads to better efficacy. And we see that better efficacy shown on the left hand side in the Phase 1b study done in heavily pretreated patients. Here, two 14 is dosed on a 2 days a week or 3 days a week regimen in combination with weekly paclitaxel.
Many of these patients had had prior taxane therapy and so the response rate we're seeing here and the durability of the responses is encouraging. Now this mechanism is important not just in this setting, it has potential relevance across breast, lung, ovarian cancer and lymphoma because the PI3 kinase pathway is most commonly mutated pathway in cancer. Assuming that we have continued encouraging data, not just from this trial that I've shown you, but also from a trial that we have ongoing in combination with Fazlodex, which also shows encouraging tolerability
and efficacy data. There's a potential for
a Phase 3 3rd molecule I want to talk The 3rd molecule I want to talk to you about is AZD-six thousand and ninety four, which is a potent and highly selective inhibitor of MET. MET is another tumor driver, which can be amplified or mutated in some segments of cancers. Now the molecule that we have is differentiated from a drug you may be familiar with onetuzumab. Onetuzumab was designed to interrupt the binding of the ligand for the c Met receptor, which is hepatocyte growth factor to c Met. Okay.
So it's designed to work in settings where the tumor is addicted to that ligand stimulated signaling. Our c Met inhibitor is designed to work in the met amplified or met mutated setting where there could be ligand independence. So it's a different setting from onotuzumab. And we have clinical proof of principle from assessing where we have met amplification in papillary renal cancer as you can see on the waterfall plot on the left hand side. We have initiated Phase II trial in papillary renal papillary renal cancer and also in metamplified gastric and lung cancer.
And we have an ongoing combination of this molecule with 19N1 in second line EGFR mutant lung cancer because met amplification is another common resistance mechanism to currently available EGFR inhibitors. So the final molecule out of the group that I want to tell you about in tumor drivers is AZD9496, which is an oral selective estrogen receptor down regulator or SERD. Now actually targeting the estrogen receptor is one of the first examples of targeted therapy in cancer from decades ago. AstraZeneca has a strong heritage here including our drug Fazadex, but it is possible to improve on the efficacy available for the current therapies. And by designing this molecule which is orally bioavailable and much more potent than Faslodex, which we can have improved knockdown of the estrogen receptor and that leads to increased cancer cell kill.
And what you can see on the left hand side is a preclinical experiment in tumors with estrogen receptor breast cancer where AZD9,496 shows improved efficacy compared with either Fazolex or tamoxifen. We started 1st in human trials with this molecule and we will be reporting the full pharmacological data at the AACR next year. I'd also like to point out that a large pharmaceutical company with a strength in oncology recently paid substantial amount of money for a similar molecule, which is the only other competitor in the clinic. So now I'd like to turn to the area of DNA damage response. Abnormalities and the ability to repair DNA are quite common in cancer.
In fact, they're one of the reasons why cancers accumulate those genetic mutations that I talked about that help to drive cancer growth. But they also represent an Achilles' heel in terms of the ability to kill cancer cells. If cancers have a deficit in one of the DNA repair mechanisms and then you inhibit a different DNA repair mechanism, you can selectively kill the cancer cell, which has that abnormality and spare the normal tissues, which have intact DNA repair mechanisms. AstraZeneca has the most extensive portfolio of DNA damage response agents in the industry with a PARP inhibitor, an ATR inhibitor and a V1 inhibitor all in the clinic. And those are all first in class molecules.
So the principle of selectively targeting cancer cells to produce clinical benefit in patients that have a deficiency in one DNA damage repair pathway. It's clinically validated now with the data that's come from the Lynparza program. The study 19 data that's shown on the left showed an improvement in the progression free survival in patients with BRCA mutation who are dosed with olaparib versus placebo in platinum sensitive deficiency in the homologous repair pathway, which means that patients are then sensitive to inhibition of a second pathway, the base excision repair pathway to the PARP inhibition. So we've not just seen activity with olaparib in ovarian cancer. We've seen activity in breast cancer, in gastric cancer, in pancreatic cancer and most recently shown some exciting data at the ESMO meeting in prostate cancer.
We have a broad ongoing Phase 3 program readout from the SOLO-two trial in buccal mutated ovarian cancer expected in 2015 from the first line study SOLO-one in 2016 and from the advanced breast cancer BRCA mutated setting at the Olympiad trial also in 2016. The gastric cancer trial goal should read out in 2017 and we're starting the pancreatic study in the Q4 of this year. I mentioned the prostate cancer data that was presented by Johan de Bono at ESMO. They showed him in late stage patients, 10 out of 30 patients responded. These patients had all had prior chemotherapy and more than one antigen receptor antagonist.
The data that we've seen from Study 19 has led to the recent positive CHMP opinion and we're continuing to work with the U. S. FDA and with the PDUFA data expected of 3rd January 2015. So now I want to introduce AZD1775, which is our 2nd DNA damage response inhibitor. It's Now V1 is protein that's important in the control of the cell cycle.
And there are natural pauses or checkpoints in the cell cycle where a cell literally pauses, checks itself for DNA damage, repairs that DNA damage before it goes on to the next section. By inhibiting those checkpoints with the V1 inhibitor, you force the cell to go through the cell cycle carrying an abnormal level of DNA damage until the cells are more likely to die than they are to successfully complete cell division. We've got preclinical data tumors that have a P53 mutation are particularly sensitive to V1. And we're doing further analyses of the genetic background that will lead to particular sensitivity of this drug, so we can treat the right patients with it. We already have data from platinum sensitive ovarian cancer which is shown here and also in platinum resistant ovarian cancer.
And we have Phase 2 studies ongoing in both ovarian and lung, which are likely to read out next year. There's also a great rationale to combine this drug with LYNPARZA and Menypangalov in his presentation will show you some of the preclinical data that shows confidence in that approach leading us to plan to start a combination study in Q1 of next year. And the final compound I want to tell you about today is AZD 2,811, which is an Aurora Kinase B inhibitor. We actually already have proof of concept with this molecule from a randomized Phase 2 trial in patients with elderly patients with acute myeloid leukemia who are unfit to receive intensive chemotherapy. AURORA Kinase B inhibitor as monotherapy or low dose ARROC which is the current standard care and actually showed a 30% improvement in the overall complete response rate including the Chiesen criteria compared with low dose RSC and also a trend to improvement in overall survival.
So we intend to go and discuss these data with regulators early year, but we're also developing this molecule in combination in partnership with BIND Therapeutics with a nanoparticle formulation. So I think these overall show that our presence in DNA damage response is really strong and is growing. What I'd like to do now is hand over to Mohammed Daher who is going to talk to you about the progress that's been made in the immuno oncology portfolio. Mohammed?
AstraZeneca Oncology. And in fact, it represents a paradigm shift in how we treat cancer. Rather than targeting the tumor directly, we're targeting the patient's own immune system. And what we're learning is that cancer has evolved over time to utilize multiple escape mechanisms to avoid detection and destruction by the immune system. Therefore, our strategy in immuno oncology is to develop novel combinations that target each of these key escape mechanisms.
And we believe that this approach offers the best potential for delivering meaningful clinical benefit to patients. So let me share with you in more detail our strategy. So the response to cancer, the response, the immune response to cancer is actually quite complex, but we can break it down into 3 key components. The first step is antigen presentation. So small pieces of protein or antigens are released by the tumor and taken up by professional antigen presenting cells or the educators.
These train T cells to recognize the tumor. So this is the portfolio, we already have several molecules that can enhance antigen presentation and through clinical collaborations, we have access to additional molecules, including vaccines, which are specifically engineered to potently present antigens to the immune system. The next critical step is to actually once the T cell has been educated is to activate the T cell to cause it to proliferate, to cause it to secrete cytokines and ultimately for it to mature into a memory cell which offers actually the greatest potential for durable clinical benefit. And it's actually this step that's garnered the most attention and generated the most excitement especially because of targeting the success of targeting CTLA-four and the PD-one pathway. But in addition to these checkpoint inhibitors which are essentially breaks on the immune system, there are additional receptors on on T cells that actually act as a gas pedal such as OX40.
And as you can see again in our portfolio we have multiple molecules targeting both checkpoints as well as the gas pedal such as OX40. So it offers us the potential to pursue rational combinations targeting T cell activation. So once the T cell is educated and then ultimately activated, the last critical step is for the T cell to migrate to the tumor and to recognize the tumor initially been educated and then activated when it gets to the tumor initially been educated and then activated when it gets to the tumor microenvironment, there can be multiple roadblocks that actually block or stop the T cell. So we actually have been paying attention to this arena and we have several molecules within our portfolio and then through collaborations we have access to additional molecules that test hypotheses of trying to remove these roadblocks within the tumor marker environment and to combine it rationally with agents that activate the T cell or enhance antigen presentation. So as you can see, we have a comprehensive strategy in immunotherapy trying to target multiple immune escape mechanisms and leveraging both the biologics portfolio at MedImmune as well as the small molecule portfolio to AstraZeneca.
In addition, I highlight a number of new molecular entities in each of these categories that are poised to enter the clinic over the year or so. So let me share with you a couple of examples that highlight each of these components and the strategy that we're taking. The first example that I'd like to share with you is our triplet combination with debrafenib, trametinib and PD L1. So as you may know MEK and BRAF inhibitors have a well defined place in the treatment of BRAF mutant melanoma, especially frontline melanoma. But emerging clinical data shows that patients, although they achieve high response rates, eventually develop resistance and progress.
So there is an unmet need in terms of trying to deliver more durable clinical activity with these agents. And so recent published clinical data shows that patients who are treated either with a BRAF inhibitor or the combination actually have significant changes in the tumor microenvironment. What I highlight on the left hand of the slide is before and after biopsies in patients being treated with BRAF inhibitor, but the story is the same with the dual inhibitor of a BRAF plus MEK inhibitor. And what
you see on the top
picture is that the tumor microenvironment is bland. And then following treatment with the BRAF inhibitor, you see significant infiltration of immune cells and these are the CD8 positive T cells that is the focus of immunotherapy. The bottom hand before and after biopsy show that following treatment with the BRAF inhibitor what you begin to see is the tumor is now adaptively trying to resist this immune attack. It's up regulating one of the key breaks in the tumor microenvironment which is PD L1. So if you put this story together this is the perfect rationale for why you would want to add an additional immune checkpoint inhibitor on top of BRAF and MEK.
And so others have tried to actually combine a on top of BRAF and MEK. And so others have tried to actually combine a BRAF inhibitor with checkpoint therapy such as a CTLA-four inhibitor or a PD L1 inhibitor and have run into toxicity. So with that background we're actually quite pleased with the fact that in our initial Phase 1 experience with this triplet combination, we've been able to escalate to full monotherapy doses of each agent and have not exceeded a maximum tolerated dose. And we look forward to presenting this data in the first half of next year. Okay.
The next example I'd like to share with you is our approach to targeting T cell activation. So many are familiar with checkpoint inhibitors, but the other set of receptors that are important in activating T cells are the agonist receptors. And we've made a significant investment in the OX40 pathway with 3 unique molecules that are differentiated and target distinct biology of OX40. The mirroring OX40 is actually completed a first in human trial and data was published late last year. And I highlight 2 key data sets.
1 is on the top which essentially is a waterfall plot showing that a significant percentage of patients who received a single cycle of the mirroring OX40 experienced some degree of tumor reduction at the 2 month mark. In addition, looking in the peripheral blood of these patients, we find exactly what we would expect with an OX40 agonizing molecule which is increased proliferation of the peripheral circulating T cells. So based on this encouraging preliminary clinical data from the Muirreen Oxfordi we've actually initiated clinical combination trials with the murine Oxford plus PD L1 testing the hypothesis of can you concurrently target both an agonist molecule, so a gas on approach with a checkpoint inhibitor which is a breaks off approach to see whether that will be tolerated and what type of clinical activity and pharmacodynamic biomarkers will be activated using that approach. In addition, we have a second OX40 molecule which is the OX40 fusion protein which has already entered clinical trials a few weeks ago and we plan to enter a 3rd molecule which is our OX40 monoclonal antibody which will enter clinical trials in the Q1 of next year. The last two examples target the tumor microenvironment, a up till recently neglected area.
So when I share with you some data that's been generated with our STAT3 molecule, and first of all, on the left hand side is a diagram that just highlights the multifactorial effect of STAT3 on the tumor microenvironment. It can target those antigen presenting cells, the can up regulate It can up regulate inhibitory cells known as T regulatory cells. So it has multiple effects on the tumor microenvironment. So our STAT3 inhibitor is actually in Phase 1 clinical trials both in lymphoma as well as in hepatocellular carcinoma. And I highlight 2 patients' scans on the right hand side of the slide that show these are both diffuse large D cell lymphoma patients who had filled multiple lines of therapy.
And following treatment with the STAT3 inhibitor experienced significant clinical benefit that's been durable. And so we have actually a Phase 1 oral presentation at the ERTC conference this week presenting additional data with the STAT3 inhibitor. In addition, we've generated preclinical data that shows that the combination of STAT3 inhibitor, a molecule that has the potential to remove some of these roadblocks within the tumor microenvironment with a PD-one targeting agent could be potentially So based on this compelling preclinical data, we are planning to test this hypothesis in the clinic in the first half of next year. The last example I'd like to share with you is a molecule that targets CXCR2, which is a receptor that's found on myeloid cells, which is a type of immune cell that can be present in the tumor microenvironment. And one of the myeloid derived cells that's important when we're thinking about immunotherapy are myeloid derived suppressor cells which can again act as a roadblock.
So republished manuscript shows that targeting either PD-one or CXCR2 with monoclonal antibodies has modest prolongation of survival in tumor models. But when you combine the 2 agents together, you actually see synergistic activity. So based on this data as well as in house data looking at a small molecule inhibitor CXCR2 plus a PD-one targeting agent that again demonstrates similar synergy, we plan to test this hypothesis clinically of the 2 agents in the first half of next year. Incidentally, our CXCR2 inhibitor has not been tested previously in the oncology population, but was previously tested in the respiratory population and demonstrate a proof of mechanism in terms of hitting the target, showing safety and acceptable PK. So with this first part of my talk, I just want to highlight several key points.
We have a strategy in immuno oncology of focusing on novel combinations. So what you see here is that we're executing on that strategy with multiple combinations that target each of the key escape mechanisms within the immune response against cancer. In addition, we are in a unique position to leverage both the breadth of the biologics portfolio at MedImmune as well as a small molecule portfolio at AstraZeneca to execute on these combinations swiftly. And in addition, we can supplement as needed with clinical collaborations. And some of you may have heard recently with the acquisition of Definions, which we believe is core to our translational strategy, it offers another dimension that underpins our clinical strategy, which is really to look very carefully at the tumor microenvironment in these ongoing trials.
It allows us to look concurrently
at multiple markers and understand in a quantitative fashion
where there are geographic more preferentially able to respond to certain therapies and it can also further accelerate our clinical development. In addition by acquiring DEFINIONS, we feel like it will offer a competitive advantage in terms of allowing this technology to be incorporated into our clinical decision making and into our teams. So having covered our strategy in immunotherapy, I'd like to summarize our clinical development strategy with our late stage immuno oncology assets, which is really built on 3 key pillars speed, differentiation and leadership. We are committed to taking MEDI-four thousand seven hundred and thirty six and its combination with tremolimumab to the market as quickly as possible. And as you'll see in subsequent slides, we're targeting late line non small cell lung cancer as well as second line squamous cell head and neck cancer in single arm trials that are designed to garner potential rapid approval.
We're building on that by expanding potential indications and looking at high value indications such as earlier line indications in lung, such as stage 3 lung cancer that's unresectable which has been overlooked by the competition. And with the recent announcement that we are collaborating with the NCIC, we are launching our adjuvant trial in non small cell lung cancer ahead of the competition. So we're building on the initial monotherapy activity in late line disease and then expanding to earlier line indications. In addition, we're using our biomarker platform which was alluded to earlier with Vontana, our PD L1 assay and selecting biomarker negative patients that we think may benefit more from our combination therapy. And then finally, we're aiming to establish leadership in the field of immuno oncology by developing 1st as well as best in class combination agents.
As an example, we believe that MEDI-four thousand seven hundred and thirty six plus tremolimumab has the potential to be a best in class combination therapy. In addition, as you heard, we have initiated combination studies with MEDI-four thousand seven hundred and thirty six as well as AZD-nine thousand two hundred and ninety one, which offers the potential to be a 1st in class combination. And I already alluded to our triplet combination with MEK and BRAF. In addition, I shared with you our investment in AUX-forty where we have the potential to initiate the first combinations of OX40 plus checkpoint inhibitors as well as monotherapies with the fusion protein in the human Nizumab. Before I provide additional details about the clinical late stage programs, I want to refresh and re present some data that we recently shared at ESMO in Madrid, which is around our MEDI-four thousand seven hundred and thirty six monotherapy activity and I'll also highlight data we presented in Madrid for our combination therapy.
MEDI-four thousand seven hundred and thirty six has been included in a large Phase 1 trial where we've enrolled well over 700 patients. And in Madrid, we updated presented updated data with over 300 patients. And what I'm showing here is a spider plot highlighted in green are patients who are exhibiting some degree of tumor shrinkage which is approximately a third of all patients that were enrolled on the study. The other key takeaway is that with the Ventana based asset, we can actually enrich for responders as well as patients who derive durable clinical benefit. So this is consistent with the mechanism of action of the PDU L1 targeting antibody.
In addition responders on this trial appear to maintain response for a long period of time with 90% of patients still maintaining response. This is as a reminder data that we presented in Madrid 6 weeks ago on the MEDI-four thousand seven hundred and thirty combination with tremolimumab, a few key points to make here. We're actually encouraged by the fact that we've been able to escalate with more than 6 dose levels. We presented data here for 6 dose levels. We have additional dose levels that are open that did not preclude or was not precluded by safety that prevented further escalation.
So that's one key takeaway. The other is that we've actually seen clinical activity in each of the dose levels except for the very first dose level which was the lowest dose of the combination. And then finally, in this unselected population, we see a response rate of the combination approaching 30% and a stable disease rate an additional 30%. So total clinical benefit rate of approximately 60% in this unselected population. The key point to highlight is that this is still early data with approximately 20 patients and we need additional follow-up and more experience.
The last point about the combination that I'd like to make is the fact that with the limited number of patients that we were able to evaluate for PD L1 status, what we are finding is that the response rate is actually quite reasonable in the PD L1 negative with the combination and compares favorably to the monotherapy activity of PD L1 than the combination to potentially target patients who have less chance of benefiting from monotherapy. So this slide summarizes our development plan in non small cell lung cancer with MEDI-four thousand seven hundred and thirty six. And let me highlight some of the key studies that are ongoing or about to start. Beginning with the ATLANTIC trial, this is our single arm trial that's targeting PD L1 positive patients with monotherapy and it's designed to try to achieve a faster market access. Building on this study is the ARCTIC study, which will confirm the activity observed in Atlantic.
This has 2 components to it, a PD L1 positive component that looks at monotherapy compared in a randomized fashion to standard of care and then a PD L1 negative component that looks at the combination randomized to standard of care. So it builds on the initial ATLANTIC study, confirms it and expands to a PD L1 negative population using the combination. In addition, we differentiate from the competition with our PACIFIC trial, which targets previously untapped population, which is an early line of lung cancer, looking at following chemo radiation, the benefit of PD L1 monotherapy versus placebo. And then finally with the recent announcement with the NCIC, we we have launched our adjuvant study which looks at further earlier line expansion looking at potentially benefiting a larger group of patients of targeting PD L1 monotherapy versus placebo following initial surgery and chemotherapy. With this slide I wanted to highlight the complex nature of the non small cell lung cancer population, which is that it's now beginning to be molecularly subtyped.
Beginning on the right hand side, what you see is a small sliver that's ALK mutation positive as well as EGFR mutation positive. So these are small segments of the lung cancer population that can be benefited by approved therapies that target these mutations. But the key message is that the bulk of the lung cancer population does not have target old mutations with drugs that are currently approved. And so it represents a clear unmet need. Now with the advent of immunotherapy, the top gray portion of patients which are potentially PDL1 can benefit from PD L1 or PD-one targeting agents as monotherapy.
But the larger purple box represents a group of patients that are PD L1 negative that cannot benefit from targeted small molecule therapy or PD-one targeting monotherapy and represents a potential market for novel combinations such as MEDI-four thousand seven hundred and thirty six plus tremolimumab in future upcoming combinations. This is a reminder of some of the activity that we again shared at ESMO in Madrid, which is just drives home the point of the benefit of drugs like NETI-four thousand seven hundred and thirty six. This is a head and neck cancer patient that is 96 years old, who actually progressed on the available biologic therapy and then was entered onto the trial with MEDI-four thousand seven hundred and thirty six. And within 4 weeks of starting on trial, she had a dramatic response to the drug and actually went on to experience 70% reduction in her tumor. Based on this as well as a larger data set of PD L1 monotherapy data, we've initiated a program targeting head and neck that I'll highlight here and summarize.
Following a similar paradigm as non small cell lung cancer, we target a second line population that's failed platinum, both PD L1 positive using monotherapy and again building on our current emerging understanding of the role for the combination therapy in PD L1 negatives, we look at a similar population that's PD L1 negative with the combination. So these are 2 single arm trials designed to try to get faster market approval. But in addition, we have a randomized trial that then confirms the activity compared to standard of care using the combination in both in unselected patients and that's the EAGLE trial. So what I'd like to leave you with is that MEDI-four thousand seven hundred and thirty six and the combination with tremolimumab are not the only combinations that are poised to enter late stage development. With the breadth of the MedImmune portfolio along with the AstraZeneca small molecule portfolio, our strategy really is to develop novel combinations that target multiple escape mechanisms.
And as you can see here, we have multiple not only monotherapy studies, but multiple ongoing combination studies that are built around this strategy. And I'd highlight several studies on the left hand side that are ongoing that are not just leveraging large, large molecule combinations but also large, small molecule combinations such as our combination with AZD-nine thousand two hundred and ninety one, ERISA and the MEK BRAF. And then since ESMO, we've actually initiated planning for several new studies, including ones that target hematologic malignancies such as our combination with CD19 and PD-one as well as our combination with Ibrutinib. And in addition, the studies that I mentioned that target the tumor microenvironment with STAT3 and CXCR2 are in the planning stages to begin early next year. In summary, as Susan mentioned, we have key 4 key growth platforms, drivers of resistance and that includes drugs such as olaparib.
We have drugs that target mechanisms DNA damage response mechanisms such as olaparib. And we also have drugs that target immunotherapy such as 4,736 all poised to potentially get approved in the next year or so. In addition, beyond those initial monotherapy drugs, we have a broad portfolio in which we're able to combine novel combinations and execute on our strategy, which we believe is to provide more clinical benefit for patients through novel combinations. Clinic in the next year or so, which we are even more excited about that can further synergize with our current clinical combinations. Thank you.
So Anton Mondaire, going to Jonathan, would be happy to take any questions.
Yes. Thank you, Susan. Thank you, Mohammed. As the previous session, we're going to open the Q and A for about 30 minutes. We have question in the room here, question on the Internet and of course by phone.
So I open the floor with maybe first question here.
Thank you very much. It's Matthew Weston from Credit Suisse. Three quick ones please. The first regarding the head and neck program. Can you tell us what the HPV status is those patients?
Are you targeting all comers or are you specifying HPV status? Secondly, with respect to the circulating DNA test for 9,291, apologies, Susan, have you told us about that before or is that new? And the second issue or sorry, the 3rd issue, the OX40 program, again, forgive me, having 3 in the clinic, is it because they have very different characteristics? Layman's terms, why that's the right thing to do in an environment with very limited or very significant pressures and demands on R and D spend?
So Susan or Antoine, maybe you want to start with ctDNA and then we did
Yes, I can answer the ctDNA one. So we did present data at ESMO on the circulating tumor DNA. There was a poster. I think the lead author was Ken Thress. If you want to go into the details, I'd be happy to provide it.
What that showed, very similar to what we saw with ARRESSA, is that if you detect patients by circulating tumor DNA as opposed to just by the tumor biopsy and they are T790M positive, they have a similar response rate either by the tumor biopsy or circulating tumor DNA. And that was the same data that was from the IFROM trial that was used for the basis of the label update in the EU for ARRESSA. So we have been collecting circulating tumor DNA at baseline and through treatment on all of the patients in the AURA study, and we will be presenting more data on that as things progress.
Ma'am, you take the HPV status for me?
So with regards to the head and neck studies, both in the Phase I trial and the planned Phase II and III trials, we are planning to stratify or collect the PD L1 status and stratify the patients. HPV status will be collected and it will just be used as a stratification factor.
Yes. So I forgot to mention that we have colleagues in the room who are supportive of course here for the question and Peter Emitage, VP of Early Stage Clinical Development for IO will answer the question on the OX40 program.
Thank you very much. So the question is why 3? We believe that the pathway is extremely important. Mohamad alluded to its ability as an agonist to drive T cell responses. But from an immunological point of view it actually is a co stimulatory molecule which means that when you're trying to drive antigen specific responses against the tumor, molecules like this help you to build that army.
So the question is why 3? So in the first instance with the murine antibody, which is in combination with PD L1, we believe in the science. It recapitulated the biology we had seen in preclinical as well as non human primate toxicology studies and hence bringing that together with a check point blockade like PD L1 allows us to do a couple of things. 1, to learn and 2, if you see something, take it forward. So it's not a molecule that we won't take beyond where it is.
It has value depending on what we see with it. The fusion protein and the 2 human and humanized assets then tackle specific biologies associated with OX40. 1 is a pure agonist. The other one has other biological attributes that tackle different aspects of the pathway. And since from a science driven point of view, we believe in the pathway is important to our strategy moving forward, we are going to evaluate both and try to understand which pathway, which aspect of the biology brings significant benefit to patients with cancer.
Also from a combinatorial point of view where these molecules come to play. So don't forget we have a number of assets that are in the clinic and a pretty robust pipeline that's in development. And so what we need are molecules such as these that we can then in various permutations and combinations start to elucidate the best biology for patients with cancer.
Thank you, Peter. Andrew?
It's Andrew Brown from Citi. Three questions, please. So number 1, on CTLA-four and TRAMI. I'd just like your thoughts on how long do you think CTLA-four is going to be a standard backbone of immunotherapy? Previously, I might have thought it'd be replaced fairly sharply by alternative agents, but the commentary from SITC might suggest it's going to form more of a backbone for longer than we perhaps have thought.
So I'd be interested on that. And then related to that, where are you in terms of developing a bispecific antibody for CTLA-four in terms of the toxicity? 2nd, a broader question. There has probably never been so much complexity in terms of the proliferation of clinical trials with immunotherapy. Now I understand the trials are relatively inexpensive compared to cardiovascular.
But just how do you manage the bandwidth in order to determine combinations and coordinate just and this is just the start, I suspect, of your program. How are you dealing with those challenges? I'd be interested to hear. I'll hold the final question.
Thank you, Andrew. I may start with the second question and hand over then to Mohammed for the CTLA-four program. I think you've noticed from Susan's introduction the need for us to focus on a couple of core disease area. We picked those ones and of course we are limited not limited to lung, breast, ovarian and heme. We would potentially expand to other tumor types.
But the reason we are doing it actually is to integrate and come with a disease AI strategy where we can leverage the potential synergy that you can have from different molecules working in the same tumor type. As a matter of fact, we have a lung cancer disease strategy where all those assets that could potentially work in lung cancer, IO or non IO are being tested and positioned and mapped into this strategy. Number 2, we have the so called basket study type of protocol where we pick a number of combination and of course we test them at the same time and that's of course another way to find the resource if you are thinking resource, but I know it's not only resource that you have in mind, it's the ability to manage the whole portfolio. I think at the end of the day, we may end up with a very complex algorithm that go beyond what we can potentially as a human being manage and clinically critical can have in the future. I don't know if I convinced you, but I think it's clearly the integration of our portfolio across different diseases that is the way to go in the future.
For the CTLA-four, you want to add something, Moham?
Sure. So Andrew, if I understood your question correctly, you're asking whether we view CTLA-four long term serving as a backbone for immunotherapy. So I think based on the emerging data, it appears that CTLA-four and PD L1, they're non redundant. So they even though they're both checkpoints, they appear to work independently of each other and synergize based on early clinical data. The other emerging story with CTLA-four and PD-one targeting combinations is that it does appear to target a group of patients that were not responding to either agent alone, I.
E. Mainly this PD L1 negative cohort that appears to respond to the combination. So at least our current thinking is that in the near term CTLA-four is here to stay certainly not as monotherapy, but potentially in combination because it serves as a non redundant partner to an agent that targets the
pathway.
Thank you. I just wanted to go back to Andrew's question because this combination is actually the biggest opportunity we have, we as a company, the industry and medicine overall, but it's also, of course, our biggest challenge. It's a challenge for us as a company, but it's a challenge for anybody else who actually wants to be in combination. And so some of the things we're doing is, but I just wanted to also say that this is one of the reasons why we were so excited about Defineance because any technology, anything that can help us make those choices faster, cheaper earlier is a technology is something that will help us manage the complexity. I mean, there's an enormous complexity here and we're going to have to do a number of things, but certainly, the Finian fits very well in helping us there.
And maybe the other quick comment is HOX40, as Peter said, there's a lot of good data, a lot of excitement. We're not going to develop 3 products in Phase III, that's for sure, just to make sure we don't get everybody panicked about the cost of developing those
Thank you, Pascal. Actually, we're going to have one question on the phone. We have 2 questions on the Internet and then come back to the room here. Tim Anderson from Sanford Bernstein.
Yes. Thank you. Based on what you know today with the combo of 4,736 and tremolimimab, can you give us an update on what you think the maximum tolerated dose of Tremi will be? And do you continue to stand by your prior claim that you think Tremi may end up being a better tolerability or safety issue. And I'm hoping you can characterize the tolerability or safety issue.
And I'm hoping you can characterize the tolerability or safety profile of that drug a little better.
So, I'll do the combo and Susan then you take the 2014 question.
So let me comment on the question around the combination in the MTD. So as we mentioned at the ESMO conference in Madrid, the combo study is still ongoing. We have multiple cohorts that are being expanded so that we can better define the balance between efficacy and toxicity. So as
of right
now, we have not toxicity. So as of right now, we have not defined a maximum tolerated dose. We have multiple doses With regards to the TRME comparison to ipilimumab, With regards to the TRME comparison to ipilimumab, we mentioned earlier there can be small differences mechanistically between tremolimumab and ipilimumab. And these small differences, while may not show up in monotherapy comparisons, they may actually make big differences in combination. So I think ultimately the data will tell whether the differences between tremie and ipilimumab in combination will translate, but the early data seems to suggest that there is clearly differences in safety of the two combinations.
Thank you.
So in regards to the AZD-two fourteen, the dual TORP-twelve inhibitor, the data that was presented that I showed you from the Glendinning and posted from ESMO in combination with weekly paclitaxel showed a very low rate of Grade 3 toxicities at the maximum tolerated dose in that setting. And one of the things that we see that's different when you dose the drug continuously versus intermittently is a lower rate of mucositis, GI disturbance and fatigue compared with what you expect to see with continuous dosing of the pathway. And that's also some pattern that we're seeing in combination with fulvestrant in the Phase Ib that we'll present next year. But I do think it's an important principle. And I think there are also preclinical data coming out of collaborations that we have with Neil Rosen's lab showing that you can drive better efficacy as well as better tolerability to the intermittent dosing profile.
So I think it's important. It does take time and effort to invest in doing this, but I think it's time well spent because I think chronic tolerability in the setting that we're looking to take this compound
forward is important. Thank you, Susan. We have questions from Steve Scala on the Internet. The first one is for you, Susan, to compare our SERD AZD-nine thousand four hundred and ninety six with the Roche ARN-eight thousand and what PK dosing and safety data differentiate the 2 molecules? And there is a second question on the melanoma data PD-one, EP showed very good 1 year and 2 year overall survival.
In melanoma, what's the setting in which PD L1, BRAF and MEK would be used? How we would see these two regimens being sequenced? So maybe I take the melanoma question and then you answer on the SIR. So first of all, I think it's important to put this study into the context. It's part of our strategy to really differentiate.
We are not really following melanoma PD L1 approved in melanoma. We're trying to differentiate our antibody in developing a new combination that could provide benefit and are different from what the others are doing. And the first step was to show that our PD L1 confirmed the very good safety profile that we have seen in the Phase 1 and could be combined easily with small molecules and in particular BRAF and MEK inhibitors. As Mohammed mentioned, other studies have been in trouble trying to combine either EP or eventually PD-one with BRL for MEG. Here, we have achieved, I would say, the first goal to show good tolerability and of course more data about the safety, but the efficacy will communicated in scientific meetings.
The next step would be of course to demonstrate the real clinical benefit of this triplet before to think of how to position these versus PD PD-one, we need to really have the experiment and show that this triplet terms of durability of response. And then of course, we will discuss with the regulators what's the appropriate way. But melanoma is not clearly our next tumor type if that's what you have in mind. Susan, do you want to
Yes, answer the third question. So we've started dosing the first in human study with 9,496. It's too early to give you any PK data. We intend to present the preclinical pharmacological package for data and an update on any clinical data at AACR next year. I'd be happy to follow-up in detail at that point.
But obviously, we're confident in the selection of the molecule that we've got. We've got a great profile and good oral bioavailability predicted from the preclinical data.
Thank you. We have a question in the back there.
Hi, it's Kair Parekh from Goldman Sachs. And three questions please. First just looking at the kind of chart on plant trials, I see that you're doing a CD19 combination with PD-one not a PD L1. Is that a reason why kind of you've chosen to go with PD-one rather than the PD L1 there? Secondly, if I remember correctly from the data presented at ESMO and I kind of understand, Mohamad, you're not stratifying it by HPV status on the head and neck study.
But the data presented seem to suggest that the Merck compound works a lot better across both HPV positive and negative, whereas the Astra compound works better in the HPV negative cohort. Is there a mechanistic reason why that might be the PD L1 negatives, which would lead us to 2 out of PD L1 negatives, which would lead us to 2 out of, kind of 18 in the PD L positive or response rate less about 10 percent. Is there a reason why your combination seems to not work in the PD L1 positive?
Thank you. The short answer is no, but I'm going to leave Mohammed answer your question number 23. But maybe to start with the CD19 PD-one Phase 1b combination, I'll ask Peter again to give some light on the rationale of this Phase 1.
Thank you very much. So there's a number of opportunities that we have in the portfolio. But with respect to CD19 and PD-one, if you look at the access respect to the biology of CD19 is blockade. So we anticipate or postulate here that by removing the PD-one inhibition on the responding cell, keep in mind please that CD19, our MEDI-five fifty one is an afucosylated antibody that has very exquisite ADCC inducing potential. So the responding cell is going to be either an NK cell or a T cell potentially a macrophage which are sensitive
to PD-one blockade. This is not
to say that both
But within our preclinical data and modeling PD-one suits itself very well with CD19 because of the responding population.
So let me comment on the head and neck data with regards to HPV and the potential differences between what was reported with the Merck compound and ours. So I think the bottom line is that the HPV status, association with our data, the data sets are relatively small and we actually didn't collect HPV status on all patients. So I wouldn't draw too many conclusions between potential differences between the Merck data versus ARC. The data set overall is small and we didn't have complete HPV status collection in that Phase 1 trial. With regards to the TREMI PD L1 combination and potentially a lower response rate in PD L1 positives, I think the important point to take away is that we have not typed every single patient on the combination.
We only typed 11 patients. Of those 10 were negative, one was positive. So actually we don't have sufficient data in terms combination in PD L1 positive. So that data will be we're in the process of generating that data, but we don't have it from the data set that was presented in Madrid.
Thank you, Mohammed.
Thank you. Sachin Jain, Bank of America. Three short questions hopefully. Firstly, one day, you promised you'd come back to my fast to market strategy. So I wonder if you could touch on that for some of the assets that Susan touched on the c Met, Wee-one and Torq.
Secondly, on the CTLA-fourPD L1 combo, you've listed new solid tumor starts since ESMO. So I wonder if you could just give us some color on what tumors you've seen preclinical activity and the breadth of tumors you're looking at there? And then the 3rd very high level question for Susan on the DNA damage response portfolio. Just some broad color on what size of market you see, how broadly applicable this is? And I guess some color as to why you're excited by this as a portfolio whereas others, as you've referenced, potentially are not looking at it as much?
Thank you.
So we want to start, Susan, with the DDR portfolio. Yes.
What did you say?
So I think it's interesting targeting I'm a radiation oncologist by training. So causing DNA damage has been something that I've been doing for a little while. And so I think when you understand that actually there's a large proportion of common cancers that have a deficiency in one or other of these pathways and often have a p53 mutation, which, as I described for the V1 inhibitor, already means you've got a is the molecular is the molecular understanding of which patients are likely to be sensitive to which mechanism and the range of really good quality compounds to specifically drive activity. So the reason why we are a leader in the DNA Damage Response Science is because of the Qudos acquisition and the scientists that came with that Qudos acquisition along with Olaparib. And we've built on that and understood those data.
I think in Meny's talk, he's going to talk a little bit about some of the data that come with ATO and ATM. So I suspect I mean, clearly, there's multiple companies that are interested in PARP inhibitors once there was some clinical proof of principle with enthusiasm and then some lack of enthusiasm after the InupriB data, which was subsequently shown not to actually actively and potently inhibit PARP. So I just think it's one of those things where you require a level of clinical validation, but we're in a fortunate position to be in a leadership place in a mechanism that I think is important. I don't know, Naimondo, whether you want to comment on what you think is the commercial potential for the DNA Damage Response portfolio?
I can. Actually, it's interesting because we have been debating and discussing this and the richness of this portfolio of multiple agent more or less working around the same mechanism of action but targeting different subset patients. So the first key message is that any tumor type potentially, especially if you combine the DDR agent with a cytotoxic, certain type of DNA damage, cytotoxic or eventually radiation therapy could potentially be a subject and we could use the agent. Number 2, as Susan said, we have beyond the combination the ability to sequence those treatments somehow. So I can't give you the full potential of the 4 agents, but if I think of Olaparib only and go beyond the fast tobacco strategy that we have in the BRCA mutated platinum sensitive ovarian cancer and start expanding to the somatic mutation and then to even beyond the mutation to other sort of ovarian cancer.
In particular, you may have in mind the NCI data that were presented in June at ASCO, where the combination of folapolib with sedranil provide great clinical benefit in all type of patients who have been treated with the platinum but relapse. So clearly, the idea is to expand for each embryo tumor type and for Olaparib for instance, we have beyond ovarian cancer a number of other indication. Gastric cancer is one of them, breast cancer as you know both early and late stage, prostate cancer as Susan showed you and potentially also other tumor types that are part of our ESS program. So very, very important potential without getting into the detail, but clearly this class of agent that has been somehow forgot about a couple of years ago because people were disappointed after some trial were negative actually with the launch of Porpariv is going to be revitalized. There was a question on CTLA for PD L1 antibodies combination.
And before I hand over to Mohammed to give you his view, first of all, clearly, the differentiation strategy that we have is to push for the combination and the combination of 2 IMTs is the first one we've picked and the signal we've seen in lung cancer is very exciting, but it does not mean that we should not explore this combination in other tumor type, first of all, and Mohammed can give you more detail on the different basket studies that we have there. But in the same time, I think it's too early to tell whether there will be a differential of activity between PD L1 negative and PD L1 positive. I think the PD L1 negative, we know the scientific rationale there and we know that CTLA-four can upgrade PDL-one and then increase the level of expression and somehow render the tumor cell more sensitive to an anti PD L1. But we don't know whether the level of activity and the magnitude of the benefit is not the same in the PD L1 positive. We need to do the experiment and we will be doing the experiment to show that.
Moham, do you want to give some highlights on this one? Sure.
So I can comment. So our thinking around the development of the combination is in part driven by the fact that the signals that we're seeing from our broad Phase 1 trial just using MEDI-four thousand seven hundred and thirty six. So as we see signals there that identify tumor types that are responsive to PD-one targeting, but then obviously it identifies also a subset that are not responding to PD L1 monotherapy is to then position the combination to go after those tumor types to see whether we can actually now capture a larger segment of patients that can respond or benefit from the combination. So it's learning from the monotherapy experience but also understanding the biology that as long as that there is a T cell infiltrate in these tumors, but there is a segment of patients that don't respond to monotherapy, we can potentially rescue those patients with a combination.
So Susan, we'll pick up the last question on the fast to market strategy.
Fast to
market strategy. So the data that I showed you from the Glen Dunning study included some patients with squamous lung cancer where we actually saw 2 out of 2 patients that had quite impressive and durable responses in that combination with paclitaxel. Clearly, 2 is too small of a denominator to have a high level of confidence, but we're currently expanding that study. And I think that might provide an attractive opportunity. Again, as I said, assuming that the data continues to be encouraging, there's a potential papillary renal cancer, for the c Met inhibitor also represents an opportunity.
And again, it depends a little bit on the response rate and the durability of response in those settings. We have limited data currently. We'll be looking at that as well. But I think it's a general principle across all of the agents that we've got that we're looking for settings where there is a selected patient population that's going to be particularly sensitive and seeing if there's a route forward that would enable more rapid approval in that segment.
Okay. Antoine? No, no.
So we
have time to one more Alexandre?
Only got 2 left. One of this is actually a follow-up. We've already talked about the safety of the combination of Medi and the triplets. So given that this the second time we're seeing Medi being easier combined with something else than, for instance, nivolumab, can we now
safely assume that's always going to be the case or whether it's just a safer thing
to use? I mean,
you have other ongoing studies, for instance,
with Yvesa. Is that just something which is easier to combine with the TKI than nivolumab? And the other quick question is, how much follow-up will you have for 9,291 when you have when you will complete the filing in the Q2 next year? Okay.
Anton, you start with the 1999 and then Mohammed, you conclude on
the safety
of Okay.
So when we complete the filing, I mean the last data cut we will submit will be in the early Q1. And we have already engaged the agency to provide them with an updated data set that has chosen time points so that we have a maximum duration of response evidence, which was obviously the response rate is here to stay. And the big question is how durable is this response. We currently have 9.6 months and continue to accrue. It was at the last day that occurred in August.
Thank you. Mohammed, the question on the safety of the combination, in particular safety of PD L1 antibody.
So I would make 2 comments. 1, if you look at the monotherapy of PD L1 in general compared to PD-one, I think there are some differences that are beginning to emerge that suggest that the overall safety profile of PD L1 targeting agents, especially ones that the Fc function has been disabled, appears to be more favorable than PD-one. Again, it's still early days, but now we have several 100 patients treated with both PD-one and PD L1 in Phase 1 trials and the safety profile appears to be different. With regard to your specific question around the triplet, I would highlight one other difference about that study is that the previous attempts to combine immuno oncology agents with BRAF, it was with BRAF alone. And we know from experience that the combination of MEK plus BRAF at least ameliorates some safety issues with BRAF alone.
So it could be the combination of the fact that PD L1 may generally have a safer profile than PD-one and the fact that this is a triplet where MEK tends to down regulate some of the tox profile of BRAF alone.
Yes. So just one other characteristic we like in the antibody, but it's going to at least translating into maybe safer, but at least we like it to and especially for combination,
direct antibody with this, which makes it a lot easier when you're doing combination.
Thank you, Biraj. We are exactly on time. Thank you for your question. We'll be around after the session for informal discussion and it's now time for a break. No, sorry.
Well
done. Well done. Very well done. Okay. Why don't we go ahead?
I'm going to just do my presentation, then we'll take a break and then we'll come back with many and Bahija. So if you have questions for me, just save them. We'll address them after the break. So I'm Briggs Morrison. I'm the Head of Development and the Chief 2013.
Those of you who are at the session in March of 2013 will remember that I introduced myself by telling you a few stories about from my days when I was treating patients. And I told you a couple of stories, very gratifying stories about what it's like to be a practicing physician and see your patients do well. And I also told you some sort of haunting stories of patients who didn't do well, patients in their 20s, 30s, 40s who died prematurely because we didn't have is what brings me to work every day. We've tried to capture that passion for patients in our ambition. And what we said in our ambition is that we hope to improve the lives of 200,000,000 patients.
Now if you pause for a minute and think about what does that mean that you're going to improve the lives of 200,000,000 patients. What it means is that 200,000,000 times you're going to have an interaction like you see in the picture on the side here, an interaction between a health care professional and a patient where the health care professional is going to talk to the patient about their disease and about different treatment regimens that we can offer for their disease. And if we've done our job well, in fact, I would argue only if we've done our job well, that health care professional will recommend to their patient an AstraZeneca product. That's really professional needs and to generate information so that health care professional feels confident both in the quality of the way we manufacture our products and in the information that they have so they can make a recommendation to use an AstraZeneca product. And that has to happen 200,000,000 times around the world in clinics in multiple countries.
And that's what we come to work to do every day. Now we've tried to use pictures like this and stories like this to inspire our people to do great things, to do things to be honest that they didn't think was possible, in fact to do things that even some of us didn't think were possible. And I think if you look at our performance as a company over the past couple of years, what you see are it's for some reason it's working. People are actually doing great things, things that they didn't believe were possible. So you've heard multiple stories about the 9,291 program.
I think when if you ask people was that possible, they would say no, but our people delivered it. If you think about the 4,736 program, just to put it in context, when 4,730 6 went into Phase 1, one of our competitors was already in Phase 3. And yet we now have a leading position in the adjuvant adjuvant space. We have a leading position in the PACIFIC trial in a population of patients that they haven't gone after. Our people have done really, really 2013 session, I told you about SABR and how we finished our outcomes trial long before Merck did that exact same passion and energy is being brought to the PEGASUS trial.
We asked the team to do something that they didn't think was possible. I wasn't even sure was possible, but Elizabeth and her team are now mobilized the whole organization. They've been energized and they're going to deliver that study probably 4 months sooner than they would have otherwise. So that's the kind of passion that we're trying to bring to everything that we do. And I think what that led to are my 3 key points.
Number 1, I think we are doing an excellent job in delivering the pipeline and I'll show you more detail around that. We are focusing our spend on our core therapeutic areas. And now we're going to pivot for you all. You've been tracking our progress of rebuilding our Phase 3 portfolio. What we want our organization to do, what we want you to do is to pivot and focus now on submissions and approvals.
We want to take this great Phase III pipeline that we've built and now bring it all the way through to approvals so that we can have information and a marketed drug for a healthcare professional to recommend an AstraZeneca product to their patient. Let me just say one second one comment about who are the people that are doing all this wonderful work. Since 2013, when we met with you in March, if you look at the 9,000 people in our R and D organization, about 20% of the people are new. Some of those people have come through the acquisitions, Chuck Bromledge and his group from Pearl, from Thera, from Almirall, from other acquisitions. These people have come into the company and to be very honest, they've shown us new ways of working and inspired us by the kind of work that they did as entrepreneurs setting up their companies and then bringing those into AstraZeneca.
If you look at the on the other pie chart, that's the top leadership of the R and D organization. So the top leadership of the R and D organization about a quarter of the people are new from March of 2013. And many in Bahija will give you some examples of very, very accomplished So these are the people. The So these are the people. The other interesting I would say is, of course, 80% of the people are people who were at AstraZeneca before we started our journey.
And I think what we have seen is that by having a clear vision and having a clear strategy and clear priorities, our people have really rallied around those priorities and are delivering remarkable results. Pascal showed you this slide today. We showed you the slide in 2013. These are the things that we would said we would do in terms of achieving scientific leadership. And I'm going to start off with focusing on our core therapeutic areas.
So this is the slide that Pascal showed you earlier about the 3 core therapeutic areas and the 2 opportunistic areas and including the technology that sort of underpins our overall strategy. There's this old saying that how you spend your money is your strategy. So the question is how are we allocating our money within the R and D units. So if we look at 2013, what you saw was about 80% of the R and D spend was allocated to our 3 core therapeutic areas, 20% went to the 2 opportunistic areas, infection, vaccines and neurosciences. As we plan for 2015, which you can see is now 90% of the money is spent we plan on spending in our core therapeutic areas, only 10% in the 2 opportunistic areas.
That 10% to be honest we're getting really very good return for many and Bahija will again give you some examples of the really creative work that's going on in those two units, but you can see that 90% is now focused on our core therapeutic areas and you can see the ascendancy of oncology in terms of the way that we're spending R and D dollars. So a number of people during the day have asked how are you affording all this? You can see that clearly about half of that 90% is going to oncology and that's underpinning the hope that oncology will be in fact our next growth driver for the company. In 2013, we also laid down for you 3 major markers that we said you should track and that we have tracked to see how we're doing on our journey to achieve scientific leadership. So the 3 markers were number 1, that we would advance 5 to 7 new molecules into Phase 3 from our from internal work that we would have 10 potential NME submissions between 2013 2016 and that we would grow the pipeline from the 6 molecules we had in late stage development, as Pascal said earlier, to 8 by the end of 2013 and potentially 12 by the end of 2016.
So let me just talk through how we have done with regards to these 3 markers. And I'm pleased to report to you that I think it's very fair to say we have either met or exceeded all three things that we told you that we say we have either met or exceeded all three things that we told you that we would do that served as markers for our journey towards scientific leadership. So the first is the 5 to 7 NMEs. We've actually advanced 9 molecules into late development from inside. Again, consistent with the focus of oncology, 6 of them are oncology compounds, 2 of them are the severe asthma compounds that Bing talked about and roxadustat, which Elizabeth talked about.
So we clearly have exceeded our goal of 5 to 7 by having 9. When we look at the goal of having 10 potential submissions between 2013 and submissions between 2013 2016. We already had 3 in 2013. We're on track to have a 4th in 2014. We already have the data in hand for 3 more in 2015.
That's Cazavi, bertalumab and 9,291. So I think the odds are quite high that we will get 7 and we still have 8 more opportunities to get to the 10. So again, I think we're going to exceed the 10, but clearly we're on track for that. And Pascal touched on this slide how we have rebuilt the portfolio and now have 14 molecules in late stage development. I talked to you a little bit about how we have reshaped the R and D spending so that 90% of it is focused on our core therapeutic areas.
But even within the R and D spending, we also had to make an additional adjustment, which is how much do we spend on early development and discovery versus late development. So the panel on far side is exact panel that I showed you in 2013. At the time in 2013, about 40% of our total R and D spend was on late development and about 60% was on early development. We planned that by the end of 2016, we'd be at about fifty-fifty. What's happened as the pipeline has progressed so rapidly is that in fact 2014 this year we're going to probably end the year at about fifty-fifty and planning for next year we're going to have completely inverted it.
So now we'll have 60% of the spend in late development, 40% of the spend in discovery and early development. Some people in the room and some people have asked us, well, is that really the right thing to do? Aren't you sort of starving your seed corn? Are you still going to be able to produce things to have a sustainable model? And I think what's remarkable in that regard is that we've actually done a great job of building the early pipeline as well as the late pipeline.
So this is what the pipeline looked like in 2013. And again, just to orient everybody, Phase 1, Phase 2, Phase 3. On the far side are the small molecules and on the near side are the biologics in each one of those categories. This is what the pipeline looked like in 2013. When you look at what the pipeline looks like now, not only have we built our Phase III portfolio, but we've also added tremendous breadth in our early Phase I and Phase II.
And many of them will tell you a little bit about the breaking science that we think does underlie a sustainable model that we can sustainably generate great molecules and progress them through our pipeline. Remember, the goal isn't just to put things into late development. The goal is to get things from late development through registration, started in 2013, I think we've done a good job of progressing those things through their next milestones. So first, of course, are the data readouts that help us to understand the profile of our drug. Both Cazabi and lisinurad had positive Phase III readouts.
I think it's fair to say that for lisinurad, the efficacy might have been a little bit less than we were hoping for, but the safety was a little bit better. So it's a profile that we're still and there's been some questions already about that profile and what's going to look like, but it's clear to say both of those agents had positive trials and at least now we know what the profile is. In the cardiovascular metabolic space, we've delivered approvals that are critical products that will underpin the growth of the company over the next period. So you've heard about the Bydurean dual chamber pen. The early days are that that's doing quite well.
For CIGA itself, of course, approved in the United States and Japan. ZIGDOO, the only once a day SGLT2 metformin combination therapy approved in the U. S. And in Europe, EPANOVA approved in the U. S.
And the top line results which Elizabeth talked through with you on the combination of and davacliflozin. In oncology, of course, we have the positive CHMP opinion for Lynparza, which is the trade name for olaparib for those of you who just want to make sure you're following along. And we are I would say at the mid year I said I was modestly optimistic that we would get approved in the U. S. I sort of upped my ante on that one.
I think a little bit more optimistic that we will get approved in the U. S. Because of the interactions we've been with the FDA. And of course, to talk about things that we didn't think were possible, we got Movantik approved in the U. S.
And I have to say when we first filed that drug, the feedback we got from FDA, it did not seem to us that that was a likely scenario. But again, our people did things that nobody thought was possible. They got approved both in the U. S. And of course the positive CHMP opinion.
You've heard a lot of presentations from people about a lot of things that are going to be coming over the next year. What I thought I would do is simplify that for you in one slide. So sort of the key news flow that we believe as a company are going to be quite important to your perceptions of us as a company over the next period. So we have a combination of regulatory submissions and data readouts, and I'll just go through these so everybody is clear on what they are. So first of course is boudalumab, Bing showed you the data from the first head to head trial versus STELARA.
The second trial should read out before the end of this year. And again assuming that all is consistent, we'll be on track to file that next year. The PT-three, which is the LAMALABA from Pearl, that data will read out the beginning of next year. And again, if positive, we will be on track to file that next year. Just want to make a point about the LAMALABA.
Lava. Some have asked is the Llama lava itself a critical product for you. One thing I think is very important to remember, this is the part of triple. Some people have asked us as we've gone around and visited with you, to do this triple, don't you have to do every combination of A plus B plus B plus C and all that? And the answer is yes, you do.
But a lot of that is done in the LAMALABA program. So the LAMALABA program reading out positive gives us a very firm foundation to now build on the triple. Anafirblumab for lupus Phase II data will be presented sometime next year. And of course, the lacindurad submissions, if lacindurad, the submission goes in before the end of this year, it is conceivable. I'm not saying it's assured, but it's conceivable that could actually be approved before the end of 2015.
In cardiovascular metabolic, I think everybody now who's been in the room all day knows the importance of PEGASIS and that will read out early next year. And again, if positive, we're on track to have year. And again, if the review goes well, that could be approved by the end of 2015. In oncology, we already talked about the approval for olaparib both in the U. S.
And in Europe, but also the SOLO-two data. So the SOLO-two data is the Phase 3 trial that replicates what was done in Study 19, really a critical trial for us. 9,291 submission and again I will say the submission is on track to be in the Q2. If we get accelerated review by the FDA and the review goes well, it is possible that 9,291 could get approved before the end of 2015. I just want to make be very clear with people about this MEDI-four thousand seven hundred and thirty six six PDL-one third line non small cell lung cancer.
That's the so called ATLANTIC trial. And I just want to make sure that people are clear. The ATLANTIC trial is a potential opportunity for
PD-one
positive
with non small cell
lung cancer. There are 2 cohorts. Are PD L1 positive with non small cell lung cancer. There are 2 cohorts. 1 is a cohort of people who have either EGFR mutations or ALK rearrangements and the second cohort is the people who don't.
Either one of those cohorts could potentially be an opportunity for accelerated approval, but the conditions around that are first of all, the data has to be strong enough to warrant accelerated approval and it depends on none of our competitors blocking us. If a competitor already has full approval in its sub segment that we're trying to get accelerated approval, that's a bit of a challenge. So it is potentially, I emphasize potentially a registration program, depends on the data and it depends on the competitive environment. I think Mohammad did a very nice job of explaining to you the MEDI-four thousand seven hundred and thirty six TRME combination in that unique population of non small cell lung cancer patients where to be honest, there really doesn't seem to be a whole lot of competition. It's those people who are PD L1 negative and do not have one of the mutations that makes them available for EGFR or ALK therapy.
It's a very, very large population of lung cancer patients. And so I think next year at ASCO when we read out what the dose is that we've landed on and maybe some early data on larger numbers of patients, I think that's going to be an important point for us. We're still trying to work through the cedarinib data and analyze that and find out whether it's going to be suitable for European submission. And finally, the launch of the scheduling and launch of Movantik both in the U. S.
And Europe. So those are some of the key news flow. You've heard many other things today, but I think those are ones that you should keep your eyes on. And finally, I just to lay out again for you the new set of markers that we would ask you to keep your eyes on, we as an organization are keeping our eyes on as we go through the next 2 years. The key thing at this point, we want to focus our organization and the innovation and the energy in our organization around taking this 2016, we will have between 2014 and 16 submissions.
Half of those will be new molecular entities and half of those will be new indications for established medicines. So for example, the PEGASIS filing for Brilinta would be a line extension. So of the 14th to 16th, half we anticipate will be new molecular entities, half we anticipate will be line extensions. Depending on the timelines for regulatory review and when we get those in and putting a little bit of probability around it, we anticipate that during that same time period we'd have 8 to 10 approvals. And again, half of those we think will be new molecular entities, half of those will be new indications for medicines that we already have approval for.
To make sure that we also have a sustainable business model and that there are great molecules coming through, we've also given ourselves the task of making sure that we're significant number of I want to be very careful here high quality Phase II starts. Many of you will talk to about the work that's been going on in the discovery and early development group so that we understand the science. If we can have Phase 2 starts with molecules like 9,291, we'll be very, very happy. That's what we keep telling them over and over again. Give us those ones where it's very clear and we can move them along quickly.
So those are the markers that I would ask you to keep your eye on over the next 2 years to judge us on our next stage of the journey towards achieving scientific leadership. This is the substrate. So again, on bottom, you have the molecules that could potentially be NME submission opportunities in 2015 2016 and on the top are those new indications for molecules that would potentially already be approved. So in closing, I just want to again say I think we've made tremendous progress on our pipeline. It's just overwhelming to see the work that the people in our organization can rally around when you focus them and give them clear objectives.
We clearly are now focusing our resources on our key therapeutic areas with again the ascendancy of oncology as we spend our R and D dollars. And again, I've shown you the potential 14 to 16 submissions and 8 to 10 approvals for NME and major lifecycle extensions. So I'll stop there. I think the clock just ran out. We're going to take a break now.
If people could be back by 5 minutes before the hour, Meny and Behiza will talk and then we'll take your questions. Thank you very much.
Okay. We're on the finishing stretch. So I hope Bahir and I will be able to talk to you about over the next 40 minutes or so is to really give you some insight in some of the earlier programs we have in our pipeline and in our last which I lead. And some of you will be aware of a paper that we published over the year in Nature of Use Drug Discovery. There were probably 3 key learnings from the study that we did looking at our progress between 2,005 2010 in terms of how we moved our programs and what that did in terms of the quality.
The first is that our teams are focused on quality and not quantity. We're not measuring them by numbers of candidates or numbers of INDs. We're focusing on the quality of the science and the rigor of their scientific thinking. The second thing is this fundamental focus on understanding disease path ophysiology, the mechanisms that we're working on and trying to validate or invalidate hypotheses. And that leads to what we call truth seeking behavior not milestone driven behavior.
And that transformation I think in our the focus of our programs and our science. And of course what that does is it also makes it easier for us to recruit great talent. You've seen some of it on show today, but there are many fantastic scientists that are excited about the fact that we're a science led organization with a really exciting pipeline and we have the true seeking behavior, trying to understand fundamental disease biology. If I take two examples, Tim Eisen, who's just joined us from University of Cambridge, a preeminent clinical oncologist, MD, PhD, has joined our early clinical development group. Ralph Knoll has joined us from Imperial College where he was a full professor and he's moved to Gothenburg to our Mondal site to work in our cardiovascular metabolic group.
Both these scientists are incredibly well regarded internationally, fantastic publications and they elevate the level of all of our science, not just because of what they bring, but because they it rubs off on all of the people that we have in our organization. So very, very important. And as a consequence of this, we're also publishing more. As a scientist, I think one of the best ways of recognizing the quality of the science in your labs is peer review, whether it be in publications or internationally recognized academic conferences. And what you can see here is the pressure that we put on our organization to really publish high quality papers to publish in high impact journals.
And of course, this attracts great scientists again, because they have a chance to do great science to publish and talk about it and to enhance their reputation and to ultimately, I think, lead to much better drug discovery. The other piece that Pascal touched on right at the beginning of the day is the fact that I think we have a real opportunity. We're consolidating in Cambridge, which is one of the most exciting places to be a scientist in the U. K. We're bringing our MedImmune colleagues together with our AstraZeneca colleagues.
We're also going to make it very easy for our scientists to commute between Gothenburg and Cambridge. There'll be 4 flights a day, so you'll be able to go back and forth in a day. And it means that scientific exchange between those groups is going to be really, really easy. What that means and the opportunity that I think we have is really to create a European scientific powerhouse. I think we have the science to do this.
I think we have the people and I think we have the networks. I think it's a real, real opportunity for us that we're going to try and capitalize on over the coming months years. Okay. Let me talk a little bit now about a couple of areas. First one will be in the respiratory space and you've heard from Bing about the impact with the acquisitions we've had over the past year or so with Almirall and Pearl have had in terms of flexibility we have and the complementarity with our own internal capabilities in terms of devices and formulation.
What does this mean if you're a respiratory scientist? It means that as you come up with really neat molecules that are selective and potent, you have a choice of formulations and device to put them into to enable us to test hopefully more mechanisms and get those drugs into the lung and avoid systemic side effects. Let me give you a flavor and this is really just picking 3 programs. These are obviously early, but I could have picked a number of different projects. The first one is our IJAK inhibitor AZD04 49.
Bing told you about the importance of IL-four, IL-thirteen, T slip pathways that are validated in asthma. So we have a small molecule inhaled JAK1-three, JAK1 tick inhibitor which basically modulates the R4, R13 and T slip pathways. It's an inhaled molecule, so we can limit the systemic exposure and so not see any of the liabilities you get with systemic exposure. On the graph on the bottom, I'm just showing you some of the preclinical data in mice where we challenged the mice with IL-thirteen to drive the inflammatory pathway in the animals take increasing dose of inhaled AZD-four forty nine and you can see that we completely drive down activation of the pathway as measured by phosphorylation of STAT6 to the same degree as an anti IL-thirteen antibody. On the panel on the left, I'm showing you some world leading, I think, 1st in class biology around Toll receptors.
This is a TLR9 agonist inhaled oligonucleotide AZD-four thousand and nineteen that we're doing in collaboration with Dynavax. As you know asthmatic patients when challenged with an allergen have a preponderance to get exacerbations and they have an overstimulation of their Th2 cells, creating more pro inflammatory cytokines such as IL-five and IL-thirteen in their lungs. What we're trying to do with our TLR9 agonist is reset that Th2 balance to bring down that Th2 drive and equilibrate the lung in these patients when they get challenged with an allergen. In the experiment, I'm showing you what I mean. This is again in preclinical in mice.
So we're challenging the animals with an allergen called ragweed. We challenge them every week and they only get a dose of the TLR9 agonist for the 1st 5 weeks. We keep on challenging the animals for another 11 weeks and then we measure their immune response when there's no drug on board. And what we can see is that following 5 weeks of So basically recalibrating the system the way that a patient would use this is a short few weeks course of treatment and then it'd be hopefully of exacerbations with their asthma. So I think again very novel, 1st in class and we've already got proof of mechanism in the clinic with this particular molecule.
P38, many of you will know it's a very well validated pathway. It's one of central players in inflammation. It drives both IL-one biology and TNF alpha. I remember working on a P38 program when I was at GSK in the 1990s and there were some great molecules. The problem was systemic tolerability, hepatotoxicity, toxicity in the joints.
What we've developed is a very potent, very selective p38 inhibitor that we can then dose through inhalation. We know that p38 is activated in macrophages in the COPD lung. We know using human alveolar macrophages that we can completely inhibit the pro inflammatory driver of these macrophages in vitro. And we have data now in vivo in LPS challenge healthy volunteers that we can actually activate the mechanisms. We can block both the activation of neutrophils and the production of tin alpha in response to LPS.
So proof of mechanism, the molecule does what it says in the tin and it's now going into Phase 2b study to see if we can have an impact in COPD patients. So that gives you a flavor of what we can do in the respiratory space. Let me talk to you a little bit about oncology. And again, Susan's covered quite a bit around our DNA damage response portfolio. It is world leading.
We acquired the biology and the chemistry from Kudos, but we continue to push. And one of the things I would say that is quite unique in AstraZeneca, we have got phenomenal chemistry. We're able to make exquisitely potent and selective molecules and we're good at this. And I think this is another reason why we're able to get so many of these molecules through the clinic and ultimately through genes, which is called ATR. Now ATR is genes which is called ATR.
Now ATR is activated following single strand DNA breaks such as for example through ionizing radiation. And what this molecule does 6738 is inhibits this PI is a PI3 like kinase. It inhibits the activation of this pathway, which is induced following single stranded ABRX, which basically enables a cell to deal with replicative stress. So if you block the pathway, the cell can no longer deal with this replicative stress and it goes into mitotic catastrophe and dies. In the top panel where you can see these little blue spots, we have 2 different cell lines.
We've tested a number of different cell lines. And it shows you that when you radiate these cells with ionization with radiation, you get an increase in in of replicative stress. And when you
inhibit at the
same time as you're inducing analyzerom radiation, what you can see is the cell isn't able to remove this replicative stress and basically is under stress and will cause and will die. And so in the bottom panel, what you see is that the more replicative stress that you get in the cells, the more susceptible the cells are to cell death. And what does that translate to when you put this molecule in vivo and this is actually in the colorectal cancer model, we can see that with increasing dose we can get complete tumor spaces or aggression depending on the model that we use. And the plans for this molecule which went into man last year, to start working with it in combination with chemotherapy such as carboplatin. So very novel molecule, 1st in class.
And I think we have a real chance to also combine it with other molecules as well. And Susan touched on this about the potential of combining molecules. This is actually just showing you some preclinical data in a triple negative breast cancer model where we combine olaparib and we won. So what you can see here, and the lower the graph, the more we're shrinking the tumors, the lower the points in the graph. So, we can see in blue is the bars of the dosing with olaparib and you can see that the tumors initially regress, but they gain resistance and they start to grow back after a period of weeks.
In the green bars, you can see treatment with the tumor. And that I think gives you the possibility, the potential to have more profound benefit in the patients that we treat with a combination. Now we've touched a little bit on or we've touched on small molecules. Let me spend a little bit of time talking about oligonucleotides, but I think we're building again a leading position working with some of the best companies in the world in this space. We have 3 partnerships in the oligon microRNA space.
And the third one is working with ISIS in the antisense oligonucleotide space. I'm going to spend most of my time talking about Moderna and ISIS, but we actually have some very interesting preclinical data with regulators as well. We're hoping to have our first candidate nominated towards the end of this year, early next year in the cardiovascular diabetes space, the molecule that actually has very broad activity across a number of preclinical models. But in the interest of time, I'll focus on Moderna and ISIS. So let's talk about Moderna first.
If anyone had asked me 5, 10 years ago, would anyone be able to create a stabilized messenger RNA that you can express in the cell and actually produce either an interest of the protein, a transmembrane protein or secreted protein, I would have said you're nuts. You could we will never no one will be able to crack that. But what the Moderna guys have done is actually generated a chemistry platform or chemistry technology that really stabilizes the messenger RNA, enables you to transfect it into cells and express whatever protein, fusion protein, antibody, vaccine that you want. It's incredibly powerful. We have a 5 year collaboration with them, working in the cardiovascular metabolic space and the oncology space.
We have more than 20 targets in early research working on this platform. Now the data in the middle panel shows you some of the data was generated by Ken Chen, who's a professor at Harvard, who's recently moved to Karolinska, showing some data from a modified RNA VGF protein. And what he's done is he's dosed this in an acute myocardial infarction model. What he saw was the modified Vgfrna was able to stimulate both cardiomyocyte proliferation as well as blood vessel formation in the injured heart. And what you can see in the top panel is vehicle treated animals.
In the bottom panel, you can see the VGF mRNA treated panel. Can see those bright orange lines. Those are functional blood vessels that are basically oxygenating the tissue and preventing death and necrosis in the heart. And what this results in is a functional heart, so better function, better outflow from the heart. And of course, if we could translate this into humans, it would be phenomenal you're talking about cardiac regeneration.
I hope that this type of approach will be the first approach we're able to take into the clinic sometime in 20 16. The panel on the far right just shows our ability to replicate some of this data. We've taken a number of human cell types whether it's fibroblast, epicardial progenitor cells or endothelial cells and with every cell type we're able to get very good expression of VGF using this modified RNA. So the cardiovascular metabolic and oncology space. Cardiovascular metabolic and oncology space.
You've heard already from Mohammed about our STAT3 program. This is a great collaboration again using Generation 2.5 chemistry with ISIS. We have 5 potential programs. The STAT3 program is the one that's in the lead. We also have an antigen receptor program that's in Phase 1 and currently going through dose escalation.
But what's exciting here is maybe 2 points I want to talk beyond the efficacy we've seen initially in DLBCL. And just to remind you, there were 2 patients in particular that we had partial responses with. 1 was resistance to our CHOP, becomes sensitive to our CHOP, became
resistant, had gone into a
hospice and went on to AZL chop, became resistant, had gone into a hospice and went on to AZD9150 and actually 1.2 1.25 years later is still alive. The second patient actually had the worst prognosis, had been completely resistant to R CHOP at the beginning, went on to AZD-nine thousand one hundred and fifty became well enough to have a bone marrow transplant and is still alive and in remission. That's why we come to work, I have to say. It's absolutely phenomenal. But we learned from this experiment because we had actually defined some very clear go criteria for this molecule in terms of being able to knock down STAT3 in tumor cells for us to go forward to either a Phase 2 or Phase III trial.
What we saw as we were doing the proof of mechanism studies was that we were actually knocking STAT3 down in the tumor microenvironment in the circulating T cells, we were knocking down STAT3 in the tumors themselves. And of course, what this led us down in terms of the pathway was this is probably working through an immunomodulation pathway, not through a tumor cell killing pathway. So we then did some experiments combining with PD L1 and this just shows you some data in the colorectal xenograft model as well. You can see that PD L1 on its own or anti PDL-one on its own has effect or efficacy in some animals, but not all. But when you combine it with the anti STAT3 oligonucleotide, completely knock down the tumors.
They melt away. And when we look at the tumors, we can see a very high level of infiltration of CD8 positive T cells. So we're modulating the immune system as we want to as we want with the immuno oncology agent and the combination of two molecules is better than either one on its own. This is the trial that we're currently doing. And I think very exciting, we're going in DLBCL and actually had neck cancer now.
So again, the message here is actually the learning of the organization because we're focused on science, because we're focused few
words on
Few words on personalized healthcare and again Susan covered some of this, but we don't have a diagnostics business, but we are a personalized healthcare company. Our teams think about this from the very first idea when we start a target in our research labs. More than 50% of our launches between now and 2020 are going to have a personalized healthcare approach to them, trying to identify the most responsive patient population for that particular mechanism of action. As Susan alluded to,
the first company to get a circulating
tumor DNA diagnostic approved and will be the 2nd company with type 9,291. More than 70% of our clinical programs have a personalized healthcare approach to them. And if you look at our scientific reputation in the personalized healthcare space as measured by publications, by our presence at scientific conferences, we're ranked number 2 to Roche and we're catching up very fast. This is an area of intense focus for us across MedImmune and the EyeMed and is incredibly important for our future a green dot, our teams are working very hard to put a green dot on that program because they know how important it is for us to be able to define the best and most responsive patient population. Just finally, to maybe tell you a little bit about the journey that we've been on in the eye EyeMed.
We've reduced our investment in the small molecule EyeMed Biotech unit since 2010 by about 40%. And through that time, we've never been more productive. The number of backup programs in our pipeline has gone down from being almost half to less than 2%. Our cost per candidate is industry leading at between $50,000,000 $60,000,000 per candidate. Our probability of success from 1st GLP tox dose to end of Phase 2 has gone from 6% to 16%, which puts us in top quartile performance in terms of productivity.
And we delivered 5 Phase 3 programs to organizations since 2012. I'm a scientist and I work I'm very lucky to work with great scientists. It's never been a better time to be a scientist in AstraZeneca. We truly are open for collaboration. We're creating environments in our labs where scientists
sustainable flow of innovation that's coming out not just
for tomorrow, not just for a sustainable flow of innovation that's coming out not just for tomorrow, not just for next year, but actually for the years to come. So with that, I'll hand on to Bahija and she can tell you about what we're doing in MedImmune.
Thank you, Mene. Good afternoon. So I'm really excited to share with you MedImmune's early pipeline. So I will talk about the foundation of our science and then show you what's next. A few weeks ago, we just celebrated the 25th anniversary of Cambridge antibody technology.
That's 25 years for me in the combined organization of expertise in biologics. And as a matter of fact, the people and the pioneers who invented some of the drugs that are that really as the pipeline was growing are helping us bring new capabilities into the organization and move the pipeline forward. But the most important thing is absolutely to provide an environment where the science can thrive and where the scientists can have their or free to innovate. One way we measure it obviously has to be the pipeline. Another way is definitely the publications as you saw from many.
This is just an example and it's the quality of the publications. This is an example for what some of the output this year. But when I go to the foundation, I can put it in 3 pillars. You heard that from Pascal. 1 is our expertise in immunology.
The second one is our expertise in technology and protein engineering. And the third one is that what we built the last 7 years is the translational science. If I go to immunology, you have seen and I think I was really happy that we shared with you today the breadth in our portfolio in the RIA space, so it's the autoimmunity. But
just to
tell you that MedImmune was founded by an immunologist, and you can still feel it in the company. That's why we're taking that expertise into the immuno oncology and we intend to this is just the start and tend to really go deeper in there and understand even more. But as you know there is the inflammation or chronic inflammation is the underlying cause of several diseases, not just immunology, not just autoimmunity and the immuno oncology. So that provides an environment where all the therapeutic areas can benefit from each other and talk to each other. The second thing is the expertise in protein engineering.
So most of what you have seen today in the pipeline are monoclonal antibodies. I call them simple monoclonal antibodies. But if we want to go beyond that because we believe there is a power of the biologics to go into even bigger space you have to be working today on the new technologies for the future. And so we have pretty comprehensive toolkit. And I would say if we look into the preclinical pipeline and even in the early clinic, but in the preclinical pipeline 50% of our pipeline is non simple monoclonal antibodies as I call it.
And the third part is translational. And this is an area where I feel extremely passionate about because the desire here was to build in the organization even the mindset and build the translational as a real philosophy and then we can discuss again the Oxford T and Y, this is part of that, right? So how can we not only bring the projects late into the bring them to bricks with higher probability of success, but as importantly is
how to identify very early if we can make the right
experiments and stop the So let So let me tell you and show you a little bit what's coming. And the first question you have to ask, do we have a sustainable pipeline and how is the early pipeline looks like? So I'm showing you here the usually we don't show, but just to give you a flavor of the early pipeline. So at my left, you can see the preclinical solid Phase 1 and Phase 2. But it's not only solid Phase 1 and Phase 2.
But it's not only about the numbers as Briggs said, it's about the quality. So I'm going to give you a little bit flavor of what's coming. That's what I have to confess. This was the hardest part for me. You have to try to choose which ones to show.
So I try to keep every therapeutic area happy. But let me share with you this one. And this is really the case where our therapeutic area or disease area folks basically give a challenge to our protein engineering. So CD40, this is very known ligand. It's very validated.
And we know it's almost like a master switch in the inflammation pathway. The early antibodies went in there. They showed some activity in Phase 1. However, there was a safety problem and that's basically because there was clotting. So the challenge was how can we attack these pathways especially for inflammation without having the clotting problem.
And that's exactly what the protein engineering folks came up with is now a proprietary technology for us, which is a multi domain protein. So the TN3, what we call them 10acinthree scaffolds. And what you see on my right, I am directionally very challenged to tell you right and left, so I'm going to keep with mine. So if you look at this is on my right and the left on the lower panel, you can see if you see clotting, this is a preclinical model. So if you see clotting, you see the curve going this way.
If you don't have clotting, it's completely linear. And that has been extensively tested in preclinical. This is non human primates. You could see that we absolutely get rid of that safety. And we now the project is in Phase 1.
We have tested 2 cohorts at least in the clinic and so far so good. So we will tell you more about it hopefully in the next year or so. The second project, we talk a lot about the immunotherapy and we are excited and we are absolutely pushing very hard. But there is the other platform that we are taking again advantage of what we have in the organization is the antibody drug conjugate. So this platform obviously has been validated in the clinic and we believe it's very powerful.
So last year, if you remember, we acquired SpiroGen. And because they had won what we believe one of the best warhead in the industry clinic. So this I'm showing you just one representative. This is a cancer stem cell target. You can see just with one single dose, this is the right this is a zoonigraf model with the right curve you completely kill the tumor.
So what it is the antibody drug conjugate just to tell you this is an antibody and basically you put up a warhead which is a cytotoxic monoclonal antibody so you can very specifically go to the tumor and kill the tumor. The SPIROGEN folks as well received the best scientific innovation just 2 weeks ago. But to show you what's coming face display novel targets, or proprietary targets to us, but also using the PVD technology, but also our own tubulizing technology, we have both. So I'm happy to report that by the beginning of 2015, which is next year, we will have our 1st antibody drug conjugates to enter the clinic. So I wanted to show you what we're doing in the infectious disease because it represents several things or several points.
One is this is an area that's really close to my heart, but at same time, there's some great learning of the science that's going on there and also the entrepreneurial spirit going on in this area. So as you know, we have one product on the market right now that's called Synagis. This is an antibody against the RSV virus. This is a virus that's a respiratory virus basically that the premature babies if they get infected by this virus that could be even lethal. And right now the RSV season is around 5 months.
So you have to take or if you're a premature baby, you can have 5 injections of Synergis. There is no vaccine. This is a prophylaxis. This is an antibody. It's the only thing that exists actually for this population.
So one of the idea was can we utilize some of our technology to bring the next generation of synergies or the RSV antibody. And that technology is actually extending the half life of the antibody. So basically making the antibody stay in the body a little bit longer. What does it mean? It means instead of giving 5 injection in the season, you actually are able to give only 1, which is more convenient.
And that's not only that you can actually give it to more kids as well. So we have this technology. We made the antibody against the RSV. We actually showed monoclonal antibody. We also did the Phase 1 studies and we can confirm in human that we can extend the half life as well.
And this project is moving into Phase 2. So taking this idea from the antiviral, what we are so far as I know the only ones who actually managed to have prophylaxis in antiviral. We took this idea to antibacterial. So as you know, this is a real problem right now for all of us that bacterial or a bacterial resistance, right? We go from one infectious to the other and we have the bacterial resistance.
So taking from what we've done with the antiviral is we basically hypothesized maybe we can do it in the antibacterial as well. And if we go after that and make some prophylaxis, so instead of dealing with the resistance, how can we actually not have the infection to start with? Why this is important? As you go most of the infections happen when you go to the hospital. You go for something else and actually you ended up with infection.
So what we did first is an antibody against Pseudomonas. So Pseudomonas is the what we call the hospital acquired pneumonia that's caused by Pseudomonas. You also get colonization for cystic fibrosis patients. They get colonized by Pseudomonas or staff as well. So we said if we can have a prophylaxis antibody that would be something good for society all together.
And this is a really, really cool project that I wish I could talk about it for a while. But let me just give you some highlight here. What we've done is you have to attack the bacterias are not easy. So you have to attack them in multiple ways. And here in this slide just to show you we attacked we made antibodies against both 2 types of virulence factors in the bacteria.
And we put that in one single antibody. So that's what we call the bispecific antibody. And there are several things that are exciting. One of them is not only we can actually show that we can have a prevention, so you can prevent the infection. But we were also happy to see that not only that that you actually can it's also active in treatment.
But the most intriguing one and it's also exciting is that we see synergy with the antibiotics. Okay. So it's a really exciting monoclonal antibody. It's in Phase 1. And actually, we received, which is for me at least was a big surprise.
We received a happy surprise, a fast track designation from the FDA before we even started the trial. Now we have same antibody with the staff and we received in the same month that that antibody is in Phase 2b and we received in the same month the fast track designation from the FDA. And I said this area is very entrepreneurial. Most of these studies are being also done in collaboration with the IMI and the IMI actually is paying for definitely the staff and parts of this one. So the last one, I just want to give you a flavor because I believe that there is a huge opportunity for biologics in the metabolic disease area.
And as you know, when a patient comes as diabetic patient comes and actually is diagnosed with type 2 diabetes, they have already lost 50% of their beta cell health. So here we're looking at we just said okay can we go and find factors that can restore that beta cell health. So I'm giving you just a little bit of a flavor and just to really tell you to watch the metabolic disease space because we will be hopefully bringing more molecules in the next 12 to 18 months. So in this case, this is a secreted protein. Not only we see it's our early this one is the earliest that I'm showing you.
But in animal studies we see that we restore some of the pancreatic health, if you will. And then also it has an impact on glucose on the glucose. So if we if this is successful, it's going to be hopefully making a huge difference in type 2 diabetes. So those are just as early as we have in the pipeline. I just wanted to give you a little bit of a flavor, a little bit what's the strategy, where we're going and also telling you that showing you that we have pretty balanced pipeline.
We have, I think, very exciting science going on and also very exciting pipeline for the years to come as Mene shared with you. And also for me, what's also exciting, we're moving beyond just a simple monoclonal antibody which is allowing us to even widen the space where you can be in biologics. And I just want to finish where I started, which is you can't do any of these without the people. It starts with people, finishes with people. And we have really some I'm grateful for all the scientists who are day in and day out push the boundaries of science.
And I would say like Pascal said, it is so much fun doing what we do because we are helping patients. And I'll stop here.
Okay. So I think the floor is open for questions. And
I guess I'll facilitate this with
the lights up. Yes, we'll start right back here.
Thanks. It's Geoff Holford from Jefferies. I want to go back to your discussion a bit earlier Briggs. So on Atlantic, we see a primary endpoint readout on clinicaltrials dotgov around April 2015. So just wondering why you pointed to 2016 for the filing timeline for that in your pack?
And just if you could maybe comment also more specifically on some of the other data readouts and competitor activities that might prevent that filing. Just another time data readout we would think would be very exciting and that would just be when would we likely see 1st Phase 1 data for the PD L1 OX40 combination? And then just lastly maybe comment a bit on strategy around you don't have anti cancer vaccines that you're talking about. You don't have any Just your thoughts around that. Thank you very much.
Sure thing. So let me take Atlantic and then perhaps,
Mohammad, you want to talk about PD L1 OX40 combo? And Bahija, you want to talk about anti cancer vaccines and the other technologies, CAR technologies? So let me be very clear on Atlantic. It is in a way a little bit like the Phase 2 study that's going on with 9,291 where you are enrolling patients, we are gathering data both on response rate and on durability of response. So essentially you can cut the data at various times along the way.
I think in order to have enough patients with enough follow-up that we would feel comfortable, we have a good sense of both the response rate and the durability. That's why I think that's coming probably later in 2015, which would lead to filing maybe in 2015, but I think right now we're estimating more 2016. The question about the competitor landscape and I'm sorry, I don't want to go through the entire competitor landscape because it's I'll give you the principles of what we're concerned about. Of course the question is, if someone were to have full approval in third line non small cell lung cancer for patients who are PD L1 positive that would be the challenge for us. So I think probably others of you know the competitive what Merck is doing, what BMS is doing, what Roche is doing, that's the piece.
Now there is of course in Atlantic 2 cohorts. There's the EGFR ALK mutant cohort and there is the wild type cohort. I think the EGFR ALK mutant cohort may perhaps be a little safer territory relative to strategically what we would be worried about should somebody have that. So maybe Mohammad, do you want to take the question
about PD L1 OX40 combo? Sure.
So the PD L1 murine OX40 combination has started. So we've dosed patients this year. It's a dose escalation study. So there's always some degree of uncertainty in terms of the number of dose levels that you will have to ultimately explore. But if things stay on track, then we anticipate we can plan to present data in the latter half of next year.
And then Bahija you want to comment on other technologies?
Yes. And I think on vaccine you've seen we have one on collaboration with Advaxis. We talked about that one for the HPV cervical head and neck. And but we have our own efforts going on. Remember we have we've been in the vaccine area.
So now we just so you'll see some things
phone? Seamus is that
you on
the phone you have a question? Yes.
Let me
quickly go. I think is this the phone? Seamus, is that you on the phone, you have a question?
Yes, actually. Thanks for taking the question. So maybe, Briggs, can you talk a little bit about just generally how the process of research is changing and if you think that companies with broad combination opportunities may start to develop a bit of an advantage versus kind of the single agent development. Typically, you see with Bio Techs, You have more of a single agent that's developed and maybe it's a good target, but would be interesting to just know your thoughts there. And then secondly, the second question for Bahija.
Bahija, when you think about the opportunities and you think about sort of the Phase 1 data that you are asked to generate and bring forward along with the technologies, what kinds of signals are you really looking for? Are you looking for now more the very big signals in Phase 1, for an on target antibody
same thing for your question. I'll take a stab at it and then maybe, Bahiyush, you can jump in as well. I think the question about combinations and whether it's best, I think what I would say is by focusing in our core three therapeutic areas, we can look for those opportunities. And I think you've heard that theme across all of the people who presented. So in respiratory, we talked about the ability to have a triple combination in a proprietary and an important device.
That's one example of a combination. You had heard Elizabeth talk about the potential that it plus a DPP-four inhibitor plus an SGLT2 inhibitor very, very early you might change the natural history of diabetes. And of course you've heard in oncology I think many examples that we've talked about. So I think, Seamus, your question about combination therapy, I think the hope that there'll be a single drug like a Gleevec that will transform the natural history of a disease. Those are still possible and we'll still see that.
We've seen examples. But I do think as we get into more complicated systems biology, you do need multiple agents and having those all in house. But again, I think it's the focus on our course understanding the core science that again I'll let many in Bahija because I think they're the ones who are doing this early on and then bring it to us late in the clinic.
Yes. So thank you for the question. I think it really on the therapeutic area. But what's underlying everything is basically what's the hypothesis you're bringing to the clinic. Our teams are not going move if they don't have a real hypothesis.
So I'll give you an example. The antibody that we showed you for the anti Pseudomonas 1 or for the RSV, one of the hypothesis was that we can extend the half life. Well, if we don't see that in Phase 1 that's the first thing we look at the PK. PK is not good. We're not going to go.
For something like the respiratory which is you're not going to be able to see activity in Phase 1 what you're looking for is the minimum. Are you hitting the target the way you really want to see? I think what you see in Benarolizumab we actually ask these questions very early. Not only do you deplete eosinophils in the blood in Phase 1, we actually did the study to look how much we're depleting in the lung because that's very important before we invest even more. So it depends where you want to see signal of activity even early that's oncology because you can actually see activity early.
So it depends on the therapeutic area. But I think we're just that discipline of actually knowing what you're looking for and testing that in the clinic is very important. The other just last point is the also the population you're going to and testing it. That's how we did it for asthma with for everything that we do. And sometimes it's easy, sometimes it's not as easy as we are learning more in immunotherapy.
Any questions here in the room? In the back we have a few.
Hello. Amit Roy from Foveal. Just a question on CTLA and PD L1 again combinations. Two questions. Firstly, a commercial one.
If I'm correct, Pfizer's licensed TREMITU in monotherapy, what is the commercial regimen you have then with a a combination with a PD L1? That's not fair to be clear. And secondly, you alluded to the timings of CTLA versus PD L1. It's quite clear the timing seems to make a difference in terms of combination cohorts or phased delivery. What's your data telling us to which one should come first or should we be given complete together?
So don't know who wants to take the question about the commercial arrangement Pfizer? Yes?
Yes. I can answer that one. We have the freedom to do basically what when we license from Pfizer we can do with the CTLA for what we want. I think the only things that they can do is in the vaccine area. That's all.
So we have the freedom to combine to do whatever. And the second part is if I don't think we'll share with you in ASCO which one. But basically what we said even at JPMorgan a long time ago that we believe the sequencing, the dosing, the dosing schedule is going to be extremely important. And that's why we're really taking I want to say we're taking our time, but we are doing the experiments correctly to look at these three components, which I believe are extremely important.
Okay. I think there
was another question in the back.
Simon Baker from Exane. A couple of questions, if I may. Firstly, you've given us a lot of data on the changing split of R and D spend, and you've also given us data on cost savings in R and D. I wonder if you would care to share any more information on how that manifests itself at the group level over the few years as you go through this transition? Secondly, a quick question on the antisense STAT3.
Any comments on the tox profile of that? And finally, we talked quite a bit about 9,291 and the fast clinical development. Development. It looks like the preclinical development was also impressively swift. So I wonder if you care to share any changes that you've undertaken in
lead optimization and preclinical
to accelerate development programs.
Question on the R and D spend at the group level. So the chart I showed you of the distribution of early versus late and across the different therapeutic areas was really just in percentage terms. As you can imagine, I think you are we've already communicated. This year's R and D spend is up a bit from 2013, Mark, 10%, 14%. And I think as we go into 2015, there may be again we may need to have a little slight increase as well.
But I think it's sort of staying in about the ballpark that we're at now. And Mark I think will cover that in detail in his presentation. Is that fair?
And then you guys want
to talk about preclinical development? So there's a question on STAT3 which Susan might want to answer in terms of probability.
I can do it, but she can do it better than me.
Yes. So in terms of the STAT 3, the data was presented at ASCO on the Phase 1 program in lymphoma. The data will be presented on HCC at the Barcelona meeting, which has started now. But at a high level, we do see on target thrombocytopenia with STAT3. So that's we think that's an on target mechanism of action inhibition.
And I would say that the dose escalation with the AR antagonist is getting to a level where we've gone beyond where we could dose escalate with the STAT3 molecule, suggests again that that's a mechanism related toxicity. The HCC trial, I'd just say when you look at the tolerability and I'm not going to go into details, just going to be presented at the scientific meeting. Bear in mind that this is a patient population with substantial baseline abnormalities in hepatic function because of the hepatocellular carcinoma and the background of cirrhosis that many of these patients have as well. So overall, what we see is a molecule that can be tolerated at the dose levels where we are seeing the mechanism of down modulation of the STAT3 in the tumor microenvironment that many alluded to?
So there's a question on preclinical tox. And I would say there's a couple of things at play here. 1, we're just I think Pascal alluded to this in the very first presentation. We're a much simpler organization, both in terms of decision making and governance and the number of sites that we're on. So moving our programs swiftly and learning about the toxicology early on through the optimization actually helps us move fast once we've nominated a candidate.
The other piece is we've just actually simplified the safety function. So it's now on one site, one core site and we a set number of partners that we work with. And so it's a very streamlined process for how we get from candidate nomination through GLP TOGS.
Any other questions in the room? And I don't see any other questions on the call. So Thomas, we move on to I think Mark you're next.
So good afternoon. We have shown in the last few hours how exciting our portfolio was and what underpins the outlook of our business. Before I move into the translation of science into value for the company, I'd like to spend some time to review I need the review the financial performance of the company over the last our shareholders. Returns have been achieved through a combination of dividends, growing dividends, but also buyback. And as you can see that the dividend has been the foundation of our shareholder value.
While delivering this shareholder value, we have also seen a growth in the TSR. You can see on this slide the comparison of AstraZeneca in dark red with 12.9 percent average TSR in comparison to RPEs, which is if I can read properly 9.7% and for the FTSE 107.2%. So basically our TSR has grown by more than 3% higher than the competition. On this slide on the left, you have the dividend. On the left, the dividend growth and on the right, the dividend yield.
And as I said earlier on the first slide, the dividend policy has been at the core of our shareholder value creation. And you can see that on the left, the chart shows that our dividend is now 3 times higher than it was in 2000 and and 4, the start of the horizon. And then on the right for the dividend yield, we are presently at 4%. Our peers are averaging today at 3.5%. And you also have on this chart the average of the last 10 years.
That's for the retrospective of the financial performance and financial metrics for the company. I'm now going to turn to slightly more prospective parts of the presentation. Let me spend some time to explain what this slide projects. This is looking at the 4 year forward rolling revenue CAGR. So on the left of this slide, you have the scale 5%, 10% and so on.
And you have in this dark color the actuals and the dotted line represent the market consensus, the market the current market consensus. And the arrow points to you the 2014, 2018 growth rate. So that's 4 year forward growth rate. That's what we are measuring on this curve. Obviously AstraZeneca is in a turnaround situation.
And for us, the return to growth is clearly one of our key objectives. We can see that from the period of 2,006, 2010 2011, the yearly gross sales were close to 0. In 2012 2013, we had 2 years of substantial decline. So as I said, the dotted line represents the market consensus and you can see that the market is expecting the growth rate the 4 year growth rates to be around 0 in the 2014, 2018 period. The 4 year rolling forecast is an important parameter and the change of a few points in that parameter is often correlated with the rerating by the market.
And as an indication, we believe that the change in 3 to 4 points in this 4 year forward growth rate is usually sufficient to cause a change in the multiple. I 45,000,000,000 dollars for 2023. And if this point was represented on this chart, it would place us above the dotted line. This parameter is very important because I think it gives you an idea of the speed of the value creation. I will now turn to 2 different phases for AstraZeneca in an illustrative form.
The first period covers 2013, 2017. It is a period of replenishment. You have the strong headwinds of the loss of exclusivity on Crestor, Nexium and Seroquel. And you can see that the revenues of 20 seventeen's on this slide plan to be broadly in line with 2013. Thanks to the contribution of the growth platforms and to a limited extent the contribution of the less stage pipeline.
The second period is a period of harvesting. From 2017, the headwinds of generic are abating and are mostly behind us. Our growth platform continues to deliver. And therefore, you have a strong growth trajectory from 2017. And we expect, as I said earlier on that our less stage pipeline will help us drive the revenue towards the 45% long term target.
Now I'm now going to turn to the model we are using to monitor our value creation. On these three bubbles on the left, these are representing the revenues. So you have revenues coming from established products, revenues coming from growth platforms and revenue coming from the pipeline which is being developed in the course of this 10 year horizon. And then through operating leverage, obviously this from this revenue and through operating leverage, we get on to cash flows which are used for the pipeline, the R and D necessary to create the pipeline and business development opportunities, but also to provide a return to our shareholders and in line with our progressive dividend policy and also make sure that we have an efficient capital structure. The CapEx and the business development are obviously very important as the progressive dividend policy.
As we move towards from primary care focus increases the operating leverage also increases. Then you have this sort of feedback arrow coming from the pipeline and in turn providing the next wave of new products. And you can see on the under the bubble for the pipeline the products that have been described in the course of today, the approvals and the submissions and even beyond that upstream for the Phase 3, Phase 2 and Phase 1. Coupled with our strategy of value creations through our rapidly progressing pipeline, we also need to ensure that the company long term priorities and objectives and the shareholders' interest are closely aligned. And this slide explains how the management incentive which are both the STI and the LTI are constructed.
So on the left of the slide, this is a construction and on the right part of the slide, this is more the alignment with the shareholders' interest. So the STI itself is composed of 14 individual measures, which are not represented for simplicity on this slide, but they are regrouped around scientific scientific leadership, return to growth and financial targets. In this in the case of term incentive, the financial targets are the TSR and the cumulative cash flow. And on the right, we have tried to depict how these objectives are aligned with the shareholders' interest. And you can see that the obviously the scientific leadership is linked with the delivery of pipeline.
The return to growth, this is basically the measurement of the growth platform which we have talked to you about today. And the group financial targets obviously are very aligned with those of the shareholders. What we need to remember from our management incentive that they are aligned with our strategic priorities, but they're also very consistent with the figures that we have presented and we are presenting regularly about our long term plan. Let me turn now to the way we deploy our capital to in the pursuit of scientific leadership, but also to generate long term revenue growth. In this slide, Briggs showed you a similar slide earlier on.
The only difference is mine incorporates both R and D spend, so the internal spend and the business development capital allocation. So this is the aggregate of those two costs. So you can see that 92% of the aggregate of R and D and business development over the last 2 years have been allocated to the 3 core areas. Only 8% have been spent on the infection vaccines and neuroscience. So this the largest on the CV Met, the largest spend has been as you know done on the diabetes alliance with BMS.
On the respiratory area, we had 2 critical acquisition Pearl and the respiratory franchise of Almirall and oncology or capital allocation was mostly devoted to the own clinical spend. This slide was is a but also used by Pascal and by Briggs. It shows how fast we have replenished our late stage pipeline. And as we have commented during the course of today, we have seen the results which have been accomplished in the last 18 months. And you can see target of 13 to 15 new programs in Phase 3 or registration by 2016.
A few words about the potential value of our pipeline. This table classifies the products according to their peak year sales and their probability of launch. The date in brackets represents the year of launch. You have on the vertical axis the potential and on the horizontal the scientific evidence or the quality of launch. And you can see that on this slide we have included most of our Phase 2 or beyond.
So not all of them, but most of them. And you will note that 2 third of these assets are projected to reach sales above 1,000,000,000 dollars And in conclusion, I'd like to say that we are coming to we are rapidly coming to a period of harvesting and value creation for our shareholders. We have in the past 10 years returned $53,000,000,000 delivered a TSR of 13 provided superior dividend growth and yield. And now the ship is turning and the speed of the turn is rapid. And we should see an inflection in the 4 year forward rolling rate.
So just as a last word for me, we remain committed to the policy of progressive dividend and to a sustainable value creation for our shareholders. I will now take your questions and ask Briggs and Luc to join me on the podium. So we have no question on the James?
Thank you. Can you
hear me? Thanks. James Gordon from JPMorgan. A couple of questions on SG and A. So in terms of looking in the medium term, if you do have a flat top line and if R and D is growing, you've got to make some SG and A cuts.
Just in terms of how much can you cut when Crestor goes? Is there a lot of spends still attached to Crestor? And are there other areas that you can make big cuts? And how low could SG and A as a percentage of revenues actually make sense for Astra? Could you get down to the low 30s?
Or would that be cutting too far?
Okay. So first of all, the in 2014, our SG and A has been increased by 14% as we mentioned earlier on the same rate as for the R and D. Obviously, this is not going to be continuing forever and we will need to more actively manage our expenses, our OpEx from next year on and or when Nexium sort of disappears. So we are ready for this time. I've seen a note by an analyst talking about the 27% of cost reduction in the next 3 years for SG and A.
We do not have exactly the same numbers, but directionally, this is going to be in the right direction.
Thank you. And just one follow-up question, which was in terms of other things that could support the bottom line, in terms of whether you would divest other assets, pipeline assets in non core areas, are you already in advanced discussions with other partners potentially or other people who might want to buy some of your assets in infection or neuroscience? Should we expect other assets beyond Metrolipton in 2015 to be divested?
Thank you. Yes. So I think we are going to do 3 types of things. First of all, we are going to redeploy our resources even more aggressively or dramatically than we have done. Greg has already shown you today that in the course of the last 2 years, we have moved less stage development from 40% to 60%.
But also within R and D, we have moved from, I would say, project related from sort of brick and mortar to project related. This has been done very actively in particular by the Discovery units. We have also moved projects across franchises and so on. So we are going to continue to do that more aggressively. The second avenue is, as you describe it, are you going to sort of monetize the produce of your discovery?
And the answer is yes. We have already in 2014 had 2 examples of this. The base inhibitor is one type of partnership and the recent announcement mitralepine is another example. We are actively working on several other projects which have the same purpose in order to relieve our P and L and to enable us to continue having our discovery engine fully in force.
Thank you.
Yes.
Thanks. Matthias Seglund, Danske Bank Markets. Three questions please. Pascal, could you help us understand with 8 to 10 medicines likely to be launched in 2015 into 2016, how we what we should keep in mind when modeling the ramp up of those introductions, in particular in the light of payers inability to embrace innovative medicine recently? And secondly, with regards to your 2014 Focus employee survey, you shared with us a lot of parameters where AstraZeneca comes out favorably.
I'm sure there are parameters where you don't come out as good as well. I'd be curious to hear what those would be and what you intend to do to change that. And then thirdly and lastly, can you remind me how many breakthrough destinations the company has as of today? How that compares with peers? And whether that's a good measure to measure return to scientific leadership?
Thank you.
Thank you. So the third question breaks to you. Want to think about it to answer the other 2? You can count. The focus results, it's a great question.
In fact, I would have commented, but I realized I was running out of time. So I was actually speeding up a little bit. Are very exciting. We got, as you saw, very good results. There are 2 things that people told us we are not really where we complex.
Part of it is the nature of a large company. Part of it is our history. And so complexity is clearly something that people tell us. Complexity of our systems, IT in particular, complexity of the way we operate. So we certainly need to do more there.
And then the second is people development. There's certainly more we can do there too. So those are 2 of priorities that we as a senior executive team have decided to give ourselves for 20 15. Not that reducing complexity was not a priority, it is of course, but we certainly have to do a lot more. As far as your first question, I'm not really 100% sure about it.
It was more like what kind of ramp up can we expect for new products? Is it I guess the answer to this is really it depends, because it will depend on what kind of ramp up can we expect for new products? Is it I guess the answer to this is really it depends, because it will depend on what kind of ramp up can we expect for new products? Is it I guess the answer to this is really it depends, because it will depend on what product. There is some products where we expect pretty ramp up provided we can get access.
And it's partly in our hands of course because we decide the price at which we sell our products. But I think we for a number of our products we should expect a relatively good ramp up. Now one of the questions we get from time to time is the respiratory field. Are we going to be able to succeed with difficult access, etcetera. I think the answer is yes, we can.
We just need to be focused and we need to really educate the market around COPD in particular. But we've shown you what we can do with Symbicort. And quite frankly, the access we have for Symbicort next year in the United States is still pretty good actually. A little bit reduced compared to what it is this year, but still very strong and better than many of our competitors. And I think we can do the same with our other new products.
What I'll
do, I'll take maybe a question on the telephone. Simus, would you like to ask your questions? Sorry, there was another response that we were in.
I'm looking at my colleagues to correct me
if I'm wrong. I think 9,291
is the only breakthrough therapy designation we have. And as Bahija alluded to, we have a couple of fast track designations, which is different from breakthrough.
So, Simis, would you like to ask your question?
Sure. So my question is just more, can you again, Mark, you mentioned a target of 27%. Was that in terms of the threshold for SG and A? Are we thinking about that? What are we thinking about in terms of the timeframe within which one?
And I presume that you were saying that a realistic target for SG and A might be somewhere in the kind of high 20s for SG and A over time. But I'm just trying to get a better sense of when should we post Crestor or should we be thinking about a post Crestor or should we be thinking about a bit of a period where the numbers may run a little bit below that as you're launching new products and SG and A could even be higher as a percentage of sales?
Okay. So what we have so I was not indicating any company strategy for the 27%. I was mentioning that I read it in an analyst note not so long ago. So I just was alluding to it. What we are doing in 2014 what we are trying to do is to manage our top line and also our bottom line.
And as we had provided guidance, we tried to sustain our pipeline progression as well as our commercial investment as much as we could. And I think we are going to finish the year as we had planned or slightly better. We're having to do to the same principle for 2015 2016. However, the condition may change. So we may have to reduce the level of the progression of the spend on R and D and the same on SG and A.
We expect the overall in a few years' time when we go to Specialty Care, we expect that the level of spend of G and A will be substantially lower than where we are today. We believe that 20 15 will be also lower than what we're going to finish in 2014. But I'm not going to give you any percentage. We may be able next year to provide you some indication at in February for the guidance, but not for today. I'll take another In
Pascal
In Pascal's introductory slides, one of them was entitled Driving a Simpler and More Productive Business. And at the bottom, it highlighted Process and Systems, IT Enterprise, 15. I'm just curious given that you're investing heavily in that at the 15. I'm just curious given that you're investing heavily in that at the moment, is there an element of your cost base today which is effectively duplicated as you run legacy systems and invest in new systems? If so, can you quantify how much?
And how much do you anticipate that both those investments will save in 2015 2016 going forward? And then the second question, you've alluded a number of times and Pascal has that selling non core assets will be an element of funding the internal investments in your business during this replenishment phase. When it comes to guidance, are you going to give us an indication at the beginning of the year how much of your cost budget is effectively going to be covered by those divestitures? Or are you just going to leave us to wonder how that's going to play out over the course of the year? Thank you.
Pascal, do you want to take
the first one? I think the second one. Well, yes, the first one is, yes, certainly the investment we're making in systems is going to drive a reduction of cost over time. We've done a lot of this already. Mene mentioned cost.
There's more to come from an IT perspective. Our primary goal is really to make our people more effective. We've got an IT quite frankly that is today in a much better place than where we were 2 years ago, but was historically a function where we hadn't invested and we had very cranky systems that were quite frustrating for everybody and in fact creating more cost than necessary. And our IT costs were higher than the benchmarks in the industry. So essentially we have a new leadership in IT who have been working really hard to reduce the cost rapidly and increase the service level.
And done quite a lot of progress this year. We still have a long way to go, which is why our people are telling us we are still too complicated. Part of this is their experience with some of our systems. So there's more to come, more to come to make our people more efficient with better systems. We'll also reduce the cost of IT.
And we have certainly goals for cost reductions there. Of course, we don't give any guidance for those, but we suddenly directionally again you can expect that we'll get some savings out of this. As far as the other question, we see it's hard to answer today. We'll have to decide what kind of level of guidance we give for 2015. I just would like to correct something you said, Matthijs, that we're not necessarily going to divest products.
Sometimes it may be a divestment, but selptin is a divestment. But mostly it's going to be creating value in a different way through partnering or licensing products. And so trying to get some short term value out of those, but retaining long term value as well for royalties or partnerships. So it's not really totally divesting those products. It's really retaining some of the economic value, getting a little bit of it today and some other part of it later
on.
Sachin Jain. Just one question on balance sheet. You mentioned you wanted to retain an efficient capital structure. How do you define efficient on the assumption you're moving to inefficient through the course of next year? If there's no further M and A, what's your preferred route of return of cash dividend?
Or would you restart a buyback? Thanks.
So we still have our net debt position for the time being. And probably by the end of next year, we'll still be there or thereabout. If we have no prefer the dividend in relation to buyback. If there is surplus left, then we will be open to resuming the buyback. Alexandra?
So there have been various questions trying to fish for some sort of long term guidance. And I understand you don't want to give us
that, so I'm going to ask you
a related question, but actually ask me for something different. Basically, I mean, the issue really is that until recently or until last week, I thought it's actually fairly simple because you're giving us €420,000,000 that needs, unless you do buybacks, about €7,000,000,000 operating profit. So that's the 2017 base which you're going to grow. Now since last week, understanding that how you get to that operating profit number, which you need to do the SEK 4.20 billion, that will contain some elements of what you call monetizing assets, so some milestones, some other components, which may be non recurring. So basically now I'm less sure whether you're really going to have €7,000,000,000 operating profit in 2,007 that you can grow.
It may be a different figure. So I'm not going to ask you what that figure is. I'm just going to ask you, have you got good visibility what the number is going to be in 2017? Or is that still in your internal plan a range that is this wide?
No, no. We have a very clear visibility. I know maybe it's a little bit frustrating that we don't give you this midterm guidance and we just let you do your job. I guess, we'll give you some pieces of information, but not the whole picture. So that you can have fun doing your job as well.
Otherwise, I put numbers in spreadsheets. But so no, I accept that you'd like to hear more because there's a certain amount of uncertainty for sure. But now we have a clear visibility. And you should not put such a big emphasis on divestments or whatever. What we're trying to message to you is that there's many ways to create value.
And there are places where we're going to create the value ourselves as much as we can. We're going to develop, commercialize those products ourselves. And there are other places in the organization where we have great science, we have great people, but we can't do everything ourselves. And rather than say we're going to shut down those activities, which would be a pity because we really have great science. What we decided to do is continue creating value for patients and for the company by partnering or licensing out some of those assets.
And the other thing we achieved doing this is we retained the optionality to rebuild at some point in the future to kind of keep building those areas to do things ourselves. And so we maintain this optionality and we create value. So that's really what we're trying to signal to you. But fundamentally what we're going to do is manage our cost base to reduce our SG and A ratio in particular. I think you've got to look at this company, this business as an innovative business.
And so that tells you an idea of what is the R and D spend as a percentage of sales, the kind of range where we think we're going to stabilize. But certainly as we move to a more specialty care portfolio, our SG and A ratio will decline. And let me just make one last point again, repeating what I said earlier. This year is a really massive investment year in terms of several launches. The emerging markets, China, diabetes, Brilinta, Symbicort, etcetera.
And this is paying off because you see the kind of growth we're experiencing in China with Symbicort, etcetera. It's actually actually good value, good investment. But it is not going to last like this. So essentially
by 2017, we will have managed
our cost base. So we're not going to leave off selling assets, I guess is what I'm trying to say.
Maybe I'll take one question on the telephone.
Markets is going to continue to be an important part of your growth. Do you think you can actually reduce your cost base and continue to get growth in emerging markets? And I'd be intrigued on your attitude to the general view of a slight slowdown in emerging markets. And the second question is just one on cash flow. I wonder if you could give us some help on what sort of proportion of your core earnings we should expect to see converted through to cash.
I know you've got royalty payments out. You've got restructuring charges and things like that. So just some help on how we should be looking at the cash flow coming through as well as the sales and profits would be helpful.
So first of all, the first question for the emerging market, we have we will probably maintain our level of investment more than reduce it. So it will probably be a ratio that is slightly lower in the future. Mark has explained Mark Mahlon has explained to you much investment we had done in China over the course of 2014. And you have seen in his presentation how strong presence in the emerging markets. And regarding your second question on the level of cash flows, obviously, we'll give you a bit more visibility of the cash flow for 2015 and maybe possibly 2016 when we talk to you in February 2015.
You are aware of all the milestones or sales related payments that we when we do an acquisition or a business combination, we are usually very transparent with what we commit to do with our partners. So I think it's relatively simple for you to anticipate what these payments are going to be. And we do provide every 3 months on the quarterly accounts these room there.
It's Ki Yirparekh from Goldman Sachs. My understanding was that when you issued the guidance for 2017 revenues in March 2013, That was based on a purely organic measure and did not include any M and A contribution. Given the Bristol Diabetes addition and Almirall, should we now think of that being an upside to your 25.7 17? Are we consensus thinking about it wrongly? Or has something changed on the rest of the business?
That's one. And secondly, Mark, as you kind of very helpfully provided a preview for 2015, in response to an earlier question, you kind of suggested that you were in late stage negotiations with a few of your other compounds for potentially having another strategic value to it. How should we think about whether that's been already included in the preview that you provided? Or will that likely stuff that has not been announced, will that be an upside to your preview? Or is that already included?
Okay. So for the first question regarding the 2017 sales guidance, we had provided this guidance in January of 20 14. And when we provided this guidance, we mentioned that it was at constant exchange rate. We said it would 2017 sales would be broadly in line with those of 2013. And we had said at that time that it would it could possibly include small regular business development activities, but it was not including any major acquisition.
Maybe just to add, Kael, on the I think you got the wrong assumption with diabetes because if you remember, we said when we communicated our plan, we said that we used our long range plan. The only adjustment we made to it was to add the other half of the diabetes business. And so essentially the 2017 guidance included diabetes. The one thing it didn't include is the Almirall acquisition, but it did include the totality of the diabetes business. And when we said we said we would be broadly in line, which means it could be exactly the same number or a bit below, a bit higher.
And so Almirall is certainly going to be additional to what we had in our plan, but diabetes is totally included.
And then the next question is if we do if we are monetizing asset or partnering asset next year, is this already considered in your preview of 2015? The answer is yes. This anticipated. Now if we do more, then obviously it will be an upside, but it is anticipated.
And just to follow-up on that. So beyond the 3.25 that you already announced, what are you what is anticipated? Can you quantify that for us?
Not today. Okay. Maybe a question on the telephone. Tim Anderson, would you like to ask your question?
Yes. Thank you. A couple of questions. How much of a focus is there by management on trying to pull forward the year in which Astor returns to growth, which you usually describe as 2018 through M and A, so deals that would add to revenues and earnings in the intermediate term? And then second question, on your guidance for 20 20 3 revenues, can you just remind us what proportion is assumed to come from acquisitions or in licensing by the company?
Or are these two activities assumed to be 0 and all of that €45,000,000,000 is based on what you already have in house today?
So first of all, we are on the I will take the second question first. When we explained about our long range plan, 20 20 3 sales above €45,000,000,000 this did not include any major acquisitions. They are, as we said, traditional or regular acquisition that we do along the way complementing our portfolio or doing one partnership or the other. But there was no major acquisition you mentioned are we considering
M and A?
This was did I get your you mentioned are we considering M and A? This was did I get your question right or?
It's really I think one of the stumbling blocks for 2014. So 14. So my question is, how much of a focus is it by management to try to pull forward that year through mergers and acquisitions? 2018, for 2018, for example?
So what I can say that we are constantly looking for good opportunities, but we want absolutely to make sure that any opportunity would be aligned with our strategy, would be accretive and consistent is what we do. So there are not many opportunities. And we do believe that we can maintain ourselves around the 2013 level until 2017, after which we are expecting a period of rapid growth. So we don't see it as an absolute must. If we did find a great opportunity, which would be in our line of business and accretive with what accretive with our company, then we would have obviously consider it.
Yes. I mean the only thing I would add is that the price has to be right, of course, and then we have to be able to execute on it. And so when you combine all of this, it leaves you with a limited number of opportunities, as Marc said. And also, this execution dimension is an important one. I mean, I think what we try to show you today is that we're creating value organically through our own pipeline.
We're complementing this through business development. We're making rapid progress. And a merger or an acquisition of large size that would be disruptive would certainly help in the short term, but potentially create long term disruption. It doesn't mean we will not consider it if we found one that addresses the criteria Mark just described, tragically aligned, feasible, the right price, we would do it. But it is not easy to find, and we also have to consider the disruptive dimension that one of those things could bring to organization and to this value creation we are trying to achieve.
So essentially, we're trying to do it through mid size acquisitions. And so if we did, if we found more of the Almirall or the diabetes acquisition of BMS Alliance, if we find more of those, we will certainly do them because they are easy to absorb and easy to align with our business. I think we
have run out of questions.
No, we've got one there, Mark. Sorry. Actually, the
last one then. Danny from Puff and Barclays. Just a very quick question regarding the 2023 guidance. And when you laid out your long range plan, you identified a third of that €45,000,000,000 approximately was going to come from pipeline and the remainder from the mature existing franchises change for what seems to be a dramatically change for what seems to be a dramatically changed pricing environment, particularly within the fields of respiratory and diabetes that we've witnessed this year? Was this part of your long range planning assumptions at the time?
From our perspective, it would seem that has been something So
So basically what we are as Pascal was mentioning earlier on, we are now in the process of finalizing our plan for the year 2014, so the next 10 year plan. We do not see any dramatic change or evolution in our planning. So it's more or less in line with what we had year. Obviously, they are slightly ups and down. Pricing is one evolution.
But we had always anticipated a gradual decrease of prices in some regions. So there's nothing surprising I would say in the pricing environment that we are confronted with today. So the pricing that we had in our plan last year and this year are still valid.
As you can imagine, there are lots of there are moving parts, ups and downs, as Max says. But overall, the totality of the plan is very much aligned with what we had before. In some areas, for sure, we our plan reflects the changing environment and the price pressure, but we have other products that we think can do better than we expected before. That's why we feel comfortable reconfirming the 45%. I'd like to maybe go back to the previous question because I wouldn't want you to think we ignore this aspect.
I mean, I completely recognize the fact that there's a couple of years where we are fighting pretty substantial headwinds with Nexium and Crestor. And if we actually were able to address this, we would do it. And we're constantly looking. So we don't want you to think we are not considering this and not trying to address it, but we will not do it. We are trying to be an organization that is not risk averse.
We're trying to progress some of our projects fast and take educated risks. But we also want to be disciplined in the way we manage the business. And so we will not do anything that leads us to overpay for business or consider our business just for the sake of filling this gap. We want to build a sustainable company and we want to do it with a strategic approach not sort of buying stuff left, right and center just to create short term money questions. That we will not do.
But with Ceramic we'll continue very actively to look for opportunities.
And regarding your last question, the size of the pipeline in the indication of about 1 third is still valid.
All right. Thank you so much. So we're on the last stretch. It was quite a long day. I hope you found it interesting.
I hope you enjoyed it. Certainly, I did enjoy it a lot personally for two reasons. First of all, because your questions are always very insightful and they help us. Often, really, we go home and we have more to think about. But also personally, I must say, because sitting here in the audience and seeing this fantastic team in action is always very energizing.
So I was really excited to listen to them over the last few hours. So hopefully, we gave you a good sense of what we're trying to do. We covered the progress we're making with growth platforms. We covered we tried to cover the pipeline and the progress we've made with the pipeline. And we also tried to give you a sense of what's next, what's in the early pipeline in research and early development.
So I certainly didn't expect 1 minute that you would actually believe that all the early projects we showed you will work. We completely realized that some of those will work and others won't work. So the goal was not really so much to convince you that every single of this project is going to make it. It was more to give you a flavor of what we're doing. So hopefully, you could touch the science and the kind of science we're pursuing and the kind of projects we're pursuing.
And hopefully, you get a sense for the people who are doing it and how aligned the organization is in terms of progressing those projects. So we are on a journey, and the journey is still made of another couple of years, and we just talked about this. It is clear that there's 2 years where we're facing headwinds. We believe in the long term, we believe that by 2017, 2018, we'll be in a very, very good place. And we suddenly will keep working looking for solutions for this 2 year period that we're facing of headwinds.
But I think the message I also wanted to leave you with is 2 years is a very short period of time, unfortunately, because it means we're all getting older very quickly. But we talked last time we talked to you was almost 2 years ago and sort of look at the progress we've made. And so another 2 years and we'll be in 2016 and we'll be almost done with our patent expiries. So if we find the magic solution, the magic bullet for this 20 fifteen-twenty 17 period, we'll certainly pursue it. But again, at the same time, it's a relatively short period of time.
So I'll just go back to the key messages that I wanted you to live with. One is we're very focused on implementation. We're very focused on execution. We have a strategy and our energy, our entire energy is on executing as quickly as we can and as effectively as we can. We are very much on track.
We're building a sustainable business, and hopefully, that's what we showed you. We have an R and D engine that is effective and sustainable and is looking for constant improvement in productivity. We have a portfolio of products that are durable. We have more biologics. We have more devices.
And even though we didn't give you the guidance you're looking for, you can assume that it's going to become more profitable. And suddenly, as soon as the specialty care part of the portfolio starts ramping up, you will see still you will see us continue investing in R and D and maintain relatively healthy level of investment as a percentage of sales, but you should you will see the SG and A ratio suddenly decline and the profitability go up. The pipeline value is rapidly increasing, and there's a rich news flow for 2015. And finally, we reconfirmed the €45,000,000,000 So I'll leave you with this. This is basically our investor proposition.
That's what we think we have to offer. With, as I said, a productive R and D engine, a strong business, I think I cannot we cannot underestimate this. The scale of the organization, the fact that we have a strong presence in the emerging market, the fact that our businesses, diabetes and respiratory in particular, are perfect products, perfect portfolio of products for the emerging markets, hopefully, you got also a sense for the opportunities in diabetes, of course, but also in respiratory medicine. COPD is an enormous problem that is totally underestimated, and we have the products to address this. Oncology, of course, will also help us.
So we have a very strong business with a global scale. And finally, we are continuously building a culture of innovation and a culture where people enjoy what they're doing. We are recruiting strong talent. And suddenly, the kind of changes we bring into the business is helping us do this even more effectively.