Good afternoon, everybody. I'm Pascal Soriot. I'm joined today by Briggs Morrison, our EVP of Global Medicines Development, and our Chief Medical Officer. I also have with me Marc Dunoyer, our CFO. Mene Pangalos, our EVP of Research and Early Development at AstraZeneca. Luke Miels, our EVP of Global Product and Portfolio Strategy. I also have with me here a number of members of our investor relations and our finance teams. Thank you for joining us today and giving us the opportunity to spend a short time updating you on the second quarter and a half year, reiterating our commitment to achieving scientific leadership and returning to growth. We have posted a set of slides on the investor page of our website. We'll follow along with this presentation. We'll try to cue the slide numbers as we go through.
If I move to slide four, I will provide a brief overview of our financial performance to date. As we've promised, I'll provide the quarterly update on our strategic priorities. I will then hand over to Briggs for an update on the progress we've made on our R&D pipeline, finally to Marc to run through the financial performance in more details. We'll also give you an overview of the deal we announced yesterday with Almirall. I'll then give my closing remarks before opening up for questions. Moving on to slide five. Starting with our second quarter results, it has been another quarter of significant progress. We've seen genuine momentum across our business. I'm particularly pleased to note this is our second consecutive quarter of revenue growth. We had sales of $6.5 billion in the quarter, which was up 4% at CER.
We've also grown core EPS by 13% in the quarter. This reflects the good work by the teams across AstraZeneca in successfully executing on our strategy. I would also like to highlight the second consecutive quarter of double-digit growth in the emerging markets, one of our key growth drivers. Over 23% growth in China, where we continue to outpace the market. We've also seen strong progress from our younger brands this year, including the successful launch of Farxiga in the U.S., our treatment for adults with type 2 diabetes, which we launched in early February. Yesterday, we announced the deal we are progressing with Almirall, which will be important to bolster the growth of our respiratory franchise. Marc will outline the key financial details and the new assets we'll benefit from in his presentation. I'm really looking forward to welcoming the new colleagues from Almirall who will join AstraZeneca.
Turning to scientific leadership, I'm pleased to report that this has been another productive quarter for AstraZeneca. We've had the opportunity to provide updates on our rapidly progressing pipeline at various congresses in May and June, including ATS, ASCO, and ADA. We now have a total of 14 compounds in our late-stage pipeline, on which Briggs will give you a more detailed update. This has increased from last year when we had eight compounds in phase III or registration. Significant advancement has been made in our immuno-oncology portfolio since we presented the pipeline update at Q1. As you know, this is one of our key scientific areas and one of the most exciting growth areas across our entire industry. During the quarter, we also had a positive advisory committee vote for MOVANTIK and look forward to an FDA approval decision in September.
You will have seen the recent FDA vote on olaparib, which of course was a disappointment. However, our discussions with the FDA continue. The agency has now extended the review time by 3 months to early January after we submitted a major amendment in July. Let me turn to slide six. You can see key data for the first half. We had revenue growth in all key regions except in Europe, where we're still facing price challenges and generic challenges. The emerging markets, however, grew in double digits, with China being the key driver at 23%. We also had good 26% growth in Russia. In Europe, as I said, we continue to face the effect of loss of exclusivity on key drugs as well as pricing challenges. In Japan, we've seen strong underlying demand for our recent launch brands, but overall growth is only marginally up over the half year.
I will talk about that later. Core EPS for the group was marginally down over the first half of the year, with a 13% growth for the quarter. Slide seven is a reminder of the three key strategic priorities we've outlined for AstraZeneca. I will now review the return to growth platforms in more details before Briggs gives his R&D update. If we move to slide eight, I'm pleased to say that our five growth platforms contributed $6.8 billion of revenue during the first half of the year. That is an increase of 14% at CER. I will shortly review each one of these in more details.
If you look at slide nine, it's important to note that our revenue performance is helped not only by the growth platforms, but also by the resilience of some of the mature products like PULMICORT and CRESTOR, essentially driven by the emerging markets. This has helped us offset the effects of the loss of exclusivity of some of our off-patent products. On slide 10, if we now take each of these growth platforms in turn, I look first at Brilinta on slide 10, on this slide, which has continued to make good progress in Q2, with revenue up 77% globally. Brilinta has seen good uptake in Europe, in the emerging markets, and the established rest of the world, and we continue to hold leadership positions in a number of our European markets and elsewhere.
What is nice to see is that the U.S. was the fastest-growing area in the second quarter, and we're making good, steady progress in the United States. You can see on slide 11 that we continue to take market share in the U.S., and the new to brand market share is around 7%. We've always believed in the potential of this product, and we are pleased with the steady progress it continues to make with our ongoing investment. Slide 12 gives you a little bit more of a granular view of the product. We can see improved momentum for Brilinta in hospital initiations as a share of the total oral antiplatelet market. It's really pleasing to see the figure on the right, which shows the recent good share performance amongst STEMI ACS patients who are discharged from hospitals. During the last quarter, Brilinta has overtaken prasugrel in this setting.
We have now renewed momentum, even though the DOJ investigation is not yet totally concluded, and we are looking forward to a conclusion of that investigation in the near term, hopefully. Slide 13. Looking now at diabetes. We've seen strong performance over the quarter. We focused on the successful integration of BMS' assets and the excellent U.S. launch of Farxiga, which so far is one of the most successful launches in the overall non-insulin antidiabetic market since JANUVIA. ONGLYZA, BYETTA, and BYDUREON have also grown on last year, but ONGLYZA has seen a 0.3 point share decline in total prescription share in the quarter. If we look at slide 14 now, which gives you a view of the Farxiga, you can see the launch line new prescriptions volume uptake of recent launches for type 2 diabetes in the U.S.
Farxiga is the blue line and is tracking very nicely during the first five months of this launch. If you look at the right-hand side of the slide, you can see the effect of the Farxiga launch on the monthly new prescription volume in the SGLT2 class, and the figure shows the growth of the class since the launch of Farxiga. We're not only taking share from our competition, we certainly are growing the class, which is a very exciting class of new oral agents. Let me move to slide 15 to outline the strong performance of SYMBICORT in the quarter, which I'm pleased to report has continued from Q1, as seen on slide 15, and is up an impressive 30% in the U.S. and 9% globally. In the quarter, the U.S. price was broadly flat for SYMBICORT.
SYMBICORT sales in Europe are down 7% due to competitive and pricing pressures in the market. We see now the introduction of analogs and the development of sales in Europe is as per our expectations. This is, however, somewhat offset by strong double-digit growth in the emerging markets, with revenues in China more than doubling, and the potential for SYMBICORT in China is very important. If you look at slide 16, and we look more closely at the SYMBICORT's performance in the U.S., you can see the new to combination therapy market share is up to 37.7% in the U.S., 3.8 share point increase in the first half. Total prescriptions in the U.S. were up 32% for SYMBICORT in the quarter, compared to a mere 2% increase for the fixed combination market.
On the slide 17, I have already mentioned our strong performance in the emerging markets for the second consecutive quarter. If you look at the slide, you can see how our growth in China compares to the rest of the industry. We are outperforming our competitors. We, as you know, are the second-largest multinational pharmaceutical company in China, just behind Pfizer, and we have the highest growth rate as of first half of this year. Actually, it's as of May. The purple bars show the growth in May, and the green bars denote the growth in China year to date by the end of May. On slide 18, if you look at the total moving annual total sales in China from the beginning of 2013, you can see how AstraZeneca in purple continues to outpace the rest of the market.
We have a strong portfolio and strong team in China, our investments in the country are bearing fruit. I'm also pleased to say again that we had very strong growth in Russia as well. We grew in Brazil, it's not only a success in China. We experience nice growth in a variety of emerging markets. Slide 19, looking at Japan. We've seen positive underlying demand for our launch brands in Japan. CRESTOR, SYMBICORT, and NEXIUM have shown good market share progression. We posted only 1% Core growth in the first half. However, we saw 8.4% in-market growth by the end of May year to date. Our in-market performance, however, has been impacted by the price reductions in April this year. We've also been impacted by the increased use of generic medicine in oncology, which has impacted our oncology brands.
Finally, I'm pleased to report that Farxiga is off to a good start in Japan. It's still early days since the launch in May, the early signs are quite positive. I will conclude my initial remarks and now hand over to Briggs to take you through our exciting pipeline. After which Marc will discuss the quarter's financial highlights. Briggs, over to you.
Great. Thank you very much, Pascal. I'm pleased to be able to report on our pipeline progress over the second quarter and the first half of the year, to give you some guidance on items you want to track as the second half of the year unfolds. If we go to Slide 21, I'd like to first note that we continue to make really good progress in growing our late-stage pipeline. On the left side of this slide, I show new pivotal programs that have started in the second quarter. roxadustat has started phase III trials both in chronic kidney disease and in patients with dialysis.
We've decided to increase the sample size of our randomized phase II trial with our CTLA-4 antibody tremelimumab in mesothelioma to support a possible registration, we've started phase III trials for both AZD9291, our third-generation EGFR inhibitor, and MEDI4736, our PD-L1 antibody in non-small cell lung cancer. We've also started additional indications for a phase III program in COPD for our anti-IL-5 receptor antibody benralizumab, an adjuvant trial in BRCA mutant breast cancer with our PARP inhibitor, olaparib. As Pascal noted, as a result of these progressions, you can see on the right-hand portion of the slide that we now have 14 new molecular entities in pivotal studies, up from eight at this time last year and up from 11 at the beginning of this year.
We are, of course, extremely excited about this progress, and our colleagues all across MedImmune and AZ are working diligently to deliver these programs. If we move to slide 22, we've had continued momentum in the late-stage pipeline as measured by regulatory milestones, the number of accomplishments. The approval of EPANOVA in the U.S., the favorable vote for MOVANTIK indicating that for this class of agents, the FDA's not going to require cardiovascular outcomes trials. AZD0914, a drug for drug-resistant gonorrhea, obtained Fast Track status from the FDA. BYDUREON dual chamber pen received a positive opinion from the CHMP. I'll note that's a little bit earlier than we thought. In the first quarter call, I told you I thought that would happen in the fourth quarter. It happened a bit earlier. We filed for BYDUREON in Japan.
As Pascal noted, we of course were disappointed in our negative ad com vote for olaparib, we have submitted additional data which the FDA is reviewing, and they've extended the PDUFA date till early January of next year. I use slide 23 simply to turn our attention to our immuno-oncology effort. This slide simply highlights that in a patient with cancer, there may be one or more obstacles to an effective immune response, and we are seeking to understand and address as many of these obstacles as we can. There are a number of ways to theoretically improve antigen presentation on the far left of this slide, including a recent clinical collaboration we have announced in the second quarter with the Advaxis HPV vaccine.
We are clearly fully exploring mechanisms that can enhance T cell function and memory on the upper right of this slide with PD-1, PD-L1, and CTLA-4. We've entered into two additional collaborations, both with Incyte and KHK, to explore blocking known mechanisms that exist in the microenvironment of tumors to inhibit immune activity. I want to note here that our approach is to explore as many of these potential obstacles to an effective tumor response in small phase I and II trials that are designed and conducted by our translational scientists at MedImmune. These clinical investigative trials allow detailed analysis of pharmacokinetics, pharmacodynamics, and importantly, relevant tumor biology. As the science is advanced in these early trials, we then move the programs into our late-stage group, which is really focused on designing and conducting registration trials.
These registration programs could be single-arm, uncontrolled phase II trials, they could be larger randomized trials. If we go on to slide 24, we show on the left side ongoing trials in our immuno-oncology portfolio. Now, some of these are these early translational trials that I just referred to. Some of them are phase II or III registration trials, and the asterisks indicate new trials that have initiated since ASCO. On the right side of the slide, we show trials that are currently in the planning stage but could start in the second half of this year. Again, there's a mixture of these early translational trials as well as more advanced registration trials, again, with the asterisks indicating new plans since we discussed the immuno-oncology portfolio with you at ASCO.
I'd like to emphasize one set of new plan trials, and that is the registration program in squamous cell carcinoma of the head and neck region. If we go on to slide 25, at the top of this slide is a before and after picture of an elderly patient who's had a significant response to our PD-L1 antibody, MEDI4736. We anticipate that a paper will be presented at ESMO that will summarize the safety and efficacy of MEDI4736 in a cohort of patients with squamous cell carcinoma of the head and neck region. This data that will be presented at ESMO has encouraged us to plan a pivotal program in this tumor type. We have plans for a pivotal program with both PD-L1 monotherapy and the combination of PD-L1 plus our CTLA-4 antibody tremelimumab.
We will be exploring both PD-L1 positive patients as well as patients who have tumors who do not stain for PD-L1. We are in ongoing discussions with regulators who inform the final study design, but I want to highlight to you that we believe that these trials will start in the second half of this year, and we'll give you further details on the head and neck program at ESMO. If we move to slide 26, I wanted to spend a moment on highlighting our participation in what we think are really very exciting, novel collaborative trial designs, one in the U.S. and one in the U.K. In both of these studies, we are really seeing the future of the practice of medicine, where patients' tumors are molecularly characterized and then specific medicines offered based on the specific molecular defects identified.
On the top of the slide is the so-called LUNG-MAP trial, which is a very nice trial put together by FDA, NCI, Friends of Cancer Research, in which patients with squamous cell carcinoma of the lung are genotyped, and depending on the specific mutations that are found in their tumors, they are put into one of different treatment groups. For example, if the patients have abnormality of the FGF receptor, they will be randomized in a phase II portion of the study to our drug, AZD4547, versus the standard of care docetaxel. If there's a signal in that phase II portion, this is a seamless phase II-III trial, the arm is then expanded into a phase III registration trial. If there is no activity, then that arm of the trial can be stopped.
Similarly, you'll see on the bottom of this schematic for patients who do not have one of the four currently identified abnormalities in their squamous cell carcinoma, those remaining patients will be randomized to our PD-L1 antibody versus docetaxel, again, in the phase II portion. If there's a signal seen in progression-free survival, that will extend out to a phase III trial in squamous cell lung cancer. Again, we think this is a very innovative design. We really applaud NCI, FDA, Friends of Cancer Research for putting this together. A very similar program has been put together in the U.K., again, where we have patients who are molecularly genotyped, and we've contributed a number of molecules to the Cancer Research UK trial to do a similar type of thing in the U.K.
Again, we just want to highlight a great opportunity for very innovative trial designs, and we're eager and excited to participate. I'd like to move away from oncology just for a moment to talk about some other molecules in our pipeline that we're quite excited about. I'll talk about both MOVANTIK and roxadustat. On slide 27 is some information on MOVANTIK, which potentially could be the first once-a-day oral peripherally acting new opioid receptor antagonist for treatment of opioid-induced constipation. On the upper right-hand side of this slide, you'll see some data on the frequency of opioid-induced constipation amongst patients treated with opioid. About 80% of people who get opioids will develop opioid-induced constipation, and about half of them do not, in fact, achieve a desired treatment outcome. It's that half of patients that we believe that MOVANTIK offers a new therapeutic option.
On the upper left-hand side, I just summarized the primary efficacy endpoint. You will have seen the recording of the pivotal phase III trials in The New England Journal in June of this year. This is a quick summary of that. We are very excited about both the efficacy and the safety of this compound. On the bottom of the slide are the anticipated key regulatory milestones. On the far left, you'll see that we had the advisory committee where, again, the advisory committee recommended to the FDA that do not need PV outcomes trials prior to approval. In the third quarter, we anticipate a potential approval in Canada, and our PDUFA date is September 16th here in the U.S. We could potentially get EU approval as well before the end of the year.
I'll highlight that the launch for the U.S. is not until the end of the first quarter or early second quarter of next year. The reason for that gap from the approval, we hope, anticipated approval in September until the launch has to do with the scheduling of this drug. Remember that MOVANTIK structurally is related to opioids. It is an opioid antagonist and as such, must go through the DEA process on scheduling. Our assumption, of course, is that it will not be scheduled, but it must go through that process. In addition to the actual FDA approval, that process will take a little bit of time, and that's why we're anticipating, and that process must be completed before we can launch the product.
That's why there's a gap between the actual planned anticipated approval in September and the launch at the end of the first quarter or second quarter. If we move to slide 28, I just want to again remind you about roxadustat, a compound we're developing in collaboration with FibroGen. On the left-hand side is a diagrammatic slide to emphasize that this molecule, although it does induce local production of EPO, it has a number of other mechanisms that allow, in a very coordinated way, the treatment of anemia of chronic renal disease. Therefore, we believe that the levels of EPO that are induced by this molecule are considerably small, lower than they are with recombinant EPO, which we believe could give both an oral agent and a better safety profile than recombinant EPO.
On the right-hand side of this slide, just is to highlight the number of patients with chronic kidney disease in some of the major markets and the % of patients with various stages of chronic kidney disease who will develop anemia. We think this is a very important unserved medical need. We are excited if we go on to slide 29, that we have now begun some of our components of the phase III program. The phase III program is a very large program conducted by us and Astellas and FibroGen, characterizing both the safety and efficacy of the compound. Two key programs that we have undertaken have started in the second quarter. One is in patients who are not on dialysis but have chronic kidney disease. Those patients are randomized to placebo versus roxadustat. The primary endpoint here is major adverse cardiovascular event, cardiovascular death, stroke, or MI.
The intent here is to show that roxadustat has an event rate comparable to placebo. The second trial is in patients who are already undergoing dialysis, where the standard of care is EPO. There, the patients are randomized to roxadustat versus EPO. Again, the primary endpoint is MACE. The anticipation is that roxadustat will have a lower incidence of MACE than EPO. You can see on the far right of the slide, it will be a couple of years until we have the results from these trials, but we are very excited and encouraged to be getting these trials underway. If we move to slide 30, this is a slide that I showed you, a version of this slide in the first quarter call. On the far left are the pivotal study starts. This is now a summary for the first half of 2014.
I have talked about all those pivotal study starts at this point. In the middle are pivotal study decisions that we have made in the first half. I will just highlight here the Farxiga type 1 diabetes indication, where we have decided to progress that into a pivotal program. As I have mentioned earlier, 9291. Oh, I did not mention this. 9291 in first-line non-small cell lung cancer, we have made that decision to undertake that study. The study should start at the end of this year. The two bottom ones, the PD-L1 plus or minus Trem-I program in squamous cell carcinoma of the head and neck and PD-L1 and Trem-I in non-small cell lung cancer.
I will also note that on the far right, we still have additional molecules that are completing their phase II programs, which we may be able to make additional investment decisions to progress yet additional molecules into phase III before the year is over. Moving on now to slide 31. I just want to highlight a couple of congresses that are coming up. The European Society of Cardiology Congress in Barcelona at the end of August, beginning of September. I will highlight this one trial from Brilinta, which you may want to take a look at when it is reported out. This was an investigator-initiated trial in which they asked the question, if you start Brilinta earlier in the ambulance, could you improve TIMI flow and ST segment resolution?
The patients are randomized to get either Brilinta early or Brilinta at the normal time, and we encourage you to take a look at that. That'll be an ESC hotline session in September. We have a number of other abstracts that have been accepted, and we think, for those of you who are attending, we actually look forward to those. On slide 32, I'll also highlight ESMO, which will be held in Madrid in September. For Immuno-Oncology, we'll be presenting abstracts on additional monotherapy data, both in non-small cell lung cancer and, as I alluded to earlier, in head and neck cancer. You'll remember at ASCO, we did not actually present at the scientific session our PD-L1 CTLA-4 combination data at non-small cell lung cancer. We presented a very high-level summary at the investors meeting. This will now be presented at the scientific session. We've submitted abstracts there.
There'll be more patients, further dosing cohorts, and some information on the biomarker status, and some additional information on Trem-I CTLA-4 inhibitor in mesothelioma. There'll also be updates on 9291 in non-small cell lung cancer, including the duration of response, update on duration of response in the T790M second-line population, and some data on patients who've been treated with 9291 in the first-line setting in patients with brain metastases. As the year unfolds, on slide 33, there are some significant data readouts. The first three lines here are lesinurad, CAZ-AVI and benralizumab. The data readouts here will define for us the actual profile of these exciting molecules.
For lesinurad, you'll remember that we talked with you about the monotherapy data that came out at the end of last year, where we did see an increase in renal adverse effects from lesinurad. We've talked about the scientific reasons why lesinurad in combination, which are the additional trials coming out now with febuxostat or allopurinol, potentially will have a lower incidence of adverse renal effects. Obviously, what we don't know until the data reads out is whether those adverse renal effects will be the same as placebo. We don't know what the profile will be here for lesinurad. I will just note that we do have a second-generation molecule against the same target, 3170, which we've talked a little bit about with you previously, which at least in preliminary studies, looks to have an even better renal safety profile than lesinurad.
We'll know very soon what the profile of lesinurad is in the treatment of gout. The KINCAT trial, the initial trial in complicated intra-abdominal infection, should read out in the third quarter. The fourth quarter, the additional phase III data on benralizumab. These are the head-to-head trials against Valera. The other molecules on the slide I think we've talked about previously, and I've highlighted for you congresses where there'll be more information on those molecules. On slide 34, we have some additional key regulatory milestones. The filing of Iressa for non-small cell lung cancer in the U.S. Hopefully, the approval of MOVANTIK. PDUFA date is September 16th, and signs are looking positive with our interactions with the FDA that that will be a successful approval. We're also on track, as I noted earlier, for the approval of MOVANTIK in Europe.
We are still under review in Japan for the potential approval for the ACS indication for Brilinta. I've talked already about the olaparib delay to the PDUFA date until early next year. We are on track for an approval for Xigduo XR, the combination of metformin plus dapagliflozin in the U.S. The saxagliptin/dapagliflozin fixed-dose combination filing at the end of the year. Both lesinurad and cazabi, depending on the data readouts, we would be on track to file both in the EU and U.S. for lesinurad and in the EU for cazabi. On slide 35 is the slide I've shown you a number of times as a potential new molecular entity and life cycle extension submissions. The only thing I want to point out here are the things that have changed since we showed this to you at the end of the first quarter.
One is AZD9291, where we now believe that we will be able to file that in 2015. Our base assumption right now is it'll be the second half of 2015, and based upon the work that we've been doing in our non-small cell lung cancer program with MEDI4736, if the data reads out as we anticipate, we will be on track to file that in 2016. I'll stop there and turn things over to Marc.
Thank you, Briggs, and good afternoon, everyone. Today, I will provide a little more detail on the drivers of the headline results for the second quarter and investment we are making in our growth platforms and rapidly progressing pipeline as we work towards returning AstraZeneca to growth. I will also discuss the key drivers of operating profit and margin and briefly comment on the impact of exchange rate movements against the prior year period. As Pascal said, I will give you an overview of the key aspects of the deal we announced yesterday with Almirall. Turning to slide 37, we can see that revenue for the second quarter grew by 4% at constant exchange rate to $6.5 billion, our second consecutive quarter of growth. The currency impact on second quarter revenues was negligible. It was more of an impact at the bottom line.
Core EPS for the quarter was $1.30, growing by 13% at constant exchange rate. The impact of foreign exchange lowered core EPS by five percentage points. I will now turn to the P&L for the quarter, and I will focus here on core margins and profits. The press release contains the statutory numbers and a detailed reconciliation to the core measures. As a reminder, when I refer to growth rate, they will all be at constant exchange rates. Core growth margin was 82.1% of revenue. There are a number of moving parts in the quarter, but as was the case in the previous quarter, the benefit from lower CRESTOR royalties was more than offset by the inclusion of diabetes-related costs. Core R&D expenditures were up 12% to $1.2 billion in the second quarter.
Having nearly doubled our late-stage portfolio over the last 12 months, together with strong progression across all stages of development of oncology portfolio, there is pressure on our cost base. We are focused on delivering the pipeline to drive long-term value and are continuing to seek ways to contain costs. Core SG&A expense was up 13% compared with last year. The increase in SG&A was driven by the inclusion of all the costs associated with the diabetes portfolio, as well as investment behind the launch of Farxiga in the U.S. and continued investment in the emerging markets, and in particular, China. This increase in sales and marketing investment is not mirrored in the G&A, which declined in the quarter. Core other operating income for the quarter increased by 120%.
This growth was driven by milestones related to the launch of Nexium 24HR in the U.S. and Farxiga in Japan, without which other income would have declined. Core operating profit was GBP 2 billion, 2% higher than last year. Core operating margin was 31.5% of revenue. I don't intend to go into detail on this slide for the first half, since many of the drivers are the same as those discussed for the quarterly margin, in particular, the growth rates of R&D or that of SG&A. However, I would like just to highlight a strong performance year to date and note that our revenue would still have grown if original assumption for generic Nexium in the U.S. had transpired. The impact of the acquisition of the other 50% of the diabetes franchise correspond to more than 3% of growth.
Currency movements, most notably the appreciation of sterling and depreciation of the yen, negatively impacted operating profit by around $200 million. As you have seen yesterday, we announced a strategic transaction with Almirall. I would now like to take you through the key aspect of this deal, starting on page 41. This is a great deal for AstraZeneca. It strengthens our inhaled portfolio in asthma and COPD. In the short term, it brings greater device choice for patients and add DPI option to complement Symbicort and the Pearl assets. In the medium term, this deal brings novel MABA and LABA bronchodilators, which will offer once-daily treatment options and novel combination for severe patients. The innovative asset of both companies are going to be pooled, and potential revenues will flow to Almirall regardless of the origin of the molecule. The deal is structured to reduce risk and enhance returns.
It immediately brings revenue and is neutral to core earnings in 2015 and accretive from 2016. As shown on slide 42, with this deal, we acquire the aclidinium franchise, assuming all Almirall rights, an excellent pipeline asset, most notably the MABA platform, as well as option to in-license further preclinical assets. Importantly also, we will gain the rights to the Almirall Sofotec subsidiary with its device expertise and employees subject to relevant consultations. We will pay an initial consideration of $875 million upon completion of the transaction, followed by up to $1.22 billion in development, launch, and sales-related milestones. There are also some sales-related payments, but these are less than 10% of the total consideration. The scope of the transaction includes assets as well as people, and this means the deal will be accounted for as a business combination.
We will give you more details on the contingent considerations and the total value of the asset on the balance sheet once the deal closes. Slide 43 summarizes the benefit to the AstraZeneca respiratory franchise. It brings an on-market portfolio and accelerate our entrance into the LAMA/LABA market, as well as bringing us an option for patients who prefer the DPI device. It strengthens our pipeline with once-daily MABA and MABA, as well as access to interesting preclinical assets. Finally, it strengthens our device portfolio and brings a highly regarded team with a track record of technical and regulatory expertise. As a result of the strong performance highlighted in the earlier slides, we now anticipate revenue to be in line with 2013 on a constant currency basis.
You may want to know that this guidance is based on the business planning assumption of the entry of generic NEXIUM in the U.S. from October 1st. With continued investment in the pipeline and growth platforms, we now anticipate core EPS to decline in the low double digits at CER. The company continues to pursue multiple productivity initiatives and redeploy resources to fund its pipeline and growth platform whilst managing its cost base. Today, we have announced a first interim dividend of GBP 0.90 and again reaffirm a commitment to a progressive dividend policy. In conclusion, AstraZeneca has made further significant progress this quarter. We're investing in the business to drive continued momentum over the course of the year. With that, I will now hand back to Pascal.
Thank you, Marc. Let me just close by saying that, as you can see, it's been a very busy and important quarter for us. We're making good progress, not only rebuilding our pipeline and progressing our important projects, but also through achieving a second consecutive quarter of revenue growth. Our underlying performance gives us confidence in our strategy for returning to growth by 2017. It underpins our long-term prospects. I hope to see you all at our Investors Day. We will be holding it in London in November. I hope you enjoy the rest of the summer. With that, I'd like to open for questions. Over to you, operator. We have a question from Alexandra Hauber at UBS. Alexandra, go ahead.
Thank you very much. I have a couple of pipeline questions and a financial question. Starting with roxadustat, can you give us some idea about what you, given that we don't see that many studies which have MACE as an endpoint, would the diabetes guidelines be the right ballpark to what kind of risk reduction you need to rule out in a placebo study and typical sort of 15% risk reduction versus the EPO in the dialysis patients? Would that be the right ballpark to think about it? Second question, today you announced head and neck study for both the PD-1 mono and the combination. I'm not quite sure since you're talking about additional tumor types, are you likely to initiate or at least announce registrational studies in yet another additional tumor type this year?
One compound, which I didn't see on the list but has data at the upcoming ERS meeting, is the CXCR2 antagonist, the AZD5069. As I said, that has data at the ERS, but from the headlines, we cannot see whether it is actually positive or not. From the fact that you don't mention it, should we assume it's something which you're not going to take forward? The final question is, obviously, your R&D budget is expanding rapidly. Seems to move towards GBP 5 billion and potentially expanding from that. That makes it increasingly harder to hit the magic GBP 4.20 EPS in the future years, which you need for the 1.5 times dividend cover. Given where you are with your pipeline, is that something that you even still care about at this stage?
Thank you so much, Alexandra. A series of very good questions. So that my colleagues can think about it. roxadustat, Briggs, I'll ask you to cover this one and maybe head and neck, if you don't mind. CXCR2, since we have Mene here, Mene, you probably want to cover this one. I'll start with the last one. Alexandra, this year, as you can see, we're doing very well, number one. Number two, we've had a couple of additional incomes that are one-off, but very much a lot of additional income driven by our very good in-market sales performance. We have reinvested in our pipeline, but also in growing the business even faster in the emerging markets and the diabetes launches. We will be managing our cost base in line with the revenue we get.
Certainly next year, we are preparing ourselves for the loss of NEXIUM, which we assume at this stage to lose in the fourth quarter of this year. As Mark mentioned before, we have a number of productivity initiatives that will help us manage those costs. Bottom line is we're very committed to our dividend policy, and we're also very committed to the remuneration policy that goes with it. I'd like to remind you, the dividend policy is that we have to deliver a progressive dividend, which is flat or growing, and we have a dividend cover of 1.5. Certainly, we will be managing our costs next year to protect profitability.
Remember that on the SG&A front, we said it at the beginning of the year, we incorporated or integrated the other half of the diabetes franchise, and we now have a pretty large primary care presence in many countries around the world. We decided to stay focused and not disrupt the organization. There is potential for us to improve our productivity for sure, across the entire business, but certainly very much in SG&A. That's certainly what we will be doing next year. Briggs, do you want to cover the roxadustat question in the head and neck? Briggs?
Yeah, I have it. For Alexandra, for roxadustat, you're thinking about it the correct way. We have a lot of experience with cardiovascular outcomes trials and using MACE as an endpoint. The comparison to placebo, the conversations we've had with regulators are in the ballpark of the diabetes guideline, and an improvement, as you've noted, over EPO in the EPO comparators. In terms of your question about another tumor type, you'll see on slide 30, I went through it a bit quickly, we have additional pivotal study decisions pending in the second half of the year, including additional tumors for PD-L1. At this stage, we are not in a position to say what that will look like.
Obviously, we have in our expansion cohorts been looking at other tumor types, and there is the potential we would announce an additional tumor type beyond head and neck and non-small cell lung cancer by the end of the year.
Thank you very much, Briggs. Mene, do you want to cover the CXCR2 question?
Yes. The CXCR2 antagonist AZD5069 did read out in our severe asthma study. It engaged the mechanism, the molecule did what it said on the tin, it did not have any efficacy or the required efficacy. That program and mechanism has been terminated for asthma and COPD. The team is actually looking now at alternate indications because we know we have a molecule that modulates the pathway, and that includes also some of the immuno-oncology opportunities that might exist with CXCR2 antagonism.
Thanks, Mene. I should have mentioned earlier that if you want to ask a question, just a reminder, press star one, of course, to indicate to the operator you have a question to ask. Let me ask Matthew Weston at Credit Suisse. Matt, do you want to go ahead with your question?
Thank you very much, Pascal. Three questions, if I can. The first, your ASCO analyst meeting slide highlighted a novel NME in the microenvironment section of immuno-oncology. Can I check whether that is the CCR4 now in license? With the other secret NMEs you highlighted at ASCO, can I ask, are they all partnered opportunities, or are some of those in-house molecules? Regarding respiratory, GSK recently flagged an aggressive pricing situation in the U.S. respiratory market. Can I ask, are you seeing similar trends in the period where you're negotiating for 2015 formulary access? Are you confident that you'll keep the same formulary positions where you are preferred going into next year? Finally, a simple financial question. Tax treatment for the NEXIUM and Farxiga one times, should we assume that they are taxed at the normal corporate rate?
Thanks, Matt. Briggs, probably you could, if you don't mind, take the ASCO slide question and the NME. I must say, Matt, you're calling on our memory here. This NME in-house slides, I don't remember the slide, but we could comment on this one. In the meantime, I could start with the respiratory question. Luke, do you want to cover this one?
Sure.
We'll go to Briggs, then we'll go to the tax treatment, Mark, if you want.
Matt, year to date, we've been able to hold price flat. I think if we look forward, we've successfully grown market share, as we've shown so far, it remains a very competitive market. We expect further price pressure in the market. Our view is that we'll compete, we'll win some, we'll lose some. Having said that, we're taking the long view, and as you can see, we've got good momentum.
Thanks, Pascal Soriot. Yeah, we certainly can see that this market is becoming competitive, Matt, it's not the only one. Markets in the U.S. are competitive across the board. Briggs, do you want to cover the ASCO question and the NME question?
Yep, I'd be happy to. Matt, thanks very much for the question. The novel NME that we were referring to on the ASCO session was not the CCR4 there. We have a combination of internal and external opportunities. There's more than the CCR4 clinical collaboration.
We have quite a number of internal programs, Matt. Of course, you're aware of the OX40 program, behind this one, we have quite a number at preclinical stage internally. We're working on those and we're certainly also looking at external collaboration. We've mentioned some of them in Briggs's presentation today, we have a couple of others that we are exploring. As Briggs says, a variety of internal, external options. Tax treatment, Marc? Next year for
Yes, I can confirm that the other income received for next year and for Farxiga are taxed at normal corporate rates.
Good.
Much.
We move to the next question. Tim Anderson. Tim, do you want to go ahead?
Yeah. Thank you. A couple of pipeline questions and then a third question. You talk about filing your PD-L1 using the ATLANTIC study, which as you note, is a phase II single-arm trial looking at response rates. As a late entrant product, I'm wondering if it could be too late to rely on this type of a trial for registration because others may have beat you to the punch. The three other anti-PD-L1s may have launched and long by that point. Second question is on tremelimumab, and just clarifying something you've said previously, I believe it was at your Ask the Analyst meeting, where you said tremelimumab was better than ipilimumab, and I'm wondering if that's a fair characterization of your current view and why you think that drug would be better.
The reason I ask is Pfizer said on this conference call recently that they didn't view it as a mistake to let go of that program. That wouldn't seem to be congruent with your more bullish view. Last question, you've no doubt been in constant communication with Astra shareholders over the last few months, and I'm wondering if you can give us an idea of what the majority of shareholders you've met with want you to do in terms of engaging in discussions with Pfizer or not. In what direction do the majority of shareholders lean?
Tim, thanks very much. Briggs, we'll be over to you again in a minute. I'll take the easy question, the last one. It's easy, Tim, because unfortunately, as you probably would expect, we're not able to comment here. We are under The Takeover Panel rules, and it is completely impossible for us to comment on this. Briggs, two questions. The PD-L1 ATLANTIC phase II, is it too late? Also the tremelimumab versus ipilimumab question.
Tim, thanks very much for your question. First for ATLANTIC, I'll make two comments. One is, as you're well aware, it's the specific indication that you ask for when you go in for approval. If somebody was approved in second line and you're going for third line, that's still considered an unmet need. It depends on the indication, and it also depends on if the person who's there before you has full approval or has accelerated approval. If there's an accelerated approval and they're still pending full approval, then obviously others can come in and still get accelerated approval. Based upon our understanding of the competitive landscape and our program and discussions with FDA, we do think it is not too late for us to file in 2016.
The question on tremelimumab, you'll remember at ASCO, Dr. Rachel Humphrey went through a side-by-side comparison of tremelimumab versus ipilimumab, and of course, Rachel knows ipilimumab very well since she was at BMS and led the development of that molecule. There are differences between the two antibodies, that's for sure. Best we can tell of the data that has been generated on tremelimumab prior to our taking over the molecule, it does appear to be an active molecule, and we do remain bullish on it.
Tim, does it address your question?
Yeah. I guess if you could just clarify what exactly it is about tremelimumab. Is it better safety? Do you think it's going to have better efficacy? I know it doesn't seem to kill off Tregs within the tumors, but that would seem like it could even work against efficacy.
Yeah. Maybe Tim, just for the sake of this call, we'd be happy to talk with you offline about further details and molecular details of why we have those differences of opinion on tremi. Maybe we'll turn it on to. Probably not the place to go through all that science in detail. We can do that with you offline.
Okay.
Thanks, Briggs. If you also go back to the presentation at the ASCO team, we actually highlighted the reasons why we believe they could be different at the time. Let's move to Vincent Guyonnet at Morgan Stanley. Nicolas, do you want to go ahead?
Hi. Thanks for taking my question. Actually, I have three. The first one is about the rationale of the Almirall deal, given you already own full rights to very similar assets, although with a different device. In that regard, do you have any particular reason to have changed your mind with regards to Pearl Therapeutics' assets or technology, and notably its pMDI device? Second, on the recent CCR4 deal with Kyowa Kirin, it seems that the risk of skin toxicity limited your take in its hematological indication in Japan. I'm wondering whether you've got any data or comments about the safety profile of that drug when used in combination. The last one is about Farxiga. You mentioned a very successful launch in the U.S., but I couldn't find the precise figures in your press release. Any chance you can give it to us now? Thank you.
Thank you so much. I think I heard the first question. The other two, it was impossible to hear. Maybe what we could do is try to cover your first question, and if you have access to email, if you could send your questions by email, we can address them because I suspect the telephone line is actually not optimal. Seems that your first question, Luke, I think, did you hear it and understand it also?
Yes. I think your question was, is there an overlap? If we have a pMDI in a number of markets in DPI, why do we need another one? I think especially the deal reflects a broader commitment and confidence in respiratory as one of our growth drivers. We see the Almirall assets as complementary on several levels. The first one is, if you look at the splits in a number of markets, there's a clear need for both active and passive devices. You see splits of 60-40 in the U.S. and 30-70 in rest of world. That's a segment of the market that we didn't want to leave untapped. We can launch now in Europe with the Almirall assets, and then we can continue to do that with Pearl later on. We're confident we have the commercial capacity and infrastructure to maximize both assets.
We also gain access to something that we've discovered through our device testing, to a very attractive and popular device, which has good optical and auditory aspects to it and is popular with patients. That's a device that potentially we could load a number of existing and also future compounds on. Finally, we get access, as Marc covered earlier, to a number of pipeline assets, particularly the MABA, which offers a number of potential combinations in the future. Also, we get access to the group of people that created that device and are currently selling the other products. That's the rationale behind the deal. We see it as very complementary.
Thanks, Luke. Remember actually that today the market in the U.S. is 70% in DPI, 30% in MDI, and in fact, it's 30% because Symbicort has done well, and we've developed it, and it also explains some of the success that Symbicort has met in the U.S. because it's the only pMDI formulation available there. We're not going to be able to address 100% of patients' needs with only an MDI. We need pMDI. That's certainly what the Almirall assets will bring to us. Pearl will bring us similar asset combinations, but in a pMDI formulation. The other two questions, I'm not sure we heard. If you can email them, that would be great. In the meantime, we'll move to Andrew Baum. Andrew at Citi, do you want to go ahead?
Morning. 3 questions, please. Firstly, on the Almirall acquisition. Have you already approached Actavis in terms of buying them out of their U.S. rights? Just to confirm that you have 100% rights on using the Genuair device to put potentially the Pearl compound through. Actavis has no rights on that. Second, in relation to China, to what extent does the local difficulties of a dominant respiratory competitor help you in driving market share gains and growing the respiratory market within China with SYMBICORT? Finally, in the indication of triple-negative breast cancer, you have a cohort of patients in one of your phase I is ongoing. When should we expect data from that trial and further steps made public? Thank you.
Okay, great. Thanks, Andrew. Briggs, I will ask you if you could take the triple-negative breast cancer question. As far as the first one, Andrew, the answer to the Genuair question is yes, we have full rights for the Genuair device globally. Forest have rights for products that have been licensed to them in the U.S., but certainly not to the Genuair device. We can put other products in that device as you wish. In terms of extending the rights, if you allow me, I will not comment on this one. As far as China, sometimes we are asked that question, but I think it is always good to step back a little bit and look at and consider the size of China.
We often forget that there's an enormous population, there is an enormous economic development, and there is a growing problem with respiratory disease because of a high level of pollution, but also a high level of smoking. COPD and asthma, and certainly COPD, are expected to grow quite a lot. On the other hand, the market is very underdeveloped, especially as it relates to maintenance therapy. We've made enormous progress in the last few years and certainly this year with PULMICORT in asthma attacks in kids. But as far as SYMBICORT, it is still quite small. The unmet need is enormous. I can't say that the difficulty that our competition has in China doesn't impact SYMBICORT, but the growth of SYMBICORT is by and large driven by the investment we've made. We've expanded the sales force.
We are reaching out to hospitals in regions we were not visiting before. We've increased the sales force substantially. We've introduced educational campaign around the treatment of respiratory disease. Our team has just done a tremendous work developing this product. It's really what is driving the growth. Quite frankly, we're only beginning, at the very beginning here. There's an enormous need to develop this market for maintenance. Briggs, if you want to cover the triple-negative breast cancer question?
Yes. Thank you very much, Andrew. As you noted, the triple negative population is part of our cohort expansions in our early trials. At this point, we've enrolled really a limited number of patients that we've treated so far. I think it's a little bit early for us to say anything about our approach to triple negative breast cancer.
Thanks, Briggs. More to come later this year on that one. The next question is from Sachin Jain. Sachin, do you want to go ahead?
Hi. Thanks for taking my questions. A couple of product questions. Firstly around ESMO on the PD-L1 CTLA-4 combo. Any color on what dose cohort you've achieved at this stage and any visibility on how many patients worth of data we should expect by ESMO? Secondly, for that conference beyond PD-L1, I just wonder if you could comment on any earlier stage data on other assets that we might see. I know at ASCO there was some excitement internally around the c-Met or the PI3 kinase and the mTOR. Any color there? Then finally on lesinurad, you made in your introductory comments, Briggs, some comments around the renal profile and a follow-on compound. Wonder if you could clarify for us what renal toxicity profile you think would be acceptable in this population. Is anything other than placebo a no-go here? Thank you.
Thanks, Sachin. Briggs, maybe you could start with the PD-L1 CTLA-4 question, and maybe Mene, you'll take the question about other early-stage assets outside immuno-oncology. Also the renal question for you, Briggs. Quite a few questions. Go ahead.
Sure. Sachin, first let me talk about the combination with PD-L1 and tremi. As we talked about ASCO, the Q4 week schedule that we've been studying. We've completed enrollment in a cohort where we have 15 mg of PD-L1 and 10 of tremi, and are enrolling a cohort at 20 mg per kg of PD-L1 and three of tremi. As of now, I'd say there's, if I remember correctly, about 18 patients have been treated. There's three per cohort. That will be updated when we get to ESMO, but that's about where we are. It's quite encouraging, of course. We believe this goes back to Tim Anderson's question about the fact that we can get essentially we're almost up to full doses of both PD-L1 and tremi in combination in that non-small cell lung cancer program and it's tolerable. That's where we are with CTLA-4 PD-L1.
I'll just make a comment on lesinurad. It's a fabulous question. Obviously, same as placebo would be brilliant. A slight difference from placebo could still be an important profile. I wouldn't say that we have a definitive answer on that. We'll have to see the data as it comes out, just how different it is from placebo. I'll let Mene Pangalos comment on early stage assets, there'll be at ESMO.
Yes. What I would say is that we've obviously submitted our abstracts and the decision dates for what's accepted and what's not is September 17th. Until that time, we can't really talk about what's going to be or not going to be from the early pipeline, but obviously, we've got a number of submissions in.
Okay, thanks. Thanks, Mene Pangalos. Just maybe to add on the lesinurad, as Briggs Morrison said we'll have to wait for more data, and it's really hard to predict what we'll get. We expect better results than monotherapy, but certainly we have to wait until the data reads out. The good thing about the combination of PD-L1 and CTLA-4, Sachin Jain, is that we haven't met a safety issue, we've been continuously escalating treatment. As Briggs Morrison said, we've added cohorts with IO doses. Of course, the consequence of this is that we're taking a little bit more time exploring those additional doses. What I could do is maybe take one question online. Eric Le Berrigaud at Bryan, Garnier & Co. Eric, I'll read your question and ask Marc Dunoyer maybe to cover it, to answer it.
The question is as the first quarter with full impact from diabetes full ownership, meaning the quarter 2 was full quarter, could you clarify the amount of royalties paid to BMS former shared products and where it is reported in your accounts in Q2, Marc?
Yes. As you will remember, the accounting treatment for the BMS rights acquisition is a business combination. We do capitalize all the payment at fair market value, then we amortize all those rights in full Onco. Regarding the specific question of the royalties. I can't give you the number of the royalties separately, but I can tell you the number that we have paid as royalties for the first half. The number is GBP 58 million for the first half. Quarter 1 plus quarter 2. As you noted, we took over the business from February 1st. GBP 58 million of royalties paid from February to June of 2014.
Thanks, Marc. James Gordon at J.P. Morgan. James, you want to go ahead?
Taking my questions. A couple of questions on Almirall and respiratory. One would be that Almirall's got a once-daily LABA/ICS in phase II, and my question is just based on the initial performance of GSK's Breo, do you think such a product or a once-daily LABA/ICS is a very promising product to bring to market, bearing in mind that the time it might come to market in the U.S., there'd probably be generic Advair on the market at that time as well?
Another respiratory question I had was on triple therapy. You've got now two MABAs, then you're also talking about doing a conventional triple therapy. These seem like two different routes to really get to the same end of giving people. Both would effectively give people triple therapy. Would you consider developing both a MABA and a conventional triple? As, for instance, GSK seem to have deprioritized their MABA and just be going for the conventional triple. I just also want one clarification, which was that in the Q1 pipeline presentation, it looked like there was going to be some combo PD-L1 CTLA-4 data in a mixture of solid tumors, so a different study to the lung study. I think it's the 562 study. Could that data still be at ESMO, or has that data been a little bit delayed and that's now next year?
Thanks, James. So maybe, Mene, you could cover the questions regarding the MABA. Maybe just one quick point, actually, James. The MABA, the arrangement here is a pooling of assets. So we basically, of course, will pick the best MABA to develop to move forward in phase III. Do you want to cover the
I think we're interested in both. Obviously, the conventional triple is something we're moving very aggressively and plan to move into phase III as fast as we can with our Pearl colleagues. What the MABA brings you isn't just the ability to combine with vedolizumab, but it's also with our other novel anti-inflammatory agents. So it gives us a level of flexibility, both in terms of combinations and device that we wouldn't otherwise have, which I think is very exciting.
Thanks, Mene. Briggs, I'll ask you to take the PD-L1 CTLA-4 question in other tumor types, but in the meantime, maybe, Luke, you could cover the once-daily LABA ICS question.
I think, James, for asthma and COPD, we can confidently say there's no one-size-fits-all solution. There is room for both dosing frequencies. As we've announced, we do gain access to a phase II QD LABA. Also if that resulted in a QD MABA, that would certainly be interesting for us as a platform for triple or even further beyond that. Really, I think there's room for both. Having said that, the BID remains attractive for patients with nighttime symptoms. I think to reinforce that, SYMBICORT continues to be well-received in the market.
Your question, James, was also about the competitive intensity there. I think the one thing we would say is that in the short term, what this acquisition gives us is a LABA/LAMA in a DPI formulation, and we will have the same in an MDI formulation with Pearl Therapeutics. In the long run, we have MABA combinations, as we explained a minute ago. It is clear that LABA/ICS is a competitive marketplace, and these decisions will have a place, but it's probably not our priority. Briggs Morrison, do you want to cover the Q1, the pipeline question about PD-L1, CTLA-4 and other tumor types?
Yes. James, you're correct. There are two trials. There's the one trial that I referred to earlier about the dose escalations on the every four-week schedule in non-small cell lung cancer, and then a second trial that's being run by our partners at the Ludwig Institute for Cancer Research in a variety of tumor types. To my knowledge, only the trial that I referred to in non-small cell lung cancer will be at ESMO.
Thanks, Briggs Morrison. Mark Clark at Deutsche Bank. Mark, do you want to go ahead?
Yes. Good afternoon, gentlemen. Two quick questions. Firstly, on the quantum of accretion from the Almirall deal, you don't give any explicit guidance, but looking at the sort of sales levels that are currently being generated and forecast, my assumption is we're talking about low single-digit accretion. Would you agree or have anything you could add there? Secondly, on roxadustat, you gave us some timelines on the phase III readout, Q1 2017, but the pipeline filing chart includes that in 2016. Are you assuming you can file on interim data, or is that simply an oversight? Thank you.
Thanks, Mark. We'll ask Briggs to cover it. In the meantime, the accretion question, the first question regarding the accretion for Almirall. We will not comment on this, Mark. This is not something we would like to give an indication on at this point in time. We're not going to give guidance to 2016 on this one. Actually, maybe what I can do, Briggs, to save you a bit of time. I suspect the filing date, Mark, you see on the pipeline chart relates to the filing in China. You may remember there is a special local development in China for this product, which was started by FibroGen, is a very smart approach to approval in China. China, actually, this product is potentially the first one that would be filed in China first before it's filed anywhere in the world.
I think that's what you see in the pipeline chart. Let me move back to Nicolas' question. We've received it on email now. The question was on recent on TCC, for the deal with Kyowa Kirin. You elaborate on the dose used for compound in combination with PD-L1 or CTLA-4. I'm not sure I understand the question. Oh, sorry. Can you elaborate on the dose? It's a question for you, Briggs, actually. Can you elaborate on the dose used for the compound in combination with PD-L1 or CTLA-4 in the tumors? There's a further comment here that says, it seems that there is a risk of skin toxicity in hematology in Japan. Do you have comments regarding the safety profile of drug use in combination? Do you want to cover this one, Briggs?
Sure. I'd be glad to, Pascal. No, at this point, I can't comment on the dose of either CTLA-4, PD-L1, or CCR4. We've entered into the agreement, and we're in the process of designing that trial. It is true that, your facts are correct, that there has been skin toxicity noted with the molecule in some of the trials they've done in peripheral T-cell lymphoma. We are aware of that going into the collaboration.
Thanks, Briggs. We'll move to the next question, which is a question from Mattias Haggblom at Danske Bank. Mattias, go ahead.
Thanks so much. Your 2023 guidance for the exenatide franchise seems to point to two and a half billion U.S. dollar in sales. We have seen some new long-acting GLP-1 analogs enter the market at a pretty huge discount, it appears. Others will join the market as well over the next couple of years. We'll see combinations with basal insulin and possibly oral GLP-1s as well. Has any of the recent news, including this case pricing, will change your view of this franchise going forward? Thanks so much.
Okay, maybe Luke, you can take this one. Thanks, Mattias. I think there are two questions in that one. One is GSK, the launch of the GSK product, and two is the level of discounts in the competitive marketplace.
I think, as a general statement, we expect it to be more competitive, both in terms of promotional activity and of course, access. That being said, we have good access with the product. We have a well-established team. We've integrated the BMS team as well, and we have good targeting. I think on top of that, we have the next stage in our device strategy, which would be launching in the second half of the year, which is the dual-chamber pen. It's very much on track. I think ultimately, when we look at the competitive situation, we recognize the importance of device, and that's why we're launching that pen. We're very confident around the profile of BYDUREON, which again, has shown consistent A1C reductions in the range of 1.3%-1.9%.
It's very durable in terms of A1C effect and weight with 6 years in data. The parameters of efficacy and convenience of device, I think will remain core factors. In terms of oral GLP-1s, I think they're further out. There's a number of questions over the feasibility and the amount of volume of drug.
Thanks, Luke. Mattias, your question was also related to the GlaxoSmithKline product and the pricing strategy. I would say that we don't expect this product to really have a substantial impact because probably the pricing reflects the clinical profile of the agent. Other competitors will come in that will have a bigger impact. Our strategy here relies on a couple of things. One is the devices, as Luke was mentioning, and two is the development of the volume here. The GLP-1 class is a class that has really an important place in diabetes, and if prices decline, you could also expect growth in volume, and we certainly would expect growth in the emerging markets. Very competitive, there's no doubt about it. But we also see a good complementarity with Farxiga.
For instance, the combination of GLP-1 and Farxiga will be a very competitive combination. We'll leverage the portfolio as much as we can. Let me move to Seamus Fernandez. Seamus, go ahead.
Thanks very much for the questions. Just wondering if we could get a quick update on some clinical trials. In terms of the trials that are ongoing with BYDUREON, and the look at potential cardiovascular outcomes benefits, can you just update us on how those events are accruing in that study and when you anticipate that study to read out? The second question, if you could provide us your thoughts in the diabetes space on the prospects and interest in a combination of GLP-1s with SGLT2s. We're seeing some interesting case reports around that. Lastly, if you could give us an update on your thoughts on olaparib. Are you preparing for potential approval in the U.S., or should we anticipate that the negative FDA panel really puts that as a requirement for full phase III data?
Maybe you could update us also on the international prospects for olaparib. We haven't really heard anything, although that filing was filed, I think, in the second quarter of last year in Europe. Thanks so much.
Thanks, Seamus. I'll ask Briggs in a minute to comment on the BYDUREON CV outcome study and maybe olaparib. As you know, the FDA has extended the PDUFA date to January 3 to consider additional data we submitted. Let me start maybe with this diabetes study question because it really is a nice bridge to what I was saying a minute ago. There is indeed a very strong logic to combine GLP-1 and SGLT2 FARXIGA, it is clearly a combination we will be exploring. That's really a place where we believe the two products can support each other. As you know, the potential problem with the SGLT2 as a class is that they upregulate glucagon and liver glucose production, combining with a DPP-4, but even more so with the GLP-1, should actually lead to very substantial clinical benefits. We certainly will be exploring that one.
Briggs, do you want to cover the BYDUREON CV outcome questions and olaparib?
Sure, with that, James, thanks very much for your question. The EXSCEL trial for BYDUREON is enrolling actually very well. We just hit our 75% enrollment target a little bit early actually. If I recall correctly, I don't think the data will read out until 2018 for the BYDUREON outcomes trial. In terms of olaparib, we remain committed to the molecule and remain, I would say, somewhat optimistic because of the conversations we've had with FDA and the additional data that's been submitted. I would say we remain somewhat optimistic that we could still get accelerated approval.
Thanks, Briggs. Oh, sorry, there was a question about Europe as well. In Europe, we are very much on track so far, we have no reason to believe that we cannot get approval. Of course, we have to wait for the final CHMP decision. Briggs, do you want to add anything to that?
No, I agree entirely, Pascal, that the process is proceeding nicely. That we've been able to address the questions that have come up in the review, We do believe we're still on track with the CHMP opinion in the fourth quarter of this year.
Good. I'll maybe quickly touch on a question we received from Nicolas Guyon by email and Nicolas's question is about Farxiga. We mentioned we have a very successful U.S. launch, We haven't given any sales number. Actually, we will not give, for the time being, sales numbers. We decided not to do that. In fact, I'm sure you've noticed we're not the only ones doing it. The only thing I can tell you is, as I mentioned earlier, the launch is going very well in the U.S. It's actually going very well in Germany as well, by the way, also in Japan, even though it's really early days in Japan. In the U.S., we've captured 40% of the new to brand prescription. We are pretty happy with the performance to date. Keyur at Goldman Sachs. Keyur, do you want to go ahead?
Good afternoon. I have two questions, please. First, Pascal, just as it relates to the Almirall assets, if you could confirm whether you have any marketing rights or co-promotion rights to those assets in the U.S. as it stands today. If not, what is the optionality for you on that end? Secondly, as it relates to the asset you move forward in phase III, I think Briggs you kind of answered that earlier, I just wanted to confirm I heard you right, which is as it relates to the phase III trial. You're evaluating it in both kind of the main endpoints. What is the powering for the trial? Do you need for it to be superior to placebo and to EPO, or do you need roxadustat to just be similar to those two agents? Thank you.
Thanks. Thanks, Keyur. Maybe, Marc, you can take the Almirall question and Briggs the Roxa question.
Yes. I can confirm that Almirall has co-promotion rights in the U.S. As we are taking over the right and obligation of Almirall, there's a possibility for us to have co-promotion rights on the aclidinium in the U.S., this requires the consent or some discussion with Forest Laboratories/Actavis. At this stage, we haven't engaged in these discussions.
Thanks, Marc. Briggs, do you want to cover the Roxa phase III question?
Yeah. For Roxa, you'll remember the issue with the risk for angiotensin-stimulating agents was the concern that they increased cardiovascular risk. We don't believe that we have to be superior to placebo, but we do believe we have to be superior to the angiotensin-stimulating agent. That's the hypothesis of the trials that we're conducting.
Thanks, Briggs. There's a question from Christopher Lyrhem at Carnegie about would we do the Pearl acquisition if we had already done the Almirall acquisition? The answer is a clear yes, because the other way around is also true. Having Pearl, we make the Almirall acquisition. I think it's really important to keep in mind that in most countries around the world, in fact, every country, it varies country by country. If you ask patients' preferences, it's not exactly half and half, but depending on countries, it's not far from that. Some like MDIs, aerosols better. Others like DPIs better. Elderly patients tend to prefer aerosols better. You really, if you want to cover the whole spectrum of needs, you have to have both MDIs and DPIs.
Pearl will bring us a very nice MDI technology that will help us with combination products, LAMA/LABA, but also the triple. Suddenly, the Almirall acquisition brings us all the benefits we've talked about, in particular, a number of products, but also the device technology, which is a very nice device technology. We have a question from Danny Sorimpa at Barclays. Danny, go ahead.
Yeah. Hi there. Thank you. We've heard from some companies that they've been having conversations with companies like Express Scripts, who have already indicated potential exclusion from their formularies for 2015, and I was wondering whether you could comment as to whether you've had any of those discussions and been given any verbal indication as to any of your major products potentially being excluded from coverage next year. I also wanted to just clarify on the NEXIUM assumption within your guidance. Is there anything that's driving that particular assumption in terms of it being an October event? We've seen, obviously, with Novartis and its case with Diovan, these issues can drag on and just wanted to confirm that any excess sort of NEXIUM revenue is going to be reinvested in the business. Just lastly, can you maybe comment on a couple of legal matters?
I noticed on the news wires you're talking about Brilinta and hope to have an outcome into that probe soon. Can you maybe update us as to why you think the timing of that is imminent and what we can plan for?
Thanks, Danny. I may have missed one question. Let me cover the last one, I think it relates to the DOJ investigation, I suspect. Well, our understanding from what we know is that the investigation is well advanced, it's hard to comment. We have to wait till we hear from the DOJ. We hope that it will conclude rapidly so that we can remove this concern some of our customers may have. As far as ESI or other listings, as Luke said before, we expect to win some, lose some. There is very competitive market out there. We're not going to comment on individual customers, ESI or others. Certainly know that as we move into 2015, there'll be some wins and some losses.
Finally, the NEXIUM guidance, it's our best estimate October. It is indeed possible that the generics launch is further delayed, in which case, we'll have a further upside. We'll see how we manage that upside. Certainly, if we had an upside in sales, some of it would fall to the bottom line. Some of it may be reinvested. We'll manage that as we go, keeping in mind always our commitment, as I said before, to defending our profitability next year and in particular, our dividend policy. I'll move to Lars Hevreng at SEB. Lars, go ahead. Lars?
Yeah, sorry. Within COPD, can you just give some background to why, benralizumab of course, some background to why you have moved out the baseline eosinophil count as an inclusion criteria in the COPD trial since these are fairly big, at least the three of them that you have included in clinical trials thus far.
Sorry, Lars, I'm not sure I got the question. Briggs, it's a question for you. Did you get it or would you
I didn't get it.
Okay.
I can repeat. Why baseline eosinophil count is not an inclusion criteria in this COPD trial in contrast to the asthma trials?
Yeah, I got it. I think you're talking about benralizumab COPD trial?
Yes.
For the benralizumab COPD trial, we are enrolling all comers. There is not a cutoff on eosinophil inclusion. In the phase III program, we hope to identify, as you remember from the phase II data, it did appear that the treatment effect was greatest as the eosinophil count increased. We hope to identify a cutoff in the phase III program, but it is not an inclusion criteria.
Thanks, Briggs. We have maybe time for one more question from Naresh Chouhan at Liberum. Naresh, go ahead.
Hi. Thanks for taking my question. Firstly, just on CRESTOR in the U.S., it has managed to hold up quite well due to, I think around a 7% price increase. You are saying that price increases in 2015, or sorry, price pressure in 2015 is to increase significantly. Should we assume that those CRESTOR price increases are not repeated from now on, because that is quite a big driver of CRESTOR sales growth. Secondly, on cash. By the end of this year, you should have very low levels of debt. You have talked potentially about returning cash in the future. Can you talk us through just philosophically how you think about usage of cash in the coming years? Obviously, you have just done the Almirall deal, filling a gap in your portfolio. Are there other gaps in your portfolio that you think you need to fill?
If possible, would you like to do a mid-size deal to get you through the next few years or buybacks is a priority? Just some help around how you think about this would be useful. Thank you.
Thanks, Naresh. I think we are going to have a relatively challenging telephone lines. I think I got your two questions. One, the first one is about CRESTOR pricing in the U.S., Luke, maybe you want to cover this? The cash utilization question, Marc, perhaps you could take?
Sure.
I think overall, we expect to hold our net price in what is a very competitive market with generics. We expect to maintain commercial and Part D, which is around 80% of the volume, through access programs and also promotional activity. By the year-end, we do expect some net realized price appreciation, these are flattered by one-time prior year adjustments. Overall, CRESTOR has reclaimed its top position as the most prescribed branded product in the U.S.
Thanks. Marc, do you want to cover the cash?
Yes. I think your remark is true. Our leverage is decreasing as we go. I'm not sure I got your question, I think you alluded to buyback or the possibility of buyback.
My question was, as you get to the point where you have to start to consider how you use the cash, are there other obvious gaps in your portfolio that you may need to fill? Or potentially, would you like to do a mid-size deal to help you get through the next few years, or are buybacks a priority?
Okay. Sorry, I did not catch earlier on your question. We are continuing our program of business development and bolt-on acquisition. I think the Almirall is a good example of it, provided it is aligned with our strategy in our core areas. It's accretive relatively rapidly and complementary to our portfolio. We will continue to look for BD opportunities or bolt-ons acquisition. We are not actively looking at medium or large acquisition, but obviously, as we have said repeatedly, if we were to see a very great opportunity which would be aligned with our strategy, accretive and complementary to what we have, we would, of course, like to consider it. We have also said that our buyback policy is suspended. Obviously, if we could not find any opportunity, if we had too much cash on the balance sheet, we would have to revisit that question.
We have an ongoing process of strategy review. Now, actually every year, the last part of the year, we review our long-range strategy with the board. We review our long-range plan. We're going to go through that again in the last quarter of this year. We'll review our strategy and the use of cash, and that's the decision the board has to take, of course, based on what we think the opportunities are and what's the best use of our cash. It's a little bit early to comment, as Marc was saying, but certainly, we will keep looking for bolt-on acquisitions with the caveat that Marc gave you. I think we maybe should stop here because we are a little bit over time.
Let me thank you again for all your attention and remind you that certainly, the good sales growth we've experienced in the first half helped us invest in our priorities, platforms, and pipeline. We'll continue to do this, but we'll continue to do this as long as our top line allows us to do it, of course. As we move into 2015, our productivity programs will be targeted at defending our profitability. Certainly, the pipeline is a priority, but there is potential for us to improve our productivity in a number of areas. With that, I'll thank you again