AstraZeneca PLC (LON:AZN)

Earnings Call: Q2 2014

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Jul 31, 2014

Good afternoon, everybody. I'm Pascal Soria, and 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 Luc Miles, 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 Q2 and a half year and 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 and we'll follow along with this presentation. We'll try to queue the slide number as we go through. If I move to Slide 4, I will provide a brief overview of our financial performance to date. And as we've promised, I'll provide a 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 and D pipeline and finally to Marc to run through the financial performance in more details. And 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 5, Starting with our Q2 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 2nd consecutive quarter of revenue growth. We had sales of $6,500,000,000 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 growth drivers and 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 June, including ATS, the ASCO and the 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 8 compounds in Phase 3 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 Moventik and look forward to an FDA approval decision in September. You will have seen the recent FDA vote on Alapare, 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 6. 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 7 is a reminder of the 3 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 and D update. If we move to slide 8, I'm pleased to say that our 5 growth platforms contributed $6,800,000,000 of revenue during the first half of the year. That is an increase of 14% at CER. I will shortly review each one of this in more details. So if you look at slide 9, 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 Bouygues in turn on slide 10, which on this slide, which has continued to make good progress in Q2 with revenue up 77% globally. We've been testing 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 investments. And 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 were discharged from hospitals. During the last quarter, Brilinta has overtaken Rasugra in this setting. So 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 anti diabetic market since Januvia. Ongliza, beta and Baiduarene have also grown on last year, but Ongliza has seen a 0.3.share decline in total prescription share in the quarter. If we look at Slide 14, 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 striking very nicely during the 1st 5 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 Farxiga. So we're not only taking share from our competition. We suddenly 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 Q1 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 2nd consecutive quarter. But 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 2nd largest pharmaceutical 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 and 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. So it's not only a success in China. We experienced 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, Nexium have shown good market share progression. We posted only 1% CER growth in the first half. However, we saw 8.4% in market growth by the end of May year to date. Our performance 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. But finally, I'm pleased to report that Forxiga is off to a good start in Japan. It's still early days since the launch in May, but the early signs are quite positive. So I will conclude my initial remarks. I'll 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 Q2 and the first half of the year and 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 the slide, I show new pivotal programs that have started in the Q2. Roxadustat has started Phase 3 trials both in chronic kidney disease and in patients with dialysis. We've decided to increase the sample size of our randomized Phase 2 trial with our CTLA-four antibody tremolimumab in mesothelioma to support a possible registration. And we started Phase 3 trials for both 9,291, our 3rd generation EGFR inhibitor and MEDI-four thousand seven hundred and thirty six, our PD L1 antibody in non small cell lung cancer. We've also started additional indications for a Phase 3 program in COPD or anti IL-five receptor antibody, bendrolizumab and 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 this slide that we now have 14 new molecular entities in pivotal studies, up from 8 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 EPINOVA in the U. S, the favorable vote for Movantik indicating that for this class of agents, we do not the FDA is not going to require cardiovascular outcomes trials. AZD-nine fourteen, a drug resistant gonorrhea obtained fast track status from the FDA. Bydurean dual chamber pen was received a positive opinion from the CHMP. I'll note that's a little bit earlier than we thought in the Q1 call. I told you I thought that would happen in the Q4. It happened a bit earlier. And we filed for Bydurean in Japan. Pascal noted, we of course were disappointed in our negative AdCom vote for olaparib, but we have submitted additional data, which the FDA is reviewing and they've extended the PDUFA date until the end of until early January of next year. I use Slide 23 simply to turn our attention to our immuno oncology efforts. This slide simply highlights that in a patient with cancer there may be 1 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 the recent clinical collaboration we have announced in Q2 with the Advaxis HPV vaccine. We are clearly fully exploring mechanisms that enhance T cell function and memory on the upper right of this slide with PD-one, PD L1 and CTLA-four. And we've entered into 2 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 has 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 or they could be larger randomized trial. 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 asterisk indicate new trials that have initiated through ZASCO. 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. And again, there's a mixture of these early translational trials as well as more advanced registration trials, again with the asterisk indicating new plans since we discussed our immuno oncology portfolio with you at ASCO. I'd like to emphasize one set of new planned trials and that is the registration program in squamous cell carcinoma of the head and neck region. If you go on to Slide 25, at the top of the slide is a before and after picture of an elderly patient who has had a significant response to our PD L1 antibody MEDI-four thousand seven hundred and thirty six. We anticipate that a paper will be presented at ESMO that will summarize the safety and efficacy of MEDI-four thousand seven hundred and thirty six 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. So we have plans for a pivotal program with both PD L1 monotherapy and the combination of PD L1 plus our CTLA-four antibody tremolimumab. 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 to 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, what we think are really very exciting novel collaborative trial design, 1 in the U. S. And 1 in the UK. 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 LungMAP 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. So for example, if the patients have abnormality of the FGF receptor, they will be randomized in a Phase 2 portion of the study to our drug AZD-four thousand five hundred and forty seven versus the standard of care docetaxel. If there's a signal in that Phase 2 portion, this is a seamless Phase twothree trial, the arm is then expanded into a Phase 3 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 4 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 2 portion. If there's a signal seen in progression free survival that will extend out to a Phase 3 trial in squamous cell lung cancer. So again, we think it's 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 UK, 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 UK. So again, we just want to highlight a great opportunity for very innovative trial designs and we're eager and excited to participate. Now 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. So 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. So 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 3 trials in the New England Journal in June of this year. This is a quick summary of that. And so we are very excited about both the efficacy and the safety of this compound. On the bottom of this 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 to be the outcomes trials prior to approval. In the Q3, we anticipate a potential approval in Canada and our PDUFA date is September 16 here in the U. S. We could potentially get EU approval as well before the end of the year. Now I'll highlight that the launch for the U. S. Is not until the end of Q1 or early Q2 of next year. And 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 opioid. It is an opioid antagonist and as such must go through the DEA process on schedule. Now 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. And that's why there's a gap between the actual planned anticipated approval in September and the launch at the end of the Q1 or Q2. If we move to slide 28, 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 a very coordinated way the treatment of anemia of chronic renal disease. And 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 believe could give a both an oral agent and a better safety profile than recombinant EPO. On the left right hand side of the slide just is to highlight the number of patients with chronic kidney disease in some of the major markets and percent of patients with various stages of chronic kidney disease who will develop anemia. We think it's a very important unserved medical need and we're excited if we go on to Slide 29 that we have now begun some of the our components of the Phase 3 program. Phase 3 program is a very large program conducted by us and Astellas and FibroGen characterizing both the safety and efficacy of the compound. 2 key programs that we have undertaken have started in the Q2. 1 is in patients who are not on dialysis, but have chronic kidney disease. Those patients are randomized to placebo versus roxadustat and the primary endpoint here is major adverse cardiovascular event, cardiovascular death, stroke or MI. And the attempt here is to show that roxadustat has an event rate comparable to placebo. And the second trial is in patients who are already undergoing dialysis where the standard of care is EPO and there the patients are randomized to roxadustat versus EPO. Again, the primary endpoint is MACE and the anticipation is that roxadustat will have a lower incidence of MACE than EPO. As you can see on the far right of the slide, it'll 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 the slide that I have showed you a version of this slide in the Q1 call. On the far left are the pivotal study starts. This is now a summary for the first half of twenty fourteen. I think I've talked about all those pivotal study starts at this point. In the middle, our pivotal study decisions that we have made in the first half. And I'll just highlight here the Farxiga Type 1 diabetes indication. We've decided to progress that into a pivotal program. And as I've mentioned earlier, 9,291 I did not mention this, 9,291 in first line non small cell lung cancer, we've made that decision to undertake that study and the study should start at the end of this year. And then the 2 bottom ones, the PD L1 plus or minus TRME program in squamous cell carcinoma of the head and neck and PD L1 and TRME in non small cell lung cancer. I'll also note that on the far right, we still have additional molecules that are completing their Phase 2 programs, which we may be able to make additional investment decisions to progress yet additional molecules into Phase 3 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'll highlight this one trial from Brilinta, which you may want to take a look at when it's 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 kidney flow and ST segment resolution, so the patients are randomized to get either BLINTA early or BLINTA at the normal time. And we encourage you to take a look at that. That will be an EFC 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-four combination data at non small cell lung cancer. We presented a very high level summary at the investors meeting. So this will now be presented at the scientific session. We submitted abstracts there. There'll be more patients, further dosing cohorts and some information on the biomarker status and some additional information on TRME CTLA-four inhibitor in ophthalioma. We'll also be updates on 9,391 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 9,291 in the first line setting in patients with brain metastases. Now as the year unfolds, on Slide 33, there are some significant data readouts. The first three lines here are osimurad, casavri, and berdalumab. Data readouts here will define for us the actual profile of these exciting molecules. For the cineurad, 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 lisinurad. We've talked about the scientific reasons why lisinurad in combination, which are the additional trials coming out now in few with febuxostat or alopurinol 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. And so we're still we don't know what the profile will be here for lisinurad. I will just note that we do have a 2nd generation molecule against the same target 3,170, 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 lisinurad. So we'll know very soon what the profile of lisinurad is in treatment of gout. The CADE trial, the initial trial in complicated intra abdominal infection should read out in the 3rd quarter. And then the Q4, the data additional Phase 3 data on bertalumab, these are the head to head trials against bolera. The other molecules on the slide, I think we've talked about previously and I'll highlight for you Congress where there'll be more information on the molecule. On Slide 34, we have some additional key regulatory milestones filing of ORISSA 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 Zigduo XR, the combination of metformin plus dapagliflozin in the U. S. And then at the three lines I'm sorry, the Saksadapa fixed dose combination filing at the end of the year. And then both lacinurad and Cazabi depending on the data readouts, we would be on track to file both in the EU and U. S. For lisinurad and in the EU for Cazabi. On slide 35 is a 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 Q1. One is ADD 9,291 where we now believe that we will be able to file that in 2015. Our base assumption right now is it will be the second half of twenty fifteen. And based upon the work that we've been doing in our non small cell lung cancer program with MEDI-four thousand seven hundred and thirty six, if the data reads out as we anticipate, we would be on track to file that in 2016. So I'll stop there and turn things over to Mark. Thank you, Briggs, and good afternoon, everyone. Today, I will provide a little more detail on the drivers of the headline results for the Q2 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 Q2 grew by 4% at constant exchange rate to €6,500,000,000 a second consecutive quarter of growth. The currency impact on the 2nd quarter revenues was negligible. There 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 5 percentage points. I will now turn to the P and 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 rates, they will all be at constant exchange rates. Core gross 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 and D expenditures were up 12% to €1,200,000,000 in the 2nd quarter. Having nearly doubled our late stage portfolio over the last 12 months together with strong progression across all stage of development of our 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 and A expense was up 13% compared with last year. The increase in SG and 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 United States and continued investment in the emerging markets and in particular China. This increase in sales and marketing investment is not mirrored in the G and 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 OTC in the United States and Forsega in Japan, without which other income would have declined. Core operating profit was €2,000,000,000 2% higher than last year. Core operating margin was 31.5 percent 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 and D or that of SG and 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 $200,000,000 As you have seen yesterday, we announced a strategic transaction with Almirall. I would now like to take you through the key aspects of this deal starting on page 41. This is a great deal for AstraZeneca. It strengthened our inhale 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 asset. 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 acquired the Academia franchise assuming all Almirall rights, an excellent pipeline assets 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 devised expertise and employees subject to relevant consultations. We will pay an initial consideration of 8.70 $5,000,000 upon completion of the transaction followed by up to $1,220,000,000 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 include 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 accelerates our entrance into the LAMALABA market as well as bring 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. And finally, it strengthened 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 note that this guidance is based on the business planning assumption of the entry of generic Nexium in the United States from October 1. With continued investment in the pipeline and growth platforms, we now anticipate core EPS to decline in the low double digit 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 the 1st interim dividend of €0.90 and again reaffirm our commitment to our progressive dividend policy. In conclusion, AstraZeneca has made further significant progress this quarter and 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. So 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 and 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, and I hope you enjoy the rest of the summer. So with that, I'd like to open for questions. Over to you, operator. We have a question from Alexander Hauber at UBS. Alexander Hauber, go ahead. Thank you very much. I have a couple of pipeline questions and a financial question. Starting with rocadustat, 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 be the diabetes guidelines be the right ballpark to what kind of risk reduction you need to roll out in a placebo study and typical sort of 15% risk reduction versus EPO in the dialysis patients? Would that be the right thing the right ballpark to think about it? And second question, today you announced head and neck study for both the PDL mono and the combination. And 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? And one compound which I didn't see on the list, but has data at the upcoming ERS meeting is the CXCR2 antagonist, the 5,069. 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 something which you're not going to take forward? And the final question is, obviously, your R and D budget is expanding rapidly, seems to move towards $5,000,000,000 and potentially expanding from that. So that makes it increasingly harder to hit the magic $4.20 EPS in the future years, which you need for the 1.5 times dividend cover. Now given where you are with your pipeline, is that something that you even still care about at this stage? Thank you so much, Alexandre. 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. CXR2, since we have Meny here, Meny, 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 1. Number 2, we've had a couple of additional incomes and that are one off, but very much a lot of additional income driven by our very good in market sales performance. So we've reinvested in our pipeline, but also in growing the business even faster in the emerging markets and the diabetes launches. So we will be managing our cost base in line with the revenue we get. And suddenly next year, we are preparing ourselves for the loss of Nexium, which we assume at this stage to lose in the Q4 of this year. And as Marc mentioned before, we have a number of productivity initiatives that will help us manage those costs. So bottom line is we are very committed to our dividend policy and we're also very committed to the remuneration policy that goes with it. And I'd like to remind you the dividend policies that we have to deliver progressive dividend which is flat or growing and we have a dividend cover of 1.5. So certainly, we will be managing our costs next year to protect profitability. Remember that on the SG and 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. And we decided to stay focused and not disrupt the organization, but there is potential for us to improve our productivity for sure across the entire business, but certainly very much in SG and A. And that's certainly what we would be doing next year. So Briggs, do you want to cover the roxa duster question in the head and neck? Thanks. I have it So for, Alexander, for roxadustat, you're thinking about it the same the correct way. We have a lot of experience with cardiovascular outcomes trials in using MACE as an endpoint. So the comparison to placebo, the conversations we've had with regulators are in the ballpark of the diabetes guidelines 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, but we have additional pivotal study decisions pending in the second half of the year, including additional tumors for PD L1. So at this stage, we are not in a position to say what that will look like. But 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. Meny, do you want to cover the 6 CR2 question? Yes. So the 6 CR2 antagonist 5069 did read out in our severe asthma study. It engaged the mechanism, so the molecule did what it said in the tin, but it didn't have any efficacy or the required efficacy. So that program and mechanism has been terminated for asthma and COPD. But 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. So I should have mentioned earlier that if you want to ask a question, just a reminder, press star 1, of course, to indicate to the operator you have a question to ask. Let me ask Matt 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? And then 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? And are you confident that you'll keep the same formulary positions where you are preferred going into next year? And then finally, a simple financial question. Tax treatment for the Nexium and Forsega one times, should we assume that they are taxed at the normal corporate rate? Thanks, Matt. Bricks, probably you could, if you don't mind, take the ASCO slide question in the NME. I must say, Mathieu, calling on our memory here, suddenly this NME in the house slides, I don't remember the slide, but we could comment on this one. But so in the meantime, I could start with the respiratory question. Luc, do you want to cover this one? And then we'll go to Briggs and then we'll go to the tax treatment, Mark, if you want. So 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, but it remains a very competitive market. So we expect further price pressure in the market. Our view is that we'll compete. We'll win some, we'll lose some. But having said that, we're taking the long view. And as you can see, we've got good momentum. Thanks, Joe. So yes, we certainly can see that this market is becoming competitive, Ahmad, but it's not the only one. Markets in the United States are competitive across the board. Briggs, do you want to cover the ASCO question and the NME question? Yes, I'd be happy to. So Matt, thanks very much for the question. The novel NME that we were referring to on the ASCO session was not the CICE CAR for there. We have a combination of internal and external opportunities. So there's more than the CCFR clinical collaboration. We have quite a number of internal programs, Matt. Of course, you're aware of the OX40 program. But behind this one, we have quite a number of preclinical stage internally. We're working on those and we're suddenly also looking at external collaboration. We've mentioned some of them in Briggs' presentation today, but we have a couple of others that we are exploring. So as Briggs says, a variety of internal and external options. Tax treatment, Marc? Yes. I can confirm that the other income we see for next year and for CIGA attacks at normal corporate rates. Good. We'll move to next question, Tim Anderson. Tim, do you want to go ahead? Yes. Thank you. A couple of pipeline questions and then a third question. So you talked about filing your PD L1 using the ATLANTIC study, which as you noted, the Phase 2 single arm trial looking at response rates. But as a late interim product, I'm wondering if it could be too late to rely on this type of a trial for registration as others may have beat you to the punch, the 3 other anti PD-1s may have launched in lung by that point? Second question is on trimilimumab and just clarifying something you've said previously, I believe it was at your ASCO analyst meeting, where you said tremolimimab 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 his conference call recently that they didn't view it as a mistake to let go of that program, but that wouldn't seem to be congruent with your more bullish view. And then 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? So in what direction do the majority of shareholders lead? Thanks very much, Tim. So, Briks, it will 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 London takeover panels takeover panel rules, sorry, and it is completely impossible for us to comment on this. So BRICS, two questions. The PDI-one Atlantic Phase 2, is it too late? And also the TRAME versus CP question. Yes. Tim, thanks very much for your question. So first for Atlantic, I'll make 2 comments. One is, as you're well aware, it's the specific indication that you ask for when you go in for approval. So if somebody asked for somebody was approved in second line and you're going for 3rd line that's still considered an unmet need. So 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. So if there's an accelerated approval and they're still pending full approval, then obviously others can come in and still get accelerated approval. So 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 TREMI, you'll remember at ASCO, Doctor. Rachel Humphrey went through a side by side comparison of TRME versus ipi. And of course, Rachel knows ipi very well since she was at BMS and led the development of that molecule. There are differences between the 2 antibodies, that's for sure. And the best we can tell of the data that has been generated on Tremi prior to our taking over the molecule, it does appear to be an active molecule and we do remain bullish on it. Okay. Tim, does it address your question? Yes. I guess if you could just clarify what exactly it is about tremulinemab. 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? Yes. So maybe Tim just for the sake of this call, we'd be happy to talk with you offline about further details, molecular details of why we have those differences of opinion on Tremi. But maybe we'll turn it on to probably not the place to go through all that science and detail. You can do that with you offline. Thanks, Briggs. If you also go back to the presentation at the ASCO team, we actually highlighted the reasons why we believe that they could be different at the time. Let's move to Nicolas Guillaume at Morgan Stanley. Nicolas, do you want to go ahead? Hi. Thanks for taking my questions. Actually, I have 3. The first one is about the rationale of the Almirall deal, given you already own 2 rights to very similar assets although it's a different device? In that regard, do you have any particular reason to have changed your mind with regards to Pearl's assets of technology and notably its PMDI device? 2nd, the recent NGCFR deal with SKYO-one, And 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. Nicolas, thank you so much. I think I heard the first question, but the other 2, it was impossible to hear. So 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 it's the telephone line is actually not optimal. It seems that your first question, Luc, I think did you hear it and understand it? Yes, sorry. I think your question was, is there an overlap? And if we have a PMDI in number of markets and DPI, why do we need another one? So I think, especially the deal reflects a broader commitment and confidence in respiratory as one of our growth drivers. And 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. So 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. And we're confident we have the commercial capacity and infrastructure to maximize both assets. And 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. And that's a device that potentially we could load a number of existing and also future compounds on. Finally, we get access, as Mark covered earlier, to a number of pipeline assets, particularly the Maba, which offers a number of potential combinations in the future. And also we get access to the group of people that created that device and are currently selling the other products. So that's the rationale behind the deal. We see it as very complementary. Thanks, Luc. 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. But we're not going to be able to address 100% of patients' needs with only an MDI. We need PMDI and that's certainly what the Almirall assets will bring to us. And Pearl will bring us similar assets combinations, but in a PMDI formulation. The other two questions, I'm not sure we heard. So if you can e mail them, that would be great. And in the meantime, we'll move to Andrew Baum. Andrew at Citi, do you want to go ahead? Yes, morning. Three questions, please. Firstly, on the Amoral acquisition, have you already approached at harvest in terms of buying them out of their U. S. Rights? And then just to confirm that you have 100% rights on using the GenuAir device to put potentially the pearl compound through Actharvest has no rights on that. 2nd, in relation to China, to what extent does the local difficulties of a dominant respiratory competitor help you in driving market share gains growing the respiratory market within China with Symbicort? And then 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'll ask you, if you could take this triple negative breast cancer globally. And for us to have rights globally. And Forests have rights for products that have been licensed to them in the United States, but certainly not to the Genua device. We can put new other products in the 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's an enormous economic development and there is a growing problem with respiratory disease because of high level of pollution, but also a high level of smoking. So COPD and asthma and Southern 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 and the unmet need is enormous. So it's 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. So it's really what is driving the growth. And quite frankly, we're only beginning. At the very beginning here, there's an enormous need to develop this market for maintenance. So Briggs, if you want to cover the triple negative breast cancer question? Yes. Thank you very much, Andrew. So as you noted, our the triple negative population was part of 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. So I think it's a little bit early for us to say anything about our approach to triple negative breast cancer. Thanks, Briggs. So more to come later this year on that one, Andal. 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. So firstly around ESMO on the PD L1, CTLA-four 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. And at ASCO, there was some excitement in turning around the c MET or the PI3 kinase and the mTOR, so any color there? And then finally on Lesnarad, you made in your introductory comments, Briggs, some comments around the renal profile and a follow on compound. Would you please 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. So Briggs, maybe you could start with the PD L1, CTLA-four question. And maybe, Mene, you'll take the question about other early stage assets outside immuno oncology. And also the renal question for you, Briggs. Quite a few questions. Go ahead. Sure. So, first let me talk about the combination with PD L1 and tremie. And as we talked about ASCO is a Q4 week schedule that we've been studying. We've completed enrollment in a cohort where we have 15 mgs gig of PD L1 and 10 of TRME and are enrolling a cohort at 20 mgkg of PD L1, 3 of Tremi. As of now, I'd say there's if I remember correctly about 18 patients have introduced 3 per cohort. And 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's question about the fact that we can get essentially the full we're almost up to full doses of both PD L1 and PREMI in combination in that non small cell lung cancer program at a top and is tolerable. So that's where we are with CCL4 PDL-one. I'll just make a comment on lacunurad. It's a fabulous question. Obviously, famous placebo would be brilliant. A slight difference from placebo could still be an important profile. So, 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 and I'll let many comment on early stage assets albeit as well. Yes. So what I would say is that it has we've obviously submitted our abstracts and the decision dates for what's accepted and what's not is September 17. 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, Mene. So the yes, just maybe to add on the Lesinor had, as Borics said, we'll have to wait for more data, and it's really up 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-four such in is that we haven't met a safety issue. So we've been continuously escalating treatment. And as Briggs said, we've added cohorts with IO doses. And 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 Loberrigo at Bryan Garnier. Eric, well, I'll read your question and ask Marc maybe to cover it to answer it. So the question is, as the Q1 was 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 account in Q2, Marc? Yes. So as you will remember, the accounting treatment for the BMS rights acquisition is a business combination. So we do capitalize all the payment at fair market value and then we amortize those all those rights in full non core. Separately, but I can tell you the number that we have paid as royalties for the first half. And the number is $58,000,000 for the first half. So quarter 1 plus quarter 2. And as you noted, we took over the business from February 1. So €58,000,000 of royalties paid in the from February to June of 2014. Thanks, Marc. So James Gordon at JPMorgan. James, do you want to go ahead? Hello. Thanks for taking my questions. A couple of questions on Almirall and Respiratory. One would be that Almirall has got a once daily Lava ICS in Phase 2. And my question is just based on the initial performance of GSK's Brio, do you think such a product sort of once daily larva 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 in the market that time as well. Another respiratory question I had was on triple therapy. You've got now 2 marbles and then you're also talking about doing a conventional triple therapy. These seem like 2 different routes to really get to the same end of giving people effective both would effectively give people triple therapy. Would you consider developing both the MARBA and the conventional triple? For instance, GSK seems to have deprioritized their MARBA and just be going for the conventional triple. And then I just want to one clarification, which was that in the Q1 pipeline presentation, it looked like there was going to be combo PD L1, CTLA-four data in a mixture of solid tumors, so it's 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, Menel, you could cover the questions regarding the Maba. Maybe just one quick point actually, James. The Maba, this is a the arrangement here is a pulling of assets. So we basically, of course, will pick the best Maba to develop to move forward in Phase 3. Do you want to cover the Yes, I think we're in both. And I think it's not obviously, the conventional triplets, I mean, we're moving very aggressively and plan to move into Phase III as fast as we can with our Per colleagues. While the MARBA brings using just the ability to combine with edestinib, 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, Manabe. Briggs, I'll ask you to take the PDI-one hundred and sixty L4 question in all the tumor types. But in the meantime, maybe Luc, you could cover the 1 study lab ICS. Sure. So I think, James, for asthma and COPD, we can confidently say there's no one size at all solution. So there is room for both dosing frequencies. And as we've announced, we do gain access to a Phase 2 QD Lava. And also if that resulted in a QD Mava, that would certainly be interesting for us as a platform for triple or even further beyond that. So really, I think there's room for both. Having said that, BID remains attractive for patients with nighttime symptoms. And I think to reinforce that SYMPAKO continues to be well received in the market. Your question, James, was also about the competitive intensity there. And I think the one thing we would say is that in the short term, what this acquisition gives us is a La Balama in a DPI formulation, and we will have the same in an MDI formulation with Pearl. In the long run, we have MABA combinations, as we explained a minute ago. It is clear that Laba ICS is a competitive marketplace, but it's and these decisions will have a place, but it's probably not our priority. Briggs, do you want to cover the Q1 the pipeline question about PD L1, CTLA4 and other tumor types? Yes. So James, you're correct. There are 2 trials. There's the one trial on that I referred to earlier about the dose escalations on the every 4 weeks schedule in non small cell lung cancer and then a second trial that's being run by our partners that's a little big in a variety of tumor types. To my knowledge, only the trial that I referred to in the last small cell lung cancer will be at ESMO. Thanks, Prajek. Marc Klaas, Deutsche Bank. Marc, 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? And secondly, on roxadustat, you gave us some time lines on the Phase 3 readout Q1 2017, but the pipeline filing chart includes that in 2016. So are you assuming you can file on interim data? Or is that simply an oversight? Thank you. Thanks, Marc. So 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. I think we'll 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, I'll break this, save you a bit of time. I suspect the filing date, Marc, 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. It's a very smart approach to approval in China. And China actually, this product is potentially the first one that would be filed in China first before it's filed anywhere in the world. So I think that's what you see in the pipeline chart. Let me move to back to Nicolas' question. We've received on email now. And the question was on the recent on TCCR4, the deal with Kiowa Aco. You elaborate on the dose used for compound in combination with PD L1 of CTI. I'm not sure I understand the question. Can you 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-four in the tumors? And there's a further comment here that says this it seems that there is a risk of skin toxicity. I'm sorry, I struggle a bit to read it here. And hematology in Japan, do you have comments with regarding the safety profile of drug use in in combination? Do you want to cover this one, Briggs? Sure. I'd be glad to, Pascal. So no, at this point, I can't comment on the dose of either CTLA-four, PD L1 or CCR4. We've entered into the agreement and we're in the process of designing that trial. It is true that I mean 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. And so we are aware of that going into the collaboration. Thanks, Bri. So we'll move to the next question, which is a question from Matthias Hagblom at Danske Bank. Matthias, go ahead. Thanks so much. Your 2020 guidance for the exenatide franchise seems to point to 2,500,000,000 dollars in sales. And we have seen some new long acting GLP-one analogs enter the market at a pretty huge discount, it appears. And others will join the market as well over the next couple of years. We'll see combination with base and insulin and possibly oral GLP-1s as well. Has any of the recent news including a case pricing biology changed your view of this franchise going forward? Thanks so much. Okay. So maybe Luc you can take this one. Thanks, Matthias. Related to I think there are 2 questions in that one. One is JSK, the launch of the JSK product and 2 is the level of discounts in the competitive marketplace. So I think as a general statement, we expect it to be more competitive, both in terms of promotional activity and of course access. And that being said, we have good access with the product and we have a well established team. We've integrated the BMS team as well 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 and it's very much on track. And 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. And we're very confident around the profile of Bydureon, which again has shown consistent A1C reductions in the range of 1.3% to 1.9%. And it's very durable in terms of A1C effect and weight with 6 years in data. So 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, Luc. I think, Matias, your question was also related to the Gaxo 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. Certainly, all the competitors will come in that will certainly will have a bigger impact. So our strategy here relies on couple of things. 1 is the devices as Luc was mentioning and 2 is the development of the volume here. The GLP-one class is a class that has really an important place in diabetes and is if prices decline, you could also expect growth in volume and we certainly would expect growth in the emerging markets. So very competitive, there's no doubt about it. But we also see a good complementarity with Farxiga. For instance, the combination of GLP-one and Farxiga will be a very competitive combination. So we'll leverage the portfolio as much as we can. Let me move to Simas Fernandez. Simas, go ahead. Thanks very much for the question. Just wondering if we could get a quick update on some clinical trials. In terms of the trials that are ongoing with Fyodorion and the look at cardiovascular outcomes, potential cardiovascular outcomes benefit. 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 interesting case reports around that. And then 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 really kind of puts that as a requirement for full Phase 3 data? And 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 Q2 of last year in Europe. Thanks so much. Thanks, Thomas. I'll ask Briggs in a minute to comment on the Badureon 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-one and SGLT-two Farxiga and it is clearly a combination we will be exploring. And that's really a place where we believe the 2 products can support each other. As you know, the problem potential problem with SGLT2 as a class is that they up regulate glucagon and liver glucose production and combining with DPP-four, but even more so with the GLP-one should actually lead to very substantial clinical benefits. So we certainly will be exploring that one. Briggs, do you want to cover the Badurean severe outcome questions and Olaparib? Sure. Thanks very much for your question. So the EXCEL trial for Badurean is enrolling actually very well. We just hit our 75 percent enrollment target a little bit early actually. And if I recall correctly, I don't think the data will read out until 2018 for the BIBIERATE 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. Sorry, there was a question about Europe as well. In Europe, we are very much on track. And so far, we have no reason to believe that we cannot get approval. But of course, we have to wait for the final CHP decision. Boris, do you want to add anything to that? No, I agree entirely, Pascal, that the process is proceeding nicely. We've been able to address the questions that have come up in the review, and we do believe we're still on track to CHMP opinion in the Q4 of this year. Good. So I'll maybe quickly touch on a question we received from Nicolas Guillen on by email. And Nicolas' question is about Farxiga. And we mentioned we have a very successful U. S. Launch, but 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. And 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. And so also in Japan, even though it's really early days in Japan. But in the U. S. We've captured 40% of the new to brand prescription. So 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, this 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, kind of what is the optionality for you on that end? And secondly, as it relates to the acid you mean forward in Phase III? And I think, Briggs, you kind of answered that earlier. But I just wanted to confirm I heard you right, which is as it relates to the Phase III trial for you evaluating it in both kind of the nascent points, what is the powering for the trial? Do you need for it to be superior to placebo and to EPO? Or do you need to look at your start to just be similar to those 2 agents? Thank you. Thanks, Kjell. And maybe Marc you can take the Almirall question and Briggs the Roxar question. So I can confirm that Almirall has co promotion rights in the United States. And as we are taking over the rights and obligation of Almirall, there is a possibility for us to have co promotion rights on the Academia in the United States, but this requires the consent of some discussion with the with forest activists. So at this stage, we haven't engaged in these discussions. Thanks, Marc. Briggs, do to cover the roxa Phase III question? Yes. So for roxa, you'll remember the issue with the risk of the report and simulating agents was the concern that they increased cardiovascular risk. So we don't believe that we have to be superior to placebo, but we do believe we have to be superior to the erythropoietin stimulating agent. And then that's the hypothesis of the trials that we're conducting. Thanks, Briggs. There's a question from Christoph Falyberg at Carnegie about would we do the Pearl acquisition if we had already done the Almirall acquisition? The answer is 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. But if you ask patients' preferences, not exactly half and half, but depending on countries, not far from that. Some like MDIs, aerosol is better, others like DPI is better, and elderly patients tend to prefer aerosols Pearl will bring us a very Pearl will bring us a very nice MDI technology that will help us with combination products, La Balama, but also the triple. And suddenly the Almirall acquisition brings us all the benefits we've talked about and in particular the number of products, but also the device technology, which is a very nice device technology. So we have a question from Danny Sorempo at Barclays. Danny, go ahead. Yes. Hi, there. Thank you. We've heard from some companies that they've been having conversations with companies like Express Scripts and who already indicated potential exclusion from their formulas for 2015. I was wondering whether you could comment as to whether you've had any of those discussions and 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 being an October event? And 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. And then just lastly, can you maybe comment on a couple of legal matters? But I noticed on the Newswires, 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, Tania. I may have missed one question. Let me cover the last one, I think, relates to the DOJ investigation, I suspect. Well, our understanding from what we know is that the investigation is well advanced, but it's hard to comment. We have to wait till we hear from the DOJ, and we hope that it will conclude rapidly so that we can return to we can remove this concern some of our customers may have. As far as ESI or other listings, as Luc said before, we expect to win some, lose some. There is very competitive market out there, but we're not going to comment on individual customers, ESI or others. But certainly know that as we move into 2015, there'll be some wins and some losses. And finally, the next year guidance, it's our best estimate October, but it is indeed possible that the generics launch is further delayed, in which case we'll have a further upside and we'll see how we manage that upside. But 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 on particular dividend policy. So I'll move to Lars Severengh at Seb. Lars, go ahead. Lars? Yes, sorry. On within COPD, can you just give some back end to why and then, of course, back end to why you have moved out the baseline as a senior count on as an inclusion criteria in the COPD trial. These are fairly big, at least the 3 of them that you have, including clinicaltrials dotgov. [SPEAKER SEBASTIEN DE MONTESSUS:] Sorry, Lars, I'm not sure I got the question. But Gregs, it's a question for you. So did you get it or would you I didn't get it. Okay. So I can repeat why baseline as a field count is not inclusion criteria in this EPD trial in contrast to the asthma trials? Yes, I got it. So I think you're talking about Benralizumab COPD trial? Yes. Yes. So for the Benralizumab COPD trial, we are enrolling all comers. It's not a there's not a cutoff on eosinophil inclusion. And in the Phase 3 program, we hope to identify as you remember from the Phase 2 data, it did appear that the treatment effect was greatest as eosinophil count increased. And so we hope to identify a cutoff in the Phase 3 program, but it's not an inclusion criteria. Thanks, Bri. So 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. Has managed to hold up quite well due to I think around a 7% price increase. Also you're saying that price increases in 2015 also price pressure in 2015 is increased significantly. Do you assume that those Crestor price increases aren't repeated from now on? Because that's quite a big driver of Crestor sales growth. And then secondly on cash. By the end of this year, you should have very low levels of debt. You've talked about returning cash in the future. Can you talk us through just philosophically how you think about uses of cash in the coming years? Obviously, you've just done the Almirall deal filling gap in your portfolio. Are there other gaps in your portfolio that you think you need to fill? If possible, are there would you like to do a mid sized deal to get you through the next few years? Or are buybacks as far as you just help around how you think about this would be useful? Thank you. Thanks, Faiz. We I think we are going to have a relatively challenging telephone lines, but I think I got 2 your two questions. 1, the first one is about Crestor U. S. Pricing in the U. S. And Luc maybe you want to cover this and the cash utilization question Marc perhaps you could take? Sure. So 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. And by the year end, we do expect some net realized price appreciation and these are flattered by onetime prior year adjustments. And 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, but I think you alluded to buyback or the possibility of buyback. So for the time being The question was more was as you get to the point where you have to start consider how you use the cash, are there obvious gaps in your portfolio that you may need to fill? Or are there potentially would you like to do a midsize deal to help you get through the next few years? Or are buybacks a priority? Okay. So I did not catch earlier on your question. So 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. So we will continue to look for video 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. And we have also said that our buyback policy is suspended. But obviously, if we could not find any opportunity and if we had too much cash on our balance sheet, we would have to revisit that question. We have an ongoing process of strategy review in Arashay every year. In the last part of the year, we will review our long range strategy with the board. We'll review our long range plan. We're going to go through that again in the last quarter of this year. And 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. And but certainly, we will keep looking for bolt on acquisitions with the caveat that Mark gave you. So 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 strong the good sales growth we've experienced in the first half helped us invest in our priorities, platforms and pipeline. And 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. And 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.

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