Earnings Call: Q2 2019

Jul 25, 2019

Good afternoon, Europe, and good morning to the U. S. Welcome, ladies and gentlemen, to AstraZeneca's First Half twenty nineteen Results. Before I hand over to AstraZeneca, I'd like to read the Safe Harbor statement. The company intends to utilize the Safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Participants on this call may make forward looking statements with respect to the operations and financial performance of AstraZeneca. Although we believe our expectations are based on reasonable assumptions, by their very nature, forward looking statements involve risks and uncertainties and may be influenced by factors that could cause actual results to differ materially from those expressed or implied by these forward looking statements. Any forward looking statements made on this call reflect the knowledge and information available at the time of this call. The company undertakes no obligation to update forward looking statements. Please also carefully review the forward looking statements disclaimer in the slide deck that accompanies this presentation and webcast. I will now hand you over to AstraZeneca's Chief Executive Officer, Pascal Sorio. Hello, everyone. It's Pascal Sorio. Welcome to the first half twenty nineteen conference call and our webcast for investors and analysts. The presentation is available on astrazeneca.com as always, and we have also sent it to those on our distribution list. Please turn to Slide 2. This is our usual Safe Harbor statement. We'll be making comments on our financial performance using core reported numbers and at constant exchange rates or CER, which are both non GAAP measures. We'll also discuss other non GAAP measures deemed helpful for investors and analysts. All numbers will refer to $1,000,000 and growth rates will be at CER and for the first half year of twenty nineteen, unless we state otherwise. Please turn to Slide 3. We actually plan to spend a good half an hour on the presentation and then do a Q and A. For those on the phone, please remember to get in the queue by pressing star 1. There is also an option to ask questions as part of the webcast. As we would like to provide to provide everybody with an opportunity to ask questions, we ask to please limit yourself to one question in the first round. Thanks in advance for that. Today, I'm joined by Dave Frederiksen, who is our Executive Vice President of the Oncology Business Unit Roeth Dobber, the EVP for Biopharmaceuticals Business Unit Marc Dunoyer, our CFO Jose Baselga, who is our EVP of Oncology, R and D Meny Pangalos, who is our EVP of Biopharmaceuticals, R and D. And for the questions later, we've also with us, we have Leon Wang, our EVP in charge of China and the Emerging Markets. So if you turn to Slide 4, this is the agenda. We plan to cover all key aspects of our results today. Turning to Slide 5. So we had a good start of 20 19 and we've continued on a very high note in the Q2. Sales were up 19% in the quarter, 17% year to date. We saw very strong performance across our company. New medicines grew by 77% and added $2,000,000,000 in incremental sales in the half. This strong performance was driven by oncology with an increase of 58%, $4,000,000,000 of sales in the first half delivered by the oncology franchise and also the emerging markets grew by 24%. Our Japanese company advanced by 31%. These numbers highlight the geographical diversity of our global business. Our total revenue increased by 14%, driven by smaller contribution from collaboration revenue. On the cost side, core operating costs increased by 5% as we continue to invest in sustainable growth, but also focus on our cost management. As a result, we continue to deliver operating leverage with our core operating profit up by 44%. Core EPS was $1.62 including a 21% tax rate. We increased the guidance for sales today from high single digit growth to low double digit growth. As we focus on return to sustainable business growth, we now anticipate a lower total of collaboration revenue and other operating income. As a result, core EPS guidance will remain the same. Our pipeline, importantly, continued to deliver on the 2nd quarter, and we're really looking forward to a very busy second half of the year. Turning to Slide 6. When we look at the pipeline progress in the 2nd quarter, we suddenly have rarely seen such a long list of positive achievements and only one small disappointment, the complete response later for Far ARSIGA in Type 1 diabetes. There were a number of highlights in oncology, including a positive Phase III result for Imfinzi in small cell lung cancer. Lynparza was approved in first line ovarian cancer in the EU and in Japan, and we started with the regulatory submissions in pancreatic cancer, first in the EU. Trastuzumabderuxtecan met the primary endpoint in its first pivotal trial for the upcoming regulatory submission. Finally, Calquence met primary endpoints in 2 Phase III trials in relapsedrefractory and in frontline chronic lymphocytic leukemia. In biopharmaceuticals, we saw progress for Farxiga and the important severe outcomes data in Type 2 diabetes with a positive EU opinion and a regulatory submission in China. Lokelma, which is now launched in the U. S, we started promoting in June, saw regulatory submission in Japan and in China and a priority review in China, highlighting the unmet medical need in the country. Staying in the field of kidney disease, roxadustat confirmed its cardiovascular safety. On the respiratory side, Japan led the way with approval for Bevespi and Breastri, the 1st global approval for our new closed triple inhaled medicine for the treatment of COPD. And last but not least, Fasenra also moved towards approval for its new auto injector pen device with a positive opinion in the EU. As always, Jose and Mene will cover more R and D details later on. So please turn to Slide 7. We have delivered on our promises to return to growth and we remain very excited with the trajectory. We now have 4 consecutive quarters of very strong sales growth. After our 1st great quarter, the 2nd quarter continued strongly with 19% sales growth. It takes the year to date achievement to 17% growth. While comparisons are getting tougher in the second half, as you can see here, we today increased our full year guidance for sales growth for the whole year. Our new medicines continued to make a significant contribution to growth, this time increasing by 77%. The biggest contributor remained Tagrisso, which is already our largest selling medicine. Imfinzi and Lynparza also did well, and they added significant sales and we're pleased with the underlying geographical expansion beyond the U. S. Market. Fasenra, Brilinta and Farxiga strong double digit sales growth in biopharmaceuticals. Together, the new medicines added more than $2,000,000,000 of incremental sales in the first half of twenty nineteen. So please turn to Slide 8. So if we look at the main therapy areas in the emerging market, what comes across here is the well diversified business of our company becoming more visible. We have we are now more diversified than in the past and we're becoming more diversified than other peers, both from a geography, but also from a portfolio viewpoint. As a result, this will create a more sustainable performance in the future compared to what we've experienced in the past. Oncology remains above $2,000,000,000 per quarter and it grew by 58% in the first half of twenty nineteen. It's now approaching 40% of our total sales. New CVRM with diabetes and Brilinta grew by 16% to more than $2,000,000,000 and it includes about 1 5th of our total sales. It represents 1 5th of our total sales. Respiratory increased by 10% and also represents about 1 5th of our total sales. And finally, other medicines declined by 14% and they now represent less than 1 quarter of sales. The geographical diversification is important for the future of industry and certainly for our company. So our growth in the emerging markets is important. It continued strongly with an increase of 24% with China growing above recent trends. We continue to emphasize growth in those emerging markets and we want to bring all our medicines to patients in need. In general, we would like to remind our investors that sales growth does fluctuate more in the emerging markets, of course, but our broad presence really helps us manage these ups and downs. Please turn to Slide 9. I wanted to say a few words about sustainability because we often talk about sustainable sales growth, but sustainability for us is a broader commitment and a commitment that goes beyond sales and beyond our top line. As you can see from our results announcement, we've embedded sustainability in our company as well as in our quarterly reporting to investor and analysts. This past quarter, we made some important progress like expanding our Healthy Heart Africa program to patients in Ghana. Members of the senior executive team have been to Africa themselves to see the program in action. And I can tell you, we all each time come back very energized by the impact we are having on patients in Africa. You cannot open a newspaper without reading about climate change and the impact our modern lifestyle has on the environment. During the quarter, AstraZeneca joined the EV100 program, where we will shift company cars to electrical cars. We have 16,000 vehicles on a global basis. Those will be shifted to electrical cars and will save a very large amount of CO2 emissions over the next few years. In the quarter, we also received an update on colleague engagements for our periodic pulse surveys. We are pleased to see that the majority of our employees and our colleagues around the world show very high engagement scores that remain ahead of our peer companies in the pharma sector. With this important summary, I will hand over to Dave to cover our oncology business. Please turn to Slide 10. Thank you, Pascal. So now I will update on the performance of our oncology portfolio before, as usual, handing over to Ruud, who will update on CVRM, respiratory and the emerging markets. If you could turn to the next page. The first half of twenty nineteen has started off well for oncology with sales of $4,000,000,000 and continued strong growth at 58% with our 4 new medicines now contributing $1,500,000,000 of incremental sales. In the lung franchise, the Tagrisso and Imfinzi rollouts and the new indications of first line EGFR mutated non small cell lung cancer and Receptable Stage III non small cell lung cancer are truly well underway. Lynparza continues to cement itself as the leading PARP inhibitor further enforced with the first line ovarian cancer setting launch. We see continued encouraging uptake of Calquence in the smaller mantle cell lymphoma indication with sales now of $64,000,000 in the half year. The majority of sales came from the approved indication in the U. S. And we estimate now that as many as 45% of the patients in the approved indication are now treated with Calquence. This launch has allowed us to build the infrastructure needed within the hematology space as we prepare for the larger chronic lymphocytic leukemia indication following the 2 positive pivotal Phase 3 readouts earlier in the year. I do also want to comment on Faslodex, which for the first half was holding ground quite nicely with sales of $521,000,000 and growth of 8%. We do though note that in the Q2, the U. S. Started to decline due to the entry of generics, and I want to highlight that we do expect some headwind as we head into the second half of the year in our mature portfolio with U. S. Generic fulvestrant or entrants and further ERISA declines as we focus our efforts on Tagrisso. Please turn to Slide 12. Staying on Tagrisso, which is the company's number one selling medicine, Tagrisso demonstrated continued growth of 92% in the year with $1,400,000,000 in sales as the global first line label launches continue to take effect. I'm very pleased to note that the current quarterly run rate is annualizing at over $3,000,000,000 The U. S. Continues to exhibit strong growth with sales of $559,000,000 and with a return to quarterly sequential sales growth following growth in underlying demand as we reach a high level of penetration in the first line setting in the EGFR mutated space. Europe reported $212,000,000 with a growth of 64% as first line launches take effect following reimbursement decisions. Japan had very strong sales of $291,000,000 up by 151% as levels of penetration in the first line setting are actually getting well over 66%. And emerging markets saw $329,000,000 in sales with China contributing more than half as the NRDL listing starts to take effect and we continue to provide access to more and more patients across emerging markets in China specifically. We do look forward to China's first line regulatory decision now in the second half of the year. Please turn to Slide 13. Staying in lung cancer, Imfinzi continues quarterly growth as the global approvals for the PACIFIC indication of unresectable Stage 3 non small cell lung cancer start to take effect. Imfinzi reported sales of $633,000,000 with the vast majority coming from the U. S. And the lung indication. In the U. S, where we have 75 percent of total Imfinzi sales, we saw strong sales of $473,000,000 and we're very encouraged to see that the number of patients now getting chemoradiation in this setting is increasing, as is the number of patients getting Imfinzi postchemoradiation. Radiation. We now see that most of the immediately available patients are benefiting from Imfinzi as evidenced by the increasing patient infusions illustrated on the right hand chart on this slide. Our focus now is shifting to providing the benefit to patients ex U. S. And we are now approved in 49 countries. Sales outside of the United States are beginning to ramp up as we look to launch and gain reimbursement in many, many important countries across the globe. In Japan, where we do have approval and reimbursement, we delivered $86,000,000 and in Europe, dollars 60,000,000 of sales in the half. In Japan, we've seen the number of patients getting systemic therapy post chemo radiation increase as a result of our commercial efforts and now over half the patients are getting therapy in this setting. We will continue to roll out in further countries in order to allow for more patients to get access across the globe to Imfinzi in this area of high unmet need through 2019. We're also kicking off a number of trials in the early settings in lung and beyond building on the foundations by PACIFIC. Please turn to Slide 14. Finally, I want to talk about Lynparza and note that it demonstrated continued progress with sales of $520,000,000 in the year and it's now on track for blockbuster status with annualized run rate of more than $1,000,000,000 We've seen growth across all regions as we continue to roll out the broader second line maintenance label in ovarian cancer and in breast cancer, and of course, the first line ovarian cancer indications, which now are in the major markets of the U. S, EU and Japan. U. S. Sales were $262,000,000 where Lynparza continues to be the leading medicine in the PARP inhibitor class at nearly 60% share as measured by total prescription volumes in this competitive market. Increase in demand came from the all comers second line ovarian cancer and the subsequent first line label and also some from the emerging breast cancer indication. As you would expect, we continue to see the majority of use in ovarian with emerging use within breast cancer. In Europe, sales were $131,000,000 up 61% versus prior year, reflecting the increased bracket testing rates as we roll out additional launches and secure reimbursement across several markets with the inclusion of the broader EU ovarian tablet label. Japan is launching quite nicely, delivering $58,000,000 following the launches in ovarian and breast cancer. And Lynparza was the first inhibitor launched in China, which contributed to the $59,000,000 in emerging markets in the half year. The ongoing collaboration with our partner Merck progresses in the field and beyond, and we continue to look forward to an exciting next period of delivery of what we believe will continue to be the leading PARP inhibitor. I now hand over to Ruud to cover CVRM and emerging markets in more detail along with respiratory. Thank you so much, Dave. For the biopharmaceutical business, total sales of new CVRM and Respiratory were $4,600,000,000 in the half. This represents 42% of our company's sales and growing at 13%. We are very pleased with the continued growth of Farxiga and Brilinta and the ongoing successful launch of Fasenra. Although Symbicort faced some headwind, Pulmicort continued to provide robust sales delivery. We look to build on this growth including through further launches of Lokelma in the coming months. Please turn to Slide 16. For NIL CVRM, sales were up by 16% despite intense competition in diabetes with total sales at $2,000,000,000 Growth for both Farxiga and Belinta remained strong with double digit increases globally. Farxiga delivered sales of $726,000,000 with 90% growth maintaining volume market share leadership globally. Farxiga saw U. S. Growth of 2% versus the first half of twenty eighteen with growth slowing due to increased in class competition. We look forward to the potential declared labor update in the United States in order to accelerate market growth and our share in the SGLT2 class. Outside the U. S, where we have 63% of sales, we have seen encouraging performances with volume driven growth increasing. Europe saw sales up 26% and Emerging Markets sales were up by 45%. Berlin delivered sales of $737,000,000 with 26% growth driven by a strong performance in the emerging markets up by 58%. We also had continuous growth in the United States and Europe, up by 24% and 7%, respectively. We continue to be very pleased with the performance of Brilinta, which is still outgrowing the markets in all regions. Bydureon, including the auto injected by durian B size were impacted by the supply constraints for the new B size device, with sales down 3% in the first half. This has been resolved and we will be back to normal supply in the second half of the year. Please turn to Slide 17. Turning to respiratory, where we now have $2,500,000,000 in sales, we saw 10% growth in the year to date, mainly driven by Fasenra and Pulmicort. Symbicort was down by 6% to $1,200,000,000 with the growth in emerging markets not fully offsetting the impact of market access in the United States and pricing pressures in the U. S. And Europe. The volume growth continues and we remain the global volume market share leader. U. S. Symbicort sales were down by 13% and Europe was down by 7%. However, in the emerging markets, Symbicort was up by 18%. In Japan, we saw the effect of destocking due to the transition from the promotion agreement with Astellas. Pulmicort was up by 19% with sales of $760,000,000 Emerging Markets was the driver of this growth, up 27%. Growth of Fasenra continued, now launched in 47 countries with $296,000,000 of sales in the year to date with the bulk of the sales coming from the United States, Germany and Japan. In the U. S, Fasenra is performing against new competitors with $208,000,000 in sales. Europe and Japan continue to deliver with $45,000,000 $30,000,000 in sales, respectively. We are looking forward to offering Fasenra as a self administered medicine with the auto injector device in the second half of this year. We are also excited to launch breast free AeroSphere for COPD in Japan during the second half of this year. We have also priority review in China for Process 3. Now I will move to Emerging Markets. Please turn to Slide 18. Emerging Markets continue to track ahead of our long term performance ambition, which is to grow sales on average by mid to high single digit percentage with 24% sales growth overall in the year to date. Outside China, overall sales were up by 10%. China continued to deliver a very strong performance with 35% growth with the new launches taking effect. Finally, the strong performance was spread across our main therapy areas with a quarter of oncology sales coming from the emerging markets with Tagrisso as the main contributor. New CVRM was up by 44% driven by Verlinta and Farxiga and respiratory sales were up by 30% with Pulmicort as the key driver. With this, I will hand over to Marc. Please turn to Slide 19. Thank you, Ruud, and hello, everyone. I want to take you through our financial performance in the first half and the second quarter as well as our financial priorities and our updated guidance. Please turn to Slide 20. As usual, I will begin with the reported P and L before reviewing our core performance. As Pascal mentioned earlier, product sales grew by 17% in the first half while there was minimal collaboration revenue. Other operating income of around $700,000,000 mostly came in the Q1 as part of the divestment of the rights to synergies in the United States. Please turn to Slide 21. Moving to the core P and L, our gross margin ratio improved by 1 percentage point in the half to 81%, reflecting an improving mix of sales as well as manufacturing efficiencies. Operating costs increased by 5% in the half and represented 61% of total revenue, a 6% percentage point reduction in year to year. With product sales continuing to grow ahead of operating cost, we are making a good start in improving our operating leverage and this was illustrated by a 5 percentage point improvement in our core operating profit margin in the half to 27%. The core tax rate was 21%, impacted by the geographical mix of profits and the impact of collaboration and divestment activity. In the second quarter, the tax rate was reduced to 18%. Even with a higher than average core tax rate and reduced transaction income in the half, our core earnings per share increased by 40%. Please turn to Slide 22. Turning to net debt and cash generation. Our net debt was broadly stable in the half. The share issuance of $3,500,000,000 was offset by a number of elements, including a higher than average level of purchase of intangible assets, highlighted by the 1st upfront payment in respect to stratumumab deruxtecan to Daiichi Sankyo as well as a final true up net payment of around $400,000,000 to Merck. We also paid the 2nd interim dividend in the first half of the year. We made encouraging progress in the half when looking at net cash from operations. We delivered an inflow of around $500,000,000 in the half versus an outflow of $75,000,000 last year. As we had mentioned earlier, our improvement in sales and core operating profit as compared to previous year was supported by movement in working capital and short term provisions. The reduction centered on favorable trends in both receivables and payables. This was offset by one off legal receipt in 2018 and higher tax paid in 2019. Below cash from operations, higher cash inflow from disposable of intangible asset was more than offset by higher cash outflow from the purchase of intangible assets I mentioned a moment ago. I expect the majority of the value of payments relating to prior business development to have been settled in the first half. We are making good progress. Please turn to Slide 23. We are making good progress delivering strong and sustainable sales growth, and we are fully committed to working on our operating leverage and profitability. These improvements are intended to generate more cash, which over time will be directed towards deleveraging our balance sheet while increasing the dividend at the earliest appropriate opportunity. Looking at this year, our cash from operation plus divestment income will be broadly in line with 2018. The majority of this year's outflow from legacy business development transaction took place in the first half. Even so, we made good progress in the first half with the net cash flow from operating activities of $491,000,000 versus an outflow of $75,000,000 in the first half of twenty eighteen. Looking ahead, our ambition is to fully cover the dividend with cash flows before financing activities in 2021. Please turn to Slide 24. Finally, I will turn to guidance, which is on product sales and core EPS at constant exchange rates. Partly reflecting the performance in the first half, I now expect product sales to grow by a low double digit percentage this year, even accounting for tough comparison in the second half. My previous expectation was for high single digit percentage increase. I expect a significant reduction in the sum of collaboration revenue and other operating income this year. By comparing our operating leverage with core operating profit anticipated to increase by mid teen percentage, my expectation for the core tax remain in the range of 18% to 22% in 2019. I continue therefore to anticipate growth in core EPS to $3.50 to $3.70 at constant exchange rates. Lastly, capital expenditure is still expected to be broadly stable this year and we continue to target a reduction in restructuring charges. With that, I will now hand over to Jose. Thank you, Marc. Let's move to Slide 25. So thank you, Mark, and hello, everyone. My name is Jose Baselga. I am happy to provide an update on the of the progress made in our oncology pipeline since the last quarter. Today, I am joined by my counterpart, Meny Pangalos, who will discuss our biopharmaceuticals pipeline and upcoming news flow across the business. Meny will also provide an update on progress we have made in our mid stage pipeline. Let's turn to Slide 26. Firstly, I would like to take some time to go over the exciting science we showcased at this year's ASCO 2,009 Annual Meeting. Overall, we presented 93 abstracts spanning multiple tumor types, including 12 oral presentations, a panelization and 4 late break in abstracts. We presented data from Lynparza's POLAR trial, which evaluated Lynparza use in metastatic pancreatic cancer. Results showed a statistically significant and more importantly, a clinically meaningful improvement in progression free survival for Lynparza versus placebo. More than twice, as many patients showed no disease progression, both at 1 year and 2 years intervals in theLYNPARZA arm. We have now received polo regulatory submission acceptance in the EU and plan to commence other polo regulatory submissions in the second half of this year. Also for Lynparza, we reported results for the confirmatory SOLO-three trial in third line ovarian cancer, seeing Lynparza become the 1st and only PARP inhibitor to demonstrate efficacy versus chemotherapy. The trial also met the key secondary endpoint of improvement of progression free survival, which is the time patients lived without disease worsening. We presented 3 year overall survival data for our immunotherapy medicine, Imfinzi, from the PACIFIC trial, showing durable and sustained overall survival benefit in patients with unresectable Stage III non small cell lung cancer who had not progressed following concurrent chemo relation therapy, a previous standard of care treatment. And I'm happy to report that now we have specific overall survival data included in the U. S. Label. In addition, we also presented at ASCO the results of the randomized Phase 2 study for capivasertib, which when added to Faslodex led to more than doubling of the progression free survival compared with Faslodex alone in patients with endocrine resistant estrogen receptor positive advanced breast cancer. Capivasertib has recently entered Phase III trials in breast cancer. Let's move to Slide 27, please. Now for an update on the progress of our pipeline. In terms of regulatory milestones, during the period, we saw positive results from the Phase 3 Caspian trial, which looked at infancy use for the treatment of small cell lung cancer, an area of a net medical need. The Caspian trial has a number of differentiating elements. 1st, it allows for flexibility in the type of backbone therapy administered, either carboplatin or cisplatin, which can differ by geographic region in practice. The trial is also the first to compare the role of immunotherapy with real world clinical practice, demonstrated by the allowance of 6 cycles of chemotherapy and prophylactic cranial irradiation into control arm, as well as a variety of chemotherapy regimens. We recently received orphan drug designation status in the U. S. Following the Caspian results. Full results from this trial will be presented soon at the coming medical meeting in the second half of this year. Lynparza received EU and Japanese regulatory approval for first line BRC mutated ovarian cancer. Our potential new medicine in HER2 therapy, trastuzumab derustekan, demonstrated efficacy in HER2 positive line breast cancer by meeting the primary endpoint in the Phase II trial, DESTINY BREZ-one. Regulatory submission is anticipated in this half of the year. And as a reminder, we have already received breakthrough therapy designation from the U. S. FDA. Calquence met Phase III primary endpoints in both the ASCEND and the ELEVATE TN trials, and the former was presented at the European Hematology Association earlier this year. I will talk about this more in a few seconds. The second half of the year for oncology will continue to be a very busy one. We are expecting final overall survival data for Tagrisso. And for Imfinzi, we have first line non small cell lung cancer from the Poseidon and NEDUEN trials, as well as first line head and neck data from Crestle and BRADOR data from DANU. Lynparza will be seen first line ovarian cancer data in BRCA wild type patients with the PAULA-one trial and second line metastatic castration resistant prostate cancer in the PROFOUND trial. Let us move now to Slide 28. Finally, before I hand over to Mene, I would like to focus a bit on our emerging hematology franchise. Hematology is an area of strategic focus for AstraZeneca and we were strongly encouraged by the results from 2 chronic lymphocytic leukemia trials for Calquence, both of which were stopped early at interim analysis due to overwhelming efficacy. Firstly, ASCENT showed a statistically significant and clinically meaningful improvement in progression free survival with Calquence monotherapy compared to a combination regimen of rituximab plus physician's choice of idelalisib or bendamustine for relapsed refractory CLL patients. This data was presented at this year, European's Hematology Association Congress in Amsterdam. And in the ELEVATE TN study, Calquence combined with ovenituzumab demonstrated a statistically significant and clinically meaningful improvement in progression free survival when compared with the chemotherapy based combination of cholambosil and ovinituzumab. The trial also met a key secondary endpoint, a statistically significant and clinically meaningful improvement in progression free survival was seen with concurred monotherapy compared to the chemotherapy and obinutuzumab regimen. We aim to complete regulatory submissions for both trials in the second half of this year. Finally, I would like to introduce some earlier stage hematology medicines we have. Firstly, we have ACD-five thousand nine hundred and ninety one, an MCL-one specific inhibitor currently in Phase I for relapsedrefractory malignancies. We also have ACD-four thousand five hundred and seventy three, a cyclin dependent kinase inhibitor, which also targets MCL1. And lastly, ACD-two thousand eight hundred and eleven, an Aurora B Kinase target, which we are evaluating in myelodysplastic syndrome and leukemia, and we have also seen activity with this agent in small cell lung cancer. I will now hand over to Mene to talk through progress made in biopharmaceuticals. Please turn to Slide 29, and thank you very much, Jose and hello to everyone joining us on today's call. We've also had a great first half in biopharmaceuticals across both cardiovascular, renal and metabolism and respiratory. And I'm excited to talk to you about where we have progressed so far. Starting with new CVRM and I'll start off with a reminder of our data presented for Farxiga's cardiovascular outcomes trial DECLARE at this year's American Diabetes Association Medical Meeting. Farxiga showed a 47% reduction in the composite of kidney function decline, end stage renal disease or renal death compared to placebo in a pre specified analysis. As a reminder, the Phase 3 DAPA CKD trial is due to readout just beyond 2020. The DECLARE trial also received a positive opinion from the CHMP this month and has been submitted for a label update in China. Now looking at our renal franchise starting with Leklma. We made regulatory submissions in both Japan and China with the latter granting the Kelma priority review status highlighting the great unmet need there for patients with hyperkalemia. At ERA EDTA this year, we presented data for the DIALYSE Phase 3 trial, which evaluated the efficacy and safety of the Lekalma for the treatment of hyperkalemia in patients with end stage renal disease who are on hemodialysis. In the trial, 41.2 percent of Lekoma patients maintained normal potassium levels pre dialysis compared to only 1% receiving placebo. Last in the period, we confirmed the cardiovascular safety profile of roxadustat by the pool safety analysis of trials with our partners Astellas and FibroGen. Work is now underway to prepare for the U. S. Regulatory submission in the second half of the year. Please turn to Slide 13. Now on to respiratory, where we continue to build momentum in our inhaled portfolio with Japanese approvals for 2 medicines on our AeroSphere delivery technology platform, the VESP and Breasttree, the new name for our inhaled triple combination medicine. Both are indicated for the treatment of patients with chronic obstructive pulmonary disease COPD. Biologic medicine for Senra indicates for severe asthma received positive opinion in the EU for self administration and the new auto injector presentation. We're investing in these lifecycle management activities to complement the benefits for Senra such as fast onset, its unique mode of action, strong efficacy and convenient dosing regimen. These benefits have been increasingly experienced by patients worldwide, which is illustrated in the feedback we're highlighting with a quote from the patient on the slide. Please turn to Slide 31. Now I'd like to summarize some of the key news flow items still to come across the company pipeline. The second half of the year is one of the busiest I've seen in my time here at AstraZeneca and I think it's testament to our ongoing growth trajectory. For oncology, we have major readouts upcoming as previously mentioned by Jose, such as Imfinzi's, Poseidon, Kestrel, Danube and Neptune trials and Lynparza's PAULO-one and PROfound trials. We'll be submitting POLO data for Lynparza, Destiny data, BRES-one for trastuzumabderixitam data in the U. S. And both CLL trials for Calquence before the end of the period. In CVRM, regulatory decisions for Farxiga's declared label update in the U. S. And EU are expected, as well as data readouts in the first of the heart failure trials for Farxiga, DAPR HF. Also in CVRM, Themis Brilinta's cardiovascular outcomes trial in type 2 diabetics with coronary arterial disease will be submitted for regulatory decision in the second half. In respiratory, we expect regulatory decisions in China for Bevespi for use in COPD and for Senra's self administration use in auto inject device in the U. S. All in the second half of the year. We plan to submit Symbicort mild asthma data in China and we're due to have Ethos data readout for Breast Tree in COPD by the end of the year. Please turn to Slide 32. Finally to provide an update on progress on some of our exciting new medicines in early development that will have an impact on our future news flow in the next 3 to 5 years. News this quarter as mentioned by Jose, our AKT inhibitor cabivosertib has started Phase 3 trials in breast cancer. We also have a number of additions to this slide following internal review. In CVRM, we have MEDI7,219, our new oral GLP-one agonist, which is currently in Phase 1 trials and AZD-two thousand six hundred and ninety three entering Phase 1, which will be evaluated in NASH. In respiratory disease, we have an inhaled selective glucose course good receptor modulator AZD7594, which is currently in Phase II trials. With so much activity, I'd like to thank everyone on this call for their support and thanks and to all our colleagues here at AstraZeneca, whose expertise and dedication help bring all of these new medicines to patients. And with that, I will now hand back to Pascal for his closing comments. Thank you, Mene. Please turn to Slide 34. So in summary, as a brisk start in 2019, we've continued on a very high note in the Q2. As I said earlier, sales are up 19% in the quarter, 17% year to date. We've seen a strong performance across all our business and our new medicines in particular grew by 77%, adding $2,000,000,000 in additional sales in the first half. This was driven by a number of elements. Oncology, of course, 58% up. Emerging markets as well up 24%. Japan grew by 31%. These numbers really highlight the geographical diversity of our company. Importantly, in our biopharmaceuticals business, we also saw double digit growth rate across both CV, RN, but also respiratory and very strong launch of launch uptake of our new products. Core operating costs increased by 5% as we continue to invest, but at the same time, manage our costs prudently. As a result, we have delivered operating leverage with our core operating profit growing by 44%. Our core EPS was $1.62 and the tax rate in the first half was 21%. So we've increased our sales guidance. As you heard Mark say, we now anticipate low double digit growth rate. We also anticipate a lower total of collaboration revenue and other operating income as we transition faster than expected into our organic growth. And as a result, core EPS guidance remains the same. RPAPAN importantly continued to deliver in the Q2 with a very strong set of results and we are now looking forward to a very busy second half. So we'll now go to the Q and A. And we'll also take written questions from the webcast. So let's now take the first question from the conference call, and I'll turn the microphone over to James Gordon at JPMorgan. James, go ahead please. Hello, thanks for taking the question. James Gordon from JPMorgan. Question was just about Lynparza and the upcoming Powler study results. So GSK's competing PRIMA study has reported positive top line data for all comers and HRD positive patients. But GSK haven't commented whether they've shown the benefit in HRD negative patients, which in terms of the patient numbers could be the biggest patient population. So can you just talk about for your study, are you only going to test all comers or will you also be testing HRD positive and HRD negative subpopulations? So will we actually see how the benefit breaks out? And is that an indication you pursue? And is there are there differences between the studies such as the fact that you've got Avastinib that might mean you do better in the HIV negative patients potentially? Thank you very much, James. Great question. But there are 2 parts maybe in it. And if I may, I'll ask Jose to comment from the view point of the clinical trial and what we see what we expect and what we see in the benefits of the combination with Avastin. And maybe Dave could give you some more color on the more commercial aspect of the use of those agents and as we see them in the future if, of course, Paola is positive. Jose, over to you. No, absolutely. So thank you, Pascal. So James, our study Paola, the primary endpoint is in all comers. So it's in the intention to repopulation, and this includes perspective of BRCA status. Now of course, the study is stratified by BRCA status, and we're also going to be looking at HDR positive patients as secondary endpoint. Maybe you want to comment, Dave, on the Avastin part? Yes. So in terms of Avastin, we selected Avastin to be in the control arm and part of the study, because of the hypothesis that, Lynparza alone, while remarkably beneficial for patients with the biomarker status, And we saw this in SOLO-one where the hazard ratio was 0.30, but that for patients that don't have the biomarker, that combination on top of Avastin is the right comparator because Avastin is standard of care. And I think that we can take a look and see that across the globe, over half of women in the U. S. Are treated with Avastin in combination with platinum based chemotherapy for induction. Now half of those women go on to receive it in maintenance, half of them do not get it in maintenance. So there is certainly a drop off as you move to maintenance. But then across the globe, when you look at Europe, Japan, 40% to 60% of women are treated with Avastin in this frontline setting and induction, and almost all of them continue on to receive Avastin in the maintenance setting. So clearly Avastin is a well established standard of care here. And I think that the point that Jose was getting at, we'll see the data that come out of Paola. And I think that if the data that come out of Paola suggests that there's a benefit of adding Lynparza on to an Avastin backbone in the maintenance setting, that, that risk benefit is one that we will have every opportunity to bring to physicians. And there's enough behavior and comfort with Avastin that exists across the globe that I don't see that as a difficult barrier to adoption. Thanks, Dave. I think, James, it was important to remember, if I may add a couple of comments, is that ovarian cancer is a terrible disease and efficacy has to be the driving factor here. We do believe there is a synergy combining Lynparza and Avastin. Of course, we are running the experiment, the clinical experiment to demonstrate that. But if indeed our hypothesis is correct and there is a synergy, the efficacy in the first line all comers will be the overwhelming clinical factor here in term of prescribing because you really have to prioritize efficacy here. And as Dave said, 50% of patients receive Avast in the U. S, up to 60% in Europe. Physicians are quite well used to using Avastin and they will happily combine it with Lynparza if indeed paralyzed positive. So should we move to Andrew Baum at Citi? Thank you. A couple of questions. Firstly, what do you see the risk to Tagrisso and Nipasa Medicare Part D revenues in light of the recent Senate Finance Bill? And do you expect support for the bill in Washington? That's 1. 2nd, you've been very thoughtful in how you think about take forward strategies to address Tagrisso resistant. There was some intriguing PARP data suggesting it may overcome EGFR resistance. I was wondering whether this would precipitate any clinical trial program? And then finally, on Lynparza in China, how competitive do you think you can be with Olaparib given that you've got a domestic company marketing Zejula, will the home advantages that, that may bring in terms of access? Many thanks. Thank you, Andrew, and thank you very much for remembering the one question per person. But we'll give you those 3 questions. So I will ask Dave maybe Tagrisso, Pardee, do you want to cover this one, Dave? And also, I think maybe Lynparza China and then Leon, who is there with us, give some additional color on LYNPARZA in China. And then Jose could cover the Tagrisso resistance and the PARP combination question. Yes, absolutely. So Andrew, on maybe let me start with the second part of your Part D question in terms of do we expect support in Washington. State of play is that this is still early days. I'm sure that there's quite a bit of road in front of us before what is getting marked up today in or now in 1 of the in the Senate, then then it's going to have to go through the House and then they'll have to bring those two things together. So there's quite a lot of state of play here for us to be able to make a prediction on whether it'll get supported or not. On your specific question, Part D mix for both Tagrisso and Lynparza is 25% to 30% of our U. S. Business. And so if you put that in the broader context of the whole portfolio, for Tagrisso, U. S. Represents 40% of total sales, Lynparza represents 50% of total sales. In both of those instances, I would expect that the U. S. Percentage of total sales to frankly, actually, certainly with Tagrisso, U. S. As a percent will decline slowly as we've achieved, I think, a pretty high level of saturation in terms of the frontline opportunity, but many other markets coming on board. And I think that back to the question that James asked, we'll sort of see how Paola plays out before we'll know where the Lynparza trajectory goes. Staying on Lynparza, in terms of within China, I mean, I think that one of the major advantages that we've got within China is that we are the 1st PARP into the marketplace. We certainly also have been working very diligently in a lot of the market shaping activities and building up our presence that's there. We've been leveraging the presence that we've had of field forces that have been calling on physicians that are treating women's cancers from a lot of the work that we've been doing on the breast cancer space with some of our more mature brands. And that's something that we see as a real strength that carries us to be competitive within China. I think Leon, with that though, I'll turn it to you if there's things that you'd want to add. Leon, if you want to add, I mean, Andrew, just for you, a little bit of a challenge here to beat the local competition. I know you like challenges, so please go ahead. Yes. I think Lynparza in China, we launched in a self pay with patient support program a year ago. So I think achieved quite good success together with co promotion with MST. So I think this is first thing. And second is AstraZeneca and MSD are both very strong oncology company now in China. So with very strong presence in China and commercial ranking wise, AstraZeneca is the number 2, number 3 oncology company in China. So we have a strong base. And thirdly, the NRDL national reimbursement, I think we qualify for this round of NIDL negotiation, which is going to happen in September, October. So with the SOLO II second line indication, so I think we will be ahead in market access, hospital listing, provincial tendering. So I think in many aspects that which is quite important in China. And on top of all these, we have very good coverage of breast cancer. We are only number 2 to Roche in China and prostate cancer we have quite leading position in China. So these future indications, AstraZeneca already have a very strong base and other products already exist in the market. So we'll be quite a formidable power in these current and future indications. Carry on. Jose? Yes. So Andrew, to the question of how are we addressing Tagrisso resistance, we are both familiar with Tagrisso and PARP inhibitors that has been published in some high peer, high review, high sorry, high impact factor journals of the cell group. So this data is quite interesting. What I can tell you is that we have a quite comprehensive number of studies addressing Tagrisso resistance. As you know, we have these platforms called Orchard and Tatum, and we are combining Tagrisso with MET inhibitors, Tagrisso with Imfinzi and many other arms. And these trials have the advantage that they're very dynamic, so we cannot and subtract anything that we like. So we are following this very carefully. And then also, I'd like to call your attention, perhaps one of the most well identified mechanisms of resistance acquire resistance to Tagrisso is MET amplification. And we have the SABANA study in which we are combining Tagrisso plus savolitinib, which is quite hopeful based on the data that you saw at the AACR. So I do think we have a comprehensive approach to tareso resistance and we are confident that we'll make progress there. Thank you, Dave. Shymos Fernandez at Guggenheim. Shymos, go ahead. Thanks very much for the question. So just a couple here. I did want to follow-up on some of Andrew's questions around Part D and the impacts there relative to frankly the overall portfolio. Can you guys maybe just give us a general sense? It looks like there's an assumption in the market that high cost drugs would take quite a hit. But AstraZeneca, I think, published a comment on the Ways and Means website that specifically cites the decline in utilization with high co pays. Just hoping you guys could put that into context in terms of what happens with volume because of that. And then separately, as we look at the Fasenra growth and the prospects for Fasenra going forward, it looks like you guys are almost caught up to your 1st major competitor, but just hoping to get a better understanding of how you feel Fasenra is positioned going forward relative to the growth of Dupixent? Thanks so much. Thanks, Seamus. So I think I'll just make a couple of comments and hand over to Ruud to comment generally on partly changes in the U. S. Marketplace, but also on Fasenra because I think he probably loves your comments about catching up to the competition. Just to remind you what Dave said a minute ago in terms of the so called expensive more expensive products. I mean, in our case, you would think Tagrisso and Imparza, 25% to 30% of our sales in the U. S. Are in Part D. So that's the part of the sales we are talking about that are potentially impacted. I think overall, it's still too early to judge what the impact will be. Certainly, there is a negative impact that could come from those changes. But on the other hand, we also help a lot of patients with free goods. And if patients are helped by an out of pocket cap, that certainly will be a big relief to many of those patients who have to cover large co pays today for expensive medicines. So we should get some upside there in terms of the ability of patients to access and stay on their medicine, less fewer patients to help and possibly certainly more persistence. But it's really too early because the discussions are still ongoing as to what the final outcome of this out of pocket cap and also the financing would look like. So still a little bit of discussions on to happen in Washington before we can really give a clear answer. Rod, do you want to cover the two questions? Yes. So absolutely, Pascal, and I will not reiterate the words you were saying. So specifically about Part D, it's a little bit too early to comment on that. Clearly, we have a very diversified portfolio, both in Part D and Part B, So that's one. So we believe that we are relatively, relatively okay and that we can mitigate against any single policy. Having said that, of course, it's concerning. Equally, there are a couple of elements, which we are supporting as a company regarding the bill or the cap of the out of pocket cost. Clearly, the increased use of biosimilars, I think, is an important way to create headroom for new innovative medicines. And finally, we are very supportive of all policies related to more transparency to patients regarding affordability and costs. So it's a bit of a mixed bag. But once again, I can only echo the words of Pascal that's a little bit too early in order to make bold statements regarding the financial impact. Regarding Fasenra, we keep saying that we are very pleased with the performance overall, almost $300,000,000 of sales in the first half year, primarily coming from 3 countries, the United States, Germany and Japan. Clearly shows that there's an enormous potential also in the rest of the world, including, of course, the other major European markets. I think the success of Fasenra so far is threefold. First of all, I think the product features, Menno was alluding to that, are very strong. The product is working fast. The efficacy is very strong. And it also clearly has a convenience advantage versus the competition, whether it is Dupixent or Nucala. On top of that, we have a very extensive life cycle management program in place, which is very, let's say, hopeful moving forward. And we clearly believe that the products will be very soon the standard of care certainly in the NTR-five class, but I think in a broader way in the total biological space for patients with severe and controlled asthma. So, so far, very positive feedback from physicians and patients about the use of and the impact of Fasenra. Raul. The only thing maybe I would add is that we've almost caught up, as you said, Seamus, in terms of total scripts. But we are a leader in new initiations, in new scripts in those countries, in most of those countries where we've launched in CELENY in the U. S. Those products tend to be life transforming for patients who have severe asthma and the compliance, the persistence is pretty good actually. So you have a long effect of the total number of prescriptions keeps growing over time because patients like those products and they stay on treatment. But in terms of new patients, new prescriptions, we are now in a leadership position. So let's move to the next question that is online from Marietta Miemits at Prima Venio. And the question relates to the emerging market growth, where we said it fluctuates. And the question is, are there any positive one offs in Q2 that you don't expect to recur in second half? Where do we see that we normalize growth in the emerging market in China? So I'll ask Leon to cover this. I'll just say that there was I mean, no real I mean, there was no one off in Q2. In fact, Q2 was negatively impacted by divestments outside of China. So we would have had an even higher growth rate in emerging markets outside of China without those divestment that took place of older products. But suddenly, Leon, you want to talk about moving forward, what should we expect, especially in China? Yes. I think just to echo Pascal's comment, I think divestment outside China impact outside China growth is supposed to be even bigger. So these negative impact of divestment will gradually disappear in quarter 3 quarter 4. So within China, there are positive things still and also outside China ongoing is the expansion retail pharmacy and also the GP selling multiple products, Crestor, Brilinta and Forsika. And also we have new launch continue because the waves of new launches, new products. So we are unlike U. S. And Europe launch new products quite simultaneously, but emerging market we are launching countries 1 by 1, what a country line behind. So it's a sustained release of new product launches. And also we are facing under treated, under diagnosed and also not properly compliant patients in the emerging markets. So these are the positive things I think will continue. But within China, we do not expect it will continue to grow like this speed. I think it will still be double digit growth, but there could be tendering expansion outside the 4+7 cities and also patent expiry of major products like Brilinta is also coming in China. So there could be some negative, but also we are facing NRDL application of Forsygga and NRDL application of robsa and Lynparza. These are major inclusion, which we expected around the end of the year. There could be some price cuts in the quarter 4, which impact quarter 4 growth a bit, but it will definitely positively impact 2020 business. So it's a mixture of positives and negatives and I think continued double digit growth will definitely happen in emerging market in China. Thank you, Leon. Louisa Hector at Exane. Louisa, go ahead. Hi, thank you for taking my questions. Maybe to touch on the cost lines. So R and D, SG and A growing in line with how you've guided. So in constant currency terms, R and D plus 2% in the first half, SG and A plus 7%. So I'm not trying to prompt any particular guidance into 2020, but just if we think about those two cost lines, is that trend likely to continue into 2020? Or could we see a sort of switch away from the investment in SG and A towards the R and D, whether that would be a 2020 time frame or beyond? And then perhaps I could ask on Imfinzi in the U. S. You've talked about a kind of market penetration there being fairly full. So just to check-in the Stage 3, is that because you literally are tapping in all patients, you're not seeing KEYTRUDA have an impact taking share away from you? And then as Caspian comes online, just any more color on the timing of the filing there? And whether you might expect some early off label use in the U. S, please? Thank you. Thank you, Louisa. Marc, do you want to cover the cost question? And Dave, maybe you could cover the Imfinzi U. S. Question? Sure. So first of all, Luisa, thank you for the question. The progression of operating expenses, as you have quoted, R and D plus 2% for the first half and SG and A plus 7%. So I'm not going to provide any guidance for 2020 today. But I want this to put this in perspective of what we are trying to achieve. I mean, what we are trying to achieve is to gain a margin expansion and to gain operating leverage. So we look at the progression of expenses by comparing the sales growth that we are achieving. So this is for us the most important part for 2019, but this same approach will continue in 2020. We continue obviously across the whole company to look for productivity initiative, and we try to have the highest possible cost discipline to achieve this operating leverage over 'nineteen, over 'twenty and also 2021. Thank you, Mark. Dave? Great. So starting first, Louisa, on your question around Imfinzi in the U. S. I think one of the things that you certainly saw in the slides that I presented and one of the things that I wanted to point out was that we do continue to see U. S. Patient infusions increasing. So I'd think about that as the same as a TRx. And so we do see growth in that. It's just that the growth sequentially that's coming from it is slowing relative to what I would say was a fairly torrid pace that was happening in the second half of last year and frankly throughout all of last year. In terms of where we see that growth coming from, we have seen a steady increase in the United States from about 50% at the beginning of 2018 to about 2 thirds of patients now getting CRT in this Stage III setting. So we have seen some growth in the use of CRT. I think importantly, on the second part of your question, we've also seen that when patients get systemic therapy post CRT and about half of them get that, that now nearly 100% of the patients getting systemic therapy are getting an I O therapy. And we now see also that really much more than the majority, we're nearing kind of 90% of those patients are getting Imfinzi if they're getting an IO. So on your specific question in terms of do we see off label use from other IO agents, we do, but I would say that it's an absolute minority, and we've seen some strength within that number. And as I mentioned in the comments, we're really looking forward to launching outside of the United States where we continue to see opportunity for growth. In terms of on Caspian, we're working as quickly as possible on making sure that we prepare that filing and speaking with health authorities and we'll move to get that into discussions with FDA as fast as we can. I guess what I would comment on is that we know that there is an incredibly high unmet need in small cell lung cancer. It's got 6% 5 year survival rates. It's about 15% of all lung cancers that are diagnosed. And usually areas of high unmet need move with some pace, but we have to obviously have those discussions. Thank you, Dave. There's a question from Tim Anderson at Wolfe Research. Tim, do you want to go ahead? Thank you. A question on Tagrisso and the overall survival data that's coming. And just the riskiness that you don't hit overall survival because there will likely be crossover. So it seems like the risk of not hitting it is not inconsequential. And my question on that is, how are you thinking about that? And then how does that tie into reimbursement and coverage in certain ex U. S. Markets where often overall survival is required? So for example, in China to get first line NRDL, do you have to hit overall survival? 2nd question is on POSEIDON and NEPTUNE from the news yesterday from Bristol on CheckMate 227 showing that PD-one and the CTLA-four works in first line lung. This would seem to raise the odds of success for your two trials that were put out in the back half of this year. How do you view your two trials? Are they super high risk that may not lead to much? Are you more encouraged now? I know investors generally have low expectations on those. Thank you, Tim. So the first I propose we do the following. The first question is multidimensional. So let's focus on that one and then we move to the next question. So the first question on Tagrisso, there's a clinical aspect that Jose, you want to cover or maybe Dave, do you want to cover that? And also then take advantage of that to cover also the reimbursement aspect. And then we'll ask Leon to talk about the China part. Great. So I think that the first part that I would say, so question, how risky is not hitting overall survival in the context of crossover? I mean, you start first with the PFS data. So you certainly know that in the frontline setting, PFS medians of 18.9 months versus 10 months suggests that you've gotten a pretty good head start on Tagrisso. You're right, the crossover is certainly something that could come into play. I'd also note though that the emergence of the T790M resistance may be beneficial for some patients in terms of crossover, but not for others that are negative. We don't really know on that. I mean, I just would also note that this is an event driven study as they all are. I think the events have taken some time. I generally see that as a positive thing for studies in terms of event rates, but we'll see when we see the data. From a marketplace perspective, there's no question that positive overall survival data is beneficial to us in our discussions with payers. As you have conversations in HTA markets, as you have conversations like you alluded to, with China having overall survival data is something that we if we're positive, we'll quickly get into the hands of payers and health authorities, and we would expect that to be an important catalyst for us. And so we'd have to also accept that if we didn't have it, that that would be a headwind that we would have to face. So I think that it is something that's important in the markets that we haven't yet gotten reimbursement for with Tagrisso. Thanks, Dave. Leon, anything do you want to add on the China part in RBL listing? Yes. I think in China, we are still waiting for the indication approval for FLORA first line indication, which is expected anytime in quarter 3. And we might miss this round of NRDL and I think we are expecting to apply for NRDL sometime later next year. So a good OS data will definitely help our reimbursement and price negotiation with the payer. Good. Jose, do you want to cover the IOI question and if there is any more color you want to add to the clinical aspect of the Tagris. So OAS data, please do so at the same time. Yes. No, thank you very much. I think the Tagrisso was well covered by Dave. On the IO question IO question, I think the data from the CM-two twenty seven study, this data is complex. I think we need to look at it in its full detail before we can make an assessment. These what we are learning, I think, and I think it's fair to say, what we're learning is that these immuno oncology studies have a degree of inconsistency that is palpable. So I do think that while what has been reported is hopeful for Neptun, we just need to wait. And I think that's our approach. These studies are fully enrolled. They will deliver results in the second half of this year. So we are just hopeful, but we'll need to wait until we get the outcome. Thanks, Jose. I mean, as Jose said, we've seen variability from one study to another and then sometimes the crossover plays a role, sometimes all the aspects. So it's really prudent to wait until we see the data with all of those things. So there is a question from Sachin Jain of Bank of America. Sachin, go ahead. Sachin Jain of Bank of America. Thanks for my questions. Firstly, Pascal, some comments on the wires that you're open to deals where they can add value. I wonder if you just clarify how you're thinking about that from a size of deal and financing perspective? Secondly, for Mene, on roxa, FibroGen had indicated they would be meeting with the FDA in July. I wonder if that meeting has happened and whether you have any agreement on the statistical plans going forward, particularly the confidence intervals for non inferiority and how to analyze dropouts in the non dialysis? And then one for Jose, just on DS-eight thousand two hundred and one. There's been a bit of discussion about DESTINY-four in LoHER2 potentially being next year. It's not listed on your 2020 news flow. Just so just any updates as to when you expect that data? Thank you. Thanks, Sachin. So yes, I mean, you're going to cover the Roxas question. As far as the deals, I think what is important to add, Sachin, is that mentioned to people that our focus is on delivering our own pipeline. You've seen the amount of work that is ongoing, the amount of news that has been delivered in the 1st 6 months, the amount of news flow coming in front of us. So our focus is delivering this pipeline, launching those products, improving our operating margin and improving our cash flow. So that's number one focus. But the other thing I said is sort of stating the obvious, which is we of course would consider any addition to any asset that could be strategically sound for us to acquire at the right price. And if we can add value, just like we've done with the Daiichi Sankyo partnership, we felt we could add value. We partner well with Daiichi Sankyo. We have a global presence and we think we can add value to this asset working collaboratively with them. But clearly, our priority remains our own pipeline and improving our operating margin, our cash flow over the next period of time. That's really the top priority. Mene, do you want to cover the roxa question? Yes, very brief. I mean, again, just for context, FibroGen made an announcement in one of their IR calls about having a pre NDA meeting with the FDA at the end of July. As you know, we don't normally comment on meetings such as that. I think what it highlights is that we're very much on track for filing in the second half of the year. In terms of the specifics of how we handle, for example, dropouts relative to placebo in the non DAS Phenom. Obviously, we have a plan which we're confident about. We'll be talking about that with the regulators, but we're not going to go into details about that until we've had those conversations. Thanks, Mene. The one thing I should have added, by the way, to the previous question is that it's very low probability that we would do something new. Again, we're focusing on our own knitting, if I may say so. And then the Daiichi Sankyo, as we've told you before, was a unique opportunity, a unique asset, and it's sort of a good bridge to your last question. Jose can tell us a little bit more about the S and the program. Yes, thank you very much. So the program is going well. And in particular to your question about the low HER2 expressing breast cancer study, the DESTINY-four, the study is enrolling. This is an event driven study. So we cannot comment on when precisely this study will roll out. It's going to be at some point 2020 plus but I think that we just need to wait for the events to occur. So I don't think we can be precise on when these data will come out. Thank you. Thanks, Jose. So there's a question coming from Matt Weston at Credit Suisse. Matt, over to you. Thank you very much. Two questions, if I can, please. The first, a follow on to Tim's on Poseidon. One thing that we've seen from CheckMate 227 is quite significant differences in the squamous and non squamous elements of that trial. KEYTRUDA separated those into 2 studies, but POSEIDON, I think, is like 227 and has them mixed. What I wanted to ask is what flexibility you have ahead of trial readout around the endpoints and whether there's anything you can do to focus primary endpoints solely on one element of the data or whether or not it will always be an all comers non small cell lung cancer study? And then secondly, just coming back to the commentary around raised revenue guidance and not raising core EPS guidance. I fully understand less externalization and other operating income coming in 2019. I guess the question is that, is that a formal deemphasizing of externalization as a strategic goal as you move to a more normalized P and L? Or is it just timing issues that mean that in 2019, you feel there are not assets ready for disposal or partnering? Thanks, Matt. So maybe, Jose, you could cover the first question and the second, I'll say a few words and Marc, you could also help me there. Jose, do you want to cover the PROCEDEN question? Yes, absolutely. So again, I think that you need to just look at one data set, such as the one from the BMS study in the overall context. So that study, again, we need to take a look at the data in careful detail. There are many details that are unknown. As Pascal mentioned just a few minutes ago, in that study, for example, if you look at the control arm, the control arm performs differently than in the prior studies. It has an overall survival that is close to 16 months. This is a marked difference, for example, to the PEMPRO studies that had overall survival in of 11 months. And then also, again, although this study shows a difference in the squamous population, I could also put forward to you that the sample size is quite small. And this is inconsistent in some degree with the pembro data in which the benefit was in both. So the study will read out and we'll find out. Our study is in all comers and we are planning to keep it we are not planning to change at this point, this primary endpoint. Thanks, Jose. So the second question, Matt, on a strategy from a strategy perspective, nothing has changed. We will continue to do 2 things. 1 is partner assets that come out of R and D, but we're not the best company to commercialize them and we partner those. And the second is to continue focusing our portfolio and divesting products that don't fit. But of course, as we always said, there's less of those. We always said there will be a bullish and over time, the amount of upfront milestones will decline and then will be replaced by a certain amount of recurring revenue and profit. And we could never say how much because it depends on how well those new those products do with our partners. Marc, anything you want to add to this? I think we have for quite some time distinguished in our P and L the collaboration revenues used to be known as external revenues, which are the most sustainable part. So this will continue in the future also. On the other income, they are we always said that every quarter is different and then this is a variable part. Is it normalizing? For sure, as Pascal says, we have indicated to a constant trend of reduction in 2019 versus 2018, 2018 versus 2017. So this trend is likely to this trend of reduction is likely to continue in 2020 for the disposal of the disposal of the other income. However, the Colabor revenue should obviously follow the progression of the alliances that we have already signed. Thanks, Max. For those who were a little bit worried about our underlying organic growth, if you want to call it this way, this result should be reassuring. I mean, we are able to transition suddenly faster than many would have thought to an organic growth and really driven by top line sales of new products in Paracola, but also emerging markets. So I think a really good demonstration that our strategy is working and we are delivering what we said we would do and we're transitioning to organic growth now. So we'll take maybe the last question from Thibault Busser at Morgan Stanley. Thibault, go ahead. Thank you for taking my question. So it's on the 4 plus 7 pilot tender scheme in China. Just wondering if you could help us to understand the impact we should anticipate as it spreads nationally on current exposure drugs like Crestor? And also on potential future targets such as Faslodex, potentially Tropper XL and Nexium. Should we assume that a product like Pulmicore will remain protected? And then just a follow-up on this, if we look at the split of your current China business between kind of legacy exposed products versus new products, it seems to us that the ratio is maybe 40% to 16% 2018. And how should we expect this split to be in 2 or 3 years' time? Thanks, Thibault. So a number of questions for you, Leon. So maybe the first one is 4+7 and whether it will spread nationally and also potential impact on other products like Topol and Faslodex is sort of one question. I think the other question was new versus older and at what speed do we expect the shift to new products to happen in China? Yes, I think 4+7 tender is something we are closely watching. I think first plus 7 is 11 cities. So geographically, the first round of 4 plus 7, we have 2 products, Erito, we won the tender and Crestor, we lose the tender, both get the price cut. And this price cut already reflected in the first half, especially Q2 of business. But it's only in 4 plus 7, 11 city, and it will roll out across China, but how far it can reach, we don't know yet of the expansion. And the 2nd round of this tender will happen next year. So, so far we are expecting the solid tablet form of the drug will be highly likelihood to be included into the next round of 4+7. But injectable and nebulized and inhalation products will be less likely among the legacy products. At the same time, we have newly included reimbursement products like Tagrisso and we're applying for Lynparza, Forsiga and Brilinta was included last year. So we are still continue growing these newly reimbursable products to access more patients. So like I said, nebulized products and also inhalation products, Promicort, Symbicort and we will also newly launch triple combo and also bovesti dual combo. So I think we will be able to grow these products relatively faster because we have strength in Respiratory in China and also we have strength in oncology in China. So SOLIDEX and Fosidax are injectable and quite difficult to copy. So we foresee these 2 injectable oncology products will still play a very, very important role and will continue to grow. So as I said in the other question, I think China is seriously under diagnosed, under treated and also not compliantly follow-up. So I think we have a huge room to in geographic expansion to continue. So I expect new products will of course grow much faster, but legacy products will remain to be important and still grow. That is not double digit, I think high single digit, but new products will definitely increase percentage. So I expect that within next 2 to 3 years and half of our sales will come from new products and majority of the growth will be coming from new products. Thank you, Ian. So this was the last question. Thank you so much for your interest and your great questions. Just as a conclusion, I think I'd just like to remind everybody on very strong sales growth in quarter 2, 19%, 17% year to date. And that growth is multi is coming from multi source. Multi sources, we have growth coming out of oncology, of course, 58%, dollars 4,000,000,000 in the first half, growth coming out of the emerging markets that are up 24%, Japan 31% up. We have our Pharmaceuticals division growing by double digit. So you can see that we are really broad based, both from a portfolio viewpoint, but also from a geographical viewpoint. And that has always been a core part of our strategy. So first of all, we address the needs of patients around the world, not the needs of some patients in some countries, but also so we establish a resilient business moving forward. And there's always ups and downs in the world. Some countries are doing better than others. Some products will do better than others. But overall, our broad base will help us manage these ups and downs and continue growing over the next few years. We are focused on driving this top line and then making sure this turns into an operating margin improvement. Our profit was up 44%. Our EPS was 1.62 dollars Still have a lot of work to do to deliver on our ambition over the next few months, but importantly over the next few years. But as you can see, we are very much on track and very happy with the progress we've made. The guidance, we improved it for sales. You heard why we didn't change it for EPS. We suddenly are transitioning to an organic growth faster than many people expected, which really is, we believe, good news. And finally, but importantly, the pipeline continue to deliver and we are very much looking forward to a very busy second half of twenty nineteen. So again, thank you for your interest and look forward to further discussions in the months ahead. Thank you. Bye bye.