Earnings Call: Q1 2019

Apr 26, 2019

Good morning and good afternoon. Welcome, ladies and gentlemen, to AstraZeneca's Q1 2019 Results Conference Call and Webcast for Investors and Analysts. Before I hand over the call to Pascal Sordio at 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. By their very nature, forward looking statements involve risk and uncertainty, and results may differ materially from those expressed or implied by these forward looking statements. The company undertakes no obligation to update forward looking statements. We will now hand you over to AstraZeneca, where the call is about to start. Hello, everyone. It's Pascal Soria here. Welcome to the Q1 2019 conference call and our webcast for investors and analysts. We're in London today for the Annual General Meeting that will take place this afternoon. The presentation, as always, is available on astrazeneca.com, and we've 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 reporting numbers and at constant exchange rates, EIA, 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 Q1 of 2019 unless we state otherwise. Please turn to Slide 3. We plan to spend a good half hour on the presentation and then go to Q and A. For those on the phone, please get in the queue by pressing star 1. As we would like to provide everyone with an opportunity to ask questions, please try to limit yourself to one question per person in the first round. Thank you so much for your help with this. And today, I'm joined by Fredericksen, our EVP for Oncology Ruud Dobber, EVP for Biopharmaceuticals Marj Denoyer, our CFO Mene Pangalos, who is our EVP for R&D Biopharmaceuticals and Jose Baselga, our EVP for R&D Oncology. We're also very pleased to have Suzanne Galbraith with us today. And Susan, as you know, is our SVP of R and D Oncology. She will join us for the Q and A. Please turn to Slide 4. This is the agenda. We plan to cover all key aspects of our results today. So if we move to Slide 5. In March 2013, we launched a new strategy for AstraZeneca where we outlined plan for achieving scientific leadership, returning the company to growth and being a great place to work for all our colleagues around the world. We have more than 60,000 colleagues working for our company. In the meantime, we have rebuilt the pipeline and returned to sales growth. If you turn to Slide 6, with the progress that we've made, we recently updated our 3 strategic objectives and they remain consistent with our previous priorities. But of course, they reflect our new focus for the next few years. And number 1, it is to deliver the growth that we have created with the new products we are launching and to deliver our our ambition to be a TA leader in each of the therapy area where we focus. 2nd, priority is to accelerate innovative science by moving some of our mid stage pipeline to late stage as fast as we can, and we are prioritizing some of our projects to do that. And the third is to be a great place to work, and that is really fundamental to our future success, we believe. So our efforts will not only continue more readable to build an even greater place to work. On the science side, our focus is now on accelerating the science we've built to the benefit of patients. 1st and foremost, AstraZeneca is a company focused on innovation. We're focused on prescription medicines and the medicine that brings true value and innovation to patient society. We're well diversified with lower presence and scale. And it's an important message for you is we have a geographical diversification and also we don't rely on one therapy area. We have 3 therapy area in both primary care and specialty care. This takes me into growth and therapy area leadership, which we updated to reflect our recent return to growth and to signal our clear ambition to create a company with sustainable sales growth. We've now started to focus on the next wave of growth, sales growth towards the middle of 2020. Please also let me emphasize that growth also covers earnings and cash flow. We continue to expect growth in earnings this year and the years to come and our cash flow improvement in 2020. I want to emphasize here that we are very much on track with what we said and to return to cash flow by 2020 that delivers on our goals and enables us to start reducing debt by 2021 and beyond. We look forward Marc will cover those financials a bit later. And we look forward to keeping our shareholders and the analysts updated on the continuation of our strategic journey. We're really pleased to share that our Q1 2019 results clearly demonstrate that we're more than on the right track. So if you turn to Slide 7. Essentially, if I summarize our quarter, our sales grew by 14% in the quarter. In fact, I would add that if you normalize for the impact of divestments, you know, we've divested a number of medicines, our growth rate would have been 21%. And that reflects really the outstanding underlying growth and momentum in our business. We had strong performance with new medicines increasing by 83% and adding more than $900,000,000 in incremental sales. So we almost increased sales by $1,000,000,000 out of new products this quarter, very strong growth. Oncology grew by 59%, but it was a very broad set of growth rates, not only oncology. New CVRM, diabetes Brilinta grew by 19% and respiratory grew double digit by 14%. And that growth in respiratory was driven by Fasenra and Pulmicort. As we discussed before, AstraZeneca is well diversified across 3 main areas and also for global presence in emerging markets. So that brings me to our performance in the emerging markets. Sales there grew by 22 This is a historical growth rate for us, first time we achieved such a high number. And it was not only in China, 28% growth there, but also we had strong growth right across all emerging markets. And collectively, they grew by 13% outside of China. Total revenue grew by 11% despite very limited collaboration revenue. Our core operating costs increased by 5%, and as a result, we saw a strong operating leverage as we promised last quarter we would deliver. Core operating profit jumped by 96%. Despite a higher tax rate, our core EPS doubled to $0.89 Our guidance remains unchanged this year as we are early in the year. Outside the financials, the pipeline continues to progress and we anticipate a very prolific news flow in the second half of the year. Finally, our focus on sustainable sales growth was strengthened through the agreement with Daiichi Sankyo regarding the collaboration on trastuzumab, Deroxetan. Please turn to Slide 8. If you look at the pipeline, we continue to make good progress and that remains central to sustaining sales growth over the mid- to long term. There were a number of highlights in oncology, including their regulatory approval for Lynparza in breast cancer in the EU and the regulatory submission in China for the same indication. Lynparza obtained positive Phase III data in pancreatic cancer, a new cancer tab for Lynparza. Telimitinib got breakthrough therapy designation for NF1, a rare disease. In biopharma, Farxiga obtained the 1st approval for type 1 diabetes in Japan and in the EU. And we also saw the DECLARE CV Outcomes trial data accepted by regulators in the U. S. And in the EU. Brilinta met the primary endpoint in the THEMIS Phase III trial in type 2 diabetes patients with coronary heart failure disease. In COPD, our partner received approval in the U. S. For DRAKLEA. On the list, we also got regulatory submission acceptance in the U. S. And the EU for PT010, a second trial resolved later this year. Finally, saracatinib, which was repositioned from cancer into IPF, obtained orphan drug designation in the U. S. Mene and Jose will cover more R and D details later on. If you turn to Slide 9. The Q1 with 14% growth was the 3rd consecutive quarter of strong sales growth since the bottom cliff. So we clearly have put the period of patent expiries behind us. We promised a return to sales growth in 2018. We delivered. We're now on the next journey of sustained sales growth in 2019 and beyond. As we move through 2019, the comparisons will get tougher in the second half of the year, but our sales guidance remains strong at high single digit growth. And it remains tougher because, of course, the oncology business in particular is becoming bigger, so that impacts the growth rates. But also, we want to flag that we expect China to still continue growing at a fast clip, but not as fast as we have experienced lately because we will start being impacted as other companies by the changes in the marketplace. Our new medicines continued to make a significant contribution to growth, this time increasing by 83%. Overall, the biggest contributor remained Tagrisso, which is now our largest selling medicine. Imfinzi and Lynparza also did well and added significant sales. Fasenra, Brilinta, Farxiga drove strong double digit sales growth in biopharmaceuticals. Together, the new medicines added more than $900,000,000 of incremental sales in the Q1 of 2019. So if you look at Slide 10 and our main therapy areas and if you look at the emerging market, the well diversified nature of our company becomes much more visible. We're more diversified than in the past, and we are more diversified than our peers. Oncology is approaching $2,000,000,000 per quarter and it grew by 59% in the quarter. It's now more than onethree of our total sales. CVRM, new CVRM with diabetes and Brilinta grew by 19% to more than $1,000,000,000 and represents about 1 5th of our total sales. Respiratory grew by 14% to now around 1 quarter of our total sales. And finally, other medicines declined by 21% as expected. And importantly, here, you see the reflection of the final impact of final expiries, but also as I earlier, the impact of divestments, which is a big part of this decline here. But importantly, you can see these other medicines are now representing less than onefour of the total sales. And I would add to this that if you look at other medicines outside the emerging market, these are really now representing a small portion of our total sales and other medicines in the emerging market continue to grow. Our geographical diversification is important for the future of our company. The emerging market broke the $2,000,000,000 mark, 22% with more than $1,000,000,000 in China for the quarter and a growth of 28%. So it's really pleasing. 22% is a historical growth rate for us, and we have many opportunities to help patients in China and many countries around the world. It's not on the slide, but I want to make a note of our fantastic performance in Japan. Our team there did a really great job, and Asia Japan grew by 27% in the quarter. So I would like to offer my thanks to our Japanese colleagues who have worked very hard to return AZI Japan to growth and are bringing important medicines like Tagrisso, Imfinzi, Lynparza and Fasenra to more patients. If we turn to Slide 11. Very recently, late March, we announced the collaboration with Daiichi Sankyo on trastuzumab deruxtecan, an innovative antibody drug conjugate or armed antibody. With the addition of this new medicine, we added a 5th pillar to our oncology strategy. We already have leading medicines for lung cancer with Tagrisso and Imfinzi. We have Lynparza in ovarian cancer, but also across multiple cancer types, and we have Calquence for blood cancer. And breast cancer has always been an important priority for us, and this new agent will help us build a strong presence in breast cancer, but also outside of breast. We have been a pioneer in breast cancer with Novadex, Arimidex, but also now with Faslodex and Lynparza. And so this new agent will also expand will help us expand our presence in precision medicine that follows the success with Sangristo and Niparza. And importantly, we have a strong knowledge referred to among many people in the company that have operated in the field, either in development or in the commercial field, and it's an important aspect of our collaboration with our colleagues at the HE Center. We lack the long dated nature of the medicine, and therefore, we were also prepared in this exceptional case to use long dated financing in the form of an equity insurance to bring the medicine in. But I also want to add that the equity issuance is a unique event, of course, but it reflects the uniqueness of the asset. And I think people will learn to discover the potential of this medicine. We believe as we progress and produce more data, it will become very apparent to everybody that this is a transformative agent that has enormous potential. We look forward to keeping you updated on further progress with our oncology strategy, and I will hand over now to Dave for a review of the latest oncology performance. So please turn to Slide 12. Great. Thank you so much, Pascal. And I think it's a nice segue to bridge from a conversation about the oncology strategy to the performance within the Q1. After I do that, I'll hand over to Ruud Dobber, who will give an update on CVRM, respiratory and emerging markets. Please turn to Slide 13. 2019 has really started off well for oncology. Sales of 1 point $9,000,000,000 in the quarter represented 59% growth and the 4 new medicines contributed $700,000,000 of incremental sales. In the lung cancer franchise, Tagrisso and Imfinzi continued their launches in the new indications of first line EGFR mutated non small cell lung cancer and also within unresectable Stage 3 non small cell lung cancer. Lynparza continued to cement itself as the leading PARP inhibitor with first line ovarian cancer launch now underway and expanding across the globe. We continue to see encouraging uptake of Calquence in the smaller mantle cell lymphoma indication, now with sales of $29,000,000 in the quarter. The majority of sales coming from the approved indication in the U. S, where we estimate as many as 40% of the patients are being treated with Calquence, and we saw the majority of use in patients naive to BTKI inhibitors. This launch allowed us to build the infrastructure as we prepare for the larger chronic lymphocytic leukemia indication, where we have 2 pivotal Phase III readouts coming in the second half of the year. And finally, while it's not mentioned on the slide, I do want to note that Faslodex held ground with sales of $254,000,000 in the quarter and growth of 4%, mainly driven by performance in emerging markets that were up 28%. And we do note that we anticipate to see the 1st generic fulvestrant in the U. S. Market relatively soon. With that, let's go into the product specifics and turn to Slide 14. Starting first on Tagrisso, we're excited to share that Tagrisso is now the largest selling medicine in the AstraZeneca portfolio. It demonstrated continued growth, up 92% in the quarter with $630,000,000 in sales as the launches in the frontline setting are really taking effect across the globe. The U. S. Exhibited strong demand growth with Tagrisso sales of $259,000,000 as we reached a high level of penetration in the line setting in the EGFR mutated non small cell lung cancer setting, though that high demand was offset by inventory reductions and some gross to net adjustments, which resulted in a sequential decline in the U. S. But again, we saw really good underlying demand growth. Europe reported $100,000,000 of sales in the quarter with growth of 55%, driven by increased testing rates and strong levels of demand in the second line setting as more countries start to reimburse for the first line indication following the approval in June of 2018. Japan delivered Tagrisso sales of $123,000,000 up by 153% as Tagrisso reached new highs in adoption following the first line launch in the Q3 and is now the region where we actually have the highest market share for Tagrisso across the globe. Emerging Markets delivered $138,000,000 in sales with China contributing more than half as the NRDL listing started to take effect, and we look forward to China first line regulatory decision later this quarter. Please turn to Slide 15. Staying within lung cancer and moving on to Imfinzi. Imfinzi continued quarterly growth as the U. S. Continued to see adoption of the PACIFIC regimen in unresectable Stage 3 non small cell lung cancer. Imfinzi reported sales of $295,000,000 and is now annualizing at over $1,000,000,000 a year with the vast majority coming from the U. S. And the lung indication. In the U. S, we are seeing more than half of patients are now getting chemo radiotherapy, with more than half of those then getting Imfinzi after chemo radiotherapy. We see that the most immediately available patients are now benefiting from Imfinzi as evidenced by the increasing patient infusions illustrated on the graph, and our focus in 2019 is really on making sure that we drive the same level of performance outside of the United States as we've now seen within the United States. During the quarter, Imfinzi secured more approvals for the PACIFIC regimen, and now we are approved in over 45 countries. Sales outside of the U. S. Are starting to ramp up as we gain reimbursement in more countries. Japan alone delivered $34,000,000 in sales Europe $23,000,000 and we are excited to bring Imfinzi to more patients across the globe in this area of high unmet need through 2019. We've also kicked off a number of other trials in the early settings in lung cancer and beyond, building on the foundations set by PACIFIC. Please now turn to Slide 16. Finally, for me on Lynparza. Lynparza demonstrated continued progress with sales of $237,000,000 and growth across all regions as we continue to roll out the broader second line maintenance label in ovarian cancer and the breast indication in the U. S. And in Japan. As of last month, Europe was approved in breast cancer, and at the end of last year, we received U. S. Approval in the first line ovarian cancer setting, a new growth contributor. U. S. Sales were $119,000,000 where Lynparza continues to be the leading medicine in the PARP inhibitor class as measured by total prescription volumes in what is a very competitive marketplace. Increase in demand came from the all comers label in second line ovarian cancer and the subsequent first line label as well as the growing use within breast cancer. As you would expect, we continue to see the majority of the use of Lynparza in the ovarian cancer setting. European sales were $65,000,000 up by 62% and reflecting increased BRCA testing rates as we roll out additional launches and secure reimbursement across several markets with the inclusion of the broader EU label in ovarian cancer and for tablets. Some EU sales were also attributed to clinical trial supply. Japan delivered sales of $22,000,000 following the launches in ovarian and breast cancer last year. Lynparza was the 1st PARP inhibitor launched in China, which contributed to the $26,000,000 in emerging markets in the quarter. And with this, I hand it over to Ruud, and please turn to Slide 17. Thank you so much, Dave. Today, I'm here to talk to you about the biopharmaceuticals business. Total sales of the 2 therapy areas was $2,300,000,000 in the quarter, growing at 16%. We are very pleased with the continued growth of Farxiga and Brilinta and the ongoing successful launch of Fasenra. Symbicort and Pulmicort also continued to deliver strong sales. We look to build on this growth, including through further launches for Lokelma during 2019. Please turn to Slide 18. Moving to new CVRM. Sales were up by 19% despite intense competition in diabetes, with total first quarter sales at $1,000,000,000 Growth for both Farxiga and Brilinta remains strong with double digit increases globally. Farxiga delivered sales of $349,000,000 in the quarter with 23% growth, maintaining volume market share leadership globally. Forsiga saw U. S. Growth of 3% in the quarter, with growing slowing due to increased competition and formulary plant changes taking effect in the quarter. Outside the U. S, where we have 62% of sales, we have seen encouraging performances with increasing volume growth. Sales in Europe were up by 30%, and emerging market sales were up by 51%. Brilinta delivered sales of $348,000,000 with 24% growth, driven by a strong performance in Emerging Markets, up by 38%. We also had continuous growth in the U. S. And Europe, up by 33% and 3%, respectively. European underlying demand growth was high single digit despite some negative inventory impact. We continue to be very pleased with the performance of Brilinta, which is still outgrowing the market in all regions. Bydarian, including the auto injector bydarian BSIZ continued to perform well with sales up 4% despite the impact of supply constraints for the new BSIZ device. We are on track to resolve this throughout the year and be back to normal supply in the second half of this year. Please turn to Slide 19. Turning to respiratory. We saw 14% growth in the quarter, driven by Fasenra and Pulmicort. Symbicort was down by 3%, with the growth in emerging markets not fully offsetting pricing pressure in the U. S. And Europe. Volume growth continues, and we remain the global volume market share leader in the ICSLABA class. US Symbicort sales were down by 4% and Europe was down by 8%. However, in Emerging Markets, Symbicort was up by 13%. Growth in China continued to be supported by the inclusion of Symbicort in local guidelines in 2018 as the only ICSLAVA on the China essential drug list. Filmicort was up by 16% with sales of $383,000,000 Emerging Markets was the driver of this growth, up 20 3%. Fasenra continued to perform, annualizing $500,000,000 of sales with $120,000,000 of sales in the quarter, with the majority of the sales coming from the U. S, Germany and Japan. In the U. S, Fasenra is performing against new competitors with $93,000,000 in sales. Europe and Japan continued to deliver with $18,000,000 60,000,000 dollars in sales, respectively. Fasenra in the U. S, Japan and Germany maintained its market leadership in new patient share of novel biologicals. Now I will move to Emerging Markets. Please turn to Slide 20. Emerging Markets continue to track ahead of our long term performance ambition, which is to grow sales on average by a mid- to high single digit percentage with 22% sales growth overall. Again, China delivered a very strong performance this time with 28% growth. China clearly benefited from the addition of Tagrisso on the national reimbursement drug list, which took effect at the beginning of the year. Outside China, overall sales were up by 13%, and especially Brazil delivered a strong quarter of double digit growth, driven by Forxiga, Tagrisso and recently Lynparza. Finally, the strong performance was spread across our main therapy areas with a quarter of oncology sales coming from emerging markets. New CVRM was up 40%, driven by Brilinta and Porcica, and respiratory sales were up by 26%, with Pulmicort as the key driver. With this, I will hand over to Marc. Thank you, Ruud, and hello, everyone. I want to take you through our financial performance in the quarter as well as our financial priorities and guidance. Could you please turn to Slide 22? As usual, I will begin with the reported P and L before turning to the core performance. As Pascal mentioned earlier, product sales grew by 14%, while there was minimal collaboration revenue in this quarter. Other operating income of around $600,000,000 included the impact including the impact of divestment of right to synergies for the United States. Please turn to Slide 23. Moving to the core P and L. Our gross margin ratio improved by over 2 percentage points to 80.5%, reflecting the phasing of our mix of sales. Operating costs, which increased by 5% in the quarter, represented 61% of total revenue, which was a 4% point reduction versus the Q1 of last year. With product sales growth ahead of operating costs, we are beginning to deliver operating leverage and our core operating profit margin reached 30%, supported by other operating income. The core tax rate was 23%, impacted by the geographical mix of profits and disposals. Despite the higher than average core tax rate, our core earnings per share doubled to $0.89 underpinned by top line growth and cost leverage. Please turn to Slide 24. This is a slide I first showed you at the full year results in February, and I will use it going forward to demonstrate our progress. It describes our financial journey and what our priorities are. We are delivering strong and sustainable sales growth, driving operating leverage and improving our margin and profitability, but the story will not stop there. Our focus will be on taking this down to generate in 2020 more cash so that we can direct it to deleveraging our balance sheet and towards our progressive dividend policy. As mentioned, at full year results for 2018 in February and looking at this year, our cash from operations plus divestment income will be broadly in line with 2018. However, there will be a number of 1 off cash payments reflected in cash flows from investing activities relating to prior business development transaction. A significant proportion of this payment was made in the Q1. As a result of the equity raise, we anticipate a reduction in net debt from the 2nd quarter. The purpose of the equity raise was to fund the initial upfront and near term milestones commitments arising from the collaboration with Daiichi Sankyo as well as to strengthen AstraZeneca's balance sheet. 1 of the company capital allocation priorities is to maintain a strong investment grade credit rating. The share issuance strikes an appropriate balance between the company's equity investors and creditors. I am confident that our growing product sales and operating leverage will drive much improved cash generation over the cycle, and I'm looking forward to updating you on our progress in the future. Please turn to Slide 25. Finally, I would like to reiterate our guidance for 2019, which is on product sales and core EPS at constant exchange rate. With the patent cliff now behind us, I expect product sales to grow by a high single digit percentage. It is worth noting that the tough comparison we have on product sales in the second half of the year. With operating leverage and a core tax rate of 18% to 22% in 2019, I anticipate growth in core EPS between $3.50 to $3.70 Outside of guidance, I also expect a reduction in the totality of collaboration revenue and other operating income. Core operating expense are expected to increase by low single digit percentage, with core operating profit anticipated to increase by mid teens percentage. Lastly, capital expenditure is expected to be broadly stable, and we are also targeting a reduction in restructuring charges. With that, I will now hand over to Mene. Please turn to Slide 26. Thank you, Mark, and good afternoon, everyone. I'm delighted to be here today to provide an update on the progress in the pipeline since our last announcement. I'm also joined today by my counterpart, Jose Baselga, who will discuss the oncology pipeline and our upcoming news flow. Firstly, and this is something I'm very passionate about, I'd like to take a moment to speak about the improvements in our R and D productivity over the past few years. Please turn to Slide 27. As you know, we're committed to the productivity and quality of our science across the portfolio. And I just want to highlight a few examples of the progress that we've made over the past 5 years in our attempt to bring new and better medicines to patients. Firstly, the number of accepted high impact publications has increased tenfold to over 100 in 2018. This, as you know, is a clear measure of the high quality of sciences underpinning the research and development in our organization. Secondly, the number of Phase 2 projects has increased by a third. And with this, we've also achieved 30 projects with validated proof of mechanism in the same period. Again, this is a demonstration of quality of the molecules we're putting into the clinic, which improves the probability of transitioning them from early development to late. Finally, we've received more than 50 regulatory designations in major markets. And I'm very proud of what we achieved in 2018. It was a record breaking year with both new molecular entities and major lifecycle programs, seeing 23 major market approvals in total, the most ever attained in 1 year in AstraZeneca's 20 year history. Please turn to Slide 28. In respiratory, our partner Circassia received U. S. Regulatory approval for Duaklir, a medicine for the treatment of chronic obstructive pulmonary disease. In the same indication, we also listed regularly submission acceptance for the inhaled triple combination medicine PT010. During the quarter, we received U. S. Orphan drug designation for saracatinib. This is a potential new medicine for idiopathic pulmonary fibrosis, a devastating diagnosis that results in the scarring of the lung, and this program could initiate in Phase 2 later in the year. Regarding Fasenra, we intend to build upon its fast onset unique model of action and strong efficacy seen in severe asthma with an extensive lifecycle program across a variety of eosinophilic driven diseases. This will include eosinophilic granulomatosis with polyangiitis and hyperidosinophilic syndrome, both of which recently received U. S. Orphan drug designation. I'm glad I said that properly. Please turn to Slide 29. Now focusing on new cardiovascular, renal and metabolism. Farxiga received approvals for the treatment of Type 1 diabetes in both Europe and Japan this quarter and regulatory submission acceptance for the DECLARE cardiovascular outcomes trial in both the U. S. And the EU. We also received label inclusion for BIJURIAN's CVOT safety data in the U. S. And BRILINTA's THEMIS trial met the primary endpoint in patients with coronary artery disease and Type 2 diabetes. Last month, we were pleased to see favorable guideline updates from the American Heart Association and the American College of Cardiology recommending the SGLT2 inhibitor class including Farxiga as primary prevention against cardiovascular events. This is truly important for diabetic patients who tend to be at higher risk of developing cardiovascular disease. We have a really solid lifecycle program for Farxiga, which includes the trials DAPR HF, DAPR CKD and DELIVER, looking at heart failure with reduced ejection fraction, chronic kidney disease and heart failure with preserved ejection fraction, respectively. DAPRA HF is now expected to read out this year earlier than we previously anticipated. It's important to remember that all of these lifecycle opportunities are in both diabetic and non diabetic patients aiming to establish Farxiga as a cornerstone treatment for cardiorenal and metabolic diseases. Please turn to Slide 30. Finally, I wanted to take a moment to focus on roxadustat, a 1st in class hypoxiainducible factor prolyl hydrolase inhibitor, if PHI, and potential neural medicine for patients with anemia caused by chronic kidney disease, CKD. As a reminder, in December 2018, we and FibroGen received Chinese regulatory approval for roxadustat in the dialysis setting, and the regulatory decision in the non dialysis dependent setting is anticipated in China later this year. Late last year, we also announced the Phase 3 OLYMPUS and ROCEYS trials met their primary endpoints. During the Q2, we're expecting the aggregated safety data across the whole program, the combination of programs to Nastellus, FibroGen and ourselves. The totality of evidence from these trials will help inform our regulatory interactions, and we now expect to make a U. S. Regulatory submission in the second half of this year. Thank you all for listening. And I will now hand over to Jose. Please turn to Slide 31. Thank you, Mene, and hello to everybody on the call. My name is Jose Baselga, and I'm very excited to speak to you here on our results call today for the first time. I'd like to start reporting on another successful quarter for oncology and also giving some insights in that we are preparing for a very busy second half of twenty nineteen. Since the last full year results, some new highlights include the regulatory approval in the EU of Lynparza in BRCA mutated metastatic breast cancer and also the positive high level results from POLO. This is Lynparza's Phase III trial in BRCA mutated metastatic pancreatic cancer. In the APOLLO trial, Lynparza met its primary endpoint of progression free survival as the first line maintenance monotherapy in patients with Gemline BRCA mutated metastatic pancreas cancer, whose disease had not progressed on platinum based chemotherapy. We also announced that the results were not only positive, but were also clinically meaningful. The regulatory submission is anticipated to take place in the second half of twenty nineteen. In addition, in the U. S, selumetinib has received breakthrough therapy designation in a very debilitating disorder, mostly in children in nephropathy type 1. Now if we move to upcoming presentations at ASCO, that's the middle column, we will present updates on Tagrisso, on Lynparza and on Limfinzi. And we also have new data on capivasertib, which is our oral novel oral selective AKT inhibitor, which will enter Phase II III studies soon. On the final part of the slide on the right, this is the news flow in the second half of this year. It's going to be busy for Imfinzi. We anticipate data readouts in the metastatic setting for a number of tumor types, including non small cell, lung cancer, small cell lung cancer, head and neck and bladder cancer. For Lynparza, we are expecting to have Phase III data readouts in prostate and in first line all comers ovarian cancer. And then lastly, Calquence is anticipated to have 2 pivotal Phase III CLL trial readouts in frontline and in the relapsed recurrent disease setting, also in the second half. Let's turn to Slide 32, and I would like to spend some time on a very exciting compound that you have heard already from Pascal. On March 29, we announced a strategic collaboration in oncology with Daiichi Tancchio for trastuzumab deruxtecan. This is an antibody drug conjugate, which we feel strongly that is potentially transformative for the treatment of breast cancer and other tumor types. This new medicine will add to our rich heritage in breast cancer. It has a unique structure that delivers a higher intensity chemotherapy from the well established Tenkan family. I'd like to make the point here that this payload is very unique unlike other ADCs. And not only that, but it provides more payload on each antibody. It has a very high ratio of payload per molecule. It also has, upon being cleaved and it has a very unique linker that is very stable until it's been internalized. But when it's cleaved, this drug has high membrane permeability that potentially contributes to its high efficacy in the HER2 low and in the HER2 mutant cancer. Now if you look at the data that is available in a large in a very large Phase 1 study, it has shown a robust unprecedented duration of response of over 20 months, together with a response rate close to 60% in a very, very heavily pretreated HER2 population. These patients had received 7 lines of therapy as a median. Now in addition to the activity in HER2 High, the data obtained in HER2 Low also shows promising response rate of 47% and duration of response of 11 month, also unprecedented in this population. Tasuzumab deruxtecan has already been granted breakthrough therapy designation status in the U. S. In the third line HER2 positive metastatic breast cancer. We anticipate to have data coming along. We're going to have the data of the Phase 2 trial, the so called DESTINY BRES-one study in the second half of this year with the regulatory submission of the biologics license application in the U. S. In the same time frame. Let's now move to Slide 33, where I'd like to summarize some of the key new flow items still to come across ophthalmic areas. Many mentioned earlier that the pool safety data of roxadustat is expected during the Q2 with a U. S. Regulatory submission now anticipated in the second half of twenty nineteen. Now let's look at the data on the different key readouts, including key regulatory submissions and potential regulatory decisions. If we focus first in oncology, for Tagrisso, we are expecting a regulatory decision for its first line use in China, and it is anticipated in the second quarter. We also expect to have a final overall survival data for Tagrisso in first line use in the second half of the year. Moving to immuno oncology. We expect a regulatory submission the regulatory decision, I'm sorry, for Imfinzi in unresectable Stage III non small cell lung cancer in China in the second half. And also, in the same time frame, for Lynparza, we also anticipate regulatory decisions for the SOLO-one trial in first line BRCA mutant ovarian cancer in the EU, Japan and China. If now we move to CVRM for Farxiga, we expect to receive regulatory decision in Type 1 diabetes in the U. S. And a regulatory decision regarding the inclusion of cardiovascular outcome data for DECLARE during the second half of the year. We also plan to submit data from THEMIS, Belinta's cardiovascular outcomes trial in coronary artery disease and type 2 diabetes for regulatory review in the second half of the year. And lastly, in respiratory, we hope to receive a regulatory decision for PT010 in COPD in China and Japan in the second half of the year and see data from the ETHOS trial. We also anticipate regulatory decisions for Fasenra's self administration and auto injector in the U. S. And EU, for Symbicort in mild asthma in the U. S. And for vevespi in COPD in Japan and China in the second half of the year. Now if we turn to Slide 34, and this is an important slide, I'd like to present our rich mid stage pipeline, and we are going to be selecting some we're going to show some selected molecular entities. Last quarter, Mene presented an introduction with insights into some of our new medicines that will shape our future over the next 5 years. Going back to Pascal's point, these are potential new medicines with the opportunity for sustainable sales through using clinical practice, and the number has expanded following internal reviews. We now have a quality, breadth and depth to our mid pipeline, which begins to gain pace with initiation of the Phase III program in asthma for PT027 and also, as I mentioned already, for trastuzumab deruxtecan. We look forward to providing you with more updates through the year. Thank you, everyone, for your ongoing support, and thanks to all the colleagues in AstraZeneca who work hard to continue to deliver new medicines to patients. I have been extremely encouraged by the level of enthusiasm and expertise and science that I've seen so far. And with that, I will now hand back to Pascal for closing comments. Pascal? Thank you, Jose. So in the interest of saving time for Q and A, I'll skip the last slide and just remind you product sales grew by 14% and operating profit is up 96 percent with an operating margin of 30%. We reconfirmed our guidance for the year, and our pipeline is making good progress. So with that, we'll now move to the Q and A. Thank you. And we'll now get started with Richard Parkes at Deutsche Bank. Richard, over to you. Hi. Thank you very much for taking my question. Since I'm first, I'll ask the inevitable cash flow question, and it's got 2 parts, unfortunately. So obviously, the decision to raise equity as part of the Daiichi collaboration has raised a real focus on cash flow and your balance sheet. And I think that was triggered by the decision to raise more cash than was required for the initial upfront and milestones. So I just wondered if you could talk about that decision and was that driven by the fact that the rating agencies take into account the longer term milestones when they're looking at your rating? Or was it because you're seeing these additional payments from legacy business development deals impacting cash flow in the short term? So that's the first part. The second part is just on the cash flow in the Q1. You've given some sort of clarity on that in the release. But obviously, it's still a significant negative in the Q1. So when you look at working cap short term provisions and non cash movements of more than €1,000,000,000 negative. Can you help us to understand those and get a sense of how those will develop for the full year? Thanks very much. Thanks, Richard. So I think that the line was not really good, but hopefully, we captured the 2 parts of your question. The first will relate to the equity raise and the second relates to the cash flow itself and some of the negative movements in the cash flow statement. Marc, do you want to cover both of those? Yes. Let me start Richard, thank you very much for these two informative questions. So the first one on the equity. So as we have said, the equity was the purpose of the equity was to pay for the upfront and the milestone in the early years for the Daiichi Sankyo product right acquisition as well as to strengthen our balance sheet as we are we have a repayment of €1,000,000,000 bond in September of this year. So this is exactly the way we explained it. Now turning to your question on the credit rating agencies, they tend to look at the cash flows and other a lot of financial metrics usually within a 12 to 24 months horizon. So they are informed and well aware of our 2019 cash flow progression. You will certainly remember that at the full year results in February of this year, I have flagged that in 2019, we would have a larger proportion of business development payments to be made, some of them linked to deals that we have done recently, but some others linked to deals that are much older. In particular, we have had a substantial payment for a true up of a joint venture with Merck in the United States that started in 1988 for Nxiom. So some of them are recent, some of them are more historical. So that, I think, answers the situation of why the credit rating agencies were looking at our credit rating with some level of scrutiny. Turning to the quarter cash flow and what can we learn from the quarter cash flow for the full year. So first of all, we have to be very much aware that quarter to quarter cash flow comparisons are very delicate. You could have in one quarter a positive, and you can have similar quarter, the following year a negative. And of course, this exacerbates the difference. And I think the quarter 1 of 2019 is a very good example. We have, as I've just described, a screw up with Merck for historical joint venture. This was negative of 400. In 2018, we had a positive for litigation that we had settled. This so you have one off on one side, one off on the other side. This is where both of about €400,000,000 each. So you have a variation in that quarter of $800,000,000 which, of course, is not reflective of the progression of profitability. So this is why quarter to quarter comparisons are very delicate. Now if you go for the full year, this is a bit less variable, but still you could have some variability. So we have said that in 2019, we will have more GD payments than we have had in the past. And therefore, we said that the results of cash flow for 2019 will not be as good as they have been in 2018. And I think I can confirm, again, the same today. Thank you, Mark. Thank you. Sorry, Richard, did you have anything else you wanted to ask? No, that's great. Thank you. Great. Thanks for your questions. So we'll move to Mark Purcell at Morgan Stanley. Mark, over to you. Yes. Thank you, Pascal. Good afternoon. As part of the ongoing U. S.-China trade talks, been reported that China has offered U. S. Pharma companies 8 years of regulatory data protection in China for the biologics they develop. Pascal, what are your thoughts on this and other potential offsets to the political agenda, which is driving earlier and more rapid uptake of innovative medicines in China? And if I may, just a point of clarification on the last question. Could you tell us which year the dividend is going to be covered by cash flow before financing activities? And which year is going to mark the start of a sustained improvement in your net cash position before M and A and internalization consideration? So just linked to that last question and earlier comment that you made at the beginning of the call. Okay. Thanks, Marc. So the first question, as it relates to China, I will really start by saying that everything we've seen happening over the last year or 2 in China goes in the right direction, quite frankly. I mean, and that could least, for instance, the government is really protecting going in the direction of protecting IP or respecting IP rights, at least in our industry. There's an emergence of an innovative industry in China, and of course, that's something that can only develop and flourish with an IP system in place. So clearly, China is focused on IP rights. And we've seen acceleration of review and approval of new innovative medicines, which is a real positive. We've seen funding being deployed to reimbursing and facilitating access to new innovative medicines like Tagrisso, Farxiga, which quite frankly not long ago nobody would have thought would be reimbursed. On the other side, we've seen of course, we've seen the emergence of generics and the price pressure on older products. So you can see China transitioning to a model that is more aligned with what we see in the Western world and driven by innovation, quite simply. We've seen that coming since quite some time, and we've spent a lot of time and effort preparing for it and accelerating the development of our new products. Now as it relates to this ongoing discussions between the U. S. And China, And I would think that it is a little bit early to comment. I think we should wait until these discussions conclude. But again, I think the fact that we are debating 8 years or 10 years or more is actually reflecting that there is a discussion around IP rights, which is a good one, good discussion to have. I will only say that the gold standard really for biologics protection is 12 years. International norm has started to establish itself around 10 years. That's what you see in this recent agreement between the U. S. And Canada and Mexico. So I can only say that I would hope that China and the U. S. Can agree on 10 years, but we'll have to wait till the end of these discussions. But really, I think I would look at it with a positive approach, really. I mean, the discussion reflects really good progress on IP protection. So dividend, Marc, do you want to cover that? Yes. So I did not understand your question very clearly, but I assume that you wanted to ask about the payment of the dividend in 2020? Yes. Sorry, I'll just repeat it. The question was just based on what Richard was asking some of the concerns here that which year will the dividend be covered by cash flow before financing activities? And which year will mark the start of a sustained improvement in your net cash position before considerations around M and A and internalization? Very good. So I think the so first of all, one remark on the underlying trend. Obviously, the continuous margin expansion and operating leverage will lead to a better cash generation from 2020. So as we regarding the share issuance and the relationship with the Daiichi Sankyo investments, we have said that this share issuance was going to cover the upfront and the milestone in the early years. So if we exclude the impact of Daiichi Sankyo, we anticipate to reach a coverage of our dividend in 2020. So first and then the job will not be finished. We'll continue to work on increasing profitability, increasing operating leverage and margin expansion from 2020 onward. Thanks, Marc. I mean, I think Marc, we can only Marc, first of all, that is we can only reconfirm what we've told you before. I mean, there's no change to what we've said. We will basically cover the dividend from 2020, start reducing debt from 2021. And as Marc Dunoyer said a minute ago, essentially, the equity issuance will enable us to cover the cash outlays related to this DS-eight thousand two hundred and one asset, which again, I think people will learn to appreciate the significance of this asset and its enormous potential. So let's move to Andrew Baum at Citi. Andrew, over to you. Thank you. First question relates to something you've already touched on in AstraZeneca's success in building a very sizable pipeline. So by your own admission, I think you call out 157 projects. I'm counting around 133 for Roche. You spend about $5,000,000,000 per annum, they spend $10,000,000 Without getting to hang up on the absolute numbers and talking about probability of success, I guess what I'm getting at is, could you give us some indication on the rate of increase for R and D spend given the opportunities in front of you? And then related to that, could you talk about the extent to which there can be much further prioritization of your portfolio including throughout licensing, especially now given the integration of MedImmune? And then separately, if Susan is on the line or to Jose, there's now been 2 sets of data with PARP inhibitors showing the prostate cancer having ATM mutations are not PARP responsive. This is obviously part of the population for the primary endpoints of your PROFOUND trial, which reports at the end of this year. How do you think about the risk of powering and the size of the market in the event this pans out within that trial? And apologies for the second question. Thanks, Andre. That's great. Two great questions. So maybe what I would propose, Mene, if you could cover the first one. And then if Jose allows me, I'll ask the mother of this great Melissa Limpaza to answer the second question, if that's okay. So, Mina, do you want to Yes. So, the size of the pipeline, so as you articulate, we do have a rich array of molecules across our therapy areas in early to mid stage. And I think the key actually is generating confidence in the data sets that enable you to be comfortable and confident moving into late stage development where obviously the big investments are made. So I think rigorous prioritization, which is something that we're actively doing on a regular basis and then making sure that we ask really good questions in early development to demonstrate proof of mechanism, early signs of efficacy, so that when we move things into Phase 3, have a higher probability of successfully launching the medicines, I think, is key. And it's a much better place to be than not having enough molecules in your pipeline where you're actually just moving these forwards because you can. And then the surplus molecules that we have, if there are things that are low priority, Andrew, absolutely, we would out license them. We'll work out how to partner them in a way that gets them to patients as fast as possible. And we are in this process, Andrew, of prioritizing a few mid stage projects and accelerating them to the extent we can and doing this prioritization and selling some of the most promising projects. But I think that, as Mene said, we should keep in mind our productivity has increased. And we have been able with the lower R and D budget to deliver a very rich pipeline relative to some of our competitors. But still, we need to continue prioritizing. Limb process, Susan? Okay. Thanks, Andrew, for the question. So one thing to note is there will be more data that's coming out from expanded data set from top part B at ASCO coming up. So look for that from Johan de Bono's group. Clearly, across the panel of genes that can produce homologous repair recombination deficiency, there is some variation in the relative sensitivity to PARP inhibition. Nonetheless, we've got very good strong proof of principle from the data in the original TOW PART B that patients with ATM loss do have activity as being with long and durable responses with elaparib treatment. So one thing to bear in mind is the testing for ATM. As with all of these big genes, I think there's probably increased sensitivity when you've got biallelic loss rather than just monoallelic loss. I think so getting the testing right is important. We've taken that consideration into account when we've designed the studies that we have ongoing. So we remain confident that the study is designed well to look for the size of benefit that has been powered to detect across the patients that were enrolled. Thank you. So thanks, Susan. So let's move to Naresh Chouhan at Intrinsic Health, sorry. Naresh has a question that is asked online. I think it's for you, Dave. And the question I will read the question so everybody can benefit from it. And it is, please can you help us to understand the slowdown in Tagrisso? I guess the question relates to the U. S. Mainly. Underlying demand only grow mid single digits quarter on quarter, but penetration is only 60%. Some discussion about where you expect penetration to pick out would be helpful. Great. Thanks, Pascal, and thanks for the question. I think, first to start with, so I think you're pointing out that in the U. S. That there was a decline in the sequential growth quarter over quarter. I do think that it's important to point out that obviously the year over year growth of Tagrisso has been quite tremendous. And I think that given where we are in the launch of Tagrisso, we're quite pleased with mid to high single digit demand. We look at the demand as the primary measure of the health of the brand. And at the end of the year, there are always inventory movements and one offs. And you'll recall that we had described that as happening in the Q4 last year within China, and we saw China rebound back quite nicely as we said that it would in the Q1 of this year. I think the other piece that I'd like to highlight here is that I think what you see is also the strength of the diversity of the geographies that we operate in. And again, here you saw sequential growth globally of 6% for Tagrisso. And I've been working in oncology a long time. You see these S curves where the goal is you get as rapidly up the adoption curve as possible in various regions. And you know that U. S. Will be 1st and usually Japan and Europe follow on the heels of that and then China comes after that. So on your question about what's the top penetration that we can expect, TKIs as a class have about 80% to 85% penetration of the frontline market space. There are remarkably still patients despite TKIs having been on the market for decades that are still getting chemotherapy or even I O chemo as their first therapy. That's part of our educational effort, but that's what I'd look at in terms of what the maximum potential of the class is. Thank you, Dave. So Jo Walton with Credit Suisse is next in line. Jo, go ahead. I wonder if I could just return to China and get a little bit more information about it. Sanofi pointed in their strong results in China today to a pull through of demand into 1Q that would otherwise have been in 2Q because of the change to value based pricing. I wonder if you felt that there was any distortion in your numbers. And then as you reflect on how things go going forwards, should we see are there any particular products where we should see a decline in growth? And I wonder if you could also help us by giving us the absolute sales of Tagrisso in China. Thank you. Thanks, Joe. So I'll ask Dave if you have the number to answer the second question. The first question is clearly no. We haven't had any effect, as you described, that Sanofi mentioned. In fact, I would say it was the other way around as we are concerned. We had an inventory decrease in Q1. And at the end of Q1, our trade inventory is frankly the lowest it can get to. I mean, we cannot get lower. We would have supply issues. So we have very low inventory in the trade in China. We haven't seen that effect. In fact, again, we have had an inventory decline. So the Tagrisso question in China, do you have to Yes. So Joe, we don't share the specific sales levels for individual brands within China. What I can say is that we certainly saw a very nice increase in oncology sales in the emerging markets. Oncology sales growth of 43% and Tagrisso was a significant contributor to that. Thanks, Dave. So, Keyyo, go ahead. Thank you. Two questions, please. The first one coming back to cash flow for Mark. Mark, when you talk about covering the dividend in 2020 from operational cash flow, is that pre or post CapEx and your royalty payments to Bristol and Shinogi and things like that? Just linked with that, how what is it that is likely to change so dramatically over between kind of the cash you're generating today versus 12 months' time? Inherently what you're talking about is an increase in quarterly cash flow generation of about $1,000,000,000 So just if you can help us bridge the gap that would be great. And then secondly, Dave, just a clarification on your comment regarding the Imfinzi growth outlook. Just want to make sure I heard you right, saying you we should be thinking about Imfinzi growth in the near term as being driven by ex U. S. Rather than the U. S? Thank you. So on the cash flow, so what I just said a few minutes ago that since we have used the share issuance to cover the upfront for the upfront and early milestones for Daiichi Sankyo, I'm looking at the coverage of the dividend excluding the impact of the Daiichi Sankyo product acquisition. So you need to remember this caveat. So the coverage the dividend will be done after CapEx, after restructuring expenses, after the normal outflows, but excluding the impact of the cash payments related to Daiichi Sankyo. And so the answer to And then why is it I guess, why is it getting better? Well, I think I have also outlined that for 2019, we have reasonably high level of payments for business development deal. Some of them, we have done in 2018. Some of them we have done much earlier, and I mentioned the true up with our joint venture with historical joint venture with Merck in the U. S. But also, we have some molecules which are progressing through the development momentum, and hopefully some will be approved. And there are milestones which are accompanying these regulatory approvals in the course of 2019. So I see it as a good news in a way because it means these products will reach market very soon. So two effects really, okay. I mean, the obvious one is the improvement of our operating margin that flows down to the cash flow. And the second, as Marc said, some of these one off payments will decline. And remember, in Q1 this year, we had a big one, dollars 400,000,000 relating to next year, which is 20 or 30 year old joint venture, and it's the final milestone relating to the undoing of this JV. I think there was a question on Tagrisso for you, yes. Yes. So it's on Imfinzi actually. So, Keyur, the first part, we I certainly have expectation for continued growth within the U. S. But I do think that growth rate on a percentage basis sequentially is going to be lower than what we've seen. We saw a fairly significant catalyst with the overall survival data at ESMO, and we saw a sequential growth rate of 27% on the heels of that within the U. S. And we saw a lower rate in the mid single digits in terms of the growth rate that we saw at 7% in terms of sales within the U. S. We see CRT rates now really well above 50%, probably getting close to 60% within that. We think that there's some opportunity for continued growth there, but we're also under the belief and we listen to what the physicians are speaking through. I think that there are patients for whom CRT just isn't a viable option. And so that's probably getting close to near where its max is. Again, we also see opportunity for continuing to have more patients treated with Imfinzi post CRT. But we have a greater opportunity to get to U. S. Levels of performance outside of the U. S. We have just recently launched within Japan, where we saw really strong uptake in the quarter. And we're encouraged by the trajectory that we come into Q2 on. In Europe, recent approval and we're starting to see reimbursement coming on board where demand is increasing in Germany, increasing within France and we're still yet to see reimbursement in a number of other countries. So, U. S. Growth still there. Other markets outside of the U. S. Have an opportunity to get to the U. S. Levels and that was the comment that I was making. Thanks. The next question is online Sorry, just a clarification to Mark's answer. But I'm just thinking I forgot to answer the second part of Joe's question about China a minute ago. She was asking what product could be impacted moving forward on a negative basis. And as I said, the second half in China will be impacted by some of those new policies of tendering products that are patent expired. So I would say that the one product that you could see being impacted in the second half will be Crestor because we lost the tender. In fact, as you probably noticed, of all the tenders that were issued in China, only one tender went to a international multinational company, and that's us with IRESSA. But we did lose the Crestor tender, so suddenly that product would be impacted. So the online question related to PACIFIC 2 and it is, do you still estimate that the PACIFIC ineligible population due to a progression after chemo that could become eligible based on PACIFIC 2 is still at 25%? Or are you seeing a lower number in the real world given the difficulties with defining progression in this setting and the availability of Imfinzi as an option? And this is a question for Marietta Miemitsuko. It's for you, Dave. So, Marietta, on this question, I guess the main focus for PACIFIC 2 is testing the hypothesis that can we actually get more patients through CRT and those that progress or drop out within it? The rate that you're using there is a reasonable one in terms of what we see of patients that while initiating therapy do drop out. Now I think that maybe implied within this is another question, which is we do not promote to this, but we do see that there are physicians that are utilizing Imfinzi in patients post maybe just radiotherapy or if they're not able to actually give a full course of CRT in the way that they want to for tolerability reasons. But again, that's a minority of use that we're seeing and I think that PACIFIC 2 provides us the opportunity to be able to give evidence in the setting, which we do believe is an important area of opportunity. Thanks, Dave. So we'll take last two questions. Hopefully, we can deal with them within the time allocated. We're a bit behind time. So the first one is Seamus Fernandez at Guggenheim. Seamus, do you want to go ahead? Yes. Thanks for the question. So maybe just if I could make one suggestion and then I'll follow-up with a question. But just in terms of the cash flow dynamics, I think it would be helpful to everybody if we had a slide or a schedule of potential payments going forward so people can understand more clearly the specifics around cash flow dynamics that's become an overt focus relative to the future growth of the company. So just a suggestion there. And then separately, my question really is in terms of our thoughts around the growth opportunity for the overall portfolio and the various programs that you have studied outside of the Daiichi Sankyo program, which programs are you particularly excited about to really improve cash flow going forward? I think probably the biggest focus right now is on roxadustat, And I feel like that program maybe isn't appropriately understood in terms of where the pushes and pulls are for roxadustat. So I'd really love to know a little bit more of AstraZeneca's thoughts around that program and how you drive the opportunity in anemia. Thanks, Thomas. First of all, the comment, well, thank you. The question, growth opportunities, there's a long list of I mean, long list, there's more than 1. Of course, HOKA is an important one. We will have SOLO 1. We'll have a lot of yes, we'll have well, PT010, but it's probably more for 2021 and beyond in terms of cash flow generation. So Oksa, we will have Lokelma that we are about to launch. We'll have some of our IO readouts. So there's quite a few, but maybe what we could do is focus a little bit on OXA since you must focus on it. Or do you want to say a few words about the opportunity there? Yes, of course. First of all, we need to see the safety analysis, and we have said that this will be done in the first half of this year. But the opportunity, of course, is very substantial, both in the dialysis segment. But to give you a few numbers, roughly there are 600,000 patients in the United United States on dialysis. It's growing, but the especially the non dialysis population is at least 4 or 5 times bigger than that. At the moment in the non dialysis setting, only iron, oral iron or IV iron is used because of the black box warning of EPOS. Equally, the opportunity in China is very substantial. In China, roughly, there are 800 1,000 patients on dialysis. We already have secured approval in that indication, and we are doing our best in order to get on NRDL as we speak. So we need to wait and be more patient, but we will launch roxadustat in the second half of twenty nineteen. So all in all, depending of course of the outcome of the safety analysis, we feel very good about this opportunity. The unmet medical needs is very, very substantial. But we just need to be a bit more patient in order to see the full data set. Yes. Thanks, Rod. And maybe that gives me an opportunity to make a comment on these data sets because I know some of you have been wondering when is it coming. And we communicated earlier that it would be first half and we are on track with this. You have to keep in mind that it's a very complex database. I mean, it's first of all, a large database, several studies. But importantly, it's not your standard one company sort of analysis. We have 3 companies involved. So we have to consolidate all of this. FibroGen is taking the lead, of course, consolidating this. Then when it is all done, we'll have to have the 3 companies working together to analyze the data and agree on the conclusions. So this is not a very simple exercise. But Sal and L of course, as soon as we have the results, we're very well aware of our obligations here. We will communicate those results immediately when we know the safety analysis. So we start maybe Sachin Jain at Bank of America. Sachin, go ahead. Thanks for Sumit on Sachin Jain, Bank of America. One question on roxa and then one clarification. On roxa, Slide 30, I don't know if I'm over interpreting, but will there be one safety press release or 2? Because you referenced a pool safety analysis followed by totality of evidence. So is there a splitting of the CV versus a broader safety update? Or am I over interpreting that? And then just the second question, just on back to the cash flow and the BD payments. Mark, just to clarify, you had said that the predominant payments were in 1Q. And in your prepared remarks and in answer to a prior question, you said there were further payments through the course of this year. So is it fair to assume that the further payments are smaller than the €400,000,000 for Nexium? And is there any larger payments you could call out? For example, I know you were due EUR 600,000,000 in development milestones on roxa. Should that be positive? Would we expect that cash outflow this year? Thank you. Thanks, Sachin. So the first question, maybe I can cover the second question, Marc, you would cover. The first question very quickly. Again, I just kind of I can only repeat what I said a minute ago, Sachin, is that it's a very complex data consolidation, 3 companies involved. The lead partner here is FibroGen. This is their product. We take their lead. And so we're working as fast as we can. But today, I can't answer your question in the end whether we will have a safety, safety TV safety analysis that we release or we will release everything in one go. It will depend on how quickly we can get those analysis completed. And of course, we know everybody is focused on the CV safety. So as soon as we have this, we know we have to release it. Ideally, we would release everything in one go, but it may be that we have 2 sets of data releases. Again, we're going to have to take our lead from FibroGen on that one. Marc, do you want to cover the Yes. So as I said, there won't be a payment as large as the true up for the joint venture with Merck later in the year, but there will described most of them. They are usually milestones of some form of success, progression of a development program, approval of that development program. So there are there is still quite a few programs that we will have to pay for in 2019. But we have also given an indication that the spend into the outlay in 2019 Q1 was a relatively large quarter. So I think from there, you can probably project the rest of the year. Yes. It's an important piece. The majority of these large payments has just taken place in Q1. So maybe the last one question because we are out of time. Unfortunately, there's a few more questions, but we'll take one one online that relates to Tagrisso there for you. And it's saying that U. S. And Japan are well penetrated in the existing indications. China is the future key growth driver. I would not underestimate Europe also. I mean, unfortunately, and I have to say really unfortunate, in Europe, patients are at the back of the queue. They have to wait until reimbursement is achieved. That's the reality of our reimbursement system in Europe across all products and all markets, quite frankly. So they but we are getting there in term of getting 2nd line reimbursed. And as soon as we can, we'll get 1st line. So Europe still has to make a contribution. But the question here relates to China. Where is the China penetration now, Dave? And where do you see the theoretical ceiling? So let me take James' questions in reverse order. So in terms of the second line, which is where we've got both the approval and the NRDL listing, we estimate that there are within China as many as 80,000 patients. Now we take in our own mind about 20% to 25% access cut on that. So we think that there's between 16,000 and 20,000 patients treated in the second line that have the ability to really get access to. We have a small percentage of those patients and we've got frontline indications and then we'll be looking forward to frontline NRDLs. So obviously, we look forward as well to frontline indications and then we'll be looking forward to frontline NRDL opportunities. So there's really a tremendous amount of China opportunity for DeCaruso. And I can only reiterate what Pascal said, which is that we still see quite a bit of frontline opportunity across the rest of the globe. And I think it's important to look at the China numbers and the composition and see that it is a product that really U. S, Japan, China, Rest of World all make important contributions to it. And again, on China, remember, we have the tender. We won the tender for IRESSA, and it's actually very important because it's important for IRESSA, it's important for 1st line lung cancer patients in China, but it's also important for Tagrisso because in doing this, we kind of create, if you will, the 2nd line market. And the opportunity there is still very large in China. And as Dave said, we'll then move on to 1st line, hopefully. So we'll close here. And I would like to, again, thank you for your interest and repeat that we believe we are very much on track with what we told you before. We're now focused on driving this top line growth, taking it to the bottom line, improving our operating margin and improving our cash flows. And what we've said to you before remains true. And I also want to maybe close by saying this DSI-two zero one opportunity was a unique one. And hopefully, over time, people do realize the potential of this agent, which is, we believe, enormous and explains and justifies why we did this equity raise. So with that, again, thanks for your interest, and I wish you a good rest of the day.