AstraZeneca PLC (LON:AZN)

Earnings Call: Q3 2020

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Nov 5, 2020

Hello, everyone. It's Pascal Soriot, CEO of AstraZeneca. Welcome to the year to date and the Q3 2020 conference call and our webcast for investors and analysts. As usual, the presentation was posted to astrazeneca.com earlier today, and we have also sent it to people on our distribution list. So if you can please turn to Slide 2. This is the usual Safe Harbor statement. We'll be making comments on our performance using constant exchange rates or CER, core financial numbers and other non GAAP measures. A reconciliation between non GAAP and GAAP data is contained in the results announcement. All numbers used are $1,000,000 and refer to year to date September 2020 unless we state otherwise. So starting to turning to Slide 3. We plan to review the presentation first and then do the Q and A until 1:15 p. M. U. K. Time. If you keep questions short, we will try to keep answers short too. For those on the phone, please join in the queue for questions by pressing star 1. And in speaking order, I'm joined by Dave Fredericksen, EVP of the Oncology Business Unit Ruud Dobber, EVP of the Biopharmaceutical Business Unit Marc Dunoyer, Executive Director and Chief Financial Officer Meny Pangalos, who is EVP of the Biopharmaceuticals R and D Group and Jose Baselga, who is the EVP of Oncology R and D. For the questions later, we also have Pam Cheng, EVP of Operations and IT and Leon Wang, who is the EVP for the China and Emerging Markets. Please turn to Slide 4. This is the agenda where we plan to cover all key aspects of our results today. So if we now start with Slide 5. In the 1st 9 months of 2020, our performance remained strong and resilient despite some impact from the COVID-nineteen pandemic and our business performed in line with our expectations. Our total revenue advanced 10% in the year to date despite some headwinds from the pandemic. New medicines were up 36% and we saw continued performance across all therapy areas and in emerging markets. We had a substantial negative impact from Pumilacort that affected respiratory immunology sales in particular in China. And in China, the negative it was negative by around 15% in each case. But one can see strong growth excluding this. Core operating profit grew by 13% 15% lower other operating income with a tax rate of 21%. Core EPS ended at $2.95 and it is up by 16%, more than revenue, delivering operating leverage. As a result, guidance remains unchanged today. We continue to see strong progress in the pipeline, mostly on approvals, supporting sales today and tomorrow. Next year, we are back with many Phase III trials readouts after the regulatory focus this year following extensive data readout in 2019. The efforts against the COVID-nineteen pandemic include advancing the vaccine candidate and now importantly initiating Phase 3 trials for our long acting antibody combination, which is incredibly promising. It's a potential new medicine called AZD7442. And please turn to Slide 6. Looking at the pipeline news flow since the result announcement in July, a few new highlights. There were a number of approvals for the QICA and some medicines across users and geographies. We made regulatory submissions for a number of new users for leading medicines and we obtained several priority reviews. As I mentioned earlier, 2020 has seen a lot of regulatory news flow while we anticipate more new Phase 3 data readouts as we enter 2021. Jose will detail this news flow a day or later. All in all, another great period for the pipeline and only this week and including this morning, we received additional approvals for some of our new indications. So very exciting pipeline progression. If we start to turn to Slide 7. After the financial headline in the pipeline, we now take a deeper dive into our revenue. Total revenue advanced by 3% in the Q3 with growth reduced by Lynparza milestones in the comparative period. In the quarter, if you exclude the milestones, our sales growth was 7%. And in fact, as I mentioned earlier, Pulmicort was the most affected product by this COVID, especially in China. That affected the number of asthma exacerbations, sorry, and therefore, the sales were substantially impacted. If you exclude the effect of Pulmicort, our sales growth was about 10%. So the message is the underlying sales growth is still very, very strong across the portfolio and it actually reflects the strength of our model, the diversified portfolio and the diversified geographical footprint. We have ups and downs and we will cover across this presentation. Some products are up, some others are down, but we have a very resilient portfolio across. As I mentioned earlier, there was some impact from COVID-nineteen in particular China, of course, but also in all regions. We've seen an impact of COVID on the number of hospitalization for heart attacks and initiated in hospitals, so we've seen an impact there. And it has also affected infusion or injectable medicines like Imfinza and Fasenra. Despite this, new medicines added $2,600,000,000 of additional revenue year to date with Tagrisso, Imfinzi and Lynparza as the biggest contributors, followed by Farxiga, Calquence and Fasenra. In particular, Calquence is making very rapid progress. We now have certain new medicines contributing growth and adding further diversification to the revenue as we look ahead. If we turn to Slide 8, if we aggregate the medicines into therapy areas, we had solid double digit growth for oncology and new CVRM with respiratory and immunology seeing the impact from Pulmicort. Excluding Pulmicort, there was, as I said earlier, an absolute double digit growth there of about 10%, so very strong. From a regional viewpoint, there was growth everywhere with Europe impacted by the timing of Lynparza milestones, which I mentioned earlier, but strong sales growth excluding the milestone, which we expect to come in Q4. In summary, the results year to date support the guidance and also a future of sustainable growth across medicines and geographical markets with our global revenue base and diversified portfolio of new medicines as AstraZeneca is well strategically positioned in the current environment and we are ready to be a top an area when needed as we have shown with the effort against COVID-nineteen. We want to remain a trusted collaborator for global healthcare system. Before I hand over to Dave to go into details on our oncology business, I would like to say how grateful I am for the support and hard work from the more than 75,000 colleagues around the world. And I would like to thank everyone for their efforts in the current situation fighting the virus. As I said earlier, we've had some impact from COVID on some of our medicines. The biggest impact is PIMICOT, but we see strong resilience across the portfolio. And importantly, as you will hear during the call, we see a return to normality for Premier Cart in China. It's a slow but steady return to normality. So for Q4, we still expect challenges, headwinds, but going into next year, the picture looks suddenly better. And we also hope and that the trend we've seen in terms of cancer diagnosis that is improving will also play well for us into next year. So with this, please, Dev, go ahead and please turn to Slide 9. Thank you, Pascal. We are pleased to report a strong growth in total revenue of 24% for oncology to $8,200,000,000 year to date. While we did see continued impact in the quarter from fewer patients diagnosed due to COVID, we are seeing nice robustness of our business as sales grew across all of our oncology new brands and this came from regional expansions and new launches. Please turn to Slide 10. Starting with our lung cancer franchise, we're pleased to report that both Tagrisso and Imfinzi showed strong growth in the quarter year to date at 39% 43% respectively with revenue of $3,200,000,000 $1,500,000,000 respectively. Tagrisso continues its global rollout and is now approved in 87 countries in the first line setting and we saw continued expansion in countries with national reimbursement, which now totals 32. U. S. Tagrisso revenue was up 26%, where we saw continued single digit demand growth and also benefited from a one off gross to net adjustment in the quarter. The majority of Imfinzi revenue continued to come from the U. S. As the launch of the Caspian indication, an extensive stage small cell lung cancer has really begun to take effect despite henweds from COVID-nineteen on patient diagnoses. Outside of the U. S, we're starting to see the revenue of Imfinzi pickup, particularly in Europe and the emerging markets as we continue to roll out with more approvals granted. We await the Caspian indication to drive further growth outside of the U. S. Where the ability to combine with both cisplatin and carboplatin represents further benefit for patients. For both medicines, we anticipate that if the China NRDL negotiations are reached, we could have the usual sales impact towards the end of the year, as we would then look to provide access to a greater proportion of patients. But right now, we can't say what that outcome will be. Please turn now to Slide 11. On Lynparza, Lynparza showed continued progress with product sales up by 53% with about half of sales coming from outside the U. S. This reflected growth across all regions as we continue to roll out the breast and ovarian cancer indications in the major markets of the U. S, in Europe and Japan. Total revenue was impacted by the phasing of milestone payments from Merck with further milestones anticipated in quarter 4 of this year. U. S. Sales continue to grow by 46% with continued increase in demand as Lynparza maintained its leadership in the PARP inhibitor market in both ovarian and breast cancer as we launched the PALO-one indication in first line HRD positive ovarian cancer and the profound prostate cancer indication. Europe sales were up by 51%, driven primarily by first line ovarian cancer launches as we now look forward to the ovarian paula and prostate launches in Europe following the approvals that we announced earlier this morning. Emerging market sales were up by 105%, driven by the China launch and the recent inclusion on the NRDL. Japan sales amounted to $119,000,000 with growth of 30% driven by uptake in ovarian and breast cancers. Please turn to Slide 12. Turning now to our more recent launches, Calquence in chronic lymphocytic leukemia and in HER2 and third line HER2 positive metastatic breast cancer. I'm very pleased to report Calquence revenue of $340,000,000 in the year to date, predominantly coming from the U. S. Where the new approval in CLL took effect at the end of 2019. The launch feedback is very encouraging as the very impressive Phase 3 data are resonating well with physicians. We're encouraged to see expansion in our prescriber base with Calquence now achieving over 35% of new patient starts across all lines in CLL. We await the EU regulatory decision imminently following the positive CHMP recommendation earlier this year. Following the in HER2 launch at the beginning of the year, we're pleased to have reported $63,000,000 in collaboration revenue based on $136,000,000 of U. S. Sales booked by Daiichi Sankyo in the year to date. And HER2 is now the most prescribed medicine in the 3rd line and 4th line settings of HER2 positive metastatic breast cancer. Before I end, I want to thank all of our oncology colleagues for what they do every day to the benefit of patients and to our company, especially during the ongoing global pandemic. I'll now turn it over to Ruud for an update on our biopharmaceuticals business and emerging markets. Please turn to Slide 13. Many thanks, Dave. Today, I'm very pleased to talk to you about the biopharmaceutical business. Total revenue of biopharma comprising new cardiovascular, renal metabolism and respiratory and immunology was $7,300,000,000 in the year to date, growing at 5% despite the COVID pandemic. Starting with new CVRM, revenue was up by 10% despite intense competition in diabetes with total revenue at $3,500,000,000 Growth for both Farxiga and Brilinta continued. Farxiga maintained volume market share globally with strong volume growth across all regions, while benefiting from the SDLT2 class growth. In the United States, Farxiga saw a reduction of 3% as price declines took effect, though volumes continued to grow due to the hard failure launch. And in the quarter, sales were up by 18%. Outside the U. S, which accounts for 72% of revenue, we saw strong performances with volume driven growth increasing and China benefiting from the NRDL listing. Berlinza delivered revenue of $1,200,000,000 with 9% growth, driven by a resilient performance in emerging markets, up by 18%, while China volume based procurement impacts took effect. We also had continuous growth in the U. S, up by 7 percent, but Europe experiencing COVID headwinds down by 1%. The majority of use is still in the acute setting and Berlinta continues to outgrow the market in all regions. Please turn to Slide 14. Turning to respiratory and immunology. We reported revenue of $3,800,000,000 with a 1% growth in the year to date, mainly due to the negative impact from Permicort, notably in China. The impact of Permicort on our overall respiratory and immunology revenue was 15% in the quarter and the year to date. Symbicort sales were strong at $2,200,000,000 with a growth of 16% in the year to date. United States saw particularly strong growth, up 29% to $755,000,000 due to the demand growth following the launch of the authorized generic and a resilient ICSLABA market. Globally, Symbicort remained the leader in value and volume market share in the ICSLABA class. Pulmicort was down 39% in the year to date with revenue of $628,000,000 which continues to be impacted by COVID in China, especially the pediatrics nebulizing segment. We continue to focus on growing revenue of Symbicort as the maintenance therapy. Please turn to Slide 15. Now I will focus on our new launch medicines. Fasenra contributed $660,000,000 of revenue in the year to date with good growth despite COVID-nineteen, whereas the majority continued to come from the U. S, Germany and Japan. In the U. S, Fasenra is performing very well against new competitors, up by 23%, which is $423,000,000 in revenue. Europe and Japan revenue were $140,000,000 $72,000,000 respectively, as Fasenra continued to be the leading novel biological medicine for severe uncontrolled asthma. The launch of BREXTRI for COPD is progressing well with revenue of $21,000,000 in the year to date, with launches taking place in Japan, China and more recently, the U. S, as we await for the U. S. For the EU regulatory review with anticipated decision before the year end following the positive CSMP recommendation. As we look to kidney disease, we plan to further build our franchise on top of Farxiga on top of the Farxiga data with Lokelma and roxadustat. Lokelma had revenue of $48,000,000 in the year to date, mostly from the U. S. At $37,000,000 as we maintain leadership in the new to brand prescriptions. China and Japan launches are progressing well. On roxadustat, we reported collaboration revenue of $90,000,000 in the year to date coming from China. However, the quarter declined versus the previous quarter reflecting an accounting adjustment, demand remains very strong with more than 90,000 patients being treated for anemia in CKD with roxadustat. We continue to anticipate the U. S. Regulatory decision by late December. Please turn to Slide 16. Now let's take a closer look to the positive momentum we are seeing with Fasenra. Across the world, Fasenra continues to be the leading novel biological medicine for severe uncontrolled asthma in new to brand prescriptions, as you can see on the left side of the slide. Equally, from a total prescription perspective, we have made very positive progress from 2019 to 2020, as shown on the right slide. We are confident that Fasenra is on track to blockbusters status and more importantly, helping 1,000,000 years of severe asthmatics around the world. Please turn to Slide 17. Emerging Markets, where total revenue grew by 11% in the year to date, continue to track ahead of our long term performance ambition, which is to grow sales on average by mid- to high single digit percentage despite a slight negative effect from divestments. Outside China, total revenue was up by 10% with growth spread across the regions. China delivered a resilient growth of 11% and continued to see some impact from the COVID-nineteen pandemic. Notably with Pulmicort, as previously mentioned, and continued volume based procurement impacts. We anticipate the typical quarter 4 impact in China as we approach the NRDL negotiations. New medicines grew by 68%, now contributing just over onethree of total revenue in the region with the strong performance driven by oncology and new CVRM. With this, I will hand over to Marc. Please turn to Slide 18. Thank you, Ruud, and hello, everyone. I want to take you through our financial performance in the year to date, as well as a reminder to our guidance for the full year. Please turn to Slide 19. As always, I will start with the reported P and L before commenting on our core results. As Pascal mentioned earlier, total revenue grew by 10% in the 1st 9 months of the year, despite the impact of the COVID-nineteen pandemic. Within total revenue, product sales were up by 11%, driven by the success of the new medicine, while the fall in collaboration revenue in the Q3 primarily reflected the phasing impact of substantial milestone received booked in the Q3 of last year in respect to Lynparza. I do expect significant Lynparza milestone receipt in the final quarter of 2020. Please turn to Slide 20. Turning now to the core P and L. This slide shows the progression in our operating leverage, and now we are performing in line with our full year guidance. Our gross margin ratio was 80.5% in the 1st 9 months, and I continue to expect a ratio of around 80% to 81% over the full year versus 80% in 2019. Core R and D expenses increased by 9%, partly a result of the focused investment in the pipeline, including the development of ONEO2 and now DS1062. Merck's upfront contribution in 2017 to the development of Lynparza, recorded at that time in our balance sheet, was gradually released to the P and L until last year. This impacted the comparative performance. The R and D line also includes the development of Brasikumab, though we have refunded those costs through the other income line. Core SG and A expenses increased by 3% in the year to date, driven by additional investment in the China expansion and further support for global launches of the new medicine. There was, however, a decline of 1% in core SG and A expenses in the 3rd quarter, helped by savings in travel and expense cost. Core other operating income declined by 15% in the 1st 9 months to $889,000,000 and anticipate a slightly lower combined level of collaboration revenue and other operating income over the full year versus 2019. Our core tax rate so far this year in the 1st 9 months was 21%, in line with the indicated range of 18% to 22% for the full year. Finally, our core earnings per share ended at 2 $0.95 up by 16%, demonstrating the sustained progress we are making. Please turn to Slide 21. Before we look at net debt and cash generation, I want to take a moment to highlight the changing shape of our P and L. While we expect collaboration revenue to increase over time and anticipate that income from divestment will remain a material part of our P and L, The left of this slide highlights the change in sources of profit and the growing contribution from product sales that are being made from our new medicine. And I expect this long term trend to continue. Turning now to net debt, it increased by $1,900,000,000 in the year to date. The generation of $6,000,000,000 of EBITDA was offset by a number of factors, including dividend payments totaling $3,600,000,000 while we also made the second of $2,675,000,000 upfront payments to Daiichi Sankyo in respect to R2. Finally, we also paid the 1st non contingent payment of $350,000,000 in the 3rd quarter as part of the agreement on DS1062. It is worth noting that net debt remained stable since the end of June, a date after which the second interim payment was paid. I was pleased to see that our constantly evolving underlying business performance drove a year on year increase of $1,400,000,000 in net cash flows from operating activities. This result bodes well for our ambition to cover dividend payment next year through cash flows before financing activities. Please turn to slide 22. This familiar slide continues to demonstrate the progress we are making. As I mentioned, the 10% growth in total revenue so far this year was converted into a 16% increase in core earnings per share. Our core operating margin rose by 1 percentage point to 28%, even with a significant reduction in collaboration revenue and other operating income. The progress of our operating leverage was also demonstrated by the fact that core operating expenses represented 57% of total revenue versus 59% a year ago. This increasing level of profitability will convert into more cash that will help us deleverage our balance sheet and help us to remain focused on the capital allocation priorities of reinvestment, the progressive dividend policy and our strong investment grade credit rating. Please turn to slide 23. Finally, I will turn to guidance for 2020, which as I mentioned a moment ago, is on total revenue and core earnings per share at constant exchange rates. I am confident in the retention of our guidance for the year, despite the uncertainties arising from the pandemic. A high single digit to low double digit percentage increase in total revenue is anticipated to drive growth in core EPS of a mid-twenty 18 percentage. With that, I now hand you over to Mene. Thank you, Mark. And if we can go to the next slide, please. Hello, everyone. I'll provide an update on our COVID-nineteen efforts and our biopharmaceuticals medicines since last quarter. And I'm also joined by Jose Baselga, who will discuss oncology movements and upcoming news flow across the company. Please turn to Slide 25. We continue to lead across multiple fronts in the global response to the COVID-nineteen pandemic. Progress has been made with our vaccine AZD1222 and we have now resumed dosing in all our trials globally alongside entering a rolling regulatory review in Europe. We are fully recruited in the U. K, Brazilian and South Africa trials with around 23 1,000 patients now enrolled. And we continue to anticipate data readouts for these studies from our vaccine program within the next 2 months. Our long acting antibody combination MEDI-seven thousand four hundred and forty two is starting several Phase III trials to evaluate this potential role in the inpatient, in the outpatient and in the prophylaxis treatment setting. The trials will look at a range of doses from 300 milligrams to 900 milligrams of both across both intramuscular and intravenous routes of administration. And we're optimistic based on the data we've seen so far from our early clinical studies that we can deliver protection for between 6 12 months. Finally, we continue to look across our pipeline for medicines that may address different symptoms of COVID-nineteen disease such as acute respiratory distress syndrome and organ damage. Please turn to Slide 26. We recently showcased 2 key pillars of our growing renal portfolio at Medical Congresses as we start to focus on specialty care in CVRM. At the ESC, we presented the DAPA CKD trial where results showed a 39% reduction in the composite measure of worsening of renal function or risk of cardiovascular or renal death. Farxiga truly has the opportunity to redefine a new standard of care for kidney protection as the first medicine to significantly prolong survival in patients with CKD either with or without type 2 diabetes. With our partner FibroGen, we presented over 40 roxadustat abstracts at ASN. 2 late breaking posters examined the association between hemoglobin levels and cardiovascular outcomes. Roxadustat also showed a reduced risk of hospitalization for heart failure and the risk of red blood cell transfusions while not being associated with an increased risk of cancer. These abstracts all highlight the potential of roxadustat to transform the standard of care in patients with anemia of CKD and we anticipate the U. S. Regulatory decision before the end of this year. Please turn to Slide 27. As we prepare for the readout of tazepelumab in severe asthma this quarter, I'll now focus on new data in respiratory and our expanding immunology pipeline. On the left hand side, I wanted to highlight another practice changing data set, this time in COPD with Breast 3 from our Ethos Phase III program. In addition to meeting the primary endpoint in exacerbation reduction, Breasttree with a 3 20 milligram dose saw a 46% reduction in the risk of all cause mortality, a key secondary endpoint when compared with LAMALABA therapy, really transformative data for COPD patients. Switching to immunology. Fasenra's extensive life cycle program in immune driven diseases continue to expand. And this month, we announced positive data from the Phase III nasal polyps trial, OSTRO. And nasevumab in collaboration with Sanofi is the first potential pathogenization for infants to demonstrate a sustained protection across the entire respiratory synchial virus season with just one dose, using the same technology as it happens as monoclonal antibodies for SARS CoV-two YTE technology. For Crohn's disease and ulcerative colitis, our IL-twenty three antibody brasikumab seeks to address the large unmet need. Anifrolumab, our interferon 1 therapy has demonstrated consistent clinical benefits across all measured SLE patient subgroups as presented at this year's EULA conference with additional analysis presented at ACR 2020. Regulatory submissions for nifrolumab have been accepted both in the U. S. And the EU with regulatory decisions expected in the second half of next year. Please turn to Slide 28. To end, I'll quickly update you on the progress made in biopharmaceuticals and what's next in our pipeline. Our GLP-one glucagon dual peptide cetalotide, the start of Phase II trial is now also in diabetic kidney disease. Building upon the success with Farxiga in CKD and heart failure, we have 2 Farxiga combinations moving into Phase II across heart failure and chronic kidney disease indications. The first is our mineralocorticoid receptor modulator AZD9977 and the second is a selective endothelium A antagonist, divertentan, otherwise known as AZD4,054. These are the first of several Farxiga combinations moving into mid stage development across CVRM indications with the extend the aim of extending the life cycle and life of Farxiga. Finally, having demonstrated robust proof of mechanism for our subcutaneous PCSK9, antigen soluble nucleotide, we'll be starting Phase IIb trials in the next few weeks with the ambition of rapidly moving into pivotal studies in the coming year. We look forward to updating you on the progress of all our medicines in our biopharmaceuticals pipeline. Now I'll now hand over to Jose and please turn to Slide 29. Thank you, Mene. Hello, everyone. We had a strong presence at this year's virtual ESMO 2020 meeting that was held this quarter. If you look at the left, exploratory analysis from Tagrisso Zadora Phase III trial showed that Tagrisso reduced the risk of central nervous system disease recurrence by 82% in stage 1b to stage 3a EGFR mutated non small cell lung cancer patients. This data underlies the capability of Tagrisso to reshape clinical practice in the months years ahead in this patient population. If we now focus on the middle panel, we presented overall survival data from Lynparza's PROfound trial in biomarker selected men with metastatic castration resistant prostate cancer. The study demonstrated the potential that this drug has to transform the therapy landscape. In addition to the main data, in a pre specified adjustment for crossover, we saw a hazard ratio of 0.42, further supporting the transformational potential of this medicine. We are happy to let you know that today we announced that we have received regulatory approval for both ProFound and Paolo 1 in the EU. Additionally, if you look at the right, we showcased data from our pipeline, including an HER2 and a HER2 subgroup analysis in patients with HER2 low gastric cancer. This was the DESTINY Gastric 1 study. Of note, we have recently granted a priority review in the U. S. Alongside with regulatory submission acceptance. We also presented 4 year overall survival data for Imfinzi in stage III undersectable lung cancer and a 5 year follow-up data from Lynparza's SOLO-one trial illustrating our vision to transform the cancer treatment landscape and advanced clinical practice. Please turn to Slide 30. Next, I would like to update you on our progress on what's next for oncology. New this quarter, we now have included ditopotamab deruxtecan, our TROP-two ADC licensed from Daiichi Sankyo as a potential new medicine. Based on very strong Phase 1 clinical data in lung cancer, it is now advancing straight to Phase 3 trials in this indication. Additionally, in normal cell lung cancer, our bispecific PD-one CTL-four MEDI-five thousand seven hundred and fifty two antibody will commence Phase II trials. In multiple myeloma, we've started phase 2 trials with MEDI-two thousand two hundred and twenty eight, our BCMA ADC. In addition, we continue to move forward aggressively to launch our initial phase 3 study for the oral SIRT. If you look at the right now, as for progress on what's now, we are launching a number of exciting Phase III trials, including capivasertib in prostate cancer and HER2's DESTINY Breast 6 trial in HER2 low breast cancer and CALQUINZE in diffuse large B cell lymphoma. I look forward to updating you on the progress of these medicines and others in the near future. If you could please turn to slide 31. As Pascal highlighted earlier, 2020 has indeed been a great year for regulatory news flow with some key submissions and regulatory decisions still to come in the last quarter. In terms of data, we still have our anti TSLP, tesalipumab, due to readout in severe asthma this quarter. Now as we look into 2021, there is a lot to look forward to. We will see phase 3 data readouts from Lynparza's OLYMPE trial in adjuvant breast cancer and the PROPEL trial in the first line metastatic prostate cancer. For NEMINCI, we will report on the PACIFIC II trial in stage 3 and resectable non small cell lung cancer and in early bladder cancer in the NIARA trial. We'll also have the highly anticipated head to head data for ANHERT2 persulfidium1 in second line breast cancer as well as Farxiga data in heart failure with preserved ejection fraction and PT27 in asthma. As you can see, these pipeline events provide further evidence of our diversified portfolio, both in biopharma and in oncology. And with that, I'll now hand back to Pascal for closing comments. Please turn to Slide 32. Thank you, Jose. So if you want to turn to Slide 33. Before the Q and A session, I will leave this slide for a few moments. As a summary of the strategic achievements and summarize today's results as follows: 1st of all, revenue advanced by 10%, in line with our expectations and despite the impact from COVID-nineteen. The global business continued to deliver with strong performance in the emerging markets, excluding Trinamicorp, the performance also supported by the U. S, Europe and Japan that are helping to further diversify the revenue base. In addition, there are 8 medicines with annual sales in excess of $1,000,000,000 We've also made solid progress on operating leverage, profit and profit contribution from sales as well as cash flow. I would like just to highlight that this results, financial results, strong results are actually achieved in the context of 2 challenges or 2 headwinds. The first one is we have lower operating income and collaboration revenue, as Mark highlighted, in great part due to the timing of a milestone. And the second is we are operating in a relatively hostile environment with COVID headwinds. The impact is mostly on Pumicot, of course, with a more modest impact on some other products. And despite those challenges, the business is able to develop today about this kind of growth rate and profit improvements and cash flow improvement. So it really bodes well for the future as the world hopefully will return to more normality as we find solutions to this terrible pandemic. Our pipeline continued to advance in 2020, mostly in the form of approvals and other regulatory milestones. And that is supporting our aspirations for continued strong revenue growth. We now have 20 medicines in the late stage pipeline across new medicines and life cycle opportunities. And with that, there is optionality in the fight against COVID-nineteen with the vaccine and most importantly, the long acting antibody combination, which as you heard from Mene is looking quite exciting and promising. Early days, of course, but they're quite exciting. In 2021, we anticipate more new Phase 3 data, which, if positive, will help sustain the current momentum as we continue to transform and transition our business, increase our profitability and our cash flow. We will now go to Q and A. And can I please remind everyone to limit questions to 1 to be fair to all of our callers? Thank you in advance. And perhaps now we can take the first question from the conference call. The first question is from Andrew Baum at Citi. Andrew, go ahead. Thank you, Pascal. It would be remiss for me to ask not on COVID given where the world is at. I see you have Pam Chen on the call. Perhaps Pam and Mena, you could comment on the exact nature of the roadblocks in the supply chain that have led to some downscaling of the volumes that you intend to supply the U. K. Government, just so we can think through the ramifications for volumes to the U. S. And other markets in the next year? And one question on Mena, just could you add to that for your antibody cocktail 7,442, the volumes that you could hope to attain given the potency that you seem to be able to generate through the engineering with this biologic? Thank you, Andrew. Let me make a couple of comments before I hand over to Pam for your first question. The first thing is that we are a little bit delayed in our initial timing because of the drop in infection rate during the summer period in the U. K. If you remember back in April May when we started the infection rate was very high and it dropped in the summer which of course was good news for the community but impacted the timing of the trial. It has picked up now quite a bit, and of course we have also accumulated events in Brazil. We are we are blinded to the event the number of infections that have been accumulating. As you know, in a study like this, only a couple of statisticians know. But we expect now with this pickup and based on what we are told, we expect, as many said earlier, to have results before the end of the year. As it relates to supply, again, I'll hand over in a minute to Pam to give you more details. But what we have done is we have aligned the timing of delivery of vials to the timing of the clinical trial with that because I remember when we keep the drug in drug substance in vaccine bulk format, this is kept in a frozen state and therefore delivers a very long shelf life. As soon as you turn this vaccine into vials, the shelf life starts ticking. And of course, the vaccine being new and recent, we have limited shelf life data so far. It looks good, but, you know, it will improve over time, hopefully. But so far, we have limited data. So we've kept this vaccine in bulk formats, and we will turn this into virus as soon as we feel confident, as soon as we get clinical data. We also know in the U. K. That what the timing of the vaccination schedule looks like. And of course you can't vaccinate 20, 30,000,000 people in a week. So we will be able to deliver our vaccine. If we get approval before the end of the year, we will be able to time the delivery of our vaccine in viral form to the U. K. Government to align these deliveries to the vaccination schedule they have put in place with population priorities and weekly targets per week. And net net is on a global basis, we'll be ready to supply 100 of millions of doses of vaccine around the world by January. And by hopefully by January, if the vaccine works, so I think it's crossed, we would hopefully have approval and start vaccinations. Pam, do you want to give a little bit more details as to the supply chain process we follow? Absolutely. So thank you, Andrew, for the question. This is Pam Chang speaking here. I have to say, given the enormity of what we are undertaking here, challenge is normal and I'm happy to report that we've been able to deal with the challenges. And since we've last reported on our capacity, there has not been any meaningful changes in the target capacity on the supply chains that we have set up. So as Pascal have spoke about, what's really important is really to make sure that supply chain our supply chains are ready across our supply chain nodes, including drug substance, which is the active formulation, filling and packaging, and as well as analytical testing and release steps. Many of our sites really important to note that many of our sites in a global network have begun process validation and commercial manufacturing. So in other words, we are ready as we speak to produce finished products. However, as Pascal mentioned, we must be thoughtful in terms of how much and when we convert what we call the drug substance, which is the active, into formulated vials, for example, because of shelf life issues. So our aim is upon regulatory approval, if and when we get the regulatory approval, we will be able to release product on a rolling basis, and begin supplying 100 of millions of doses, upon approval. So with that in mind, we are placing significant amount of effort into planning in terms of when we convert the drug substance. And we are holding majority of our inventory in drug substance form, which is in frozen state, which is obviously more stable. Thank you, Pam. And, Nenet, do you want to cover the second question? So as you know, Andrew, we've got commitment already from the U. S. And U. K. Governments during the public domain for 2,000,000 doses, which we'll be able to supply next year. And we have additional capacity beyond that. I think as William said, we're aiming to be between $2,000,000 $4,000,000 doses next year, obviously, depending on the ultimate dose. And then obviously going into 2022, we want to increase that as much as we can. So we're in the several million doses next year and then growing into 2022. Thank you. And then, Louis Hector at Berenberg is the next question. Louise, go ahead. Oh, hello. Thank you. So I have a couple of follow ups still on the vaccine and the antibody. So in terms of the vaccine, should we be expecting early data from the 2 dose regime? And to what extent would there is there likely to be data on elderly patients? I'm just wondering if they were recruited slightly later into the study and the early data might just be in slightly younger cohort? And on the antibody, I'm just interested to understand with the Phase 3s in terms of the prophylaxis, how long you expect to have follow-up to really demonstrate that 6 month longevity. So will those studies take longer to read out Or can you take the cut to 2 months and then keep the follow-up going? Thank you. Thank you, Chris. Two important questions, Mene, if you want to cover those 2. And the antibody, we like to call it a long acting antibody, Liza, because we hope to deliver 6 to 12 months protection depending on the dose used. But with that, Mene, go ahead. So in terms of the readout, as Pascal said, we're expecting to get a readout before the end of the year. And Andy Pollard has just presented a few weeks ago. You may have missed it at an infection conference, actually data from elderly adults. So we showed that the immune response in the 56 to 69 year olds and 69 and 17 and above looks very similar to the response of the 18 to 55 year olds. In that regard, we're feeling good about the immunogenicity in all the age groups that we're testing. And we think we will have data from those age groups for the readout. With regards to the antibody study, it's a great question. We'll be following patients out for 12 months, We will obviously be having interim looks that will enable us to understand the efficacy of the antibody sooner than that once we continue to complete the studies to the final analysis. Thanks, Mene. Do you want to say an additional couple of words on the antibody explaining the long acting but also the lack of effect of function and the potential benefit of it? There's a couple of there may be a few different things to say. So there's a number of different studies that we're taking. So we have a prophylaxis study that's hopefully starting next week called Proven. This is going to be using a relatively low dose, 300 milligrams intramuscular. So obviously, intramuscular is a very easy route of administration for the general population. And the population we're going after here is immune compromised patients, vulnerable patients that maybe will not respond well to a vaccine. Just to give you an indication, there's about 500,000 patients just in the U. K. That are immune compromised that would be available for such a therapy. We have another study called STORM CHASER, which is looking at post exposure prophylaxis. That's also going to be using 300 milligrams I'm And in that particular study, we're going to 300 milligrams or 600 milligrams sorry as well. In that study, what we're doing is going into a site that's have an infection and immunizing everybody with the antibodies. So whether you're positive or negative, it doesn't matter. Everyone gets infected. So you can imagine a care home having an infection. You go and immunize everyone in the care home and give them immediate protection. And then we have our TACL study, which is our outpatient treatment study. That's looking at 600 milligrams I'm And then we have 2 studies that are going to be sponsored by the NIH. 1 is the ACTIVE II, which is also an outpatient study. They're looking at both an IV and I'm dose route of administration. And the ACTIVE III study is the inpatient treatment study where they're going to be looking at a a the doses, they'll be looking at an IV infusion as well. So as I said, the YT extension gives us what we feel pretty confident about will give us 6 to 12 months of protection with a single dose. The Fc inactivation that we've done, we think is important potentially could be important in those severe patients. As you know, the lileo and Regeneron antibodies are both stopped because of a poor risk benefit in the more severe population. The fact that we've inactivated the Fc domain in terms of Fc receptor binding and the fact that we're going with much lower doses, I think, means that we may have a better chance of seeing some activity or some efficacy in that more severe patient population as well. But we think overall the half life, the route of administration, the dose give us a real competitive advantage relative to the other antibodies. The next question is from Richard Fox at Exane. Go ahead, Richard. Hi. Thanks for taking my question. Hopefully, you can hear me okay. Yes. Yes. So yes, I just wanted to ask a big picture one maybe for you, Pascal, on U. S. Drug pricing reform. It looks like it's likely we'll have a Democrat President and a Republican controlled Senate. And I just wonder, do you think the outlook is for further stalemate on this issue? Or does that really provide the ideal backdrop for maybe the industry to support a compromised solution that might finally remove the industry from the political crosshairs? So just your thoughts on bigger picture for U. S. Drug pricing? Thank you. Thanks, Richard. I could ask maybe Ward who to answer. Ward leads about pharma business, but also is the head of the U. S. Organization. So Wood, do you want to go ahead? Yes, absolutely, Pascal. First of all, it's clear that it's still unknown, of course, who's going to win. But regardless of who's going to win, we are a little bit neutral, to be very honest. We have a clear statement that we try to work with every government irrespective of the political backgrounds. We are very committed to be a very constructive partner. And we also hope that some of, let's say, the policies we are supporting will get traction, policies like value based agreements, lower co pay, co pays for patients, a better affordability for medicines, innovative medicines are crucial elements and whether the current president will remain in office or if we have President Biden, we once again, we are a little bit ambivalent and we will do our best. Having said that, linking it also to the vaccine and antibody, we are working in a very constructive way with the U. S. Government. They are highly supportive, as you know, of our vaccine efforts as well as our long acting antibodies. And hopefully that will continue if there is a change. Thank you, Rod. I mean the only thing I would add is that, Richard, is I'm sure you've seen that the balance of the Senate tends to favor Republicans, and, the Speaker leader McConnell has been reelected, as you know, and they've always been very vocal in terms of their opposition to any form of price control. So of course, that will have an impact on the ability of any administration to implement changes, and we hope to see discussion around value based pricing as Rod said and not so much discussion about government driven price controls. So the next question is from Steve Carlett Cohen. Steve, go ahead. Thank you. I have 2 product related questions. On Imfinzi and neoadjuvant non small cell lung cancer, when should we expect to see the MPR and PCR readouts and would you file on them? And what led to the decision to make NPR rather than PCR the co primary endpoint? So that's the first question. Second question is regarding the collaboration with Arcus for the TIGIT, have you seen data? And why did you pick the Arcus agent as opposed to that of competitors? Thank you very much. Thanks, Steve. Jose, do you want to cover both questions? And maybe on the ARCUS collaboration, Dave could add anything he wants. So, Jose, go ahead. Yes. So in the other collaboration, we studied very well the antibody properties and we feel that is a fantastic antibody. So that's why we were so happy to seek a collaboration with them. And to be as most important at all was the enthusiasm that was shared with Arcos and ourselves in developing this in what we think is the best indication, which is in the PACIFIC indication. And I think that for us was very, very important because we feel that there we can make a true difference. Then as for the first question, would you mind repeating this briefly to me? You know what, you meant Imfinzi, Jose, on the change from NPL, CPR, the endpoints modification? Yes. So we have been following like the endpoints and we just changed them because we think that we're trying to find an endpoint that is more robust and that's what we just did it. We have kept the old endpoint as a co primary endpoint. Thank you. Next question is Sachin Jain, Sachin at Bank of America. Sachin, over to you. Thanks for taking my questions. 2, please. Firstly, on China outlook into 2021. You've highlighted there's lots of moving parts of EVP pressure, Polycorp base effect NRDL additions, which will have price and volume. So I wonder if you could try and put all of that together for us and give us some idea of how growth will look into next year versus the 26% growth ex Polycom in the Q3? And then the second question, just big picture capital allocation. You've mentioned unchanged priorities, but each of the last 2 years have seen product deals even though they're officially low on your capital allocation list. So how do we think about exceptions to the rule into 2021 for product specific deals, which the market is generally light, both in HER2 and 1062 or even larger deals, if they are on the radar at all? Thank you. Thank you, Sachin. So Leon, do you want to cover the first question about China? Yes. I think VBP is definitely will be coming, the 4th batch, 5th batch sometime next year. And some of the AstraZeneca products will definitely get in. But right now, we actually have been trying very hard on Crestor and now on Belinda. So by channeling patients, loyal users to the outside hospital channel like retail pharmacy, online pharmacy in order to maintain a loyal user as much as possible for branded off patent products. So I think we definitely have a way and by expanding to more outlets, hospital and pharmacy and clinics, and we will be able to slow down the decline or erosion for VBP. And the Pulmicore, I think this year, like Pascal said, in September, we already see a good sign of rebounding of POMICCORD because of schooling and the people are less wearing mask in China. So we want to also see the same trend happening in quarter 4. And also quarter next year 2021, Pomi Cord will be comparing Pomi Cord very low Pomi Cord this year as a very low base. So we believe next year promo code will be a better year. And NRDL this time, we are applying for 6 to 7 new products and also some new indication. So definitely there will be also quite price cuts because of the budget pressure in China. But AstraZeneca has very good coverage and a solid number one position in China. So we will definitely be able to scale up volume much faster than the other companies in China. So we will be definitely benefit from NRDL one after another like Foresigar, Roxa and Tabrizio and Impa that you saw in the past. So with all these three moving pieces, we expect not China will not grow like 30%, 40% like what we did last year. But I think China will still continue to grow low double digit or low mid teen digit, I think, so in that range. Thank you, Leon. Let me just add 2 things that Leon has said, but I'd like to reemphasize this. I think our our number one position in China and the strength of our organization are really bringing 2 specific benefits that we can leverage. One is Leon talked about Cresta. Because the prices of those products is declining after VBP and the drug themselves in the end are affordable. There is this market that is developing that you can supply for retail pharmacies, online pharmacies, and we've been very active in that segment. And essentially, the story is people can decide to pay out of pocket because of, CRESTA, their loyal supporters. And instead of going to the hospital to get and queuing there to get their medicines for free, they just have to get to pay a limited amount out of pocket, and they can even get the drug delivered to their home. And in Shanghai, the big cities, you get things delivered to your home for $1 or $2 So there is this special market that exists and has enabled us to maintain CRYSTAL through enormous volume growth despite the price drop. And the second phenomenon that is really important is an RDL drives access to many patients, but it also drives price decreases. Now get, again, advantage of the volume growth, you have to have a broad coverage of the entire country. And we are one of the few companies that have this broad coverage reaching out to clinics, small county hospitals, etcetera. And so we are very, very well positioned. We have a strategic advantage leveraging this existing network to grow volume across the country and take advantage of an RDL listing. Otherwise, you get the price cut, but you cannot benefit from the volume growth. So with this, the second question is capital allocation. I'll ask Mark to answer this, but I will not say as such in that you should see the deals we've done as exceptions. We've always said that we will remain open to doing deals that are strategically making sense for us and products we can add value to. We start over to you, Man. Thank you, Pascal, and thank you, Sachin, for the question. So our capital allocation priorities are not changed. I think what you referred to is probably the immediately accretive condition that we have. And if we look at the 2 ADCs that we are partnered with Daiichi Sankyo, they were in a way not meeting that criteria and therefore one could term them as exception to our general rule. But apart from the accretion of these two deals is not very long, not very deep and not very long. So there are exceptions, but they are not major exceptions. So basically, there is no change in our capital allocation priorities. Thank you, Marc. The next question is from KU Parikh of Goldman Sachs. KU, over to you. Good afternoon and thank you for taking my questions. 2, if I may, please, on the vaccines. The first one is, I think on the media call this morning, Astra was quoted as saying that we should expect the data from the vaccines in November. So just wondering if you can clarify, is that timeline based on an interim analysis of the ongoing Brazilian South African and the UK studies? And if so, what is the number of humans that would be needed to trigger this interim analysis? And then secondly, continuing with vaccines, I was wondering if you can just help us think through the powering you need on the first final income analysis there? Thank you. Thank you, Kjell. So I'll ask Meny to cover this. Let me just correct one thing quickly. As we didn't say November, we said before the end of the year, which, of course, you could read as November or December. The choices we don't know because we are blinded, but and the projections are such that we know it could it should happen before the end of the year. But with this, Mene, over to you. Yes. So thanks, Kieran. Unfortunately, I'm not going to be able to shed a lot of light on this because as you know, we don't talk about interims and on giving details about this. This is an OCCO sponsored study. I think what I can say is that we're confident that we'll get results before the end of the year. But we're not disclosing whether that's interim or final. But we do hope we'll get results by the end of the year that will tell us one way or the other whether this vaccine is effective. And that is based, of course, on the non U. S. Studies. U. S. Study has restarted and is recruiting fast, but of course, initial results would be based on the non U. S. Program. Pascal, maybe you want to go to the webcast question and then back to Tim. So we'll give Tim a few minutes to connect. So the next question online is a question from Marietta Nimitz at Primaverneux. And the question from Marietta is in China for Brilinta, does the in class price cut after VBP round affect the hospital market only or also the retail market? Is there a spillover into retail? And is the price cut always 30% or does it vary? Leon, it's for you this one. Yes. Actually, in China, it's a universal price. There's no public or private or hospital retail difference on pricing. So it's a universal cut if you lose tender or if you win the tender, it's all the same cut. So the spillover definitely, the percentage of business in pharmacy will go up because in hospital they first need to use tender winners drug instead of losers. So losers all go to retail pharmacy and still selling to the low user. It's not always 30%, 30% is the maximum cut. If your price gap against the similar generic is very small and this can also go down to 20%. Thank you, Leon. So what we could do is move to the next question, Marc Persil at Morgan Stanley. Marc, over to you. Thanks, Frode and Mene. Clearly, tremendous growth in Q3. The heart failure indication hasn't really kicked in and obviously CKD is yet to come. So could you talk to sort of maximize the opportunity over the medium to long term? Obviously, the composition matter pattern going in about 5 years' time. But will you get additional IP, you believe, which can stand the test of time in the in heart failure in CKD? And When it comes to the combination approaches, you talked to there, Meny, with MCR and the ERA. Is there any evidence to suggest that the fixed combination could generate some synergies, which may be sort of more elusive to find in a free combination? And then Pascal, could I just ask one clarification question on the vaccine questions? Maybe it's for Pam, but you were due to deliver 7 100,000,000 doses of the vaccine through the government and regional agreements by the end of the year. So should we just assume that you've reached that level or you will reach that level in terms of the API frozen product? And can you just help us understand how quickly you can go from API to products in a while that's being distributed? So will you be 700 by the end of the year? And then will it take, for example, 4 to 6 weeks to then deliver that to the final customers? Thanks, Mark. So a few questions here. The first one is heart failure, CKD, Farxiga and the comments on the IP and the potential importantly of heart failure CKD. I could ask Ruth to cover this one. The combinations, Mene and maybe the vaccine supply question could go to Pam. Just on this last one, the 700,000,000 doses will start in January. Essentially, we are accumulating the drug substance, and we'll turn this into vials and start delivering really substantial quantities, January forward to enable mass vaccinations. We start delivering in December if we get approval, of course. But I guess, really, the big ramp up would be early January. So we start hold over to you for the Farxiga questions. Yes. Yes. And thank you so much, Mark. So first of all, we remain extremely bullish on the potential for Farxiga. We had a very strong quarter across all geographies. The heart failure opportunity is very substantial in the U. S. We have now the indication for a couple of months and we are very pleased to see that in this specific segment already Farxiga is becoming the market leader in the SGLT2 class. So clearly, the instruction and there's no reason to believe that that will not continue. Equally, we just saw the approval in Europe for heart failure. So all geographies are well poised in order to capitalize on this huge opportunity. CKD, I will not dwell on the phenomenal results, but I can tell you is that the opportunity is very substantial at our roughly 700,000,000 chronic kidney disease patients in the world. And if you zoom in for the U. S, there are an enormous amount roughly 34,000,000 patients in CKD3. The big ticket item is that diagnosis rates are still limited, roughly 12% is diagnosed. So we will do a huge effort in order to increase that. So that will continue and we are very bullish that Farxiga will show double digit growth in the next 5, 6 years. Your IP question specifically, it's in the public domain. We have protection till 2025, 2026 depending on the geography you are in. And of course, Mene and the research and development groups are doing everything in order to come up with sensible combination. So perhaps Mene, you can give a little bit of flavor of what we're doing there. Mene, before you comment, let me just add one quick one on the CKD. We just gave you the large, very large number of patients around the world, 700,000,000 that suffer from CKD. The one thing that is important to remember with CKD is heart failure is a sophisticated diagnosis, but CKD is very simple. As you know, you measure GFR as part of your blood checkup or you look at protein in the urine. So very simple diagnosis that can be conducted by primary care physicians. So the hope here is that we can really drive diagnosis and initiation of treatment in those patients who will benefit from Farxiga. Mene, sorry, over to you. Thanks, Pascal. So first of all, just say that the combinations, and I'm only showing you 2, we have several combination programs in the works, but I wanted to highlight those 2. We're aiming to launch them and to get data in time for the loss of exclusivity of the monotherapy. In answer to the synergy question, the hope is that there'll be synergy and it's actually the combination of mechanisms that make sense. So for example, endothelin antagonist traditionally have suffered from edema because of the highly effective because of the low dose that we think we can use with our particular endothelin antagonist, but also combining with SGLT2, we minimize the risk of any edema, but maximize the efficacy or the addition of the endothelin antagonist in the patient population. And with the mineralocorticoid receptor modulator, our chemists have done a remarkable job of finding a set of molecules that are in profile against all the other MR antagonists. We have very little evidence of any impact on electrolytes and potassium, which is one of the major reasons why MR antagonists aren't used, particularly in heart failure patients with impaired EGFR, functional kidney function. And so again combining PORCIGA with an MRM, we think is going to be a really valuable tool across heart failure and CKD. Thank you. And then Pam, the last question? Yes. Thank you, Pascal. So as mentioned, we are in commercial manufacturing for the drug substance as we speak, so which is the active material. So you can assume that drug substance will be available upon approval as planned. The time to convert drug substance to package vial is only a few days, followed by a sterility test. So as Pascal mentioned, upon approval, we will have the capability of readiness to convert into bios in a very short amount of time and release the material and on a rolling basis in terms of the number of doses that we've been planning on. Thanks, Matt. As a quick reminder, we all get excited about deliveries, but we have to remember, we have to first show the vaccine well. We all hope it does, but we still have to show that, yes. Okay. So maybe Tim Anderson, if Tim you're back online if it works. A high level question. What can we expect for revenue and earnings growth in 2021 even if only directionally ahead of official guidance, just what are the tailwinds, what are the headwinds in the greatest sources of uncertainty? And you can ignore any of the impact of COVID in that question. I'm really thinking about individual brand and geography performance. And then PumaCore, just a simple first one, as you'd expect, Tim, we're going to second question. But the first one, as you'd expect, we don't give guidance at this stage in the year. I can sort of give you the ups and downs. I mean, 1st of all, we have a normal we have strong momentum across our pipeline, and we have more news flow coming that will further fuel growth across oncology. But I think also Farxiga is going to be a pretty strong driver. In respiratory, we in Europe and also Fasenra to continue growing. So we have new launches. Roxas is doing very well in China. So we have quite a number of launches that will support this growth. The headwinds, it depends how COVID continues to impact PIMIC court. You have Leon said a bit earlier that we see demand sales recover, slowly recover in China. So if things continue to improve that way, we should have a better up in the court next year. And in terms of the headwinds, I would say really what is COVID going to impact premium court again and also we'll have VBP and NLDL price listings. So the NLDL price listing, they drive price reductions. But again, with our strong coverage footprint in China, we can benefit. We're able to benefit from the upside in volume, which not every company can do. Very few company can do that. But I'm sorry you can't give much more guidance at this point in time. Then the second question Leon, go ahead. Yes. I think the Promicord right now we have 1 or 2 generic already approved with different SKU dosage. And I think sometime next year, they will be more completed with minimum another 2 generic POMICO. So POMICO will be included in the VBP week. Our assumption is sometime next year, but will impact will not impact demand sales next year. We will definitely have impact on sales of permacore in 2022. But we believe permacore with half of the business still will be coming from normalized and will come from pediatric. And pediatric are usually self pay. So we have a good chance to direct patients to outside hospital pharmacy and purchase online. And it's for acute short term usage. So it's very convenient to do it to buy nebulizer and Pulmicore in the pharmacy. And just to be aware, permacore business impact is quite obvious, but underlying business of China, if you exclude the Pulmicore, the business in China is doing actually very well. And it's very much on track on the 20s percentage growth, above 20% growth. So I think it's a very good business. So we will continue pushing the other new products and new NRDL included products. Thanks, Leon. And then Tim, I was thinking in terms of the ups and downs of this the trend in 20 21. I should have mentioned the optionality coming from the long acting antibody. If this works, we are going to be ready to supply a few million doses. And that definitely would be an upside also. So next question is from Simas Van Andes at Guggenheim. Go ahead, Simas. Okay. Thanks for the question. So just I wanted to ask one question specific to the your building presence in the nephrology space and kind of hematology. You had a big presence at ASN. But right now your commercial presence there seems a little bit under resourced. And just wondering in terms of your commitment to that space and growing that space, really where you see sort of the your vision for that area and growing there? How committed are you to that? And how core is roxadustat to that presence? Or do you see opportunities to move beyond that? And then just a very follow-up question on roxa. Mena, you seem extremely confident in your commentary in that regard heading into the FDA's decision on December 20. Can you just give us a little bit of incremental color in terms of what you think are the key questions that are would be an area of focus for the label in particular? Thanks so much. Thanks, Seamus. So let me ask Ruth to comment on the first one, mainly on the second one. Second one, I don't think you heard us being very confident. I mean, the outcomes of these FDA discussions as far as the label could you know, there's still several potential outcomes that many can explain. And on the nephrology side, I don't know where you get this impression. We are not very strong commercially. We started this focus on nephrology many years ago. We acquired Lokelma knowing that we had roxa. The positive surprise was Farxiga and kidney disease. And we've had a nephrology team for quite some time, and it's a very good nephrology team. So we have a presence in nephrologists offices. And of course, we have the diabetes team and all these teams will complement each other. But, Ruud, over to you. Yeah. No, no, exactly, Pascal. We are extremely bullish about the renal opportunity. There's an incredible high unmet medical needs. And the fact that we have now hopefully very soon dapagliflozin in the CKD indication, Lokelma is doing very well in the United States and the next stage will be to expand the market. And assuming that we will get a positive readout from the FDA regarding the approval roxadustat is a major, major opportunity for so many patients treated facing anemia. China, I think, is doing an outstanding job so far with roxadustat, roughly 90,000 patients are already on roxadustat, both in dialysis dependent in the dialysis dependent situation as well as in the non dialysis. So, all the lights are green to be very honest and we are very committed to this space because we really believe that we have a portfolio which is making a huge impact on so many of those patients. And then with regard to I mean, obviously, the big question is black box or no black box. And obviously, the regulators are going to make their decision on that. I think the important thing for us is to make sure we get the data across the various subtypes for the roxa, whether it's in the non dialysis dependent population, the incident dialysis population or the DD population. We think we have a very competitive profile. You'll be aware of the Akebia data where I think it's really opened up the space for us in the non dialysis dependent population given their CV data. And so we think we're in a very good position. I know hopefully with a positive outcome from the regulators in terms of the label. Thanks, Meny. And Seamus, I think you were also referring to hematology. I mean, in nephrology, we are very well equipped, including people treat anemia of kidney disease. And as it relates to the more hematology driven conditions, we have an hematology sales force, and we're looking at how the Calquent sales force could potentially help where appropriate could potentially help roxadustat. So we have synergies across our various sales forces. So we'll move to Matt Weston of Credit Suisse. Can I ask a finance question for Mark, please? You flagged operating leverage as a key driver on Slide 22 with the 2 percentage point improvement in cost ratio over 2019, but that includes a significant SG and A benefit from COVID. So are you confident that we can still see margin leverage next year as SG and A presumably bounce back and you also have a significant launch commitment? And then if I can, a second one for Mene on COVID vaccines. We saw some delays in the U. S. With extended requirements from FDA on median safety follow-up. Can you just remind us what the requirement is for safety follow-up from EMA in terms of time on the product? Thank you. Thanks, Matt. Marc, do you want to start and then Meny can cover the other question? Yes. Thank you, Matt, for the question. So first of all, operating leverage, which we simplistically define as growth of product sales minus growth of operating expenses. We need to also remember that in the operating expenses, a large part is occupied by the R and D and the R and D ratio has increased is increasing in 2020. It is year to date about 22%. So there will be an improvement and we'll continue to work on the improvement of the operating leverage. And this year, it is at the end of September of about 5%. We it's a sort of rate of improvement that we are satisfied with. It will continue in the year 2021 and following 2021. So yes, we will continue to work on the operating leverage, But plus remember that the operating leverage also includes the large investment we do on R and D. And then, Matt, in terms of the question around vaccine safety, I mean, bear in mind again that we started dosing with this vaccine in April of this year. So we've actually got now over 20,000 patients dosed. And there's nothing from the interactions that we've had with either the MA or the MHRA that has given us pause that if we demonstrate efficacy and safety in the data set that we have in the studies that are ongoing across Brazil, U. K. And Africa that we won't be able to get an approval. Thanks, Manny. Two quick also after other income and R and D is influenced by the Brazil cost, which Mark mentioned earlier, and we get refunded in the other income line. So I know it's not always easy. There are many moving parts with all these collaborations, but you always need to remember this when you look at all the costs. And as far as the safety, I think it's I mean, I know you know that, but it's important to remember there is an independent safety committee that constantly reviews or regularly reviews the data, of course, as you would imagine, and monitors the safety in the two arms. Important to remember this as we consider the overall safety profile. And so far, of course, we know that they have been satisfied with the safety and as well as the regulators. Next question is James Gordon at JPMorgan. James, over to you. Hello. Thanks for taking the questions. James Ford at JPMorgan. A question on the pipeline. The first question is on the AKT inhibitor. So I saw today you've announced a Phase 3 initiation of prostate and you've got Phase 3 going to pick up on renal breast cancer and triple negative. But using the same AKT negative Roche, we can get negative data in the breast cancer study and limited benefit in prostate. I don't know if it's the therapeutic window or tolerability. But so the question is, can you remind us or update us why you think CAPI is going to look different to IFA? Should we now be a bit more cautious on this class or reason that this is going to be a lot more successful? And then also a clarification upon Calphalon's fleet. So the head to head study versus IMBRUVICA, that's come forward about a year over the last 2 quarters. I think it was 2022 and then it was H2 'twenty one and now it's H1 'twenty one. So what's made that move around? Is it just more events occurring? And is that good or bad for the chances of it actually being successful? And what's given the confidence also to move this product forward into Phase III for DLBCL as well, please? Thank you, James. Two questions for Jose. Yes. So thank you very much. So let me address first the question on Capiva. So you know, we are gathering, you know, different data. You know, when it comes to triple negative breast cancer, we have positive data in our randomized Phase 2 study, which is, you know, is basically reaffirming that we believe that our triple negative breast cancer study, CAPITAL-two ninety, is likely to do well. We have different, as you know, populations, right? Roche, on the recently failed Phase 3 study, they had chosen a biomarker group predefined and basically we are not doing that. We are going on overall population. In prostate also, the difference is that we are going into an area line. So, we are not going in post failure of hormonal therapy, but rather we are going early. We think that has a major advantage. And then also in year positive, we're going to full speed. So we'll see. The data will be very confident that what we have is the best in class. Thanks, Jose. We are out of time, but we'll keep going for another 8 minutes or 10 minutes max. So we'll take the last three questions. And then please, please stick to one question per person. So over to you Naresh at Infant Health. Hi, thanks for taking my question. Just one on Fasenra. Can you give us a sense of how you're doing in terms of market share across all biologics and not just against the other IL-5s? And how is pricing evolving in that space? Thanks. So I can take it, Pascal. Yes. So of course, that's a good question, but also difficult to answer because some of the competing products have multiple indications. Of course, Dupixent has the atopic dermatitis indication, which is very, very large. Equally, Nucala has a couple of other indications EGPA and others. So all in all, I think if you look at the total volume perspective, if you include all the indications, it's clear that we are not the market leader because we're not competing in that. Equally, it's very important that if you assess the performance of the different biologics that you adjust the market shares for the number of injections, I think Fasenra is very unique that it is only dosed every 2nd month, while some of the competitors are either dosed every month or every 2 weeks. So I think that's for yourself, for your own background is very important to make that distinction. Thank you, Roeg. The next question is Peter Welford, Jefferies. Go ahead, Peter. Thanks. I'll be brief. Just quickly on to Jose. I wonder if you could comment on DESTINYBRET005 versus Kadcyla in the adjuvant setting And just give us some idea perhaps of how it can be done to expedite that study given obviously the length of time it took for Katherine to read out? And just quickly a clarification, if I can to Mark on SG and A. Is it possible to give us at all any idea of the savings you think that COVID-nineteen has had for SG and A this year to perhaps give us some sort of feeling going into next year? Thank you. Thanks, Peter. We will cover the first question with Jose and then SG and A question, we'll come back to it at the end if we still have a few minutes. Go ahead, Jose. Thank you very much. So we I think we had a very different situation than Catherine in the past because at that time, the concept that was being explored was very interesting but was not proven. I think that we're going now into a situation in which everybody accepts that is perhaps the last opportunity that you have in cancer, in breast cancer to rescue these patients with early disease. So the field has moved into embrace the concept. Now having seen this, I mean, Daiichi Sankyo and ourselves, we're putting everything we can to expedite enrollment. The advantage of Daiichi Sankyo and ourselves by being together, I mean, together we have a phenomenal machinery. So I will be vigilant and but I am positive. Thanks, Jose. The last question is from Simon Baker, Headburn. Thank you for taking my question. It's on Respiratory. And I wonder if you could give us an update on the various trends you're seeing. There are a lot of pushes and pulls within the category, The disruption to new patient starts for ZENRA on one hand and the weaker seasonal flu that we've seen this year in the Southern Hemisphere and the PSPD case in the Northern Hemisphere. So putting all that together, I wonder if you could update us on the trends that you're seeing in terms of demand across the respiratory portfolio. Thanks so much. Thanks, Simon. Orest is for you this one. Yes. Again, a very good question and thanks, Simon. So first of all, for Fasenra, in the current COVID-nineteen environment, we see roughly across all the geographies a drop of 20% to 30% of new patients. Let's not forget that those patients are getting treatment of severe asthmatics with inhaled corticosteroids, But of course, we firmly believe there are better treatment options. But in some cases, clinics are closed or getting closed again like in Europe and in some states in the United States. Of course, in the post COVID periods, we firmly believe that those new patients will come back very quickly. Then regarding your other questions about other dynamics regarding a low flu season, you are correct, flu is a very important initiator of asthma attacks. So far, the flu season is relatively mild. Equally of course a large proportion of our business is coming from the COPD segments both for Symbicort as well as recently launched Brasserie and we think that that underlying demand will remain strong. Early in the year, we have also clearly seen a high level of demand of Symbicoids because asthmatics and COPD patients simply don't want to get infected with COVID-nineteen. Their lung function is already relatively bad and the COVID-nineteen infection is certainly not helping us. So we see that overall the persistency of our therapies has increased over the during the COVID period. Thank you, Ruud. And we have a couple of minutes left, so we could return to Peter's question about SG and A. Marc? Yes. Thank you for the question. It's not an easy question to answer. If you look at the progression of our SG and A growth rate over the first quarter, it was 5% to 6%, 3% on the 2nd quarter, minus 1% on the 3rd quarter. So I would say an approximation would probably be a low single digit impact of the reduction of activities due to COVID marketing activities and sales activities and so on. I think it's hard to pinpoint a precise number and obviously it depends where the COVID pandemic is more or less intense, at what speed you are recovering and so on. But I would say a low single digit impact over the course of the year would probably be a good approximation. Thank you, Ahmad. Just as a reminder, our focus is on continuing improving operating margin, getting to 30% next year and then carrying on improving over time. And so with this, I think it's probably time to close. Just want to remind you as a closing, a few closing comments is our revenue advanced by 10%. Despite the impact of COVID and it's in line with our expectations. We had growth strong performance in the U. S, Europe, Japan and also growth and strong performance in emerging markets, especially if you exclude the Premier Court, 25% growth in China, excluding permit cuts are very strong underlying business growth. In addition, we have 8 medicines with annual sales in excess of $1,000,000,000 now, so we continue improving. And we pulled our operating leverage, our profit, our cash flow despite this challenging environment with COVID, of course, creating headwinds. And finally, I would say that we continue to improve the pipeline and we've had pretty good news so far and there's more news to come later this year, but importantly also next year and this will continue to fuel our growth as the late stage pipeline continues to deliver. We now have 20 medicines in late stage pipeline and lifecycle opportunities. So we are very hopeful that our growth momentum can continue over the years to come. So with this, I would like to thank you very much for your interest and your attention, and I wish you a good rest of the day.

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