AstraZeneca PLC (LON:AZN)

Earnings Call: Q4 2020

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Feb 11, 2021

Hello, everyone. It's Pascal Soriot, here of AstraZeneca. Welcome to the full year 2020 conference call and our webcast for investors and analysts. As usual, the presentation was posted to astrazeneca.com and we have also sent it to people on our distribution list. Please turn to Slide 2. These are the usual Safe Harbor statements including an Alexion related bonus on Slide 3. We will be making comments on our performance using constant exchange rates or CER, core financial numbers and non GAAP measures. A reconciliation between non GAAP and GAAP data is contained in the results announcement. All numbers in 1,000,000 U. S. Dollars and refer to full year 2020 unless we state otherwise. And finally, compared to past quarters, we need to be a little bit more hamstrung with financial guidance this time due to the ongoing work with And Alexian, thank you for your understanding here as we are limited in our potential comments in particular on 2021. Please turn to Slide 4. We plan to review the presentation first and then do a Q and A until 1:15 U. K. Time. If you keep questions short, we will try to keep answers short too. For those on the front, please join in the queue for questions by pressing star 1. There's also an option to ask questions as part of the webcast. We ask you to please ask one question only. Thanks for your help on this one. In speaking order, I'm joined by Dave Frederiksen, who is our EVP of the Oncology Business Unit Roald Dobber, the EVP of the Biopharmaceuticals Business Unit Martin Royer, our CFO Mene Pangalos, our EVP of the biopharmaceutical R and D Group And then again, Dave, to cover for Jose Baselga today on oncology R and D before handing back. For the questions later, we also have Pam Cheng, EVP for Operations and also IT. And we also have Leon Wang, who is for China and the Emerging Markets. We also have online with us Susan Galbraith, who many of you know, and Christian Massassecci, who are both Senior Vice Presidents in Oncology R and D. Susan for the early part, and Christian is in charge the late stage pipeline in oncology R and D. We plan to first take questions on the ongoing business And then we save any questions on the vaccine for the last part of the conference call and the webcast. We hope that works for everyone. Please turn to Slide 5. This is the agenda where we plan to cover all key aspects of our results today. Moving on to Slide 6. In 2020, performance was strong and resilient, and we delivered the guidance as promised. The 10% increase in revenue was underpinned by the focused R and D and our SG and A investment. And despite the headwinds from the pandemic in many parts of the global business, New medicines were up 33% and we saw continued performance from oncology and new CVRM. Respiratory and immunology was stable, but it improved a lot in the last quarter and the emerging markets were up by 10% with growth impacted by COVID-nineteen in Fumiko. Core operating profit grew by 17% despite 2% lower core operating income. With a tax rate of 20%, core EPS ended at $4.02 up by 18% and Modern Revenue, delivering operating leverage. As a result, guidance was achieved as we promised for the year. Our cash flow improved including net cash inflow from operating activities now $4,800,000,000 supporting the progressive dividend policy. We continue to see strong progress in the pipeline mostly on approvals, supporting sales today and of course tomorrow. This year we are back with more Phase 3 trial readouts like Calquence recently. The efforts against the COVID-nineteen pandemic continued with the 1st authorization for the vaccine. Let me assure everyone today that we are doing our very best to deliver it to governments as promised. During this first half, we anticipate Phase 3 data for the long acting antibody combination, the potential new medicine AZD-seven thousand four hundred and forty two. Our production of the vaccine is very substantial and in the months of February, we expect to manufacture 100,000,000 doses globally across our supply chain consortium and 200,000,000 doses per month starting in April. In 2021, we anticipate another year of double digit revenue growth in the low teens with that revenue growth accompanied by even faster growth in core EPS between $4.75 $5 all of this at constant exchange rates. Marc will provide more details later. Please turn to Slide 7. If we look at the pipeline news flow Since the results announcement in November, a few highlights. There were a few high number of approvals for the key cancer medicines across users and geographies. We've had regulatory submissions for a number of new users of our leading medicines in all CRP areas and we've obtained several priority reviews as well. Our clinical trial readouts also picked up and we anticipate more of this as we move further into 2021. We will detail this news flow a little later. All in all, an increase in activity levels and more progress to the future benefit of patients. We're not slowing down. If anything, we are actually speeding up. Please turn to Slide 8. After the financial headlines in our pipeline, we now take a deeper dive into revenue. Total revenue advanced by 10% in the last quarter with growth benefiting from the Lynparza sales milestone that we have discussed at the last conference call. Looking on the ad product sales, the growth was 11%. There was some negative impact from COVID-nineteen on some of our new medicines in particular, Brilinta and some on Imfinzi and Fascedra. Despite this, new medicines added $3,500,000,000 of additional revenue with Tagrisso, Imfinzi, Farxiga, Lynparza, Calquence and Fasenra as the biggest contributor. This is the strength of our company, the broad geographical coverage and the broad pipeline We are powered by several products. And of course, if 1 or 2 are impacted by COVID, some of those can do well. And overall, You can see the progress is very strong. We now have 8 blockbuster medicines overall and 13 new medicines contributing growth and adding further diversification to revenue as we look ahead. So if we turn to Slide 9, Aggregating medicines into CRP areas, we had solid double digit growth for oncology and high single digit growth for new CVRM with respiratory and immunology stable and improving the last quarter despite the COVID-nineteen impact on Pimicor. Excluding PumaCare, there was 12% growth in respiratory and immunology in the year. If we look at things from a regional viewpoint, There was growth everywhere with Europe improving growth markedly and the emerging markets continuing to grow with the U. S. Back at the as the largest region now. In summary, the results for 2020 confirm the strategic direction of our company and our confidence in our business and the future of sustainable and durable growth across medicines and across geographical markets. With the global revenue base and the diversified portfolio of new medicines and with more to come AstraZeneca remains well positioned in the current pandemic environment. We want to remain agile and ready to act entrepreneurially when opportunities arise as evidenced in our efforts against COVID-nineteen as well as the proposed acquisition of Alexion. So please turn to Slide 10. On Alexion, we've made good progress ahead of the anticipated closing in the Q3. Alexion continues to offer a compelling scientific and business complementarity and will allow us to build out in immunology long term, helping Alexion build better rare medicines using some of our platforms and help us expand into new and broader indications in immunology. So a very strong scientific complementarity that will strengthen the portfolio of our existing business, but also the portfolio of Alexion. In the short and medium term, the combined company will offer faster growth, improves profitability and cash flow and that will sustain the positive strategic developments achieved since 2013. Before closing, I would like to say how grateful I am for the support and the hard work from our more than 70,000 colleagues in AstraZeneca and also the potential new colleagues in election. And I would like to thank everyone for their efforts in the current situation fighting the virus, for always putting patients and their unmet medical needs first across all our disease areas and the geographical regions. I will now hand over to Dave. He will go into details of our oncology business. Please go ahead, Dave, and please turn to Slide 11. Thank you, Pascal. We're pleased to report a strong growth in total revenue of 24% For the oncology business to $11,500,000,000 in the year. COVID did continue to have impact with fewer cancer patients diagnosed and treated, But we saw resilience in our business as sales grew across all of our new oncology medicines from regional expansions and new launches. Please turn to Slide 12. Starting with our lung cancer franchise, we're pleased to report that both Tagrisso and Imfinzi Showed strong growth in the year at 36% 39%, respectively, with revenue of $4,300,000,000 $2,000,000,000 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 40. U. S. Tagrisso revenue was up 24% where we saw continued single digit demand growth, And we're now focused on bringing Tagrisso to patients with the earlier stage lung cancer setting in the U. S. Following the approval based upon the ADAURA Phase 3 trial as we await regulatory decisions outside of the U. S. In China, we are pleased to be able to successfully negotiate reimbursement to enable even more patients to access Tagrisso as a first line treatment in the metastatic setting. The majority of Imfinzi revenue continued to come from the United States As the launch of the Caspian indication and extensive stage small cell lung cancer continued to take effect, although we did see impacts here from COVID on patient diagnoses. Outside of the U. S, we continue to see revenue of Imfinzi pick up, particularly in Europe And emerging markets as we are now able to provide Imfinzi to a more small cell cancer patients globally. The unique ability to combine with both cisplatin and carboplatin chemotherapy will further benefit patients. Please turn to slide 13. Lynparza continued to demonstrate progress with sales up by 49% with just over half of sales coming from outside of the United States. This is a result of growth across all regions as more breast and ovarian cancer patients gained access to Lynparza in the major regions of the U. S, in Europe and in Japan. U. S. Sales continued to grow by 40% With increased demand as Lynparza maintained its leadership in the PARP market in both ovarian and prostate 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% as more first line ovarian cancer patients received Lynparza as we now look forward to the ovarian PALO-one And prostate launches in Europe following the recent approvals towards the end of last year. Emerging market sales grew by 108%, driven by the China launch and the recent inclusion on the NRDL. This should be further aided by an additional successful reimbursement decision awarded this year. Japan sales amounted to $167,000,000 with growth of 27%, driven by uptake in ovarian and breast cancers. Please turn to Slide 14. Turning now to the newer launches, Calquence in chronic lymphocytic leukemia and in HER2 and third line HER2 positive metastatic breast cancer. I'm pleased to report that Calquent's revenue of $522,000,000 in the year almost exclusively in the United States as the 2019 CLL launch really took effect. The launch feedback continues to be very encouraging as the very impressive Phase 3 data are resonating well with physicians, including the recently announced head to head data versus the incumbent BTK inhibitor, reinforcing our belief in Calquence as a potential best in class medicine. We are encouraged to see that Calquence is now 1 third share of frontline CLL New patient starts in the BTK inhibitor class in the U. S. We look forward to bringing Calquence to CLL patients in Europe in Japan following the recent approvals at the beginning of 2021. Following the InHER2 launch at the beginning of the year, We're pleased to have reported $96,000,000 in collaboration revenue based on $200,000,000 of U. S. Sales booked by Daiichi Sankyo in the year. And HER2 is the most prescribed medicine in the third line setting of HER2 positive metastatic breast cancer. I'll now turn Over to Ruud for an update on our biopharmaceuticals business and emerging markets. Please turn to Slide 15. Many thanks, Dave. Today, I'm pleased to talk to you about the Biopharmaceuticals business. Total revenue of biopharma, comprising new cardiovascular, Renewal Metabolism and Respiratory and Immunology was $10,000,000,000 in the year, growing at 4% despite the COVID pandemic. Starting with new CVRM, revenue was up by 9% with total revenue at $4,700,000,000 with very strong growth from Farxiga. Farxiga maintained volume market share globally with high double digit volume growth across all regions as the fastest growing SGLT2 inhibitor. In the United States, Farxiga grew 6%, driven by the additional indication in heart failure. Outside the U. S, which accounted for 71% of revenue, we saw strong performances with volume driven growth increasing and China benefiting from the NRDL listing. Brilinta delivered revenue of $1,600,000,000 with 2% growth as the impact from COVID resulted in fewer hospital patients and China experienced the impact on VBP driven price reductions. Sales in the U. S. Were up by 3% as an increase in treatments duration offset the negative COVID-nineteen impact. The majority of use is still in the acute setting and berlintha continues to outgrow the market in the majority of regions. Please turn to slide 16. Turning to respiratory and immunology, we reported revenue of $5,400,000,000 stable in the year, but excluding Pulmicort, Respiratory and Immunology grew 12%. Symbicort's sales were strong at $2,700,000,000 with a growth of 10% in the year. The U. S. Saw particularly strong growth, up 23 percent to $1,000,000,000 due to demand growth following the launch of the authorized generic and the resilient ICSLABA market. Globally, Symbicort remained the leader in value and volume market share in the ICSLABA class. Pulmicort was down 32% in the year with revenue of $996,000,000 which continues to be impacted by COVID, particularly in China. However, we continue to focus on growing revenue of Symbicort as well as Breastri following the successful addition to the NRDL. Please turn to Slide 17. Now I will focus on the new launch medicines. Fasenra contributed $949,000,000 of revenue in the year with strong growth despite COVID-nineteen with the majority continuing to come from the U. S, Germany and Japan. In the United States, Fasenra is now the leading novel biologic, up by 25% with $603,000,000 in revenue. Fasenra also overtook the leading IL-five blocking in total asthma prescriptions for the first time. Europe and Japan revenues were $203,000,000 $100,000,000 respectively, As Fasenra continues to be the leading novel biologic medicine for severe uncontrolled asthma. The launch of BESTRI For COPD is progressing well with revenue of $28,000,000 in the year with launches taking place in in Japan, China and the U. S. And more recently in the EU. As we look to kidney disease For Lokelma, we continue our leadership in the new to brand prescriptions, with revenue of $76,000,000 in the year, predominantly from the U. S. At $57,000,000 We have seen early sales in China and the Japan launch is progressing well. On roxadustat, we reported collaboration revenue of $30,000,000 in the year coming from China. Demand continues to remain strong as tens of thousands of patients are being treated for anemia and CKD with roxadustat. We now anticipate the U. S. Regulatory decision in quarter 1 following the submission of the additional clarifying analysis data with the U. S. FDA. Please turn to slide 18. Emerging markets, where revenue grew by 10% in the year, 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 despite a slight negative effect from divestments. Outside China, total revenue was up by 9% with growth spread across the regions. China delivered resilient growth at 11% and continued to see some impact from the COVID-nineteen pandemic, notably with Pulmicort, as previously mentioned, and continued volume based procurement impact. We were very encouraged to successfully and negotiate several medicines onto the China NRDR program for this coming year. New medicines grew by 59%, now contributed a third 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 19. Thank you, Ruud, and hello, everyone. I want to take you through our financial performance in the year as well as the guidance for 2021. Please turn to Slide 20. 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 year, in line with the guidance I provided 12 months ago. In February last year, we did not know how much and how long The adverse net impact of COVID-nineteen was going to be. Within total revenue, product sales were up by 11%, driven by the success of the new medicines, with the majority of collaboration revenue reflected milestone receipts of Lynparza. Please turn to Slide 21. Turning now to the core P and L. This slide demonstrates the progression of our operating leverage. Our gross margin ratio was unchanged in the year at 80%, in line with expectation outlined last year. Our mix of sales is continually improving, but this was offset in the year by increasing pricing pressures in China related to the impact of the NRDL and the VBP program to which Ruud alluded earlier. Core R and D expenses increased by 10%, partly a result of more investment in the pipeline, including Phase III trial starts for a number of medicine, including the oral SERD and the advancement of datopotomab deruxtezan, also known as 1062. Merck upfront contribution in 2017 for the development of Lynparza recorded at that time on our balance sheet was gradually released to the P and L until 2019. This impacted the comparative performance in 2020. There was also a material investment in the development of Brasikumab, although we are refunded for those costs through other operating income. Core SG and A expenses increased by 4%, driven by more investment in the China expansion and the launches of our new medicines. Core other operating income declined by 2%, while the core tax rate was 20%. Finally, our core earnings Per share ended at $4.02 up by 18%, demonstrating the sustained progress we are making. Please turn to Slide 22. Before we look at net debt and cash generation, I want to take a moment to reconfirm The changing shape of our P and L. While we expect collaboration revenue to increase over time And also anticipate that income from divestment will remain a material part of our P and L, this slide highlights The change in the sources of profit over the long term and the growing contribution from product sales that is being made from our new medicine. And I expect this trend to continue. Now turning to net debt. It was broadly unchanged in the year, a 27% Improvement in EBITDA to $8,300,000,000 meant we took our net debt to EBITDA ratio from 1.8 times to 1.5. The strong growth of EBITDA was offset by a number of factors, including dividend payments totaling $3,600,000,000 and we also made the second of our 2 $675,000,000 up from payment to Daiichi Sankyo in respect of Ener2. Finally, we also paid the 1st non contingent payment of $350,000,000 also to Daiichi Sankyo as part of the agreement of datoprotumab, Deruxtecan. I was pleased to see that our constantly improving business performance drove a significant year on year increase in net cash flow from operating activities. Even excluding the benefit of net cash Inflows from vaccine activity, our cash from operating activities increased by around $800,000,000 The $1,100,000,000 of Vaccine net cash flow are expected to reverse out in the near term. Our progress bodes well for ongoing ambition of converting improvement in operating leverage into increasing levels of cash. Please turn to Slide 23. This Familiar slide summarizes the continued progress we are making with our financial priorities. As I mentioned, the 10% growth In total revenue in the year was converted into an 18% increase in core earnings per share. Our core operating margin rose by 2 more percentage points to 28%, despite the reductions in collaboration revenue and other income. The progress on operating leverage was also demonstrated by the fact that core operating expenses represented 59% of total revenue versus 60% a year ago. As I said, this increasing level of profitability We'll 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 24. Finally, I will turn to guidance for 2021, which, As I mentioned a moment ago, is on total revenue and core earnings per share at constant exchange rates. It does not reflect any revenue or profit impact from sales of the COVID-nineteen vaccine AstraZeneca or any impact from the proposed acquisition of Alexion. I'm confident in our guidance despite the uncertainties arising from the pandemic of a low teens percentage increase in total revenue With even faster growth in core EPS to between $4.75 $5 The confidence is based on the success of our patient centric strategy, the focus on innovation and our track record of commercial execution. Please turn to Slide 25. And finally, I want to echo Pascal's comment on the proposed acquisition of Alexion. This transition is intended to drive both the strategic and financial development of our business. The case for scientific and business complementarity is clear With the acquisition enabling us to develop our immunology business further, utilize our emerging market presence further and help Alexion develop better rare disease medicine using our platforms. We are very excited about the prospect of combining 2 science and patient centric organization deliver further sustained industry leading revenue growth. As you will have seen from our track record and from our guidance, we are making good progress on revenue growth and operating leverage, which is driving greater level of cash generation. This strategy compelling acquisition is intended to build on this prospect based as they are on the focus on science and innovation. Thank you for listening. And with that, I will now Hand over to Mene. Please turn to Slide 26. Thank you, Marc, and hello, everyone. I'll now provide an update on our COVID-nineteen efforts and our biopharmaceuticals medicines since the last quarter. I'm also joined by Dave Frederiksen covering for Jose Basalga, who will discuss oncology movements and upcoming news flow across the company. Please turn to Slide 27. In December of 2020, our vaccine received its first authorization for emergency Supply from the U. K. MHRA. With recent conditional marketing authorization from the EMA, We're now authorized with this vaccine in over 50 countries. Yesterday, we also received a positive recommendation seen from the WHO's Sage Group. This is a really important milestone ahead of an emergency use listing by the WHO, which should it be granted, will provide an accelerated pathway to significantly broaden availability of the vaccine around the world. And I think it's important to not forget that from when the agreement was signed with Oxford University to the first approval, Only 8 months have elapsed. Now just over 9 months away, we have the vaccine approved in more than a quarter of all countries around the world. We've recently also published data on the impact of the emerging U. K, Kent and South African variants. The vaccine is as effective against the new U. K. Variant as it is against the original strain, despite some lower neutralizing activity. The South African strain resulted in a loss of efficacy against mild disease, but may still offer protection against severe disease, which is key to relieving the burden on health care resources around the world. We've also begun work on adapting the vaccine for these new variants of concern, leveraging our existing clinical trial data and an established supply chain to potentially reduce the time needed to reach production at scale. Finally, we also presented our primary pooled analysis of the pool Oxford trials and it was recently published in a Lancet preprint. The analysis showed good efficacy after the first dose with over 70%, confirmed increased efficacy with a longer dosing interval rising to 82% at 12 weeks and up and confirmed 100% protection against severe disease and hospitalization. Data readout from the U. S. Trial is anticipated before the end of this quarter. Turning to our long acting antibody AZD7442. We feel this has a differentiated profile due to its high potency, It's extended half life and its capacity to be used either as an intramuscular administration or intravenous. It is now running in 5 Phase III trials. Early in vitro data from a couple of independent laboratories have suggested Good neutralizing activity against U. K. And South African strains with potentially class leading activity for this combination against these strains. Please return turn to Slide 28. We have several medicines that have the potential to establish a new standard of care for patients in need. In CVRM, Farxiga has moved beyond Type 2 diabetes and into 2 new disease areas with high mortality and a large unmet medical need. Varcygo is now approved for patients with heart failure with reduced ejection fraction in the United States, the EU, China and Japan. And its CKD indication recently received priority review in the U. S. And Japan. Farxiga truly has the opportunity to redefine treatment as the first medicine to significantly prolong survival in patients with heart failure with reduced ejection fraction and also now in CKD with or without type 2 diabetes. In terms of upcoming news for Farxiga, we've just started a new trial in the post MI setting called DAPR MI, where we will explore whether providing Farxiga within 7 days post MI, we will be able to reduce hospitalization for heart failure or CV death in non diabetic patients with reduced left ventricular ejection fraction. We also have trial starts this quarter for our Farxiga combination programs, both with AZD9977 and lizibatantan. Lastly, in the second half of the year, We will have data from the delivered trial in patients with heart failure with preserved ejection fraction. Please turn to Slide 29. Anifrolumab is our 1st in class interferon 1 medicine for the treatment of patients with moderate to severe systemic lupus erythematosus. It has potential to bring hope to a set of patients who have been chronically underserved for over a decade. Anafrolumab has demonstrated consistent clinical benefits across all measured SLE patient subgroups, showing early and sustained reduction in skin disease activity, improvements across a number of organs and enabling importantly sustained steroid use reduction. Regulatory submissions have been completed in the U. S, the EU and Japan, and we anticipate the first regulatory decisions in the second half of this year. We also have a number of life cycle management indications planned to include lupus nephritis, cutaneous lupus erythematosus and myositis, which illustrate our excitement about the future of efforts in the immunology space. Please turn to Slide 30. I'll now update you on progress in our pipeline. In respiratory, I'd like to mention that the exciting Navigator Phase III trial data for tesopelumab in severe asthma will be presented At the AAAAI at the end of the month, our IL-thirty three antibody MEDI-three thousand five hundred and six has now started Phase II trials in asthma and also in diabetic kidney disease. Continue on the renal space, our FLAP inhibitor AZD5718 has also made progress, having started Phase II trials in CKD. And as I mentioned earlier, the first of our Aseaglifecycleexpandingcombinationprograms with our MR modulator AZD9977 is initiating Phase II trials in heart failure with CKD. Lastly, our subcutaneous PCSK9 program AZD8233 started its Phase IIb trials in dyslipidemia, and the trial continues at pace. We look forward to updating you on the progress of all of our medicines in the biopharmaceuticals pipeline over the coming year. I'll now hand over to Dave, and please turn to Slide 31. Thank you, Meny, and hello again. I'm happy to take you through oncology R and D news this quarter And I'll start with Tagrisso to continue on the theme of establishing a new standard of care for patients. The groundbreaking ADORA Phase 3 data has further confirmed Tagrisso's capability to reshape future clinical practice. We recently received regulatory approval in the U. S. As well as approvals in 4 other countries as a result of Project Orbis, a new review process by FDA and other agencies and now have further submissions underway in this potentially curative setting. Starting with its approval in 2015 from the Phase 3 AURA3 trial And second line T790M, we've since brought Tagrisso to first line in a broader setting with the FLORA trial by demonstrating an overall survival benefit. Now with the ADORA data exhibiting around an 80% reduction in the risk of disease recurrence or death, Tagrisso is the only medicine to show meaningful benefit in adjuvant EGFR mutated on non small cell lung cancer. Tagrisso's trajectory is an excellent example of the efforts we're making across our portfolio in oncology. Our aim is to establish new standards of care for patients with a concerted effort in earlier stages of disease. Please turn to slide 32. Moving on to Calquence, a selective BTKI that has shown impressive effectiveness in chronic lymphocytic leukemia. Calquence has delivered unprecedentedly low hazard ratios in both the relapsedrefractory and in the frontline settings, Within the latter showing efficacy as both a monotherapy and in combination with immuno chemotherapy. We recently announced high level results from the ELEVATE RR trial, which showed that Calquence met the primary endpoint of non inferior progression free survival for adults with previously treated high risk CLL versus Ibrutinib. In addition, with over 40 months of follow-up, Calquence demonstrated superior safety in atrial fibrillation without compromising efficacy. We look forward to discussing the totality of the data, which confirm our confidence in Calquence's favorable benefit risk profile with Global Health Authorities. Please turn to slide 33. Now I will provide a short pipeline update with a focus on the key movements in the quarter. Our TROP-two ADC, datapotumab durextecan that we develop And we'll commercialize in combination with Daiichi Sankyo has started Phase 3 trials in non small cell lung cancer, Building on the efficacy seen in the TROPION Pan Tumor 1 trial that was recently presented at the World Conference on Lung Cancer in January. In addition, we've initiated Phase III trials for AZD9833, our next generation SERD, now known as camazestrin. We look forward to updating you on the progress of these medicines and others in the near future. Please turn to slide 34. I'll end by taking you through some key items of anticipated news flow in 2021 across our entire pipeline. In oncology, we will see Phase 3 data readouts for Lynparza's OLYMPIA trial in adjuvant breast cancer and the PROPEL trial in prostate cancer, as well as Imfinzi's PACIFIC II trial in non small cell lung cancer and overall survival data from the POSEIDON trial. For HER2, we'll have data from DESTINY Breasto-three, Which is a head to head trial on the 2nd line versus trastuzumab and tanezine as well as data from DESTINYBREL2-four and HER2 low breast cancer. In biopharmaceuticals, we'll have regulatory submissions for tesapalumab in severe asthma as well as regulatory decisions for anofrolumab and for roxadustat. Finally, as mentioned earlier by Mene, we will have data readouts for both the AstraZeneca COVID-nineteen vaccine U. S. Phase 3 trial as well as the 1st data readouts from the long acting antibody AZD7442. With that said, I'll now hand it back to Pascal for closing comments. Please turn to Slide 35. Thank you, Dev. Please turn to Slide 36. In 2020, performance was strong and resilient, and we delivered the guidance as promised. The 10% increase in revenue was underpinned by the focused R and D and SG and A investment and despite headwind from the pandemic in many parts of our global business. New medicines were up by 33% and we saw continued performance from oncology and new CVRM. Respiratory and immunology were stable but improved a lot in the quarter. And emerging markets were up by 10% with growth impacted by COVID-nineteen on Pimicore. I think we told you, but respiratory immunology would have grown by 12% due to neutralize the effect on Pimicore. Core operating profit grew by 17% despite 2% lower core operating income. With a tax rate of 20%, Core EPS ended at $4.02 up by 18% and more than revenue delivering operating leverage. As a result, guidance was achieved as we promised. Our cash flow is improving, including net cash inflow from operating activities that are now $4,800,000,000 and support the progressive dividend policy. We continue to see strong progress in the pipeline, mostly on approvals, supporting sales today and of course tomorrow. This year we are back with more Phase III trial readouts like Calquence recently. The effort against the COVID-nineteen pandemic continued with the first authorization for the vaccine. Let me assure everyone today that we are doing our very best to deliver it to governments as promised. During this first half, we anticipate Phase III data also for the long acting antibody combination, the potential new medicine AZD E7442, which you've heard through this presentation is a very exciting product. In 2021, we anticipate another year of double digit revenue growth in the low teens with that revenue growth accompanied by even faster growth in core EPS to between $4.75 $5 all of this at constant exchange rate. So let's now go to the Q and A. We will also take written question from the webcast. And can I please remind everyone to limit questions to 1 to be fair to all of our callers? Thank you in advance for this. And perhaps now we can take the first question from the conference call. The first question, I believe, is from Marc. Thank you so much for taking my question. The subject is investing for growth, Pascal. Could you sort of help us understand and sort of frame the arguments here? For example, on R and D, how are you going to prioritize the various pipeline assets that you have And after Alexion acquisition closes and you have a sort of wall of what's next opportunities, but with more financial flexibility. I sort of counted 10 in oncology, 12 in biopharma and you mentioned 11 in Alexion as well. And how you should and in terms of investing for growth also, How we should think about the SG and A components of that. And that leads into specifically on to ariflomab, if I may. 250,000 diagnosed lupus patients in the U. S. Every year, or any 25,000 on Benlysta. So Can you sort of help us understand how physicians will choose to use anofronumab relative to say immunosuppressants or Benlyst or rituxan and the progress there with the subcutaneous formulation, which you're also investing in as well. Thank you very much. Thanks, Mark. So on the nifolumab question, maybe Mene, a little bit later, you can cover the subcu formulation and all you could cover the positioning and basically the commercial opportunity. So let me first cover the first question, Marcus. You've said it, we have a pretty strong pipeline and large portfolio, and that's why we believe we need to continue investing in R and D in particular. Also a little bit in SG and A, but much less, of course, because we have a strong infrastructure globally already. But certainly in R and D, we continue to invest. We want to drive top line. I mean, basically, we have 2 goals. One is to drive the top line as fast as possible and the second is to continue delivering operating leverage over a period of time. So we'll continue to invest. In terms of prioritization, essentially, We have a regular portfolio meeting that looks at all these projects. We have twice a year, we review our overall pipeline. We have a strategy meeting typically in June, July, where we look at all our projects and we compare them and we compare and contrast and we try to prioritize and the team come. The teams come and then they present their projects and we prioritize what they present to us. I mean, there's nothing really Especially here, we look at the metrics that any other company would look at. I think what we try to do is have good Beyond the Metrics, and get to the bottom of the data and understand the data and challenge ourselves. And that's how we actually prioritize and then build our plan according to this. Really, there's nothing different we do from other companies except, I think, maybe spend a lot of time looking at the data, debating and going beyond the numbers that are presented to us. So with this, maybe, Ro, do you want to cover the antifolumab question and hand over To Mene for the subcu. Of course, Pascal, and thanks, Mark, for the question. So first of all, we truly believe that The interfering mechanism is central to ASLE and therefore we believe we can help a broad patient population. We have seen in our clinical trials that we clearly have a broad efficacy across multiple organs and but also multiple patient groups as well as a very impressive OCS reduction. I think one of the most important parts is that physicians are giving that back A physician who have experience with anofolumab about an early response. The current therapies are lacking in an early response and both for physicians and patients is very important to see a positive impact. So all in all, of course, we are doing an enormous amount of work as we speak so that we are ready to launch the product in the United States and in other geographies in the second half of the year, but it is a truly very attractive opportunity and too many patients are still not getting well served as we speak. Clearly, you were referring to Balenista. Overall, the penetration is still relatively limited. So we clearly see a huge opportunity moving forward here. Mene, are you going to cover the subcutaneous formulation? Yes, thanks, Rued. So with regards The subcu we presented some data in 2019 on the subcu formulation, which was PKPD study, which was very consistent with previous studies using our IV formulation. We haven't shared time lines for when we'll be pursuing subcu, but I can say that we are Subcu formulations for Anapro and we'll give you more concrete plans in terms of timing of launches as we have them. Thanks, Mene. Richard Parkes, Exane BNP. Go ahead, Richard. Hi. Hopefully, you can hear me okay. Yes. Yes, absolutely. You have a question. So broadly financial focused, your revenue guidance for the year is a little bit more Optimistic than consensus. So I wondered if you could give us a steer as to whether you think maybe consensus was too conservative in terms of revenues. But On the flip side, it seems like your margin assumptions are a little bit lower. I'm assuming that you simply taking a conscious The opportunity to reinvest back in the business. So we need to maybe you could just clarify that and where you expect to invest a little bit more aggressively than consensus is assumed. And if you don't mind me just taking a second one on operating cash flow for 2020, if I exclude the benefit from the COVID vaccine funding, the improvement in operating cash flow is relatively modest, I think, $3,000,000 despite a significant improvement in reported operating profit, which is $2,000,000,000 plus, I think, So can you help us clarify some of the moving parts there that's maybe continued to drag and maybe give us a steer on the magnitude of free cash flow Improvement in 2021 pre to the Daiichi payments. Thank you. Thanks, Richard. So maybe I'll try to cover the first couple of questions and Marc can then add to this and also cover the cash flow question. So if we look at revenue, as you know, we don't guide or don't comment on a product by product basis. But I think you can see it. We have a very broad portfolio. We have a broad geographical coverage, and we've talked about it for quite a number of years now, but it's starting to have an impact. And So we have a very, very strong portfolio of products driving our top line. I can't really tell you Comment on one or the other product because we don't guide by product. But actually, as it relates to your second question, We do continue to invest in R and D. We do continue to build a company that is fast growing in the near term but also has a long runway. Quite often, we ask questions about succession as if some of us are getting quite old and ready to go. But I can tell you despite our advanced stage, it doesn't stop us from thinking long term. And so we will continue to invest in R and D. That's the core that's the heart of our company and that will continue driving this company in the future. Marc, do you want to add anything and cover the cash flow question as well? Thank you, Richard, for the question on the cash flow. So if you look at the so we can look at the net cash flow at the bottom of the cash flow statement or we can look at other intermediary levels. But I would recommend that you look at the cash flow at 2 things. First of all, the cash flow from operations, which has grown in 2020 by $1,800,000,000 You have signaled because we have commented upon it the part that is linked to the vaccine, the COVID vaccine. So the growth of the cash flow from operations was 62%, including the vaccine, But it was also 26%, excluding the vaccine. So the underlying business cash flow is growing Cash from operation is growing faster than sales and faster than operating profit. So I think that's a very good sign. I would also Recommend that you look at the progression of the EBITDA. We had an EBITDA in 20 €20,000,000,000 of €8,300,000,000 versus €6,700,000,000 in the comparative prior year, so an increase of $1,600,000,000 So I think these 2 in my view point to an improvement of profitability And an improvement in cash conversion. Thank you, Marc. So remember, you can ask questions by dialing star 1 or going into the website. Any other questions? We have a question from Michael Lufthans at UBS. Michael, over to you. Thanks so much. I'm going to stick to 1 on to Grisso in the adjuvant setting now that you have The companion listing and the approval. Just wondering if Dave could talk to the operational challenges that there may be in the setting, Moving patients from surgeons to oncologists. What it is you're doing to ease that And the time frame around that. And the reason I'm asking is, obviously, the prescription trends haven't seen haven't shown too much of an inflection yet. And I do understand that the approval only came late last year, but it does suggest that off label use was maybe a little bit restricted, which I'm assuming is related To those practical challenges, so any color around that would be very helpful. Thank you. Todd, do you want to cover this? And you have to remember, Michael, also that the pandemic is clearly limiting our ability to interact with physicians and this has a bigger impact on launches than existing established products. Dave, over to you. Thanks, Pascal. I think, Michael, maybe I'll start with the second part of your question first, which is about the uptake that we might have seen spontaneously prior to approval. I think it's also important to remember we had high level results Just in May of last year, we got to approval in December in the United States and Within that timeframe, we also had a publication take place, but NCCN guidelines weren't updated to reflect the ADAURA data until late last year. And so I think that that's different than perhaps what you might be expecting to see in other places where we're working on a longer timeline from high level results in the presentation of those data in between that and approval. So I think that actually together with the pandemic as Pascal raises was part of the aspect of it. I'm really happy to say that the response from physicians in just the 1 month that we have been Promoting Adora has been very positive. We already have nearly 2 thirds of physicians with unaided awareness of the 80% reduction in the risk of recurrence. We are getting very good traction both from surgeons as well as from pathology as well as from medical oncologists. And I think the experiences that we had with Pacific of working with the multidisciplinary team have really served us well here in terms of engaging with all of the different specialties that are involved in treating in the early stage. And I think Urgeons are very open and interested to learning more about Tagrisso and Adora because it's obviously coming after surgery and not as a substitute or a replacement for it. And we really also are quite pleased that while it's qualitative, what we're hearing back from physicians is there An intention to use across stages. And so, whether it's 1B, 2 or 3A, We're hearing an intent to use. It's consistent across, which is what we saw in the data. So we do need to continue working on referrals. We need to continue working on Driving, testing rates, which are only at about 50% in the adjuvant setting. We need to drive use of adjuvant therapy, which is only about 25 So the educational barriers are there, but I'm quite pleased with the 1st month and look forward to continued progress into the year. So that's kind of my outlook. Thanks, Ted. Louise Hector at Berenberg. Go ahead, Richard. Hello. Thank you. And I'd also like to take the opportunity just to extend our thanks to all your employees for the Hard work on the COVID vaccine. So my question is on the 2021 guidance and some of the moving parts. I just want to understand a little bit the range and whether you could contribute sorry, specifically comment on Ex U. S. Synergies and how that may impact in the year because I think the rights return to you partway. And do you expect more disposal gains This year, are you pretty much done because you have a high number coming in Q1? And to Grosso China, what proportion of your EM sales are in China. And can you talk a little bit about the impact of the price cut as we go through the quarters, because I think the price cut hits sooner than you see the volume placed on the expansion. Thank you. Thanks, Lisa. Marc, do you want to cover the guidance questions? And maybe Dave will address the Tagrisso China question. And again, Luisa, just to remind you, unfortunately, this year, we are more limited than usual in terms of how much we can comment for the reasons we've described before. Over to you, Marc. Yes. So I think I will take the question of the Again from disposals and how much for the year. So what I can say that other operating income will continue to be A part of our business, but will play less of a role in the medium term. I can't comment specifically on the year 2021. You're already aware of what we are going what we have announced, obviously. There will be some more, but I can't comment specifically on it. But over the medium term, this the other income will continue, But play a lower a lesser role. And the synergies, Marc, or do you want to? Synergis, I mean, yes, we are yes, Synergis is going to be we're going to recover Synergis and we are Preparing ourselves to transition from AbbVie in many countries. It will not have a major impact in terms of profitability In the year 2021 because this will be sort of a part of the year. But over time, of course, it's an important area for us. Thanks, Matt. Dave? So Luis, on the first question, China represents an important part of emerging market sales. We haven't provided the split between China and the rest of emerging markets, but I will also say that Emerging markets without China are also an important part of that number and we saw Within that area, really nice demand growth driven by Taiwan, Hong Kong, Russia, Brazil, Korea. On the specific question about China moving forward, Within China, we did see in the Q4 impact from the NRDL stock compensation that we needed to realize as we accrue for stock compensation that we're going to need to make as a result of the NRDL And the lowering of price that will take effect in March. As we saw with Flora Excuse me, as we saw with the second line as we've also seen in other indications, it does take several quarters Excuse me, several months, maybe as many as 2 quarters for the volume uptake to start to compensate for the pricing. And it really is a function of how quickly we can get up the curve in terms of adoption within Frontline. I will say that I'm pleased that we have the opportunity to expand access to frontline patients in China. You saw the speed with which we were able To grow the business when we got 2nd line NRDL listing and I have every confidence that the team in China is going to be able to do the same with frontline And that the inclusion in the frontline on the NRDL along with the renewal in second line puts us in a strong spot with Tagrisso Where in the front line and in the second line, there's an opportunity to make sure that if a patient hasn't received Tagrisso That they will get the opportunity to do so. So I think we're well positioned in a competitive environment there. Thank you, Dave. Keyur Parekh at Goldman. Keyur, over to you. You guys can hear me okay. Two quick questions, please. The first one on HER2. Update from your perspective, as we look at kind of the upcoming data sets In the second line and kind of the low hurdle, what is the clinical profile that you would like to go to the market with, Especially given how established kind of Kadcyla is in that setting. And then separately on the 3rd, kind of quite a competitive space from what we can see. So just wondering kind of where you see the potential for differentiation on your SIRD versus some of the others that are Probably slightly ahead of your service. Thank you. Thanks, Kjell. So, Dev, Maybe you could cover both questions and Christian could add anything that he thinks is relevant to add to what you would say. Go ahead, David. Great. Thank you so much. I appreciate that. So I mean, I think in terms of the profile that we're looking for in the Head to head study. What we know from Kadcyla second line study and the AMELIA Study was that they were able to demonstrate a median PFS of 9.6 months overall response rate of 43%. And that was in patients that had median lines of therapy of 1. We also know that that study was run at a time before Adjuvant per Jetta was really something that was standard of care. And I think that's important to keep in mind that we're running now in a context Of all the INHER2 studies are running in the context of patients who've all been previously treated with standard of care, which is now trastuzumab and pertuzumab. So we certainly think that the control arm, which is Consyla, should probably in the real world today be performing At or maybe even a little bit slightly below what you saw in AMELIA and the results that we saw in 3rd line that What our breakthrough therapy designation and approval were based upon, actually are getting into the 14 months of PFS range and overall Response rates of 60%. And so we have every expectation as we bring that into earlier settings that that should improve. So that's kind of how we're taking a look at the outlook on HER2. And I think that will be a very compelling profile. Susan, I mean, Christian, in terms of the oral SERD and next generation, do you want to Comment on some of the aspects of how we think about differentiation? Sure, Ade. Thank you. Thank you for the question. We presented the data from Sirena-one, our Phase I trial with Kamiz Estrand, our oral SERD. And we believe that this drug has best in class potential in terms of providing superior clinical benefit at wealth already dose. You have seen that 75 milligram QD, that is the dose that we are moving in registrational trials. The results showed a median PFS of more than 11 months and a clinical benefit rate exceeding 50%, with no dose reduction or discontinuation, no GI toxicity. This drug is already in 2 Phase 2 trials, Sarena 2 that is comparing kamizestran versus fulvestrans in patient with metastatic breast cancer and Sarena 3 that is a window of opportunity trial. There are several exciting combinations that we are entering now in Phase III pivotal trials. We've just started the first line combination trial with pabociclib. So we are we have a very strong and robust Thanks, Christian. Maybe we could stay on the 3rd. There's a question from Steve Scala at Cowen. And Steve's question is Sanofi says it has a best in class molecule. What data would you point to that might argue otherwise? So we typically don't comment on competitors' products, but maybe you could again sort of comment on what makes our product so different. I think that what I just mentioned in terms of level of efficacy as a monotherapy In a very heavily pretreated patient population, pretreated with CDK4six inhibitor, pretreated with chemotherapy, Showing this level of progression free survival, especially disease control rate is quite compelling with our molecule. In addition, our safety profile, especially at the dose that we selected To move into pivotal trials show a very benign tolerability. We almost we do not have Dose reduction, we don't have discontinuations for adverse event of 75 mg and compare maybe other molecule, The GI toxicities, the hot flashes, so those adverse event that sometimes represent averse for patients seems to be quite good. So we have a good molecule And we are developing it in a very accelerated way. Thanks, Christian. So Steve in oncology, another question from Steve about Imfinzi. And there's a question for you, Leon, I think, and Dave maybe can also comment. But So Leon, the question is, are you seeing off label use of competitors in China for the Pacific regimen? Yes. I think we are seeing quite a lot of off label usage of competitors in China using off label. But the Pacific regimen Stage 3 lung cancer in China, the market is at the moment quite underdeveloped. We see some, but still we are able to defend a large share for this specific regimen within Finzi. And our Imfinzi also have some spontaneous usage of small cell lung cancer. So I think ultimately, Imfinzi with the good We should be owning the space of Stage 3 even at a self pay situation. Thank you, Leon. The next question is from Pascal. Pascal. Pascal. No, just to add on to what Leon was saying, I mean, I For clarity on this, so the off label use of checkpoint inhibitors is something that as Leon pointed out, he's We're seeing within China. The reason that the stage 3 is less well developed is because obviously that requires chemo radiotherapy, multidisciplinary teams. And I think that the work that Leon and his team are doing to develop that marketplace Really is putting us in the right position to be able to defend the on label use for PACIFIC. And so there's certainly a lot of off label competition Throughout checkpoint inhibitors, but I think that Leon is clued in on a key piece, which is that we're playing a role in the development of that Way of treating patients which doesn't exist and that's something that we've really developed a skill set on in China. Thanks. Thanks. Next question is from Andrew Baumann, Citi. Andrew, over to you. Thank you. Question for Ruud and then one for Manet. So Farooq, it appears to me that the anticipated timing of generic entry into the U. S. Since we pushed out into the second half of twenty twenty eight, I just noted the patent term extension you got. I just wanted to confirm that's correct or whether it's still the 25 that you've previously outlined. And then also any comments on how long COVID may result in Fast leaker demand due to either increased renal or heart failure. And then for Meny, On the subject, assuming we will require novel vaccines to address these some of these variants or emerging variants, how of that Should we be about the challenges of developing novel vaccines, be it multivetance or otherwise, we think both from an efficacy point of view, Things like antigenic sin, anti vector antibodies as well as from a safety point of view. So many thanks in advance for those two questions. Okay, Andre. And also, Oates, will you take the first questions and Mene will cover the vaccines? Yes, absolutely, Pascal. So on your first question, Andrew, based on my latest information, it's still 2025. The only piece is that We're also going to apply for pediatric extension, so that will give potentially a 6 months extension of our patent, so moving in the United States into 2026. Regarding COVID-nineteen impact on Farxiga and the outlook on heart failure and kidney disease patients. We're very bullish. And yes, there is an issue. Our field forces are doing their best to reach out to nephrologists as well as to cardiologists and it's going well. If you see the data, But equally, equally, of course, there is a COVID-nineteen impact. I'm not going to play it down. But overall, if you look at the performance of of Farxiga also in the last quarter across all regions of 40% growth. It clearly shows the enormous potential of this product for our portfolio. We're very excited, as Pascal already mentioned in his opening statement, that we were granted priority review for CKD in the United States as well as in Japan. So yes, there's a little bit of headwinds regarding COVID, but equally the teams are doing a phenomenal job in order to drive this product where it needs to be. Mene? Thanks. There's a lot of questions there, Andrew. So I'm going to try and answer as many as I can. So first of all, your First point is, if we need new vaccines, I think the jury is to that. I think with regards to protecting even with these new variants Against severe disease hospitalizations, it may well be that the current crop of vaccines we have are going to be good enough. But if we do end up needing new variants, then I think we're all going to be able to move, reasonably quickly. We've started work on new variant vaccines based on the new sequences some time ago, and we're hoping to be in the clinic in the springtime ready for Being able to put it into people's arms in the autumn time frame. So a few weeks behind the mRNAs, but I'm not that far behind. In terms of antigenic SYN, whether you're going to have Multivariant vaccines in a single dose or dose sequentially, those are all questions we don't understand. So I think right now people are assuming that if you dose With the next gen variant as a boost that you will drive the immune response to be able to give you protection Against the new variants, that's not necessarily true because you may have already biased the immune response to the original variants. So we're going to have to do those Experiments, Andrew, and actually worked that out using immunogenicity and utilization assays. But I think those are all the things that we will be working out over the coming weeks months. Thanks, Manet. The next question is from Sachin at Bank of America. Go ahead, Sachin. Thanks for taking my questions. Sachin Jain here, Bank of America. Two topics, if I may. Firstly, on tezepelumab, I wonder if you could just discuss The relevance of the source data, which didn't show the benefit on steroid reduction. I'm a bit confused that powering seems to be cited as a reason, given the study size isn't That's different to the Dupixent or Fasenra studies. And if you could just touch on commercial relevance of having missed that study. And the second one is just back to cash flow Mark, I wonder if you could comment to what sort of free cash flow improvement we should see in 2021 relative to consensus at around $6,500,000,000 $7,000,000,000 in operating cash And then related, you've been fairly vocal on dividend increases as part of the Alexion acquisition. When do you expect you can get more concrete On that in terms of payout ratios of combined free cash flow and your intent to specifically target income investors given the dynamics elsewhere in the sector. Thank you. Thanks, Sachin. Can I suggest that many of you cover first the source data and the interpretation and then Ruud can cover the commercial relevance and mark the financial questions? Yes. Thanks, Sachin. So First of all, it's not a powering of the study that led to the negative. So I think it's the design of the study and some of the nuances within that. And I think when we present it, It will become clearer. I don't think it impacts the filing for tesi in any way. And actually, the data were very consistent with what we saw with tesopelumab. It's really the placebo arm didn't perform as we wished When you see the data, we still feel confident that tesi will indeed provide steroid sparing for reduction over time and we'll need to read it and run another study to prove that. But there's nothing about the powering of the study that's led to this result. Ruud? Yes. Thank you, Menai. From a commercial perspective, Sajid, we are, I think, together with our colleagues of Amgen, Very excited about this product irrespective of the source data. I think it's the first time That Biologic is clearly showing a very strong effect in lowes in the fills. None of the other biologicals I've been able to show that. So the potential is very substantial, roughly 60% are in what is called the moderate to low ears in the fill situation. So in that sense, I think it will be an extremely good product in order to serve those patients. But equally, I agree with Mene, we will do more analysis and we will look whether it makes sense in order to do another study. But In the short term, I don't expect any major impact based on the source data. So yes, on the cash flow, I'm I'm not going to be able to give you a guidance on the cash flow for 2021, but I think I would like to Explain that the sort of benefit that we got on the cash flow in 2020 due to the vaccine will obviously reverse itself in part in 2021. So this needs to be considered. If we just look at the sort of underlying cash flow, I think you will have a similar trend as one we saw over 2020 versus 2019, which is a faster growth of the underlying cash flow if we exclude the vaccine. So I think you need to take these two elements in consideration. If we talk about the dividend, So what we have said is with the Alexion, if we do acquire Alexion, we'll have a stronger capacity for of dividend expansion. We haven't provided any specific timing, but we have answered the question in the past of whether this would take place in 2021. And we have answered that 2021 will be a very busy year for us. And therefore, post 2021 seems to be a better time to increase the dividend. But we haven't provided a sort of a fixed payout ratio going forward, but clearly a stronger capacity to expand the dividend from 2022. Thanks, Marc. Tim Anderson of Deutsche Research. Tim, over to you. Thank you. I have a question on HER2 And specifically on DESTINY Breast 4 in the HER2 low segment. To me, of the various readouts occurring in 2021, that's perhaps the most exciting. It's a large segment of the market. It's one that's untapped with current HER2 therapies. So it's quite novel. I'm hoping you can characterize the riskiness of this particular trial and also the commercial meaningful on this of that particular trial relative to the other readouts. And then on Farxiga and the DELIVER results in the HFpEF heart failure segment, It could be quite meaningful, but it's hard for me to handicap the risk of that. So what's your confidence in a positive readout on that trial later in the year. Thank you. Thanks, Tim. So Christian, can you cover the first one and Dave could add to this? And Mene, if you could cover the second question, but relatively quickly because We still have a lot of questions and we would like to give everybody a chance. Sure. Thank you for the question. And the DB04 trial, I am very much in agreement with you, is a very exciting trial. One of the most important readout that we will have the second half of this year and is a study that is currently comparing in 540 patients This is a trial that we are running in pretreated patients. It is a trial that is based on the preliminary data that we have been reported in F2 low breast cancer in later line treatment and probably every pretreated moderate regional patient population. I think the data that we have presented give us confidence that Enerto in this segment can be definitely superior to monotherapy, the monotherapy that I just mentioned. So and you know this is a very important trial because based on the results of We will decide what's next in this specific segment, F2O. And of course, this can give us opportunity to And further this segment with combinations or even going earlier in terms of line of therapy. Evan, anything you want to say very quickly? Yes. So very quickly, Tim, what I would say is that commercially, it could be very attractive. It will obviously depend upon the data. HER2 low could be as Big is 3 times the size of HER2 positive, but remember HER2 low is a continuous variable. It's not a binary one. And so we'll have to see kind of What the data show when the data come out, but in terms of opportunity we're certainly excited about it. Thanks. Meny, HFAF? Yes, I mean, I'm not going to give a probability of success. I would say that PEF is definitely more challenging. But I think with what we've seen so far across Our studies, we feel confident that we should get a hopefully a positive readout, but ultimately the trial will read out and we'll see the results when we get them this year. Thanks, Mani. Since we're on Farxiga, there's a question from San Fazili at Bloomberg about Farxiga consensus estimates Rod, do you think they are sufficiently reflecting the potential for the drug? And can you update on the potential for patent protection in the long term, Rod? Yes. So, past this call and thanks for the question. Sam, we're not commenting too much about the absolute numbers. The only thing I can say is that we are very pleased with the very strong performance across all the geographies The potential, of course, of CKD is very, very substantial. It requires A lot of market development, but we are working hard on that and equally, of course, in many geographies. We have just launched Heart failure and the attractiveness of heart failure is evident and is also now seen by international guidelines and local guidelines. So once again, I'm not going to answer your question, but you can hopefully hear my enthusiasm about the potential of Farxiga in the next 6, 7 years. The potential for patent protection. I think once again, I think there's a potential in order to extend our patent based on the pediatric in the indication, if that will be granted. So we are working hard on that piece. And then on top of that, we are doing and man, I was mentioning that a quite extensive Combination studies with a couple of other assets, which we will need to wait and to see the results in the next few years. Thanks, Paul. And Sam had a question about the vaccine, at what point where we consider making a profit and we still have to define this. And we can in almost all geographies is how we book the sales and keep the profit to ourselves. Alternatively, we share with our partners in the various geographies. The next question is Jo Walton of Credit Suisse. Jo, over to you. I'll respect the one question rule To allow as many people as possible on the call. If we look at your if we look at the consensus for 2021, it's just over $5 And that's at the top end of your range. However, there only appears to be about EUR 975,000,000 of other operating income within that. Now you've got some base business of other operating income. You've got the AbbVie income. You've announced the Crestor deal and you've got the stake, The Veolia stake. So presumably, as people put all of those numbers in, that other operating income comes in comes up quite significantly. That would normally drive profit. So you would perhaps expect more than $5 of earnings. So I think what people will have to do is increase their level of investment If they're going to keep their earnings still in that $5 range. So my question is, which is the area where we should consider more investment? Is it all discretionary, fantastic R and D and you can spend more on R and D? Or is some of the incremental investment But collectively, we haven't got in our numbers an SG and A investment. It's actually going to take more boots on the ground in order to sell these products. The reason that I ask is partly because the one area that did increase in expense in 4Q was SG and A, up 6% in currency, which is a quarter which presumably had some COVID disruption in it. So I'm really trying to get some idea of how that SG and A is going to move going forward. Thank you. Thanks, Georges, to you. Yes. So thank you, Joe, for the question. So your I think your basically triangulation of the other income is looks plausible and possible to me. As far as the you're trying to find one cause of potential differences between us and consensus. First of all, we are I think we are very close to consensus. But I think you need to look at probably the integrity of the P and L and starting from gross margin as well as R and D, including SG and A. I think I don't think it's only on one line that there's a difference. There's obviously the difference that you mentioned On a possible difference that you mentioned on other income, I would look at the totality of the lines. And I do apologize, but I can't give you much more Indication on each of these lines today, but I would not think it's on one line. I would think that maybe composite on many lines. Thanks, Marc. I'm sorry we are Speaking in riddles today, Joe. But again, as we said, our ability to comment on 2021 is more limited than usual. James Gordon, JPMorgan, James, over to you. Gordon, JPMorgan, thanks for taking the questions. One following up on tazepelumab. So we saw the navigator data at AAAI and the efficacy looked pretty competitive in the high and the low synovial patients. So is the plan just to go for the lows, that's where you're going to be differentiated? Or are you going to be competing against Fasenra in the highs as well? Could assume you get approved in both. And is dose frequency important in this category? GSK, we're talking about doing long acting Yucala. Are you going to look to do a long acting version of either of these products? Or is that not really something that matters in this space? Secondly, FADIGATE. So Your comment about the generalization in the 2020s, and I can see a few different combo approaches that you're doing for kidney disease, which should be a way of extending the IP. I can't see anything listed at the moment for the combo approach for heart failure. So is there a plan to do combo approaches for heart failure? Or is that bit going to genericize? And then finally, just a clarification. On the COVID antibody, I think Mehdi made some comments about efficacy for COVID-nineteen variants. Was that talking about the U. K. Strain or also talking about the being confident in efficacy for the South African strain as well? So you're pushing your luck, James. Three questions in one. Maybe the first two, Ruud, you could cover And then Mene, you could say a couple of words on the long acting antibody. Yes, of course, Pascal, and thanks, James. Regarding tazepelumab and the positioning, clearly, we see this potentially as a best in class molecule. And therefore, we will not Make a distinction between high eosinophils and low eosinophils. We are working here with our partner, Amgen, so So we are not going to niche ourselves. We will position the product based on in-depth market research. And if that means that we also are going to penetrate in the high eosinophils, we will certainly do that. Regarding your question about how important is dosing, I think it's important. It's The less frequent patient needs to go to a hospital or a clinic or ideally can inject themselves is a win. But equally, of course, this is a class heavily directed by efficacy. And therefore, we have seen multiple times that for the patients, most importantly is a strong efficacy And less dosing, but equally, of course, if you have a dosing advantage, you will use it. Farxiga, question It's about heart failure and the combination. Yes, there are multiple combinations in in kidney disease. But equally, we're also looking at combinations in heart failure a little bit earlier, but where it is possible, We will certainly do that. And when the time is there, we will clearly disclose that. And just to add, We already have a dosing advantage of SEDRA exists every 2 months, but it is something we're looking at to see if there's any additional benefit of increasing The dosing schedule. With regards to the antibodies, it's against all variants actually, and there's 2 independent laboratories now that have shown Our cocktail both antibodies in our cocktail actually are still very potent and neutralizing All of the new variants, whether you're talking about South Africa or Kent, and that's in contrast to many of our competitor antibodies where either one Well, both of the antibodies were actually quite severely impacted. So we're in good shape with our antibody cocktail, both for South Africa and Kent variants. Thanks, Mene. This is an exciting conference for sure. So we have a question from Simon Becker, at Redburn. Simon, over to you. Thanks very much. And this is just the one question for Dave on Calquence and on Elevate RR. A couple of years ago, a lot of people thought that Calquence wouldn't take off without and until the ELEVATE IRR study. And yet the sales trajectory has been very impressive in the U. S. So I wonder if you could give us your Updated thoughts on the impact of Elevate RR, both in the U. S. Market and also ex U. S, where obviously you're at a much earlier stage. Great. Thanks, Simon. I think I've Pretty consistently been talking about the fact that our mindset in the U. S. And indeed across the globe has been that we need to be Successful with Calhoun's irrespective of the outcome of the head to head study. I think the results that we talked through today and the progress that we've made certainly shows that we're doing that in the frontline setting. We did though take I think both a smart and a courageous risk in the head to head. I'm looking forward very much to sharing those results. We obviously won't have discussions about those results until they're presented. So we continue focusing in on the data that we've got in front of us. And I think that We have the belief that we've got a best in class agent and we've achieved parity in the U. S. In terms of New patient share in MCL and I see no reason why we shouldn't continue to move on that trajectory. And we have launches underway across the globe. And I'm pleased that in Germany and in the U. K, we're already starting to see positive movement within Europe and looking forward to more approvals in the front line. Thanks, Dave. Next question is Peter Workford of Jefferies. Just one question, if you don't mind, Peter. Peter, are you on mute? Sorry, can you hear me now? Maybe we can go to the Go ahead. Sorry, can you hear me now? Sorry, apologies for that. Just really a point of clarity, please, on the cash flow. And I don't know whether Mark Comment on this or not. But just with regards to the payouts that we should potentially be thinking about in 2021, I think you've already made 2 payments milestones that you disclosed to Daichi. I wonder if you can give us in broad terms The other collaborations and potentially sort of amounts we should be thinking about in terms of the potential outflows to partners during the course of 2021. Thank you. Thanks, Peter. Marc? We don't provide this sort of a schedule of payments for the year for the coming years. But we have when we have concluded the deal the deals, we have usually indicated the Various types of payment we make for each of the project. So the question then comes when is this Triggering point is if we pay for a development milestone and approval milestone or something else, the question become then when is this triggering point taking place. So I'm not going to be able to comment in detail about that. Apologies. Thanks, Marc. Emmanuel Papadakis, Deutsche Bank. Emmanuel, go ahead. Thanks for taking the question. Maybe I'll take a quick one on Imfinzi. I mean, it Teams have flattened pretty hard in the U. S. Time lines have slipped on several trials, including adjuvant. You've had some interesting competitive The study started including TIGIT combination, and I don't think we've seen anything equivalent yet started in terms of pivotal trials from assets. Perhaps you could just comment on the outlook, Where and when will any further big growth be coming from the Infinity side and your perspective from competitive risks over the next few years? Thank you. Dave? Thanks, Emmanuel, for the question. So on Imfinzi, we have With the Pacific indication certainly in the major early markets that we've launched gotten to a place of standard of care. And as a result, we've seen kind of more modest sequential growth Particularly on the latter half. With that said, the Caspian study is an area that we are really looking forward to making continued inroads into. We have a very Nice profile. It's been well received by physicians and oncologists across the globe. The pandemic has affected probably Imfinzi As an infused therapy, more than it has some of the other products within the portfolio. In terms of the pipeline question that you ask, I think we highlighted some of the studies that I'm looking forward to readouts on later this year, PACIFIC II, Himalaya, Both of those are important opportunities to continue growth. We also are doing our own work on TEGIC combinations in collaboration with Arcus which is something that we've spoken to in the past or Arcus has spoken to. And so we look forward to continued News flow out of Imfinzi in the rest of the year. Thanks, Dave. Now that's Shuwan at Infiniti. Hi there. Thanks for taking my question. Just one on Symbicort, please. In the U. S, we've clearly seen the benefit in 2020 from higher adherence. Should we expect be expecting a similar level for this year based on pricing and and what you've seen today in volumes. It's quite a big number. Just trying to get a sense of where that's heading. Thank you. That's for you, Ruud, I think. Yes. So it's another good question. So once again, we are not going to comment on individual product forecast. But Symbicort is well placed. It's the leader in the United States in the ICSLABA class. It has a huge heritage, so we're bullish regarding the outlook. But equally, I also need to mention that we are focusing our efforts more and more on Brasserie as well In the COPD, we really believe that there is a high unmet medical needs, that triple class is growing very fast. So a lot of the efforts of our field As far as marketing and medical teams are more and more on Breastory and less on Symbicort moving forward. Thanks, Rod. Christophe Houdet, sorry, at SEB. Yes. Hi, there. So my question is about So COVID therapies. So the AZD-seven thousand four hundred and forty two, I guess it's the same underlying technology as Nirsevimab, but the as I understand it, the COGS on Nirsevimab are prohibitive for use in adult prophylaxis in RSV. So what can you say about this in COGS with 7,442 and why, if any, is there a discrepancy? And then I guess related to COVID therapies. Can you comment on I guess there was a recent study with Symbicort. Can you comment on how you see that opportunity. Thanks, Christopher. Very quickly, the first one, Cost of goods is quite reasonable, we see in relation to the selling price of this Crookedent of antibodies, of course, it's more expensive because you have to put 2 antibodies in the same virus, but We don't see this as a limitation in terms of the potential of the product. Symbicort, Raul, do you want to cover this? This is Symbicort in the COVID patients and the study, the early study with a smaller number of patients, but still quite intriguing showing a 90% reduction of professional disease. Yes. I presume it's not SYMBIKOARD, it's PROMICORE. That's Yes. But it's without any doubt, it's a very interesting finding. This study was stopped earlier Than expected because of the overwhelming efficacy. And we know, of course, that corticosteroids have a very damping effect on the cytokine storm in COVID-nineteen patients. Now the implications for what it means, we're still trying to figure it out. But equally, of course, we have seen that Symbicort adherence has increased quite substantially in asthmatics. And there are more and more reports that asthmatics because of the fact that they are using a corticosteroid, In the health corticosteroids are ending up less in hospitals and are showing less severe disease than other patients. So we're following it. We are looking into it. But I think it's a little bit too early in order To get overly excited that this will be a massive sales opportunity. Ruud, I would just say one thing. We do have several Studies that are ongoing with Palmacort and Symbicort that are being run externally just to continue to follow that efficacy. Very good. So we'll take the last question, Martin Hall at Hartmann and Co. Go ahead, Martin. Thank you. For a number of years, your SG and A has been more than 10 percentage points above the weighted industry average. You made some good progress in 2020 with the increase in sales being achieved with flat underlying SG and A. But apart from increasing sales, how do you intend to get your SG and A costs is more in line with the industry average or an alternative way of looking at it With your current sales force to bring your SG and A in line with the industry, Aarek, you need to have product sales of $39,000,000,000 Do you think that's achievable? Matt, do you want to cover this one? Yes. I think I can only point you to the years the 3 past years, 2018, 2019 2020 and see the progress that we have made on the SG and A ratio. We have also said that we will always Put enough resources behind the launching of our new products and our new indications so that we put them on the right trajectory. So this we will continue to do. But since we are promoting products within the focus areas where we are present. Over time, when the sales grow, you have this phenomenon of operating leverage at different levels, but in particular on the SG and A line. So we are going to continue our effort on the operating leverage and over time The SG and A ratio will decline. Thanks, Markus. One maybe one last question. Simas Flanders at Guggenheim. Simeon, go ahead. Great. Thanks for the question. So, mine was just on roxadustat. I know we're in kind of the final days of FDA discussions. Just wanted to get a sense of your confidence in getting the non dialysis portion approved. And if Really, the only source of debate is whether or not you have an ESA like warning on CB risk. Thanks so much. Yes. Confidence is high, I would say. So I think you've kind of semi answered the question. It's a short answer. Confidence is high. Very good. Okay. So thank you so much, everybody. And I know we took you over time, but there were so many questions. So I'd like to thank you very much for your interest, and We look forward to meeting you all during the global watch shows that starts tomorrow. It's really going to be a very exciting year, lots of opportunities for us, and I look forward to the discussions. And again, once again, thank you so much for your interest and goodbye.

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