Good afternoon, ladies and gentlemen, and welcome to the analyst call on the GSK Third Quarter 2020 Results. I will now hand over to Sarah Elton Farr, Head of Investor Relations, who will introduce today's session. Please go ahead, Sarah.
Thank you. Good morning and good afternoon. Thank you for joining us for our Q3 2020 results, which were issued earlier today. You should have received our press release and confused presentation on GSK's website. For those not able to view the webcast, slides that accompany today's call are located on the Investors section of the website.
Before we begin, please refer to Slide 2 of our presentation for our cautionary statements. Our speakers today are Emma Walmsley, Ian MacKay, Luke Miles, David Redfern and Brian McNamara. Hal Barron and Roger Connor will join us for Q
and A. We request that
you ask only a maximum of 2 questions so that everyone has a chance to participate. And with that, I will hand the call over to Emma.
Thank you, Seth, and welcome everybody to today's call. I hope that you are all keeping well. 2020 continues to be an extraordinary year. GSK has shown resilience and agility in tackling the challenges, while maintaining focus on our strategic goals, which remain firmly on track. We continue to strengthen and advance the pipeline.
In July, as mentioned at Q2, we received approval for RECOVIA in HIV. And this quarter, we've also had first approval and launches for BLENREP in multiple myeloma, the TRELEGY in asthma and new indications for Nucala. We've delivered positive data on our RSV cancer vaccines and GSK836 in hep B. Plans to progress these programs are underway. Both represent major opportunities for healthcare impact and have the potential to be significant future growth drivers.
We also initiated 3 major pivotal studies in meningitis vaccines, 2nd line multiple myeloma and with our Viya antibody in COVID-nineteen, a very exciting program you're going to hear more on later. So there have been some short term pressures as a result of the pandemic, especially in vaccines early in the quarter. Our performance fundamentals continue to strengthen. And we're very confident our vaccines portfolio and pipeline will drive growth for years to come. Brian will update you in more detail, but the momentum we're building in our commercial execution is driving encouraging growth across our new products, setting the course for strong future performance.
And this has also been a quarter of disciplined cost control as we've made substantial progress on both our consumer integration and company separation programs. We continue to deliver efficiency in our support functions, further simplify our site network and have achieved an important milestone on building one development organization in R and D for pharma and vaccines that will improve agility, decision making and scientific collaboration as well as our cost base. Our pipeline includes several COVID solutions and we remain committed to building stakeholder trust as we deliver them. We have in place supply agreements with multiple governments for our partnered adjuvanted COVID-nineteen vaccines and have pledged to maintain our focus on safety and global access. Turning to the quarter, strong performance from our future growth drivers combined with a focus on costs has offset the ongoing pandemic impact.
We've delivered margin and earnings growth this quarter and expect to deliver within our earnings guidance range in 2020. All numbers referenced are on a constant currency basis. In Pharma, we're very encouraged by the strong performance of our new and specialty products with sales up 12%. This was offset by a decrease in established pharma of 18% and we'll go into that in more detail in a minute. The greatest impact of the pandemic has been in our vaccines business, where sales were down 9% in the quarter.
However, we're encouraged by the accelerated recovery towards pre COVID level of immunization as the quarter progressed and a strong performance in flu, up 21% year to date sorry, up 21% in the quarter. Year to date, Shingrix sales are up 6%. In consumer, we continue to reshape the portfolio and pro form a growth in our ongoing business was 3% driven by vitamins and oral health. Overall, we're gaining share and our power brands are performing strongly. Group adjusted operating margin for the quarter was 30.8% with the impact of vaccines more than offset by tight cost control and the realization of restructuring benefits with SG and A down 10% pro form a, while we've continued to invest in our pipeline and our new product launches.
On a total basis, earnings per share were 0.25p and adjusted earnings per share were up 1% to 35.6p. And before I hand over to Iain, I'd just like to remind you of the great progress we're making on our portfolio of COVID solutions. Our aim is to develop multiple adjuvanted COVID-nineteen vaccines. And we now have 3 different vaccine collaborations in the clinic that could move to pivotal studies by the end of the year. We also have 2 exciting therapeutic approaches in clinical studies through our collaboration with Vir, which Luke will speak to later and our AGM CSF antibody, atilumab.
And so now to Ian with more detail on the quarter.
Thanks, Emma. All comments I'll make today will be on a constant currency basis except where I specify otherwise and I'll cover both total and adjusted results. On Slide 9 is a summary of the group's results for Q3 and the year to date. In Q3, turnover was down 3% CER, adjusted operating profit was 2 point £7,000,000,000 up 4% CER. Total EPS was 0.25p down 9% CER and adjusted EPS was 35.6p up 1%.
In the year to date, turnover was €25,400,000,000 up 4% reported, down 2% pro form a. Adjusted operating profit was £7,100,000,000 up 3%. Total EPS was £102, up 55 percent and up 55% and adjusted EPS was down 4%. We delivered GBP 2,300,000,000 free cash flow in the year to date and in the quarter there was a 5% headwind in sales and 9% in adjusted EPS from currency movements. Slide 10 summarizes the reconciliation of our total to adjusted results.
The main adjusting items in the quarter to highlight are major restructuring, which reflects continued on track progress on the consumer healthcare integration and transformation and separation activities. And in transaction related, within which the main contributor was a charge relating to the re measurement of the contingent consideration relating to Veeb Healthcare. The main component within this was an increase in our forecast for cabotegravir PrEP following the very strong clinical data that we shared earlier in the year. Comments from here onwards are on adjusted results on a constant currency basis unless stated otherwise. Slide 11 summarizes the Pharmaceuticals business where overall revenues were in line with expectations, down 3% in Q3 and down 1% in the year to date.
Excluding established pharma, revenue grew 12% in the quarter and was up 12% in the year to date, reflecting our strong commercial delivery. Respiratory was up 26% with continued strong growth from TRELEGY, RELVARBREO and YUKALA. VENLYSA was up 13%, extending its double digit growth after more than 9 years in the market. In oncology, Zejula sales were €92,000,000 in the quarter, up 40 7%, reflecting excellent commercial execution. And we remain very excited by the prospects of both Zejula and Glenrep, which launched in the quarter.
Our new products continue to perform strongly and Luke will comment on these momentarily. HIV revenues were flat with the dolutegravir franchise 1% with very strong performance from Dovato. The established pharma portfolio declined 18%. Within this, respiratory was down 18 reflecting generic competition for adverse ceratide and Ventolin plus accelerated brand erosion of Flovent in the U. S.
The rest of the established pharma portfolio was down 19% with COVID-nineteen impacting performance, particularly in antibiotics. Additionally, we've seen increased government mandated generics in certain markets. For the current year, we expect the total established portfolio to be down mid teens. Next year, we would expect the established portfolio to revert to its historical norm of mid to high single digit decline and we continue to review opportunities for divestments in this portfolio. Farm operating margin was 28% in Q3.
4 70 basis points increase reflected a favorable product mix, a benefit in the quarter from the recognition of pre launch inventory and approval of Glenrep within R and D, favorable comparison to 2019 pertaining to non recurring manufacturing write down and legal settlements, and tight control of cost and benefits of restructuring actions. These were offset by increased investment in new product support in targeted priority markets and in R and D focus mainly on oncology and COVID-nineteen programs. Year to date margin was 26.3%. Slide 12 gives you an overview of Vaccine's performance in Q3 with sales down 9% driven by adverse impact of the pandemic. Shingrix sales were down 25%, reflecting lower adult wellness visits in the U.
S. Particularly through July August. However, by the end of Q3, Shingrix weekly U. S. Prescriptions reached similar levels to the same time last year.
Shingrix revenue has grown 6% year to date and we've put measures in place to support further growth through Q4 and beyond. Recent trends are encouraging and demonstrate the strong underlying demand for this vaccine and we continue to make progress on expanding supply capacity. Flu vaccines performed well with revenue up 21%, primarily reflecting strong execution on supply and sales. We expect the increase in flu immunizations, particularly amongst older adults to support further recovery in Shingrix performance. The meningitis portfolio grew 1% with the disrupted back to school season in the U.
S. Affecting NxThera performance. And in established vaccines declined 15%, reflecting lower demand due to the pandemic environment, particularly in hepatitis as expected. The operating margin of 44.2% was 500 basis points lower, primarily reflecting the negative operating leverage from COVID-nineteen related sales decline and investment behind key brands such as Shingrix. In the year to date, vaccines revenues were down 7% and adjusted operating margin was 40.7%.
Turning to Slide 13, Q3 revenues in Consumer Healthcare on a pro form a basis were up 3% excluding brands either divested or under review. Including those brands such as Horlicks, turnover declined 6% pro form a. Reversal of the Q2 systems cut over stocking benefited impacted overall growth by around 2 percentage points. Oral health grew 5% at CER with Sensodyne up 7% driven by strong global commercial execution. The pandemic has had a sustained positive impact on vitamins, minerals and supplements, which grew 18% driven by increased consumer focus on personal health.
However, this growth was partially offset by weaker performance in respiratory health with a lower cough and cold season so far and in pain relief informed principally by Advil market share. The Rx to OTC switch triple turn in the U. S. Is performing very strongly. Operating margin for the quarter was down 90 basis points year on year, mainly reflecting the impact of divested brands and increased brand investment, partially offset by synergy benefits from the Pfizer integration and tight control of costs.
There's no change to our previous guidance for consumer margins. In year to date, consumer revenues were flat pro form a and up 6% due to the impact of divested or under new brands. Pro form a adjusted operating margin was 23.8%. Brian will provide more detail on the Consumer Healthcare performance and an update on the business shortly. On Slide 14, we summarize the sales and adjusted operating margin for Q3.
Our group operating margin was up 2 40 basis points on a pro form a basis. Lower costs across the group offset reduced sales operating leverage, which was mainly in Vaccines. Across the company, we're beginning to realize restructuring benefits from programs announced earlier this year. We continue to manage operating costs very tightly and have realized significant savings in categories such as T and E. During Q3 in SG and A, we realized a one time benefit from restructuring of post retirement benefits and the non recurrence of high legal costs from Q3 2019.
We continue to invest in new product launches and our pipeline progress remains firmly on track with pharma R and D year to date spend up 6%. The lower R and D spend in the quarter was the result of a benefit from the recognition of pre launch inventory upon approval of Glenrep. Comparably lower spend related to niraparib and to Starlamin following their filings at the end of 2019, plus the realization of transformation savings, synergies and efficiencies. This was partly offset by increased investment in the progression of key assets such as Glenrep, ICOS, etilumab for rheumatoid arthritis and 2 key COVID programs being etilumab COVID and the VIR antibody. R and D in vaccines and consumers slightly down in the year to date and with the realization of noted transformation synergies and savings, we now expect R and D for the group to increase mid to high single digits for the year.
All our pivotal programs are on track. Any COVID-nineteen related delays initially experienced now recovered with the exception of gefitidazine. We've included the analysis covering the year to date information in the appendix. Moving to bottom half of the P and L, I'd highlight that interest expense was GBP197 million, mainly reflecting lower debt. The effective tax rate of 16.8 percent was in line with expectations, and we still expect a full year effective tax rate of around 16%.
And finally, non controlling interest reflected Pfizer's share of profits of the Consumer Healthcare JV. We delivered cash flow of CAD2.3 billion in the year to September. The reduction primarily reflected higher dividends to non controlling interests and adverse exchange impacts, partly offset by lower seasonal increase in trade receivables, beneficial timing of payments for returns and rebates, higher proceeds from disposals of intangible assets and improved operating profits. As we indicated at Q2, we expect free cash flow to be lower in the second half of twenty twenty than the first half and we still expect cash flow for the year to be a step down from 2019. We closed the quarter with strong cash balances and effective approach to working capital management and maintain access to extensive undrawn committed facilities.
We set our guidance range of minus 1% to minus 4% CER adjusted EPS in early February this year. I it could be fair to say that quite a lot has happened since then, but I'm pleased that the group has responded with agility and we're still on track to deliver within this guidance range, albeit at the lower end. The performance for Pharma and Consumer so far this year is in line with where we expect it to be with good commercial delivery in our new and specialty products in pharma and our power brands and consumer health. We're encouraged by the Vaccines business recovery through the quarter with a stronger performance in September, which has continued so far in October compared to a year ago. In vaccines across the age categories, this recovery is mostly complete in pediatrics, while slightly slower in adolescents and formed by the return to schools disruption.
In older adults, the increasing immunization rates and uptake of Shingrix is encouraging and demonstrates strong underlying demand. Achieving our guidance does depend on sustaining this recovery of adult immunization rates, particularly in Shingrix. We continue to make good progress in improving supply capacity for Shingrix ahead of our new facility coming online and we'll update you on the details behind this in Q1 next year. There are no change to our capital allocation priorities. We continue to advance the pipeline as noted by Amit earlier.
We're making great progress with the integration of the Pfizer consumer business and advancing the transformation across all aspects of GSK and are confident in our preparations for the separation. As noted in our earnings release, we've declared a 0.19p quarterly dividend in line with expectations set out earlier this year. And with that, I'll hand over to Luke.
Thanks, Ian. Hi, everyone. As you know, we've been working hard on our commercial execution to ensure that we're competitively resourced with a particular focus on new product launches in our key markets. And the changes we've been made are now starting to pay off. Sales in our growth areas of respiratory, HIV, immuno inflammation and oncology were up 12% this quarter to 2,500,000,000 dollars Changes we've made include updated ACT engagement policies and sales force incentives to allow us to compete more effectively and responsibly in the key markets where we're driving growth.
And we're also winning share of voice with strong acceleration of our digital capabilities as well as increased face to face engagement where possible. And though the lockdown restrictions have as expected impacted on some of our portfolio, especially established pharma, we've taken the opportunity presented by the new way of working to amplify our digital presence, complementing more traditional approaches very successfully. And with these measures and the right investment, we are seeing great momentum across our new product portfolio, which we expect to build further in the coming quarters as we bring our pipeline assets to market. Starting now with Nucala, we had another great quarter, delivering a strong competitive performance and maintaining our leadership in the IL-five class. This remains a market with significant growth opportunities with unfortunately only 27% of eligible patients in the U.
S. Receiving the biologic. And we're leading share of both new and total IL-five patients in the U. S. And remain the leader in other key markets around the world as you see on this chart.
Nucala's leading position is built on its proven efficacy derived from its precision targeting of IL-five to reduce the synovals to normal levels, differentiating it from other biologics. And we're using that benefit to rapidly expand into other eosinophil related conditions. In the U. S, we now have approval in EGPA and HES and have recently submitted our application for nasal polyps. We've also had a first to GSK when we submitted 3 indications in parallel to DMA later this month or earlier this month and our studies in COPD are ongoing.
And we continue to see a great growth outlook for Nucala. Staying with respiratory and moving to TRELEGY, we continue to not only lead the way in once daily single inhaler triple therapy for COPD, but grow the market as well. We are growing our share in the U. S. Where we are the market leader as well as in other major markets around the world.
This is an increasingly competitive area, but we've maintained a leading share of voice in the U. S, Europe and Japan and continue to see strong growth. The opportunity in COPD is significant with less than 25 percent of patients in the U. S. Who need triple or need a triple being on it today.
So there remains substantial scope for growth. Additionally, we received U. S. Approval for asthma, about 30% of U. S.
Patients in the or adult patients in the U. S. With asthma on an ICSLA remain uncontrolled. So they could benefit from triple therapy. And it is early days, but in the 1st 3 weeks to market, we've seen a doubling of NBRx for allergist prescribers showing that there is an unmet need that is recognized.
Next slide please. Benlysta, switching to Benlysta, it continues to be a great product for us and for lupus patients around the world. In Q3, we again saw double digit growth after more than 9 years on the market, supported by the uptake of the subcut formulation and the success of our IV launch in China. Lupus is a market with considerable upside potential and we're driving through this through targeted lifecycle management, building data and working on new indications. This quarter, we're very pleased to
say we published positive data from
the BLISS LN trial in the New England and received priority review for submission to the FDA. We expect to have approval by the end of the year and are on track to become the 1st and only drug indicated for both SLE and lupus nephritis. We will also have our combo study with rituxan in house by the end of the year, and we're hopeful that this combination, if successful, could potentially lead to clinical remission. With our ongoing investment in generating important data, we are well positioned versus potential competition with established efficacy in a broad base of LIFUS patients, long term real world outcomes data and a recognized long term safety profile. What is interesting is more than 80% of eligible patients remain untreated with ZENLYSA in the U.
S. And of course even more around the world. The number treated will increase further with the lupus nephritis indication and so there's plenty of opportunity for growth remaining to help these patients. Now to oncology. Through the ovarian although the ovarian cancer market has been impacted by the pandemic with fewer patients undergoing first line treatment in the first half of the year, we have been able to execute commercially with Zejula and drive our share of the market.
Our best in class label, the only PARP inhibitor for all comers in the first line maintenance setting, has been key to driving market penetration, not only in the BRCA mutant population, but across all patient types. And that is now supported by both the NCCN and ASCO guidelines for patients who responded to chemo. As of August, almost half of all patients starting on a PARP inhibitor are now getting Zejula and by now 1 in 3 with the neural repeat patients are on Zejula in the frontline. In Q3, we saw a 50% increase in the average weekly new riders in the U. S.
And we've doubled our overall market share from 14% in April to over 30% in August. We also know there's significant opportunity to continue to penetrate the market with watch and wait still unfortunately being used in more than 70% of women in the first line maintenance setting in the U. S. And finally, we're focused on accelerating opportunities beyond that variant, we can improve outcomes for a broader set of patients. In Q3, we initiated the ZEAL study in combination with Pembroke to investigate the impact of Zejula on both squamous and non squamous non small cell lung cancer patients in a maintenance setting.
So with these differentiated properties in the superior of superior tumor penetration and the ability to cross the blood brain barrier, we believe Zejula has the opportunity to improve outcomes and be the best in class PARP and lung. Next slide, please. We launched Glenrep for heavily pretreated multiple myeloma patients at the end of
August in the U. S. And though
it's early days, we are seeing a positive response across the board from physicians, patients and advocacy groups. There's a high unmet need in multiple myeloma and over 500 HCPs and over 200 patients have already enrolled in our fully operationalized REMS program. We've had a highly experienced sales force. We have a highly experienced sales force and our in person access to ACP is highest amongst our competitive set. We're also focused on the continued development of this important and have a robust program in place to improve the safety profile by studying alternative doses and scheduling.
Importantly, we also have studies investigating lenrapin novel combinations with other drugs like pembro, which could have potential synergistic effects and a combination with SpringWorks Gamma secretase inhibitor, which appropriately inhibits the cleaving of BCMA, potentially enabling a clearer target, driving superior efficacy and an improved side effect profile. And we anticipate sharing data on some of these combinations in 2021. Shifting to vaccines on the next slide. We saw continued impact from the pandemic in the quarter with lower adult wellness visits and vaccination rates in the U. S, while momentum improved substantially in September.
For Shingrix, we saw a steady increase in U. S. Prescription volumes through the quarter and by quarter end they'd reached a similar level to that last seen before the pandemic and comparable to the same time last year. We've been very successful in driving this recovery through our DTC campaign in conjunction with the flu season and wholesaler inventory levels are now considered normal with about 1,200,000 doses in the channel. Outside of the U.
S, we saw strong demand from Germany and great progress in our phased launch in China, which is going well. Next slide please. But before I hand over to David, I'd like to take you through before David takes you through the TDR momentum in HIV, I just wanted to highlight the upcoming readout that we're anticipating for our COVID antibody that we're developing in collaboration with Via. Although there are many vaccines in development for COVID, including our own collaboration on adjuvant approaches with Sanofi and others, we believe a therapeutic option will still be necessary. There's a lot of uncertainty about how the pandemic might develop, but it seems likely that we'll continue to see a high level of infections in 2021 and beyond.
And even if a vaccine is successful, it will take time to distribute and is unlikely to be 100% effective for everyone. So on that basis, I think it's fair to say that there will be a clear need for therapeutics. VeVe antibody has been developed from an antibody taken from a patient affected with SARS CoV-one. The S309 antibody was found to have extremely high affinity for the SARS CoV-two spike protein and is highly potent in neutralizing SARS CoV-two in live virus cellular assays. It has 3 features which lead us to believe that we have a potentially best in class asset.
The first is that it has a unique receptor binding site, which is highly conserved and is required for viral entry into the host. Insilico test of over 80,000 sequences show that this epitope is highly conserved across circulating viral strains and therefore we expect a high barrier to resistance. Furthermore, escape mutants identified for similar antibodies against other viruses have attenuated or known infectivity. Secondly, the antibody has high potent effective function in vitro, allowing the recruitment of immune cells to kill off infected cells. This potency potentially allows us to have a lower single dose, which will be important as we scale up manufacturing given the large number of potential patients and the fact that global demand for therapeutics is likely to outweigh supply for some time.
And finally, the antibody has been engineered to extend half life and will potentially enhance the viability in the lung. Pivotal COMET I study in the early treatment of patients at high risk of hospitalization is ongoing and we anticipate having initial data available by the end of the year. On top of this, we're planning to expand studies to include hospitalized patients and for use of prophylaxis. This collaboration has significant potential and is very exciting to us. Let me now hand over to David to take you through HIV.
Thank you, Luke. Hello, everyone. As in the rest of our business, HIV is also benefiting from strong competitive execution. Have the leading share of voice in both the U. S.
And Europe, and the benefit is clear in the momentum we are delivering in the 2 drug regimens and across our HIV business. We are now seeing U. S. Dolutegravir MBRx share outstrip our TRx share, a key point of inflection, which demonstrates the traction that we have achieved for 2 drug regimens, which now have over a 9% share of NBRx in the U. S.
TAVASO, in particular, is performing very strongly. We saw the inclusion of the TANGO switch data on the U. S. Label. This has helped XAVA to accelerate its share of the U.
S. Switch market. We now see about a third of XAVA to scripts come from new patients, a third from competitor regimens and therefore only a third from other dolutegravir containing the new patients. As such, overall, we are seeing a positive net switch to dolutegravir regimens, helping to increase our overall market share in the U. S.
In Europe, we are growing ahead of Brexit and dolutegravir is gaining market share as we continue to roll out TAVASO. We've been able to launch early in all markets across Europe despite the pandemic and Dovate now has leading share of voice in all measures in all countries. We have also seen a positive start for RECOVIA, which has U. S. Insurance coverage at over 70 percent with 250 patients already on therapy.
And we are making good progress in our discussions with the FDA on CAB the PrEP setting. We are on track to file the U. S. Approval for PrEP in the first half of next year and anticipate the 2022 approval. We still expect HIV revenue growth overall to be broadly flat in 2020, but anticipate a return to growth in 2021.
Building on the momentum we have established, Juluca and Dovato and with the expected U. S. Launch of Cabanueva in the Q1 of 2021. I will now hand over to Brian to talk about consumer.
Thanks, David. I'd like to provide a quick update on our progress with integration, which is progressing well and is firmly on track. Our positive momentum has continued despite the challenges related to the pandemic. Importantly, we've delivered significant milestones to date. 96% of the Pfizer consumer healthcare revenue are now in our system, with 71 markets having made this transition since the start of the pandemic.
87% of co locations are complete and 39 of the 41 warehouses identified for closure are now closed. Furthermore, all future market cutovers, employee transfers and production site integrations remain on track. At the time of the transaction, we provided synergy and financial guidance for 2022 and this remains unchanged. We continue to expect annual synergies of £500,000,000 by 2022 with up to 25% reinvested back into the business to drive growth. We have also delivered on our divestment commitment with transactions meeting our target of £1,000,000,000 in proceeds already signed.
Through this process, we have divested more than 50 growth dilutive brands, strengthening our existing portfolio. Our separation program is also on track with work around the future organizational structure and system separation well underway. Now it's important to remember that the end goal of all this integration work is to bring together a fantastic portfolio of category leading brands with a strong geographic footprint positioned in a sector which is now more relevant than ever. I continue to be excited about the potential of what we have created. A 100% focused global leader in consumer healthcare, addressing consumer needs and driving better everyday health.
I look forward to sharing more with you on this great business over the coming years and in the run up to separation. Coming back to performance, I'd like to share some detail on the growth drivers behind today's results. I will focus on year to date results to take out the volatility behind the pantry loading and the systems cut over. Pro form a revenue excluding brands divested and under review grew 6% year to date supported by healthy brand growth and overall share growth. Vitamins, minerals and supplements continue to benefit from increased consumer focus on health and wellness and as a result we saw strong performance by Centrum, Emergency and Caltrate.
On a pro form a basis category sales grew in high teens across all three quarters this year and with growth at 1.5 times the market. E commerce was strong across all categories, growing at about 80% year to date and now representing over 6% of sales, up a few percentage points over last year. Key markets such as U. S, China, U. K.
And Germany are ahead of this level. Importantly, we grew significantly ahead of the market and are gaining share. Turning to our priority brands, across our 9 power brands, we saw 5 of them deliver high single digit or double digit sales growth with 8 of the 9 gaining or holding share. On innovation, we've had a number of exciting launches so far this year. Let me share some details on just a couple to give you some color on what we're doing.
We launched the Voltaren RX OTC switch in May, our 4th RX OTC switch over the last 6 years and the first in the pain category in the U. S. In over 20 years. Volkerin is the number one topical pain reliever globally despite having not been in the U. S, largest pain market in the world.
The brand is off to
a great start, growing the overall U. S. Topical category, delivering 100% of category growth and since launch is the number one HCP recommended topical pain brand. In the quarter, we also launched Advil Dual Action, which is the first ever combination of Ibuprofen and Acetaminophen and early results are encouraging. With that, I'll hand it back over to Emma.
So in summary, we delivered a resilient performance this quarter with strong commercial execution of our growth drivers underpinned by disciplined control of costs. This together with an improvement in vaccine immunization rates, we remain on track to deliver adjusted EPS for the year within our guided range. We're also pleased to have maintained progress in delivery against our long term priorities of innovation, performance and trust. In R and D, we've had 4 new approvals in the quarter and generated data to support development of major pipeline assets, including our portfolio of RSV vaccines. And very importantly, we've also been able to advance 5 possible COVID-nineteen solutions into clinical development, 2 very promising antibody therapies and 3 collaborations for adjuvanted vaccines.
Beyond R and D integration and consumer health continues at pace and we have achieved some important milestones in our programs to prepare the group for separation into 2 new companies, a biopharma company focused on the science of the immune system and genetics and a new world leading consumer health company Dehau and Roger and with the rest of the team. And so with that operator, we're ready to take your questions.
Thank you, Emma. Your first question comes from Keyur Parekh. You're live in the call, Keyur. Please go ahead.
Thank you for taking my questions. Dem, Emma, first of all, congratulations on your recognition of your achievement. So very much confident very much on that. Just linked with that, who among the senior management team has the best curtsy technique so far?
A lot of hands going up on that. It's a recognition for the company. I can assure you, Kea, nobody in my house takes their towels off on the floor anymore. But anyway, going to your technical questions.
Well, you still haven't answered the
question, So the 2 questions are, one, Hal, there is some amount of confusion on the update that your partners at Merck and you put out about bintrafusp alfa. So I was just wondering if you could share your perspectives on what kind of you made out of the update. Clearly, the cry continues, but kind of the proposed expansion of the enrollment kind of isn't happening. So I I was just wondering if you could share some perspectives on that. And then secondly, as it relates to kind of the reiteration of the guidance kind of for the full year, How much of that relies on Shingrix coming back into the Q4 and what level of Shingrix revenues might be required to get there?
Or do you feel comfortable enough to get to the bottom end of the range, irrespective of what Shingrix does during the Q4? Thank you.
Thanks, Keir. So let's come to Hal first and then over to Iain for a bit more specifics on the guidance and Shingrix contribution.
Okay. Well, thank you very much for the question, Karen. Maybe backing up, I think it's important to note that when we initiated the collaboration with Merck KGaA, we did it on a very large and robust Phase 1 data set of over 400 patients really demonstrating activity and a very well tolerated safety profile and some encouraging response data in lung. As we've said many times, we think it's important to do randomized controlled trials to see whether these observed effects are real when compared to appropriate controls. And that is really what initiated the so called 30 study to obtain this randomized data.
As you say, we updated you last week that the study is not expanding and we'll be continuing with 300 patient sample size. And while I know I can't really answer any of your questions more specifically, I will say that we need to await the final data to ensure the integrity of the trial. And it's important to wait to discuss any results of the study until we have a full data set, including data on PFS and OS. So I realize that leaves you with some questions, but that's really to the extent to which I can comment at this point.
Thanks, Hal. Ian?
Yes. So, Kier, just to be absolutely clear, it's my opinion that I do the best curtsy by a long hallway in this group, being the only guy that wears a skirt in this place.
Anyway, moving on from that to
the more important point in Shingrix, look really encouraged by the progress that we've seen through September and happily that's continued into October. That recovery in adult older adult immunization rates has been extremely important in terms of how we form the guidance for the full year. We don't necessarily need to grow immensely beyond where we are, but we do need to sustain the recovery that we've seen. Now September was a great month. I think it was probably the best single month that we'd had in Shingrix.
Overall growth year to date 6%, obviously below the number that we had guided to for Shingrix. But provided that we can sustain the recovery that we've seen through September, we're also very encouraged by the weekly prescription date and immunization dates that we see so far through the month of October, then that certainly should take us to the lower end of our guidance range.
Thanks. And just to complement that, I think fundamentally, we're absolutely convinced that Shingrix will be a great growth driver for the company for years to come. And if ever we want to be reminded of the opportunities and growth prospects in the Vaccines segment, this is definitely the year to reinforce that. So, next question please.
Thank you. Your next question comes from Graham Parry from Bank of America. You're live in the call. Graham, please go ahead.
Great. Thanks for taking my questions. So firstly, would it be possible to quantify the BlendReP inventory and pension restructuring benefits from adjusted operating income and margins in the quarter? So would you still have been coming in around the sort of consensus level without those in there? And then secondly, your guide now assumes R and D mid to high single digit increase.
I think at the start of the year, you're flagging similar growth 2019 for both 2020 2021. That would have been about a 13% increase in R and D. And it's obviously benefited from some of this blend rep inventory write back. So could you just help us understand, should we be expecting a sharp upward inflection in R and D in 20 21 as the one off benefits go away and you continue to invest in the pipeline? Thank you.
Thanks. So I think both of those 2, Ian. But just to reiterate, our number one priority is still to keep strengthening the pipeline. So we do expect to see a strong increase, but perhaps next year, but perhaps then you could put some shape around that.
Yes, absolutely. So Graham, thanks for your question. At Glenrep, the capitalization of pre approval inventory was just north of $60,000,000 in that factor. When you turn more broadly to R and D expense, the main point to I think reiterating here and Hal can go into more detail is that we've kept all our programs very much on track to the extent that we'd experienced any slight delays earlier in the year on the back of the pandemic. Those have been largely recovered.
We still got a little bit to do on but those are very much back on track again. And what Hal and the team have continued to do is realize fully the efficiencies and synergies we expected from the TESARO acquisition and continue to deliver benefits and savings through the R and D just in terms of how we prioritize and manage spend within that. Reflecting on next year, our guidance would remain absolutely consistent. We'd expect to see double digit growth in R and D expenditure next year as we continue to invest in those priority programs across the R and D pipeline and made progress in that regard.
Hal, I wonder whether you would like to add anything in terms of the sort of overall governance and sort of progress of the pipeline, because the other thing to note, Graham, would be that we're seeing it was slightly down in both vaccines and consumer healthcare R and D through integration and cost control, but perhaps you could add some more color around the government's aspects of spend?
Yes. Well, thanks, Graham. We're making a lot of great progress, I think, as Emma highlighted in her last comments on the last slide. And in particular highlighting that BLENRET started 3 pivotal studies, making very nice progress on ICOS studying adding a second Phase 2 sort of head and neck study. The 2 COVID trials that we're doing in the pharma side have been highlighted and they're going well.
3 vaccine trials, including moving the RSV to Phase 3. We've added 10 new molecules, vaccine to pharma assets into the pipeline. But importantly, we're also using a very high bar to advance things. We're using high bar for interpreting data. And based on that, we actually removed 8 assets as well.
We're tightening up our focus on research in areas that we think are most promising, making a lot of great progress on the human genetics, functional genomics side and research, but really have reduced a little bit of spend in that in the research area. But overall, I'm very encouraged by the progress we're making on the pipeline and we'll be continuing to move aggressively to the to even strengthen it further.
Thanks, Al. Next question, please.
Thank you. Your next question comes from Tim Anderson from Wolfe Research. You're live in the call, Tim. Please go ahead.
I want to go back to Bintrafusp, if I can, for Hal. Hal, would you agree that there's 2 very different but equal interpretations to the recent update. One is that you saw enough of a signal on the interim that you didn't feel the need to upsize the trial to hit survival. And the other would be the opposite, which is that it's not worth upsizing the trial because that interim only showed a weak signal. Just to clarify, will there be a milestone paid to your partner?
And then second question is another pipeline question and it's on the ICOS agonist data coming up in first half twenty twenty one. You have a second line lung trial randomized ICOS plus docetaxel versus docetaxel alone, just your updated thinking on the odds of success with that trial?
Okay. So just to confirm that there's been no milestone page today on the basis of the data to date. That doesn't mean there couldn't be one in the future. But Hal,
do you want to
make any further comments on Bintrifuss and also on ICOS, please?
Yes, Tim, thanks for your question. Our goal is to really be the partner of choice and be an outstanding partner when we work with another company. And we've committed to Merck AGA to have them be the lead on discussing how to interpret all this. So I sense the frustration, and I would typically comment more to be honest with you, but I think it's best said that we should await the data from the trial before making any comments. So sorry for not being more transparent about that.
In terms of your question about the ENTRE lung study, the ECHO study, from memory, that's about 105 patient study, the design as you described, and it is a Phase 2 where we'll be looking at all the classic sort of endpoints you might expect. I think it will be important because that will be the first randomized data that really gives us a sense of the incremental activity that IQOS could engender there. And so I am cautiously optimistic that that might show activity. And if it did, it would certainly be a huge boost to the program and drive subsequent study designs and probably thinking about where the molecule fits in medicine.
Thanks, Al. Next question please.
Thank you. Your next question comes from the line of James Gordon from JPMorgan. You're live in the call, James. Please go ahead.
Hello, James Gordon, JPMorgan. Thanks for taking the questions. Two questions, please. Let me just come back to the same Just one more on TGF beta, which would be I noted the comment on not giving specifics about what you saw at the interim and it hasn't been a milestone phase. But can you just say more generally, how is GSK thinking about investing in this mechanism in other frontline cancer trials?
Could this be
an area where we're going to
see much more investment over the next few years and you're going to go broader? Or do you still see this as just as much as a bet when you first started or entered into this partnership? So any increased confidence to go broader would be the first question. And then the second question, we've put on news flow and specifically tostolumab. So based on the slides, tstolumab and Dacpro, again, non COVID-nineteen NCEs, we're going to have Phase 3 data in 2021.
And I know you recently renegotiated the deal on tislelomab, so it allows you to partner Zejula with other PDX agents other than Dosto. So just how much potential does Doster have? Is this something that is a big focus? Should we think this will be on the key readout for 2021? Or is there other assets that you're much more excited about than Doster now?
Now? Hal, both of you. Okay.
Let me so let me go with the Dosten first. We're excited about having dostarlimab. It obviously is a part of the PD-one class, which, of course, has transformed oncology and probably as a class will be the greatest biggest medicine maybe ever. So we're excited to have one. We think that it's 2, 6 week dosing.
It's actually dosed at a higher level than other PD-1s could be an attractive attribute. I think the greatest opportunity for us with the astarolab is to be able to combine it, particularly with our pipeline reasons. We have the DREAMM-four study with belumab with PD-one inhibitor. We have, of course, the opportunity to combine PD-one inhibition with raparib, whether that be in lung or in ovarian with the first trial. We certainly have opportunities to combine tislelumab with pipeline reagents that are earlier on like CD96 and STING and ICOS and other agents.
So it is a nice complement to our pipeline and we're very excited about its activity. Course, it's also active in endometrial cancer, both in the second line and we've got the frontline study going. We are hoping that we can have a tumor agnostic approval at some point with the data beyond endometrial with colon, etcetera. So we think it has a lot of potential and that's in part why we renegotiated as you described and give us a lot of flexibility on Niraparib as well. Sorry, the other question was I didn't write it down.
Bintrafusp in broader studies.
Yes. So for Bintrafusp, we were very excited about the preclinical rationale for inhibiting TGF beta, The bifunctional nature of the protein to hit PD L1 and target the protein to the tumor is attractive. The Phase 1 data, as I comment on, was very large and robust and seem to have signals of activity and a well tolerated profile. As we get more data, we'll make data driven decisions about where to invest. I can't really say more than that, but since we got incremental data, we will be sharing that and sharing where that leads us to invest in subsequently.
Thank you. Next question, please.
Thank you. Your next question comes from the line of Steve Scala from Cowen. You're live in the call. Steve, please go ahead.
Thank you. First, do you think the inflection in the 2 drug regimens that you speak to is already reflected in davado numbers or is that yet to come? So that's the first question. 2nd question is, I would like to ask about the recent thinking on the dividend. I know it's a Board decision, but 25% of the Board is on this call and another 25% are former CFOs of drug companies.
So I would think that half the Board can't find appealing paying out the majority of free cash flow to cover the dividend. Emma, would you disagree that a good portion of the Board likely thinks that a change in dividend policy would be in the best interest of building the company? Thank you.
Thank you. So, we'll come to David in a moment on 2DRs and the growth prospects for our HIB business, also including the upcoming pipeline. On the dividends, Steve, I'm afraid I'm going to reconfirm there's absolutely no change to the Board's position on capital allocation or our dividend policy. Obviously, we're working towards separation of the group. We've been clear on what the dividend is going to be for the consumer healthcare business and contract with Pfizer.
And as we get closer to the separation and they're confirming on that, we'll update with the full board's views in terms of distribution for that, but no further comments on that at this stage. David, I think you've great Shazee.
Yes. Thanks, Steve. It is true. I mean, we're pleased with the performance of 2 drug regimens across the world and particularly Dovato, very strong in Europe, where it's now rolled out everywhere and we're seeing rapid pickup. And as I said in my remarks, in the U.
S, we've seen a very clear inflection in the NBRx and particularly in switch since we got the Tango data included in the label in the summer. So, TDR NBRx is running at about just over 9%. TRx is running around 5%. So, some of it's in the number, but I think still quite a lot more to come in the U. S.
In particular. And then I think it is just symptomatic of all the data, whether it's the clinical data, the real world data, the experience that physicians now have, we are seeing very good momentum. And I think that will come through more and more strongly in TRx and the numbers.
Thanks, David. Next question, please.
Thank you. Your next question comes from Andrew Bohn from Citi. You're live in the call. Andrew, please go ahead.
Thank you. I've only got one question, but it's a slightly longer one. So Emma, you just recently restated that building the pipeline for the pharma business is your number one priority. GSK doesn't have the strongest balance sheet compared to its peers and the dividend policy doesn't help. But you still have firepower to do meaningful bolt on acquisitions for late stage assets.
When I look at the last 18 months, Merck has taken ArQule, Avisalign, Wojemmab, Astra, Daiichi, before that, Lilly Loxo. I'm surprised that we haven't seen any activity from GSK, particularly in hematology, given the investment that you're making in the space and the obvious synergies that could be with a late stage products within that area. So the question is, what am I missing? There still are late stage hematology assets right for BD, some of which could be accretive immediately. Is this the valuation doesn't make sense for you?
Is it you're looking for internal gating in order to determine strategy? Is it concerns about the future of What am I missing here?
Well, it's an important topic, and I'm not sure that you're missing anything because we are absolutely clear and recognizing your observations that our number one priority continues to be strengthening the pipeline and it's our number one priority for capital allocation, including business development. We keep whether it's for internal assets or external ones, as Hal alluded to, we keep the bar high. We want to make sure they're obviously on in line and fueling the strategy that we've laid out for biopharma and have the right kind of discipline around returns. But we certainly see it as a priority for the new view. And that's exactly why last quarter, we built out the deal with Via, which clearly we see as having significant potential and was announced this year, but if it's successful with data later this year, it could be in market next year for something with really significant sales global demand.
But we also continue to look at technology platforms as evidenced by the deal we struck with CureVac around multiple options in terms of vaccines development. So continue to watch this space and we continue to be prioritizing this as an area for team focus and energy. So I think we now have time to move to one last question.
Yes. Your last question comes from Keri Olsford from Berenberg. You're live in the call, Keri. Please go ahead.
Thank you. Two questions, please. Firstly, on the COVID antibody, Luke, you spoke about the potential for an extended half life. I wonder if you can provide us with any more detail here. We're talking weeks, months.
Do you think one shot could cover a whole winter season, for example? I know we haven't seen full data, but any fueling around your comments there would be helpful. And then on Zejula, you talked about the progress being made in the first line ovarian market. But did that indication contribute much to sales in the quarter? It still seems relatively slow.
And I guess, when can we expect when do you think we should expect and what seems to ramp in sales in that setting? Thank you.
Thanks, Kerry. So we'll come to Luke on the JUULA, but then I'd like to come back to Hal, please, to finish up with the comments on the prospects and possibilities for the VIR antibody. But Luke, first to you on Zejula.
Sure. Thanks, Emmet and thanks, Kerry. I just one thing I put in context, it's really interesting when you look at debulking surgeries in the U. S. I mean, it's not interesting.
I think it's sad. They dropped by about 35% in April May and they steadily recovered through June July. But they're still around 10% below the levels of February. So that's obviously having an effect on patient flow. If we look and it's really in the U.
S. Because we don't well, when we look in the quarter, we didn't have the label in the first line in Europe. If you look at our spread of patients in the U. S. For Zejula, about a third of them are in first line now.
I split between treatment and maintenance, about a third of patients on treatment and about 2 thirds on maintenance. But around a third of cells are now coming from first line. If you look at our share growth, that is and your point is accurate, our growth has come from taking it away from olaparib within the class. Hopefully, as we now move through and start to at some point see some stabilization in the COVID environment, we can begin to see the overall class growth in first line and the number of people on watch and wait be reduced.
I mean that 70% on watch and wait is really the opportunity here as well as we hope in due course expanding Zejula beyond the variant. So Hal, back to the Vira antibody.
Yes. Thanks, Carrie. The Vira antibody is actually very, very special, very unique for a number of reasons. As Luc mentioned in the presentation, I think it's important to highlight that this was found through exploration of antibodies from patients with SARS CoV-one. And the argument and the rationale for choosing such an approach was that if over this period of time the SARS virus that resulted in COVID-nineteen has a neutralizing antibody to both that the epitope, the antibodies binding to is likely very important for its infectivity and therefore significantly reduced chances of mutating around that.
So the CDR regions we think, are incredibly important and why we think there's going to be very limited resistance to a single monoclonal. And that's particularly important given some of the Lilly data where I think it was somewhere between 6% 8% of the patients had resistant clones and the many, many clones that are emerging as through the genetic drift and even the D614 gs mutation that's becoming more prevalent, probably due to a fitness advantage. In addition to that, it being highly neutralizing, it actually has a modified Fc receptor that not only gives it an extended half life to your point, which we think we're not exactly sure how long that will be, but it will be most likely, densely longer, somewhere probably between 2, 3, maybe even 4 months of duration, considerably more than what you'd expect from a typical antibody because of this modification, which has been done on other antibodies that have been in clinic. So we're reasonably confident it will extend half life. But in addition, there's modification of the effector function, so that in addition to being neutralizing the antibody through this increased effector function, should be able to bind and destroy cells that are infected with the virus.
And that's very unique. That's not something you would see with the other antibodies, we don't think. And so this could give us a greater efficacy, maybe allowing us to even use lower doses, etcetera. So we think the Fc modification not only extends half life, but the effector function may be very important. So combined with that, the lower dose that's being explored compared to other monoclonal antibodies, a single monoclonal nature and the ability most likely to effectively neutralize the resistant strains is unique.
And lastly, I'll just mention that we do see lung accumulation of the antibody, whether that's due to some of these modifications in the Fc or other attributes isn't clear, but the antibody also does seem to preferentially go biodistribution wise into the lung, which we think will give it yet another advantage. So we're very excited about this program and think it could really offer a significant solution for COVID and hopefully we'll have data soon to support that.
So a concluding reason for optimism, which I'd add to the resilient performance that we've delivered and the fact that we're on track to be within our guidance range, despite particularly challenging circumstances. We're encouraged by commercial execution across multiple growth drivers and optimistic for both the near term recovery and long term prospects of vaccines. We're seeing strong progress on our strategic imperatives, whether that be in pipeline, particularly including COVID solutions or indeed in terms of the separation preparation, which is very much firmly on track and we think gives exciting options for returns to shareholders in the coming years. So with that, thank you all very much for joining us and we look forward to speaking and seeing you soon.
Thank you, Emma, and thank you to all your speakers and thank you everyone. That concludes your conference call for today. You may now disconnect. Thank you for joining and enjoy the rest of your day.