GSK (GSK) Q3 2026 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Wednesday, Oct. 28, 2026

CALL PARTICIPANTS

• Investor Relations - Jeff McLaughlin
• Chief Executive Officer - Luke Miels
• Pipeline Update - Tony Wood
• Growth Drivers - Nina Mojas
• Financial Performance - Julie Brown
• Q&A Participant - David Redfern

TAKEAWAYS

• Sales -- GBP 8.9 billion, growing 5% at constant exchange rates driven by the performance of specialty medicine launches in respiratory and oncology.
• Core Operating Profit -- growing 5% at constant exchange rates, with margins remaining stable due to efficiency gains in the supply chain and support services.
• Specialty Medicines Revenue -- growing 15% at constant exchange rates, led by HIV and respiratory product performance.
• R&D Investment -- growing 22% at constant exchange rates, reflecting accelerated oncology spending and the initiation of 12 new phase III trial starts during the quarter.
• Cabenuva Sales -- growing 35% during the quarter, with 75% of U.S. switches originating from competitor products as patients prefer long-acting regimens.
• Exdensur Revenue -- GBP 27 million, following its launch and the availability of the J-code in July and average selling price documentation in October.
• Shingrix Performance -- declining 2% at constant exchange rates, due to destocking in China which offset growth in the U.S. market.
• Trelegy U.S. Sales -- growing 8% as patients reached Medicare deductibles, despite pricing pressures in the broader inhaler market.
• Meningitis Portfolio -- rising 12% at constant exchange rates, supported by the first full back-to-school season for Penmenvy in the U.S.
• Apretude Growth -- rising 21% in the quarter, maintaining market share in the HIV prevention segment.
• Nucala Revenue -- increasing 18% at constant exchange rates, driven by a successful launch in the chronic obstructive pulmonary disease indication.
• Phase III Pipeline -- 18 active study starts out of a targeted 22 for the year, including two new trials for influenza.
• Jideytro Launch Sales -- GBP 3 million, representing the first contribution from the treatment of ROS1 positive nonsmall cell lung cancer.
• Core EPS -- growing 1% at constant exchange rates, impacted by increased interest costs following the Nuvalent acquisition and a higher tax rate.
• Full-Year Interest Expense Guidance -- GBP 700 million to GBP 750 million, including GBP 160 million related to the financing of the Nuvalent acquisition.
• Accelerate Growth Program Charges -- GBP 0.3 billion in the quarter, with total 2026 charges now expected to reach up to GBP 1 billion to simplify operations.
• Cash Flow from Operations -- GBP 7.4 billion year to date, representing an increase of GBP 1.1 billion over the prior year due to business performance.
• Net Debt to Core EBITDA -- 1.8x, reflecting the impact of the Nuvalent acquisition while maintaining capacity for targeted business development.
• Royalties Guidance -- upgraded to approximately GBP 900 million for the full year.
• Trelegy Negotiated Price -- $175 for a 30-day supply, representing a 73% discount to the 2024 list price under CMS negotiations effective in 2027.
• Hibsago U.S. Pricing -- approximately GBP 100,000 per treatment course, reflecting its status as a finite treatment for chronic hepatitis B.
• Shingrix Pharmacy Inventory -- 2.3 million doses, compared to 1.7 million doses during the same period last year, reflecting a later flu season.
• Operating Margin Guidance -- expected to be more than 31% at constant exchange rates for the full year 2026.
• Foreign Exchange Impact -- projected to reduce full-year sales by 1% and operating profit by 3%.

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Brown stated, "we now expect foreign exchange headwinds of -1% on sales and -3% on operating profit," due to adverse currency movements.
• Brown noted that interest rates are currently adverse and that "the rates are getting harder," leading to a higher projected interest charge of up to GBP 1 billion next year.
• Miels warned that the negotiated price for Trelegy is $175, "which is a 73% discount to the 2024 list price," representing a future revenue headwind for the general medicines segment.

SUMMARY

GSK plc (NYSE:GSK) reported third-quarter revenue of GBP 8.9 billion, representing a 5% increase at constant exchange rates driven by the performance of specialty medicine launches. Management stated that the specialty segment grew 15% during the quarter, supported by momentum in oncology and respiratory treatments. The company reconfirmed its full-year 2026 guidance, noting that sales and core operating profit are expected in the upper half of previously stated ranges. Management highlighted the acceleration of the R&D pipeline, with 18 phase III trial starts initiated to date and 22 expected by the end of the year. The company reported a significant reallocation of resources through its simplify and grow program, which generated a GBP 0.3 billion charge during the quarter to support increased investment in late-stage development.

• CEO Miels stated, "We are going to call things as we see them," emphasizing a commitment to transparency regarding pipeline developments and operational data.
• Management reported that more than two thirds of the enrollment target for the phase III mRNA flu vaccine study has been recruited since the study started in September 2026.
• The company identified the U.S., Japan, and China as markets representing approximately 80% of the potential value for the hepatitis B treatment Hibsago.
• Mojas noted that the company holds 90% of the global meningitis B market following the successful back-to-school season for its portfolio.
• The company reported that 68% of participants in the AZUR-1 trial for locally advanced rectal cancer achieved a complete clinical response with no disease recurrences after two years of follow-up.
• Brown stated, "The Accelerate Growth program is all about removing cost from what you may call support services and some of the manufacturing network, and it is moving it towards the front line of R&D."

INDUSTRY GLOSSARY

• CER: Constant Exchange Rate, a financial measure that eliminates the effects of foreign currency fluctuations to provide a clearer view of underlying performance.
• TKI: Tyrosine Kinase Inhibitor, a type of targeted therapy that blocks specific enzymes to help stop cancer cells from growing.
• ROS1: A gene that, when altered, can drive the growth of certain types of nonsmall cell lung cancer.
• dMMR: Deficient Mismatch Repair, a biomarker indicating a cell's inability to repair DNA errors, often used to identify candidates for certain immunotherapy treatments.
• NRDL: National Reimbursement Drug List, the official list of medicines covered by government medical insurance in China.
• J-code: A standardized billing code used by U.S. healthcare providers and insurers to facilitate reimbursement for injectable or infused drugs.
• ASP: Average Selling Price, the weighted average of all manufacturer sales prices for a drug, used to determine Medicare reimbursement rates in the U.S.
• IL-5: Interleukin-5, a signaling protein in the immune system that, when targeted by certain biologic medicines, helps reduce inflammation in severe asthma and COPD.
• ADC: Antibody-Drug Conjugate, a class of biopharmaceutical drugs designed as a targeted therapy for treating cancer.

Full Conference Call Transcript

Jeff McLaughlin: Welcome, everyone, and thanks for joining GSK's Q3 2026 results. Today's call will last approximately one hour, with the presentation taking around 30 minutes and the remaining time for your questions. Before we begin, this slide is our usual safe harbor statement. We will comment on our performance using constant exchange rates or CER, unless otherwise stated. I will now hand over to Luke Miels, CEO.

Luke Miels: Thanks, Jeff. I am joined today by Tony Wood, who will give an update on the pipeline, Nina Mojas, who will cover growth drivers, Julie Brown, who will cover financial performance, and David Redfern will join for Q&A. First, let's review the company performance. Next slide, please. Q3 was strong and we have continued operational momentum with sales up 5% to GBP 8.9 billion. As expected, specialty is driving our momentum, including launches in respiratory and oncology. Core operating profit grew 5% and core earnings per share were up 1%. Our cash generation remains very positive at GBP 7.4 billion year to date. Our Q3 dividend is 17 pence and we are on track with our responsible business rating.

Given our operating momentum and launch progress, we are pleased to reconfirm 2026 guidance today. Next slide, please. This slide is a reminder of our key priorities to drive value for the business and our shareholders. To start, we are focused on maximizing launches. This quarter, we have made good progress on Blenrep, where repeat prescribers are growing as physicians and patients get comfortable using the medicine, and Exdensur, where we are seeing momentum building with prescribers, patients, and access all increasing in the quarter. We have now also had our first launch in non-small cell lung cancer with Jideytro for TKI pretreated ROS1 positive patients, which has already delivered GBP 3 million.

Our oncology portfolio continues to grow with a further indication for Jemperli in locally advanced rectal cancer. We also received approval for Hibsago in the U.S. and Japan, the first finite treatment to offer a functional cure for patients with chronic hepatitis B. Each of these products will meaningfully contribute to near-term growth as we continue to build momentum in our specialty business. At Q2, we outlined clear plans to accelerate R&D and we are now delivering on those plans. We are recruiting in 18 of the 22 phase III trial starts for 2026, including two new phase III studies for flu and the rest on track to start recruiting before the end of the year.

We also presented data for several of these assets, including Jideytro, Ris-Rez, Mo-Rez, and Jemperli, demonstrating significant progress in our oncology pipeline and proof points for our approach to BD. Finally, on simplification, we have made progress on the Accelerate Growth program, helping to reallocate resources to invest in R&D and accelerate our late-stage development pipeline. Fundamentally, this will align our cost base with our evolving portfolio and help us accelerate growth and deliver value for patients and shareholders. With that, I will now hand over to Tony to cover our pipeline momentum in more detail.

Tony Wood: Thanks, Luke. It has been a busy period for R&D with a number of recent approvals and pivotal data readouts. Jideytro and Hibsago approvals were received ahead of their FDA PDUFA dates and Jemperli received accelerated approval for rectal cancer. These, together with the strength of the data presented at recent medical congresses, demonstrate the value of assets in our late-stage pipeline, where the majority have potential to be best in class and where we have added 12 new phase III study starts this quarter, bringing us to 18 for the year. Next slide, please. Moving to new products and indications.

Jideytro for ROS1 positive and neladalkib for ALK-positive mutations in non-small cell lung cancer have the potential to meaningfully improve on standard of care. These mutations represent 3%-5% of all non-small cell lung cancer. Here, patients are often younger, in their 40s and 50s, and remain on therapy for years while experiencing high rates of central nervous system side effects and often developing brain metastases. Importantly, Jideytro is the first and only ROS1 TKI to address both selective targeting of ROS1 resistance mutations and CNS activity, thus aiming to improve treatment for patients with brain metastases while minimizing TRK-related CNS adverse events.

Similarly, neladalkib is a once-a-day medicine designed to avoid off-target adverse events, which can be treatment limited for patients. We anticipate FDA approval in November, supported by the ALKOVE study, which showed a median progression-free survival of 14.5 months in a previously TKI-treated population. Also in oncology, approval for Jemperli in locally advanced rectal cancer is based on the AZUR-1 data, which shows 68% of participants with no detectable signs of cancer one year or more after treatment. Current standard of care achieves complete clinical response in around 20%-25% of cases and can have lasting consequences, including bowel and urinary dysfunction and secondary cancers. And finally for Hibsago.

Nina will cover our launch plans for this important medicine in a moment, but I want to reiterate how transformational Hibsago will be for those living with chronic hepatitis B. These patients are at an increased risk of death from cirrhosis and liver cancer, and current treatment options involve lifelong therapy. Hibsago is the first finite treatment for chronic hepatitis B, which provides the potential for a functional cure. We plan to share additional data from the development program at AASLD in November. Now moving to our development plans for Jideytro and neladalkib in TKI-naive patients. Jideytro data were presented at the recent World Conference on Lung Cancer.

The ARROS-1 response rates are amongst the highest ever reported in this patient population, with a 94% overall response rate and a 15% complete response rate. The median duration of response has not yet been reached, but 86% of patients have a duration of response of greater than 12 months. Data on brain metastases in this TKI-naive population show no CNS progression events observed in patients without metastases at baseline, and a 100% response rate in those with brain metastases at study entry. The emerging clinical profile for Jideytro suggests it has the potential to deliver meaningful outcomes as a best-in-class therapy for TKI-naive patients.

Neladalkib is also in development for a TKI-naive population, and here the phase I/II ALKOVE study shows an 86% overall response rate. Median duration of response has not yet been reached. However, 91% of patients have a duration greater than 12 months, as you can see on this slide. The corresponding phase III TKI-naive study, ALKAZAR, is more than 50% recruited. Based on available data today, we believe neladalkib could have the potential to drive years of progression-free survival. Next slide, please. Next for Ris-Rez, where emerging data demonstrate robust and consistent outcomes across a range of solid tumor types.

In small cell lung cancer, the Chinese phase III ARTEMIS-008 data presented at World Conference on Lung Cancer by Hansoh showed a 54% reduction in risk of death and a median overall survival of 18.5 months. The global pan-tumor phase I/II EMBOLD 101 study has now enrolled with more than 550 patients. Data from the small cell lung cancer cohort of this study were presented last weekend at ESMO and showed a 61% response rate, consistent with the 58% overall response rate observed in ARTEMIS-008. The global phase III trial, EMBOLD SCLC-301, is also recruiting well, and we anticipate preliminary data by the end of 2027. Next slide, please.

Also for Ris-Rez, data from the Hansoh phase III ARTEMIS-011 study, which looked at Ris-Rez versus standard of care in Chinese patients with relapsed refractory osteosarcoma, was selected for the presidential symposium at ESMO this week. Osteosarcoma is a rare tumor, and relapsed patients have few treatment options. The current standard of care delivers around 2% response rate and 1.5 months of progression-free survival. In this trial, Ris-Rez demonstrated a 67% reduction in risk of disease progression or death in patients with relapsed disease. A global GSK phase II trial, EMBOLD Sarcoma-202, started earlier this year and is recruiting well.

The global EMBOLD program has now over 1,000 patients who have received Ris-Rez, with more than 0.5 of those enrolled in the past eight months. Over the next 12 months, we anticipate data readouts across multiple indications, and we look forward to sharing these as they mature. Next slide, please. For Mo-Rez, new data presented at ESMO from the global phase I BEHOLD-1 trial confirms the potential for best-in-class activity in ovarian cancer, with median progression-free survival of around 11 months in a non-biomarker selected population. These data compare favorably with current standard of care, which delivers around six to eight months of PFS.

As promised at the Accelerate Growth Event in July, we have now started recruitment for five phase III trials in ovarian and endometrial cancer. Over the next 12 months, alongside Hansoh, we will continue to generate longer-term data to demonstrate the durability, response, and safety profile of this novel ADC. Next slide, please. Also at ESMO, we presented interim pivotal results from AZUR-1, which looked at Jemperli in the treatment of patients with dMMR locally advanced rectal cancer. The current standard of care for these patients achieves a complete clinical response in around 20%-25% of cases but involves chemotherapy, radiotherapy, and surgery and is associated with significant morbidity.

In AZUR-1, over 2/3 of patients achieved a complete clinical response, and after a two-year follow-up period, no disease recurrences were reported amongst patients who responded. The study continues to generate data and offers an important, potentially curative option for patients with locally advanced rectal cancer. Next slide, please. Turning now to vaccines. Last season, over 700,000 people, mostly older adults, were hospitalized with flu in the U.S.. Currently, flu vaccines, which generally focus on hemagglutinin, protect unevenly. Our mRNA flu vaccine candidate, which has achieved Fast Track designation from the FDA, targets both hemagglutinins and neuraminidase. Neuraminidase changes more slowly, so protection may be more durable when strains mismatch.

Targeting both has the potential to offer broader immunity and better, more consistent protection. In phase II, our candidate produced stronger immune responses against both targets than a high-dose comparator, supporting our decision to start a large phase III study in more than 50,000 adults aged 65 and over. The study started in September, and more than 2/3 of this season's enrollment target has already been recruited. This study will run over two seasons, and we anticipate preliminary data next year, pending a sufficient number of cases. Next slide, please. Across R&D, we continue to make fantastic progress in accelerating our late-stage pipeline. At Q2, we described our plans to start +20 phase III studies in 2026.

We've now started 18 phase III studies, with a further four on track to start before the end of the year. These studies have been accelerated based on our confidence in the differentiation and benefit to patients of our late-stage assets. I'm pleased with the continued hard work of our teams to deliver this previously unmatched pace of acceleration across a broad and growing portfolio. Next slide, please. Before I close, I momentarily want to share this slide, which we presented in July. It demonstrates the expansion of the late-stage portfolio, and from 2028 onwards, we expect to build further as we progress phase I and II studies and continue to pursue external opportunities.

I'll now hand over to Nina to cover commercial performance.

Nina Mojas: Thanks, Tony. Commercial momentum continued in the Q3, driven mainly by specialty medicines, up 15%. Our top-performing product was Cabenuva, which grew 35% in the quarter. More than 75% of switches continue to come from competitors in the U.S., and Cabenuva remains the only long-acting injectable regimen for HIV treatment, establishing a strong foundation with patients who prefer to take medicines less frequently. This is setting us up for success as we move closer to 2027, when we will have data for our 3x-a-year formulation for HIV treatment. In prevention, APRETUDE is performing strongly, with 21% growth in the quarter and holding market share.

Nucala was also a very strong contributor, up 18%, driven by the successful launch into COPD, while Exdensur continues to expand the biologic opportunity in severe asthma. In oncology, we've also now launched our first medicine in non-small cell lung cancer, Jideytro. Blenrep is continuing to build as expected, while Ojjaara and Jemperli again delivered strong double-digit growth for the quarter. Vaccine performance was down 2%, with the drag from Shingrix China destocking partly offset by growth in the U.S. We had significant growth in our meningitis portfolio, up 12%. This was driven by strong growth from our meningitis B containing portfolio in the U.S., including new contributions from the first full back-to-school season for Penmenvy.

We now have over 90% share of the MenB market globally. General medicines was flat in the quarter, with Trelegy performance offsetting the decline of the established portfolio. In the U.S., Trelegy returned to growth, up 8% as patients reached their Medicare deductibles and adjusted to co-insurance. In the triple inhaler class, we maintained market leadership in COPD and asthma. However, the overall U.S. inhaler market and SITT class continues to face price pressure. Globally, the SITT class remains the fastest-growing inhaler class, and Trelegy continues to grow double digit internationally, up 11% in the quarter. Next slide, please. Starting with Blenrep, now approved in 52 markets, we continue to launch globally.

As we are launching more broadly, we continue to see that the hands-on experience is the clearest predictor of future use, frequently changing the preexisting beliefs. In the U.K., Blenrep is now the market leader in second-line for NICE-approved regimens. In the U.S., HCPs are getting more comfortable with Blenrep and repeat prescribers account for about 1/3 of sales so far and are building. Recently updated NCCN guidelines recognize the full breadth of Blenrep data and include both DREAMM-7 and DREAMM-8 data in the second-line plus patient population, significantly beyond the U.S. label. Prescribers are getting more familiar with dosing. This is leading to an improved experience with Blenrep while also extending the period between prescriptions.

This extended dosing is similar to what we have in DREAMM-10 first-line study, expected to have MRD data in 2028. Next slide, please. Moving to respiratory, we have two key launches that have enabled GSK to gain IL-5 market leadership in a class that is up 12% versus last year. The importance of reducing exacerbations that lead to hospitalizations is the highest unmet need among physicians, and the success we are having with Nucala in COPD continues to have a halo effect across all five of its indications. New-to-brand patients in the U.S. is up 19%, with COPD driving a majority of the growth and significant room to continue growing, as only 6% of COPD patients are on a biologic.

International growth continues up 21% in the quarter. We have now achieved market leadership in China. The success we have had with Nucala and the relationships we have established with these providers has been key as we launch Exdensur. Exdensur sales were GBP 27 million in the quarter, with the majority of sales coming from bio-naive patients. Q3 was a pivot point following the availability of the J-code in July and then rollout of the average selling price as of October. As a result, new prescribers in the U.S. were up 68% in Q3, and new patient starts were up 74% when we include those who received the free first dose through our Fast Start program.

Access continues to build with more than 2/3 of insured patients now being covered. Significant growth opportunity remains as around 17% of patients who could be on a biologic for severe asthma still are not. Next slide, please. Finally, I wanted to share further details on our launch plans for Hibsago. In Japan, chronic hepatitis B is a government priority, and there are already established processes in place and guidelines that support functional cure. Since approval, we have received a very positive reimbursement decision, and physicians have already identified patients to receive therapy. In the U.S., chronic hepatitis B is very concentrated with the majority of patients in five states.

We have launched with a focus on patients with surface antigen level lower than 1,000, where the opportunity to have a positive experience leading to functional cure is the highest. The U.S., Japan, and China represent around 80% of the potential value for Hibsago. Following the approvals in Japan and the U.S., we look forward to hearing from regulators in China, where managing chronic hepatitis B is a national priority, and where we have established a strategic collaboration with Sino Biopharmaceutical, a recognized leader in hepatology in China. I will now hand over to Julie.

Julie Brown: Thank you, Nina. I will now cover financial performance with growth rates at CER, unless otherwise stated. Next slide, please. Starting with the income statement for the quarter, sales grew 5%. Gross profit was up 7%, supported by product mix and efficiencies. SG&A increased 1%, including Nuvalent costs, demonstrating smart resource allocation and improved ROI. R&D grew 22%, in line with our Accelerate Growth agenda outlined at Q2, with a further 12 phase III trials initiated this quarter. Growth was driven primarily by accelerated oncology spend on Ris-Rez, Mo-Rez, and velzatinib, as well as further investment in felcorekibart and efimosfermin.

Operating profit grew 5%, with the margin broadly stable, as increased R&D investment was broadly offset by cost of goods and SG&A productivity as we further match our cost base to the evolving portfolio. EPS was up 1% with the differential due to increased interest costs following the Nuvalent acquisition and a higher tax rate in the quarter. Turning to total results, the quarter was impacted by GBP 0.3 billion Accelerate Growth charge, with the program to simplify and reallocate spend towards R&D now well underway. We are moving at pace and ahead of schedule, and since July, we have initiated a series of changes across the organization to streamline support services, simplify our supply chain, and reallocate resources.

We now expect charges of up to GBP 1 billion in 2026. Next slide, please. Moving to cash generation. Year-to-date performance has been strong. CGFO was GBP 1.1 billion ahead of last year, underpinned by business performance with increased operating profit and favorable working capital movements. As a reminder, the year-on-year comparison was impacted by GBP 0.7 billion of Zantac cash outflow in 2025, and a net headwind of GBP 0.2 billion from the CureVac settlements. Turning to free cash flow, it was up GBP 1.8 billion year-to-date, including $650 million from the out-license of linerixibat and the special dividend received due to the ViiV shareholding change.

Looking forward to the full year, we remain on track to deliver our target of around GBP 10 billion CGFO at constant rates. Next slide, please. Over the past years, we have significantly improved cash generation, conversion of profit to cash, and the strength of the balance sheet. This has enabled targeted business development to strengthen our late-stage pipeline. Most recently with the acquisition of Nuvalent, whilst retaining capacity within a strong balance sheet with net debt to core EBITDA at 1.8x. Next slide, please. Looking ahead, we remain on track to deliver our full year 2026 guidance. Sales are expected in the upper half of the range, driven by specialty performance.

Core operating profit is also expected in the upper half of the range, and margin remains on track to be more than 31% at constant rates. This is enabled by SG&A, which is projected to be broadly stable. Cost of goods benefits from product mix and efficiencies, and royalties, which are now upgraded to around GBP 900 million for the year. Whilst R&D is expected to grow significantly ahead of sales for the year, as we more than double the number of phase III starts from the 10 expected at the start of the year to now 22.

EPS growth is expected to be in the low half of the range, with full year interest expected to be GBP 700 million-GBP 750 million, including around GBP 160 million relating to the acquisition of Nuvalent. With respect to currency, we now expect foreign exchange headwinds of -1% on sales and -3% on operating profit. Finally, looking ahead, we remain committed to our long-term outlook. In the appendix, you will find modeling considerations to the end of this year and into next. Thank you. With that, I am pleased to hand back to Luke.

Luke Miels: Thanks, Julie. To close, we remain focused on executing our strategy, which is built on driving top-line growth, building and accelerating the late-stage portfolio, and actively reallocating resources to where they can create the largest value for patients and shareholders. We will now open for Q&A.

Jeff McLaughlin: For the Q&A, please use the hand raise feature in the virtual meeting if you would like to ask a question. We will go with James Gordon from Barclays for the first question. James, you are unmuted.

Luke Miels: Hi, James.

James Gordon: Hello. Hi, James Gordon from Barclays. Thanks for taking two questions. First question was on HIV and next generation injectables, and also more broadly, what is going on in HIV or ViiV. I read there was an update about CAB four-monthly PrEP, and that you have got the data in-house and PK analysis is still underway. How should we read that? Does that mean you have got to do a bit more work on the PK equivalents? Are there questions there, and could that delay the launch? I think there was a comment about the data next year, but do you still think you can launch on the same timelines?

Is there any read-through, because I believe it is the same tech for four-monthly APRETUDE as four-monthly CABENUVA. Could there be a delay or any extra work you have got to do there? The broader question in HIV, there have been quite a few management changes. ViiV CEO and CFO and fairly recent R&D head change. Is this at all connected? Is there a trend there, any implications? Is there any sort of reboot going on in HIV since Luke became CEO? The second question was just on new launches, Exdensur and Blenrep. I have heard comments about you have now got the J-code, I think it was from the beginning of July.

Was that the key thing that was holding up the launches? Do you now think we are going to see a big acceleration, a big inflection into next year? Or might we need to wait a little bit longer because there are some other things you also need to really see those products accelerate?

Luke Miels: Great. Thanks, James. I think you have done your colleagues a favor because I suspect we will be able to capture a number of themes there. Why do not we do the ViiV questions first. I will just say something quickly, then we will go to David, then Nina, if you can cover EXTEND and Blenrep. Look, I think firstly, no connection to management changes. The fact is that Deborah got a promotion to be the CEO of CSL. These things do not come along every day. I think that is great news for Deborah. Actually, I just want to personally thank her for her years as GSK as a peer and a team member.

As an Australian, I hope she does very well at CSL, just not too well on the vaccine side. Just as background, Lynn Baxter, who stepped in, it was a very quick process. Pretty much as soon as I got the phone call from Deborah, I called Lynn. Lynn ran the US ViiV business. She launched the long-acting products. She has been on the ViiV board during this time. She is very much up to date. It was an easy decision. I have known Lynn for a long time, since my Roche days. Kim retired, remember, and Charlotte stepped in. She remains the head of ViiV R&D. Charlotte worked with Tony at Pfizer.

As I think you all saw at Q2, she knows what she is doing. So feel very comfortable there. I think more broadly, operationally, I want ViiV to be closer. So there will be more intensive interaction and supervision there, but that is not a bad thing. Secondly, before I hand to you, David, I just wanted to make a broader point about how we want to communicate with the owners of the company and you, as analysts, and I guess the market more broadly. Look, we are going to call things as we see them. We are not going to park crap on page 41 of a press release and hope none of you notice it.

So, we will tell you as much as we can. We will have a plan to address it, but please just adjust your parameters on that because that is how we want to operate. All right? So with that, David, over to you.

David Redfern: Yeah.

Luke Miels: Tony, feel free to add anything.

David Redfern: Thanks, Luke. The first thing I want to do, actually, is just echo what Luke said around Deborah. She led ViiV incredibly strongly through almost 10 years. Obviously drove a huge amount of growth through that time. Not least this year, where ViiV is up 10% in the quarter and for the year. As Luke said, Lynn Baxter may not be particularly well-known to the investment community, but she's very well-known inside GSK. Very distinguished leader with experience on both sides of the Atlantic. Led ViiV North America for six years, so very connected in the HIV community in America. Obviously, during that time, introduced the long-acting medicines to the U.S. market.

As Luke said, Lynn plus Charlotte Allerton plus Jean van Wyk, who's the Chief Medical Officer and very well-known in the HIV community. I'm very confident in the strength right through the ViiV management team. James, in terms of the pipeline, not much more to say at this point on EXTEND 4M. We have the data in-house. The analysis is ongoing. We look forward to sharing with the regulators. Obviously, we will update the market once that analysis is complete. What I would say is we're very pleased with the progress we're making with the treatment pipeline in parallel.

So the first thing I'd call out, actually, for Cabenuva is the phase III-B CROWN study, where we've shown the headline that showed superiority of Cabenuva in an unsuppressed viremic population compared to daily oral standard of care. That's important because in the U.S., there's probably about 40% of the market is unsuppressed, so over 400,000 people. So that's just people living with HIV. So that's a significant growth opportunity. We will show that data at the future congress, and we will also update the regulators and apply for a label expansion on that. Just to remind you, that's actually the second superiority study of Cabenuva. We had LATITUDE earlier in patients, people living with HIV with adherence challenges.

So great progress with Cabenuva. Then with the four monthly formulations of cabotegravir and rilpivirine, I'm pleased to say the CUATRO study recruited very fast over the summer ahead of our expectations. It's been fully recruited now for a number of weeks. The readout is at month 11. Just to remind you, it is an efficacy study comparing four months with two-monthly Cabenuva, but that's obviously now very much on track to read out next year. We continue to make progress with the six monthlies VH-184 and VH-499 that are progressing as planned through phase II. We still intend to start a pivotal study with that combination with six monthly, which we are very excited about in 2028.

Luke Miels: Great. Thanks, David. I am sure we will get some more questions on that. Anything you wanted to-

Tony Wood: Just a couple of very quick points. First of all, Charlotte is a very experienced pharmacokineticist and R&D leader. You saw that at 3Q, and I just want to underscore, we see no read-through to the treatment portfolio.

Luke Miels: Thanks, Tony Wood. Nina Mojas.

Nina Mojas: Exdensur and Blenrep. Exdensur very specific question, J-code, has that been a milestone or a change? For Exdensur, I am actually pretty confident that yes. Just for background, we got the J-code the 1st of July. Maybe a little bit more technical. Usually with J-code, the team gets something that we call the ASP document, which is average selling price document that can be shared with the physician, so they are aware of what is the price that will be reimbursed to them. That document became available on the 1st of October. All of that said, the numbers that we shared in Q3, we have seen significant increase in the new prescribers.

68% new prescribers, and then 74% new patient starts. That includes the totality of both sold volume and the free goods volume that is part of our Fast Start. Another piece to remember, Q3, because of the summer, tends to be the quarter that has the lowest number of patient visits. As that ASP document became available as of 1st October, obviously you do not see the sales after that. I can just maybe mention every week since then has been the highest week of sales for Exdensur one after another, with the last week being the high sales.

Yes, definitely for Exdensur this has been a milestone kind of moment, and we do expect to see a change in trend from now on. All of that said, it still remains the first long-acting and there has to be adjustment to that. But definitely very positive moments. Maybe just to add, this is the time when we start seeing patients coming back. It is six monthly, so we would start seeing patients after six months receiving again another shot, which is our whole benefit of Exdensur that patients remain on therapy for a long time. It is a very small number of patients that is reaching that point, but the numbers that we see are actually very encouraging.

Let us see if that holds as more and more patients get to six monthly mark. Blenrep, the way I would describe Blenrep, you have seen now that about half of the sales are coming from ex-U.S., and that reflects again that more experience, existing ex-U.S., both in the clinical setting and in the commercial setting. The previous experience is the most relevant factor when it comes to prescribing Blenrep, and that is reflected ex-U.S. A lot of learnings ex-U.S., that can be moved to the U.S. We are intensifying peer-to-peer exchange in the U.S., those who have experience to potentially impact the perceptions.

I would probably say that the preexisting perception of Blenrep is the biggest challenge rather than anything else. We have a number of activities that are hopefully going to work to change that.

Luke Miels: Great. Thanks, Nina. Next question, Jeff.

Jeff McLaughlin: Next question is from Simon Baker at Redburn. Simon, you will be unmuted.

Simon Baker: Thank you, Jeff.

Luke Miels: Hi, Simon.

Simon Baker: Good afternoon, everyone. Hi, Luke. Thank you for taking my questions. Two, if I may, please. Firstly, on Shingrix, I wonder if you could just dig down a little bit into the pushes and pulls within the various regions. We do see quite a divergent performance across the world. Related to that, perhaps you could give us an update also on the potential accelerants for Shingrix growth going forward. Firstly, the MACE opportunity, and then beyond that, the dementia potential indication. Then second question on Hibsago.

Given this is the first treatment for a very long time in that indication, perhaps, Nina, you could give us an idea of how we should think about the trajectory and also the initial prescriber reaction to the profile of the product and the label. We've had a few people questioning the monitoring. I'm wondering In the real world, how much of that really, is that really a barrier to adoption? Thanks so much.

Luke Miels: Yeah. Thanks, Simon. What we'll do Thank you. I'll cover the Shingrix component, and then Tony, you can cover the acceleration. Sorry. Yeah, the acceleration and basically MACE dementia. Then Nina, after that, we'll come back to Hibsago. Simon, how about I go region by region and call out if I confuse you? For the U.S., the IZ rate's 46%, which is up 3% points, which is in the middle of the 2%-4% range that we said that we would get in a year. TRX is okay, and we've got slightly stronger NBRX. The key thing is we're seeing stronger penetration now in the healthcare system. This is the comorbid population, so we're getting some traction there.

But we do need to balance that with the fact that the adult market overall, adult vaccines market overall is still challenging. Shingrix is doing a little bit better in relative terms. The adult market's down about 18% versus this time last year, but Shingrix is down about 14%. Inventory is usually a question we get. Wholesalers are steady at 0.4, same as last year. But the pharmacists have been buying. So the stock level is higher right now in pharmacy. It's around 2.3, versus 1.7 million doses this time last year. That's likely driven by the fact that we've got a later flu season. So we'll get a clearer picture in Q4. So that's the U.S.

China is, I think it's steady improvement, is how I would describe it. The key is in-arm demand. So we're doing about 300,000 shots a month. That's up 60% versus last year. So I would say that's steady growth over time. It seems to be pretty resilient despite the structural CDC ordering stock management challenges. Remember, we called this early when it was slowing down in 2024. We're basically doing what we said we would do, which is to work off the volume in the pipe. The inventory has dropped. There was, summer last year was around 4.3 million doses. Now we're down to 1.4 million doses as of August. That's about 1.5 Months of demand.

That's about as low as you would want it. I would expect, ideally next year we do a reorder. But again, we're not doing mass shipments. We want to sort of match the demand, knowing we've got quite a long timeframe between shipping and actually being distributed in China that we also need to manage. The rest of the world is, again, it's about nearly, well, it's about 60% of sales. Again, solid. For the E.U., it's really expansion in new countries, broader coverage. Private demand also is starting to increase, which is encouraging. We did have a bit of a softer time in Germany and France in summer.

We think that's partly due to the heat, but also there's some parallel trade impact. On the rest of international, it's very much expansion, and really driving access in markets like Brazil, Turkey, other markets like that, and Saudi. Tony, did you want to Sorry, Simon, long answer, but a broad question. Did you want to cover the

Tony Wood: Yeah, sure.

Luke Miels: dementia and MACE, then we'll go to Nina.

Tony Wood: You bet. Thanks for the question, Simon. Look, we've got a broad range of work going on looking at both the MACE and dementia aspects for Shingrix, including mechanistic studies and pragmatic RCTs. There are two of those going on, Simon, in Finland and Denmark, looking to enroll about 200,000 adults. We're expecting initial results from those two studies in 2029. We'll have a first readout on the CVD data at the end of 2027. These are Finland, where we're evaluating the effect of Shingrix on dementia in greater than 76-year-olds. That's with a registry-based diagnosis in Denmark, where we're evaluating the effect on risk of MACE and in dementia, in that case, in +65 population.

For MACE standalone, we're at the moment, expecting to be able to start a study by the end of the year. We have ongoing discussions with regulators at this point in time, but this will be a very broad study in 28 countries, and we've selected already 750 sites. Well underway.

Luke Miels: Thanks, Tony. Nina, Hibsago.

Nina Mojas: Yeah. Hibsago. Hibsago was approved in Japan and the U.S. Regulatory discussions are ongoing very intensely in China. That's the next one to come. Japan, we got the reimbursement. I think one of the testaments to Hibsago uniqueness is reimbursement in Japan was justified by the regulators with 50% usefulness premium, which is number that you hardly see in Japan. Then additional 10% premium for SENKU designation. Very, very happy with that conversation. In the U.S., and again in Japan, we have actually patients already on therapy. Physicians have actively asked for it as we were going through the pricing discussions. In the U.S., we got the approval. The price is available.

Product is going to be on the market, I think available actually within the next, I think 10 days or something like that. Very soon. Questions on monitoring. Did we expect it? Yes, because that monitoring exactly as described was part of the study protocol. We couldn't expect anything different. Monitoring is there for two reasons. One is ALT elevation, so liver enzyme elevation, and the other one is thrombocytopenia. Both of those happen relatively quickly. Thrombocytopenia, specifically, I think it's even quoted in the USPI. There were two cases of severe thrombocytopenia. It happens quite quickly after the initiation of therapy.

The ALT elevation is also, as described in the label, linked actually to the reduction of the surface antigen. Patients who see the reduction are definitely more likely to see ALT elevation. Now, how that monitoring is going to evolve, as I mentioned, it's quite important in the initial periods. We do expect that physicians will monitor early, seeing if their patients are, by any chance, one of those who have early elevation of ALT or severe reduction of severe thrombocytopenia. Following that, we expect that physicians and patients will find some kind of balance of when and how frequently they do monitoring.

Luke Miels: Thanks, Nina. I think also the feedback that we're getting from experts is they're sort of mentally gating the first 12 weeks, then reassessing it. Essentially, the language to the patient is, "Look, okay, there are frequent blood draws," and we said that to you guys in past meetings. "But look, if we can get to 12 weeks, we'll reassess where you are, then continue on from that point.

Nina Mojas: Yeah. Maybe it's important just for you to think how it's going to work. The first dose is administered in the physician's office. Then patient gets a pack of four doses that they will self-administer at home, and they will need to obviously arrange the monitoring within that period.

Luke Miels: Yeah. Good. Anything you want to add, Tony?

Tony Wood: Yeah, just worth just underscoring a few things. In terms of thrombocytopenia, as Nina mentioned, only two patients with severe cases, 8% had lower platelet counts. That is easily managed through dose holding. On the ALT flares, more than half of the functional cure patients had a flare, so it is a really important sign of potential response. You are going to hear more from us on Hibsago at AASLD, so I might as well just give you a quick summary of that now, which is the long-term sustained data out to 48 weeks. The surface antigen measurements at 12 weeks is a predictor of functional cure. Retreatment modeling for future approaches.

Lastly, continued description of surface antigen loss versus health outcome. Worth emphasizing that this is a disease with significant morbid and mortality outcomes.

Luke Miels: Yeah, and I think from memory, Tony, it was over 60% of patients who are below 1,000 at baseline could get to below 100 of surface antigen for at least a year post-treatment.

Tony Wood: That is right. More on that analysis at AASLD.

Luke Miels: Yeah. Okay, good. Thanks. Thanks, Simon. Next question, please.

Jeff McLaughlin: Next question is from Michael Leuchten from Jefferies. Michael?

Luke Miels: Hi, Michael.

Michael Leuchten: Hey, thanks for taking the questions. Two, please. One for Julie. It sounds like there was inventory in the top line around Shingrix. Were there any other items in the third quarter we should take into consideration? Then as we think about the guidance for the full year, you beat very nicely on SG&A, in particular in the third quarter, but the guidance doesn't go up. So just the pushes and pulls on why not, given you do have some slight help from the royalty income and also lower net financials into the end of the year. Then a question on, I guess, for Luke, or maybe Tony and/or David.

I understand there's limited amount you can say about Q4 treatment, as in CAB treatment, and the read across from the PrEP dose, but it's the same tech, it's the same product. You clearly had an outcome with the PrEP data, the PK/PD study, that didn't exactly tell you what you were hoping for. You're saying there is no read across into treatment. How can you make that statement? How can you give us confidence that there isn't any read across? Thank you.

Luke Miels: Yeah. Tony, did you want to? Julie can go with inventory, and then David and Tony. David, you go on the PrEP answer, and then Tony, feel free to add anything technically, if you want.

Julie Brown: Yeah. Okay. Specifically on Shingrix, I think Luke's covered some of this, but in terms of quantifying the U.S. inventory build in the third quarter, in the quarter, it amounts to about 2% points of global growth. We do get these swings, as you know. Very confident, though, in the overall picture for Shingrix. I think China, Luke has touched on this, it's all about injections in arms, and we anticipate shipping again in 2027. I think that covers Shingrix. In terms of the third quarter and the beat, versus consensus, first of all, we appreciate it was difficult to forecast the Q3. Many moving parts, including the acquisition of Nuvalent.

There are a few things to flag about the Q3. Sales were higher than our original expectations, and this included some phasing between Q3 and Q4. As we mentioned, we had the U.S. Shingrix inventory build, meningitis ordering patterns, and we also had Ventolin impacting the quarter. The operating profit in Q3 was impacted by SG&A phasing, better royalties, as you mentioned, partially offset by the phasing of R&D, which was a very high, it was a peak growth in R&D in the third quarter of 22%. So if we move now, obviously we are comfortable with the overall guidance for the full year. We do expect sales growth to moderate slightly.

Partly HIV pricing, partly we have talked about Shingrix, because last year we had a shipment going out in the Q4 to China. Then we are also lapping some of the French and Japanese launches outside the U.S. Then I think finally, when you think about SG&A, we are going to have the launches to support for Hepzato and Hibsago and Nuvalent. At the same time, there was a charge last year in SG&A of about GBP 0.2 billion that will not repeat in the fourth quarter of this year. Okay.

Luke Miels: Thanks, Julie. David, Michael's second question.

David Redfern: Yes. I think what I can say, Michael, is EXTEND, which is the PrEP study, and CUATRO, which is the treatment study, are very different studies. So EXTEND is a PK bridging study where we are looking at drug substance levels at steady state, no earlier than month 13, as well as safety and tolerability. The CUATRO study is an efficacy study comparing the four-monthly formulation of cabotegravir and rilpivirine with two-monthly Cabenuva. So they are very different studies. We are very confident in the formulation that we have got. I will probably leave it at that.

Luke Miels: Yeah. I think the key thing here, Michael, we do not want to front-run discussions with a regulator. That tends to backfire. So again, as I said earlier, we are telling you as much as we can at this point, but in the interest of long-term value creation, I will limit it to that at this point, and appreciate your understanding. The second we can update you, we will. Next question please.

Jeff McLaughlin: Next question is from Kerry Holford at Berenberg. Kerry.

Luke Miels: Hi, Kerry.

Kerry Holford: Hello all, thank you for taking my questions. I am sorry, just a very quick follow-up on APRETUDE Q4. Just interested to know whether you do have a date scheduled to review that data with the FDA, whether you can share that with us. Ultimately, when can we expect more clarity on the issues here in the next steps?

Then if we think into next year, and I appreciate you won't be wanting to give guidance at this point, but just given the commentary you made, Julie, on the OpEx in Q4, in the context of those phase restarts this year, and at least I think you highlighted six additional phase III starting next year, how confident are you that the necessary incremental R&D spend moving into next year can be offset by SG&A savings and COG savings in 2027? Thank you.

Luke Miels: Yep. Thanks. David, do you want to go first.

David Redfern: So-

Luke Miels: Then we will go to Julie?

David Redfern: I think what I can tell you, Kerry, is we have reached steady state for the last patient only a few weeks ago, not very long ago. So the analysis, as we have said, is ongoing. I think we are confident we will be sharing the data with the regulator before the end of the year, and obviously, post-regulatory discussions, we will update appropriately. So that sort of timing, but I cannot be more specific than that.

Luke Miels: Thanks, David. Julie.

Julie Brown: Yeah, thanks. Thanks, Kerry, for the question. So as you know, we have got a really good track record of delivering margin accretion and at the same time investing more and more in R&D, and this is part of the program around Accelerate Growth. So we have also got, as the business pivots more towards specialty, you do get a natural margin lift because the SG&A cost associated with a specialty sell is considerably lower than it would be if you were in primary care. So both of these are major factors. So we do expect R&D to continue to grow ahead of sales.

You will be pleased to know not to the extent of Q3, which was obviously very high. But as demonstrated, we can deliver profitable growth through the efficiency in both the cost of goods, and we have talked about the specialty pivot together with the SG&A. The Accelerate Growth program is all about removing cost from what you may call support services and some of the manufacturing network, and it is moving it towards the front line of R&D.

Luke Miels: Great. Thanks, Kerry. Thanks, Julie Brown. Next question.

Jeff McLaughlin: Next we are going to go to Sachin Jain from Bank of America. Sachin.

Luke Miels: Hi, Sachin.

Sachin Jain: Hi there. Thanks for taking my questions. A couple on some drivers into next year if I could. First, I wonder if you could just comment on the TRELEGY IRA impact you call out on the 2027 driver slide, Julie Brown. I am assuming this is already heavily rebated. Is there any color on additional IRA pressure? The second I wonder if you can just touch on is Dovato. You talk about DTG tender impact in the quarter. Should we expect that to grow into next year? Then just one follow-up for Nina Mojas on Hibsago China. Very clear on approval timelines. Can you just run us through timeline to reimbursement? I assume this requires NRDL listing, et cetera.

Just any color there. Thank you.

Luke Miels: Sure. David Redfern, do you want to do Dovato first, and then we will come back to Nina Mojas to do TRELEGY and Hibsago? I think the

David Redfern: Sure. I could be quick. I think, Sachin Jain, Dovato, there are some international markets, notably Brazil, where the patents on dolutegravir expire this year. That has had some marginal impact. Although obviously overall, we are very pleased with the commercial performance of ViiV growing double digits and dolutegravir overall, but there was some impact in Brazil. Actually, as you know, the composition of matter for dolutegravir in the U.S. is 2028. Next year, we do not really have any other significant markets where we lose patents, so expect most of the trends to continue.

Luke Miels: Great. Nina, do you want to start with

Nina Mojas: Yes

Luke Miels: Hibsago, and then we can come to TRELEGY if we've got time?

Nina Mojas: Yeah. Hibsago, China, as I said, discussions are ongoing. I am not sure I want to commit to a specific timeline because what we have seen is a huge desire from the Chinese authorities to make the drug available. I expect it is going to be sooner than what we planned, but let us leave it with that. We are going to launch immediately. We will launch in the private market in China as it becomes available. Then with the next round of NRDL discussions, it will be included. I hope by the end of next year, we should be there.

Luke Miels: Yeah. Yeah, and I think on TRELEGY, we just have to rebase it. As you know, it was added to the list for CMS in, I think, November 2025. So the negotiated price for 30 days is now $175, which is a 73% discount to the 2024 list price. So there will be a one-off impact in the U.S. We will rebase that, and then position B on that. Again, we are being thoughtful in terms of how we resource this product in the U.S. Julie, anything you want to add on that?

Julie Brown: Thanks, Luke. The WAC price reduction, clearly this is a product in its more mature phase, so there are rebates and returns associated with it. So net-net, not quite as significant as Luke's indicated. Totally included in our guidance. We judged it fairly well a number of years ago, and it was built into the long-term forecast. We have also got BREO alongside TRELEGY impacting in 2027, together with the Biktarvy royalty stream that comes off in October in 2027, which is a headwind of around GBP 70 million a quarter. Those are the main things. We have actually included a slide to help. We know you will be focused more and more on 2027.

We have included a slide on modeling considerations in the appendix for those who have not seen it just yet.

Luke Miels: Great. Thanks, Julie. Should we keep going, Jeff?

Jeff McLaughlin: Yeah. We have-

Luke Miels: I am sure we have got people with questions on. If you guys are happy to keep running, we can run for another, say, 10 or 15.

Jeff McLaughlin: Yeah. That is great. We have a number of questions. Let us go with Zain Ebrahim from J.P. Morgan. Zain?

Luke Miels: Hi, Zain.

Zain Ebrahim: Hello. Thanks for taking the questions. Just to follow up on the previous question in terms of if we think about the totality of the IRA headwind for both BREO and TRELEGY, is the consensus outlet for general medicines in the right sort of place for next year? I know you said it is broadly in line with your forecast, but just if you could clarify that would be helpful. Then on Hibsago, I noticed you mentioned that you have got some clarity on the pricing.

So how does that compare versus your initial expectations for Pepsi-like pricing, in the U.S. that is, and just remind us on what proportion of the population here is Part D and when we can expect Part D inclusion.

Luke Miels: Yep. Sure. So, on pricing, it is about GBP 50,000 in Japan, just over GBP 100,000 in the U.S. So I will give you some epi because I think it would be helpful. So U.S. is about 1.7 million patients, 400,000 diagnosed, 120,000 treated. Japan is 0.9 million. Of those, 600,000 are diagnosed and 120,000 are treated, so sort of similar. China, about 6 million treated. So it is in a category of its own, but obviously, access and pricing is different there. Julie, did you want to cover anything beyond what we can say

Julie Brown: Yeah

Luke Miels: on that?

Julie Brown: No, I think at the-

Luke Miels: Because it is forward-looking.

Julie Brown: I think at this stage, we'll concentrate on giving you comprehensive guidance at the end of the year, certainly by product area or product category. We'll come back to that.

Luke Miels: Yeah. Anything you wanted to add on Hibsago, Part D split, on commercial, Nina?

Nina Mojas: Most of these patients do have commercial coverage.

Luke Miels: Yeah.

Nina Mojas: There is no competition, which is relevant for this.

Luke Miels: Yeah

Nina Mojas: To which extent the pricing, the discounts go, there is just no alternative, which definitely helps.

Luke Miels: Yeah. The cost of these patients, obviously, as the disease progresses. Looking at the market research, it makes sense to think physicians are going to concentrate on the younger patients initially, and build that experience there with them. As Nina said, I think 2031 is the earliest entrant, excluding China, that we would expect there. Of course, there's a history of combinations and failure in this area. Let's see how these combinations evolve over time. Thanks, Zain. Next question, please.

Jeff McLaughlin: Next question will be from Matthew Weston at UBS. Matthew?

Luke Miels: Hi, Matthew.

Matthew Weston: Hi, Luke. Thank you. Two questions, please. I hear your confidence in Exdensur, but Nucala was also weak in 3Q as well. Can I understand if you've offered debates on Nucala in the additional access you're talking about on Exdensur or whether or not it's pressure overall in the IL-5 category as physicians prefer TSLP? Secondly, Julie, it's a Jo Walton pro memoria question. On 2027 net financial charge, you've highlighted the strong cash flow, but obviously the cash out for Nuvalent and for the restructuring program. Do you think that consensus has next year's net financial charge modeled correctly or we need to sharpen our pencils?

Luke Miels: No worries. Thanks, Matthew. Just quickly on Nucala. If you look at the numbers in the U.S., volume I think was up nearly 40%, 39%, prices down 15%. So there is some pressure there. I would be cautious about reading that across to Xolair. So one of the things we have been quite deliberate on, which is holding the line on Xolair pricing. We want to take a long-term view here. We have got a long-acting TSLP, we have got a long-acting IgE, we have got a long-acting IL-33. If you look at coverage, in terms of commercial parity to say Nucala or benralizumab, we have gone from 18% in Q2 to 43% in Q3.

And overall, we have got 71% of lives covered, with the difference being some step through. So that has been deliberate there. I think there is clearly competitive pressure from TSLP overall on the class, but that is also being offset to a degree with COPD, and COPD is helping us within the IL-5 class capture business. Nina, anything that you want to add on that? No?

Nina Mojas: Again, just remember Q3 for patient visits is the weakest quarter

Luke Miels: Yep

Nina Mojas: in the year.

Luke Miels: Yep. Julie?

Julie Brown: Yeah. So, just in terms of the interest charges that are coming through, and you are right, obviously we have had some considerable cash outflow, particularly in the second half of the year with the Nuvalent acquisition and Accelerate Growth. The good news is it is moving at pace, so we are anticipating charges this year. We originally guided GBP 0.7 billion. We are expecting now charges in the order of GBP 1 billion. This is P&L, and obviously that is going to affect the cash flow going into next year.

So in terms of the financial charge, we have guided for the second half of this year that Nuvalent will be GBP 160 million, so it gives you an idea about how much it will cost us next year in terms of interest. It is going to be over GBP 300 million. In terms of the overall interest charge, we will guide this at the end of the year, but it is going to be in the order of GBP 900 million to maybe GBP 1 billion. Rates are adverse at the moment as well. The team did a great job of financing Nuvalent when we did, but the rates are getting harder.

Luke Miels: I guess with the topic of Nuvalent, can I make a request? If people have got questions on oncology, we have just had, I think a remarkable ESMO. I do not know, Jeff. Hopefully, someone has got a question on oncology next.

Jeff McLaughlin: Yeah. Next up we'll go with Graham Parry.

Luke Miels: Hi, Graham.

Jeff McLaughlin: You're not number five. You're up next.

Luke Miels: You ask what you want, Graham.

Graham Parry: Great. Thanks. So a couple of questions. I asked my oncology questions yesterday, I'm afraid. Just going to go back to the EXTEND 4M, and just if you can help us understand what it is that needs fully characterizing about the new formulation. Can you just remind us, I think the study for monthly dosing was actually determined from PK simulations from the phase I cabotegravir study that you presented at CROI in 2024. Is really this just that the PK isn't matching what your simulations were showing? Or is this an issue of tolerability? Because I think you just had single administration tolerability data on that. Then, can you also clarify that it is the same formulation in CUATRO?

I think there's a bit of confusion about that based on your comments that this doesn't read through to CUATRO. Although they are different studies and one's an efficacy study, if there's a PK or tolerability issue with EXTEND 4M, why wouldn't that then translate to CUATRO? Then my final question is just thoughts on an Arbutus Biopharma litigation update. You've now had the post-trial hearing. Are we heading towards a negotiated settlement here, or are you waiting for a ruling? Thank you.

Luke Miels: Thanks, Graham. Well, I think on the second question, I would direct you to their share price on the day. I can't say much more than that at this point. David, again, I'm not sure you can add too much more. We would love to tell you more, but again, we don't want to prejudice our discussions with regulators.

David Redfern: Yeah. I think that's right. I think we need to do the analysis, and then we need to talk to the regulators. So I'm not going to go into much detail. What I can say, Graham, is you're right on the PK levels were set based on the pivotal study that we did for two monthly. You're right that it's the same formulation in both EXTEND and CUATRO. We are very confident in that formulation.

Luke Miels: I think we've said it several times, there's no read across.

David Redfern: No.

Luke Miels: Yep. Okay. Thank you. Did we cover every one of Graham's questions? We did.

Jeff McLaughlin: Yep. I think we got Graham.

Luke Miels: Yeah. Thanks. Maybe time for one more.

Jeff McLaughlin: Time for one more question. Let's go with Trung from RBC.

Luke Miels: Hi, Trung.

Trung Huynh: Hi, guys.

Luke Miels: You there?

Trung Huynh: Unfortunately, no oncology question here either.

Luke Miels: We did have a couple

Trung Huynh: a couple of pipelines at once though.

Luke Miels: We did have oncology yesterday, so I covered a lot.

Trung Huynh: You answered them all yesterday.

Luke Miels: Yeah.

Trung Huynh: On food allergy, you have the ozureprubart phase II data next year. How are you thinking about the opportunity here? The competitive landscape does seem like it is evolving somewhat. There is perhaps more Xolair generic entry. Reme is moving into phase III, so just what is your view on how that market develops and where ozureprubart can differentiate there? The second one is just on the agreement with Hengrui. One of those assets is a PDE3/4 in COPD. Can you provide a bit more detail on some of the other targets that you are evaluating in this collaboration? When can we expect the next programs to be optioned? How can we think about milestones economics as these progress?

Thank you.

Luke Miels: Yeah, sure. Thanks, Trung. I will let Tony cover the collaboration in a second. I assume you mean ozureprubart Ig, not Xolair for food allergy. In 2027, we will get a 2B readout for food allergy. The aim is to start the phase III in the H2 of next year. Look, this is a huge opportunity. There are about 17 million people in the U.S. that have some form of food allergy, and about 1.6 million of them have what we term as clinically relevant disease. You are all very familiar with the growth that Roche has seen. When we did this deal, we actually modeled that there would be up to four biosimilars entering in our calculations.

Again, there are some structural limits. It is about a quarter of patients on Xolair, where essentially, the maximum approved Xolair dose just cannot bind enough IgE to be effective in these heavier, larger individuals. We have a product that is essentially twice the potency of Xolair and could be a three-monthly shot with either three doses or an upside scenario of one dose. Look, I think we have covered the BTK. It is two tablets a day. You have the tox heritage of BTKs. XL111, it is phase I, it is due at the end of the year. I think you need to risk adjust that, and it is really a long way behind.

I think we have a very nice asset here. We have a very deliberate development plan. Its properties, it behaves the same way, binds the same way as Xolair. Factor that in, and that again is part of our BD strategy. I think we are encouraged with the profile that we see. Anything you want to add on that, Tony, before we go to Hansoh?

Tony Wood: No, I think you have covered it well. Xolair was all about the nomogram simplification and getting to the higher weight patients as well, as Luke said. On Hansoh, the PDE3/4 is in early clinical development. This is very much looking for metered dose inhaler opportunity for that particular approach. You will be aware of the early clinical data in the area from competitors that suggest that it is an effective mechanism. We were very careful to look for a molecule that had a similar profile. We have 11 other targets in the collaboration.

They have not been disclosed, but it is fair to say that we are engaged very actively with Hansoh on selecting the next range of those for disclosure. I am very pleased with the options that we have in front of us.

Luke Miels: Great. Thanks, Tony. I think we should conclude. We are 11 minutes over. Thank you everyone again for very thoughtful questions, and I appreciate you dialing in.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.