GSK Plc Q3 FY2024 earnings call

Management Statement and Operational Highlights:

• Pipeline Progress: Had 11 positive phase III readouts, with filings and data readouts for new products like Blenrep, Depemokimab, Nucala for COPD, etc. Pivotal data for depemokimab in severe asthma and positive results for Nucala in COPD were highlighted.
• HIV Business: Committed to making at least 2 million doses of cabotegravir long acting for prevention available in low and middle-income countries in 2025-2026. Long-acting portfolio represents over 50% of Q3 growth.
• Financial Performance: Core operating profit grew 5% excluding COVID, cash generated from operations was GBP5.3 billion YTD. Dividend for the quarter was 15p, up 7%.
• Oncology Milestones: Jemperli received expanded FDA approval, Blenrep filed in multiple regions, and oncology sales almost doubled in Q3.

Segment Performance:

• Specialty Medicines: Grew 19%, representing a significant portion of the business. Year-to-date, it drove more than 70% of growth.
• General Medicines: Grew 7% in Q3, led by strong performance of Trelegy. For the year, mid-single digit percent sales growth is expected.
• Vaccines: Down 15% in Q3 due to lower sales of Arexvy and Shingrix. Arexvy was impacted by ACIP guideline changes, COVID prioritization, and lower RSV infections. Shingrix saw growth outside the US but U.S. penetration growth is slowing.
• Oncology: Sales almost doubled in Q3, with over GBP1 billion in turnover year-to-date. Products like Ojjaara, Jemperli, and Zejula are performing well, and Blenrep is expected to launch in half-2025.

Guidance:

• 2024: Confirm guidance of 7%-9% sales growth and double-digit profit growth. Core EPS expected to grow 10%-12%. Gross margin strong in first nine months, but Q4 expected to be down due to supply chain investments.
• 2025: Vaccines expected to have limited growth. Specialty Medicines momentum to continue with launches like Nucala for COPD, Blenrep, etc.
• Long-Term (2026 and beyond): Confident in growth outlooks, including from Specialty Medicines and vaccines pipeline, with outlooks of more than 7% sales growth and more than 11% core operating profit growth by 2026.

Risks:

• Zantac Litigation: A GBP1.8 billion charge related to Zantac litigation impacted profit.
• Vaccines: Affected by ACIP guideline changes, COVID prioritization, and seasonal RSV trends limiting growth potential in near-term.
• US Inflation Reduction Act: Expected to impact future sales, with an estimated GBP400-500 million impact including HIV.
• Macro Economic Pressures: Tighter budgets and funding flow issues in China affecting vaccine sales.

Q: On the pneumococcal vaccine Affinivax, when could it come along and details on 2025 guidance?

A: Tony noted focus on best-in-class vaccines, shifting to 30-valent adult proposition with first-in-human study expected next year. Emma and Julie mentioned confidence in Specialty's growth leading the way in 2025.

Q: On Arexvy revaccination and Apretude in HIV?

A: Luke commented on challenges in China with POB budgets and vaccine volumes, working with Zhifei. Deborah highlighted strong HIV franchise growth, 12% in Q3, and Apretude's 95% growth in Q3 with strong PrEP market potential.

Q: On ACIP decision and GBS risk for Arexvy?

A: Tony explained ACIP's conclusion on benefit-risk for approved population, with GBS risk being rare, and more data expected on 60-plus population and boosting.