GSK Plc Q3 FY2026 earnings call

• Launch Momentum: Significant progress made on key launches. Blendrep (Blenrep) repeat prescribers are growing, particularly in the UK where it is now a market leader in second-line NICE-approved regimens. Accenture (Extensure) saw a pivot point in Q3 following the availability of the J-code and ASP document, leading to a 68% increase in new US prescribers.
• Oncology Pipeline & Approvals: Received approvals for Giadetro (Juditro) in non-small cell lung cancer (NSCLC) and Hipsaga (Hepsgo) for chronic hepatitis B. Gemperli received approval for locally advanced rectal cancer. Data presented at ESMO showed robust outcomes for Risres (solid tumors) and Mores (ovarian cancer).
• R&D Acceleration: Recruiting in 18 of 22 Phase 3 trial starts planned for 2026, including two new flu studies. The late-stage pipeline expansion is driven by confidence in assets like Juditro and Nelodalkib, which show potential for best-in-class efficacy in TKI-naive populations.
• Simplification Program: The 'Accelerate Growth' simplification program is ahead of schedule. Organizational changes are underway to streamline support services and reallocate resources to R&D. Expected charges have been updated to up to £1 billion in 2026.
• Cash Generation: Strong cash generation with £7.4 billion year-to-date. Free cash flow improved significantly, aided by the out-license of Lina Expat and special dividends. Net debt to core EBITDA remains healthy at 1.8 times.

Total sales grew 5% to £8.9 billion at constant exchange rates (CER). Specialty medicines were the primary growth driver, up 15%. Key product highlights include Cabenuva (HIV), which grew 35%, and Aperitude (HIV prevention), which grew 21%. Nucala (respiratory) increased 18%, while Shingrix (vaccine) performance declined 2% due to destocking in China. General medicines remained flat, with Trilogy offsetting declines in the established portfolio. The specialty segment continues to drive operational momentum, supported by launches in respiratory and oncology.

• Full Year 2026 Guidance Reconfirmed: Management reconfirmed the full-year guidance, remaining on track to deliver results in the upper half of the range for both sales and core operating profit.
• Sales Outlook: Sales expected in the upper half of the range, driven by specialty performance. Foreign exchange headwinds are estimated at minus 1% on sales.
• Profitability: Core operating margin is expected to remain above 31% at constant rates. SG&A is projected to be broadly stable, while cost of goods benefits from product mix and efficiencies.
• Royalties and R&D: Royalty income has been upgraded to approximately £900 million for the year. R&D spending is expected to grow significantly ahead of sales, more than doubling Phase 3 starts from 10 to 22.
• EPS: Earnings per share growth is expected in the low half of the range, impacted by higher interest costs from the NewValent acquisition and a higher tax rate.

• Regulatory and Pricing Pressures: The general medicines segment faces ongoing price pressure in the US inhaler market (SID class) and significant rebate impacts from the Inflation Reduction Act (IRA) on products like Trilogy and Rio. A 73% discount was applied to Trilogy under CMS negotiations.
• Patent Expiries: Loss of patent protection for Devato (Dolutegravir) in Brazil and other markets may impact future growth, although the US composition of matter patent expires later in 2028.
• Clinical Trial Uncertainties: The PK/PD analysis for the extended PrEP formulation (Xtend4M) requires further work, creating uncertainty regarding launch timelines for next-generation HIV treatments. There is no read-across to the treatment study (Quattro).
• Operational Execution Risks: The 'Accelerate Growth' restructuring program involves significant charges (£1 billion) and resource reallocation, posing execution risks if not managed effectively.
• Litigation: Ongoing bio litigation related to Naprosyn (Naptis) presents potential financial and reputational risks, with outcomes pending regulatory or legal rulings.

Q: Analyst asked about the timeline and implications of the Xtend4M PK analysis delay, whether it signals broader HIV management issues, and if the J-code milestone would accelerate Extensure sales. / A: CEO clarified that recent HIV leadership changes were due to a promotion to CSL, not internal issues, and expressed confidence in interim leadership. Regarding Xtend4M, he noted they will update when analysis is complete but did not confirm delays. CCO confirmed the J-code was a critical milestone for Extensure, driving a 68% jump in new US prescribers post-July, with sales weeks hitting records in October.