GSK Q4 2024 Earnings Report

GSK EPS Results

• Actual EPS: $0.59
• Consensus EPS: $0.44
• Beat/Miss: Beat by +$0.15
• One Year Ago EPS: N/A

GSK Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $7.75 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

GSK Announcement Details

• Quarter: Q4 2024
• Date: 2/5/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, February 5, 2025
• Conference Call Time: 5:45AM ET

GSK (NYSE:GSK), formerly known as GlaxoSmithKline plc, is a British multinational pharmaceutical company headquartered in Brentford, London. It operates in three main business areas: pharmaceuticals, vaccines and consumer healthcare products. The company has a global presence, operating in over 150 countries and employing over 94,000 people worldwide.

GSK has a long history of innovation and has been responsible for developing some of the world's most important medicines, including treatments for asthma, HIV/AIDS and cancer. The company is also committed to global health initiatives, focusing on improving access to essential medicines in developing countries.

Emma Walmsley has been the CEO of GSK since 2017, becoming the first female CEO of a major pharmaceutical company. She has been instrumental in transforming the company's operations and has led a significant restructuring effort to simplify the business and focus on key growth areas. The management team includes several other key executives, including Dr. Hal Barron, former President of Research and Development, now a Non-Executive Director and Luke Miels, Chief Commercial Officer.

GSK's financial performance has been mixed in recent years. The company's revenue has been relatively flat over the past few years, and rising R&D costs and the impact of COVID-19 on sales have impacted profitability. In Q2 - Q4 of 2022, the company's stock price dropped nearly 40% concerning long-term shareholders. This stock has underperformed the broader market and many of its peers in the pharmaceutical industry. However, this also points to the fact that the stock is undervalued relative to its peers providing good value for would-be investors.

GSK has also undergone significant changes in ownership in recent years. In 2019, the company merged its consumer healthcare business with Pfizer's consumer healthcare business to create a new joint venture. GSK owns a majority stake in the joint venture, which is expected to generate significant cost savings and synergies.

The pharmaceutical industry is highly competitive, with a few major players dominating the market. GSK's primary competitors include Pfizer, Johnson & Johnson and Roche. The industry is also heavily regulated, with stringent drug safety and efficacy requirements.

One of the key trends in the industry is the shift toward personalized medicine, which involves developing treatments tailored to individual patients based on their genetic makeup. GSK has invested heavily in this area, focusing on oncology and rare diseases.

Despite the pharmaceutical industry's challenges, GSK has several growth opportunities in its core business areas. The company has a strong pipeline of new drugs and vaccines in development, including several potential blockbusters. GSK is also expanding its presence in emerging markets, where demand for healthcare products is growing rapidly.

In addition, the company has been exploring opportunities in digital health and artificial intelligence, which could transform how medicines are developed and delivered. GSK is also committed to sustainability and has set ambitious targets to reduce its environmental impact and improve access to healthcare in low-income countries.

The pharmaceutical industry is subject to a range of risks and challenges, including regulatory hurdles, patent expirations and intense competition. GSK is not immune to these risks and faces some specific challenges.

The COVID-19 pandemic is one of the biggest challenges facing GSK. Another risk is the potential for increased regulatory scrutiny. The pharmaceutical industry is pressured to demonstrate that its products are safe and effective. GSK has faced significant fines and penalties for regulatory violations.

GSK faces competition from established players in the industry and new entrants, particularly in digital health. As a result, the company will need to continue to invest in innovation and R&D to maintain its competitive position and drive growth in the future.

GSK Q4 2024 Earnings Call Transcript

Presentation

[Jeff McLaughlin, Director of Investor Relations at GSK]

Hello, everyone. Welcome to today's call and webcast. The presentation was sent to our distribution list by email, and you can also find it on gsk.com. Please turn to slide two. This is the usual safe harbor statement.

[Jeff McLaughlin, Director of Investor Relations at GSK]

We will comment on our performance using constant exchange rates or CER and excluding COVID solutions unless stated otherwise. Please turn to slide three. Today's call will last approximately one hour and fifteen minutes with the presentation taking around forty minutes and the remaining time for your questions. Our speakers today are Emma Walmsley, Luke Miles, Julie Brown, and David Redfern, who will be covering HIV in the absence of Deborah Waterhouse, who's recovering from a successful medical procedure. And Tony Wood will be joining us for Q and A.

[Jeff McLaughlin, Director of Investor Relations at GSK]

Please ask only one to two questions so that everyone has a chance to participate. Turning to Slide four, I will now hand the call to Emma.

[Emma Walmsley, CEO at GSK]

Thank you, Jeff, and welcome to everyone joining us today. Today, we are reporting our 2024 results and providing you with updates on our growth outlooks, investment plans and focus on improving shareholder returns. Please turn to the next slide. 2025 will mark three years since the demerger and the creation of GSK as a new dedicated biopharma company for patients and for shareholders. The demerger enabled a fundamental restructure of GSK and its balance sheet, bringing new capacity to invest in growth and to deliver returns to shareholders.

[Emma Walmsley, CEO at GSK]

Three years on, I'm pleased to say that we've seized this opportunity and made significant progress, building a strong track record of performance delivery. Specialty medicines and vaccines now dominate our reshaped portfolio and pipeline. Our long term outlooks have consistently improved alongside the quality of our innovation. And we've delivered sustained year on year sharper operational performance underpinned by a stronger balance sheet. This all points to GSK having the platform to deliver sustained profit growth and returns in the short, medium and long term.

[Emma Walmsley, CEO at GSK]

Next slide please. Our 2024 performance demonstrates the transformation of the business. Sales grew 8% to over billion with strong growth and increasing contribution from specialty medicines more than offsetting headwinds in vaccines. Core operating profit was up 13 and core EPS was up 12%. This level of performance delivered two upgrades to guidance in 2024 and supports the increased dividend of 61p per share announced today.

[Emma Walmsley, CEO at GSK]

I'm also pleased to report that we maintained good progress in our six priority areas to build trust, not least retaining a leadership position in the Access to Medicine Index, but we've been placed first or second in the industry since its inception in 02/2008. And of course, during the year, we also resolved the Zantac litigation, prioritizing shareholder interests. Next slide, please. Operational delivery in 2024 reflected strong growth and accelerating momentum of specialty medicines with double digit growth in all therapy areas and sales of oncology nearly doubling to more than billion for the year. Vaccine sales reflect the challenges we've seen from external pressures in The U.

[Emma Walmsley, CEO at GSK]

S. And China for Orexvy and Shingrix. Going forward, we expect these to continue in 2025, but equally remain confident that Orexvy, Shingrix and our vaccines pipeline will contribute meaningfully in the medium and long term. Importantly, 2025 will see further additions to GSK's portfolio with five new product approvals expected this year. At the forefront, our potential step changes in treatment with Blenrep, our novel ADC treatment for multiple myeloma and depimocumab, our new long acting IL-five medicine for the treatment of severe asthma.

[Emma Walmsley, CEO at GSK]

Of these two, Glenrep will be the first to launch with an expected FDA PDUFA in July. Next slide please. Last year, GSK had 13 positive Phase three readouts, a record achievement for our R and D organization. I'm also pleased with the confirmed development and strengthening of our mid and early stage pipeline with positive clinical progress and the addition of several promising new assets in the areas of oncology and respiratory immunology and inflammation or RI and I. Next slide, please.

[Emma Walmsley, CEO at GSK]

So with all this progress to date, R and D is now heavily focused on the clinical development of 14 scale opportunities. With peak year sales potential above billion and expected launches before 02/1931 and the majority in specialty medicines. In our INI, we're prioritizing depimocumab, Nucala COPD, Kamlopixent and long acting IL-thirty three, IL-five and T SLIP medicines. The aim here being to leverage GSK's deep expertise in inflammatory mechanisms to lead in COPD and to target new options to treat fibrotic lung, liver and kidney diseases. In oncology, we're prioritizing resources to Blenrep and to the acceleration of our very promising ADCs targeting B7H3 and B7H4 antigens, as well as continuing lifecycle innovation for Jampirly.

[Emma Walmsley, CEO at GSK]

In HIV, our plans for long acting and ultra long acting treatment and prep options for four and six months are all progressing very well. And infectious disease, we're prioritizing development of vecaravirsen, our potential functional cure for hep b, and of course, our high potential new mRNA and MAPS vaccines. Alongside these, and as Tony starts to outline in December, we're also prosecuting the early stage pipeline with a further 40 assets or so in Phase one and two. Lastly, we continue to add new opportunities through targeted business development, the recent agreement to acquire IDRx being a great example of what we want to do here. Next slide, please.

[Emma Walmsley, CEO at GSK]

Looking at GSK's launch portfolio over the next five years, we expect it to offer scale opportunity for growth together with an attractive risk profile. By 02/1931, we're increasing our outlook again and now expect risk adjusted sales to be more than billion. This increase reflects the inclusion of Blenrep, our significant Phase three progress since last year and multiple launch opportunities in the twenty six to thirty one period. With almost 90% of our 02/1931 sales ambition coming from products already approved or planned for launch in the next three years, we're confident that our portfolio will deliver against this guidance. In terms of contribution, we now expect specialty medicines to be more than 50% of sales by 02/1931, with this area being the key growth driver for GSK over the next few years too, reflecting the high number of opportunities we have in the maturing late stage pipeline for specialty products, particularly in RI and I and oncology.

[Emma Walmsley, CEO at GSK]

For vaccines, while we've adjusted expectations to accommodate for new sales growth trajectories of Rorexvie and Shingrix over this period, as you can see here, we continue to expect this part of GSK's business to remain a key source of future growth. General medicines will also remain an important and relatively stable contributor to sales over the period. As before, we have further upside from our early stage pipeline, including notably Q6 month HIV and prospective BD, where we will continue to pursue smart opportunities at the same kind of scale and pace seen in recent years. And as you can see from the two bars here, there is significant potential for upside with successful clinical outcomes. Next slide, please.

[Emma Walmsley, CEO at GSK]

Overall then, we continue to set out positive outlooks for growth in the short, medium and long term, and we are all strongly committed to maintaining our track record of delivering this together. We expect 2025 will be another year of profitable growth led by Specialty Medicines. And with our recent progress, we're now even more confident in our ability to deliver not only our '26, but also our new 02/1931 outlooks. All of this while retaining the flexibility we need to invest competitively in growth and to deliver improving returns to shareholders. Next slide, please.

[Emma Walmsley, CEO at GSK]

We remain extremely focused on disciplined allocation of capital. Our first priority for capital remains to invest in growth and in R and D. With the pipeline opportunities we now have, we are deliberately prioritizing investment to accelerate development of key assets in RI and I and oncology alongside long acting HIV medicines and existing core vaccines opportunities. In addition to growth, we also remain focused on delivering improving returns for shareholders. Our primary mechanism for this remains via delivery of a progressive dividend.

[Emma Walmsley, CEO at GSK]

For 2024, we've declared 61p and we expect to pay 64p in 2025. And as we've previously said, we also look to deliver returns using other mechanisms when circumstances and opportunities allow. And today, we are announcing our intention to buy back up to £2,000,000,000 of shares over the next eighteen months. We believe this offers a very attractive return for shareholders at current share price levels. Very importantly, and to reconfirm, we will maintain planned increased levels of investment in R and D, new launches and targeted business development alongside these share buybacks.

[Emma Walmsley, CEO at GSK]

So let me now hand over to Luc to start to take you through more detail on our 2024 performance and the prospects we see for some of our near term growth drivers.

[Luke Miels, Chief Commercial Officer at GSK]

Thanks, Emma. Please turn to the next slide. As Emma highlighted, overall sales for the year were up 8% with strong growth from Specialty and General Medicines, more than offsetting short term headwinds primarily in The U. S. To our vaccines business.

[Luke Miels, Chief Commercial Officer at GSK]

Next slide, please. Specialty medicines continues to show excellent momentum and pipeline progress. And as Emma said, it's now expected to be over half our business by 02/1931. In 2024, specialty grew 19% with strong performances across all therapy areas. Respiratory immunology products were up 13% in the year.

[Luke Miels, Chief Commercial Officer at GSK]

Nucala, our anti IL-five biologic treatment, grew 12%, driven by strong performances in Europe and international. Benlyster, our treatment for lupus, was up 14% in the year with strong demand across all regions. In oncology, sales almost doubled in the year. SEDULA grew 17% with strong growth across all regions, driven by sustained increases in patient demand. Gemperley sales more than tripled in 2024, benefiting from increased patient uptake in The U.

[Luke Miels, Chief Commercial Officer at GSK]

S. Following FDA all comers approval for primary advanced or recurrent endometrial cancer. And we received EMEA all come as approval in January. Ojara cells increased more than 10 times in the year, largely driven by continued strong uptake in The U. S.

[Luke Miels, Chief Commercial Officer at GSK]

Contributions from Europe and international are also increasing following launches in The UK, Germany, and Japan, and we expect further launches in 2025. David will cover HIV shortly. We expect the excellent momentum in our Specialty Medicines portfolio to continue in 2025 with sales growth of low double digit percent while absorbing the IRA impact. Next slide, please. Looking at what's next in specialty in our I and I, we are targeting a major new indication for Nucala to treat COPD following positive headline results from our Phase three MACNA trial.

[Luke Miels, Chief Commercial Officer at GSK]

COPD affects more than three hundred million people globally and is the third leading cause of death worldwide excluding COVID. An FDA decision is expected ahead of the May 7 PDUFA date and launch preparations are fully underway. We plan to publish the full MAPNA results at this year's ATS meeting. Depamocumab, our new long acting anti IL-five medicine, has now been filed in all major markets for dual approval in severe asthma and chronic rhinosinusitis with nasal polyps. Depemocumab has the potential to be the first approved ultra long acting biologic with six month dosing, offering physicians and patients the reassurance of prolonged efficacy through sustained suppression of inflammation and could improve compliance and adherence for patients with severe asthma.

[Luke Miels, Chief Commercial Officer at GSK]

We expect more Phase three readouts over the next eighteen months for other eosinophil driven indications and also plan to start a Phase three trial in COPD this year. And we have Kamlopixin, a highly selective p2 x3 antagonist with the potential to be a best in class medicine for treatment of refractory chronic cough, a disease with significant unmet need. First data from the Phase three Calm Development Program are expected this year with more early next year. In oncology, we're working to realize the full potential of our existing medicines as well as to expand our portfolio in areas of high unmet need. We have significant potential assets to drive growth for GSK, and I am very optimistic about what we as GSK can deliver here.

[Luke Miels, Chief Commercial Officer at GSK]

We're building a portfolio of novel pipeline ADCs with the ability to target tumor cells while sparing healthy ones. GSK227 targets B7 H3, an antigen which is over expressed in a wide range of solid tumors. Early data show promising clinical activity and we expect to share updated small cell lung, osteosarcoma and additional data from our clinical development programs at the ASCO and ESMO conferences this year. Pivotal studies for two twenty seven are expected to start before the end of the year. GSK five eighty four targets B7H4, which is also overexpressed across a number of solid tumors.

[Luke Miels, Chief Commercial Officer at GSK]

And our initial focus here is for the treatment of ovarian and endometrial cancers. Again, we expect to share more data on five eighty four at the conferences of this year.

[Luke Miels, Chief Commercial Officer at GSK]

As you may have seen,

[Luke Miels, Chief Commercial Officer at GSK]

we started 2025 with the announcement to acquire IDRx. This gives us access to iDRX42, a very promising and highly selective KIT tyrosine kinase inhibitor designed to treat gastrointestinal stromal tumors. This adds to our GI cancer portfolio, and we plan to accelerate development of this exciting asset. Lastly, as a reminder, we also expect initial results from our ZOOR one and ZOOR two trials exploring Jim Purley in rectal and colon cancer in 2026 and 2027 respectively, and the Phase three JADE study to read out in 2028. All this highlights the very strong progress GSK is making in oncology.

[Luke Miels, Chief Commercial Officer at GSK]

Twenty twenty five will be another key year with the launch of Blenrep. Next slide, please. Blenrep is at the forefront of our ADC portfolio. In December, we presented overall survival data from the Dream seven second line multiple myeloma study at ASH, and the data demonstrated a statistically significant and clinically meaningful forty two percent reduction in the risk of death when comparing Glenrep to the daratumumab based standard of care. Median overall survival has not yet been reached in Dream seven, but the projected difference is thirty three months.

[Luke Miels, Chief Commercial Officer at GSK]

For context, that's almost an additional three years of survival versus the current standard of care. If approved, unlike a number of alternative second line treatments, Glenrep would be an off the shelf treatment option delivered by a thirty minute infusion in a community setting with no requirements for pre infusion protocols, hospital admission, or post infusion monitoring. This could be important for the seventy percent of patients treated in the community. In the newly diagnosed or first line setting, we're encouraged by the second line trial readouts, but also by the BELLA RD trial, which demonstrated one hundred percent response rates. Our pivotal trial for Glenrep in the first line, Dream 10, started recruitment at the end of twenty twenty four, and we anticipate headline results towards the end of twenty twenty seven.

[Luke Miels, Chief Commercial Officer at GSK]

Next slide, please. I remain very ambitious for Blenrep, which I believe will become an important new growth driver for GSK. We have gained extensive experience of treating patients with Blenrep and have a better understanding of how to mitigate eye related side effects. Around a third of patients in Blenrep studies have reported blurred vision as an adverse event, but for the vast majority of these patients, this was manageable, transient, and reversible, and data suggest did not impact patients' quality of life. Eye related side effects in Dream seven were generally managed by dose modification, for example, by extending the interval between doses.

[Luke Miels, Chief Commercial Officer at GSK]

Data recently presented at ASH showed that when dosing intervals were extended from eight to twelve weeks, the incident of ocular events declined and critically, the efficacy of Blenrep was maintained. We've completed a number of regulatory filings and have an FDA PDUFA date of July 23. As we prepare for Blenrep's launch, market research tells us intent to prescribe has significantly improved, with the overall survival data a strong motivator. However, ACPs are mindful of eye related side effects, and therefore educating them in the appropriate dosing will be key. As a result, in the initial phase, we expect a staged ramp up as we build physician experience for the medium to longer term.

[Luke Miels, Chief Commercial Officer at GSK]

I'll now hand over to David to talk through HIV before I cover vaccines and general medicines.

[David Redfern, Chief Strategy Officer at GSK]

Thank you, Luke. HIV sales continued to deliver strong growth, up thirteen percent for the full year with Q4 delivering our ninth consecutive quarter of double digit growth. Growth in 2024 was driven by strong patient demand for our oral two drug regimen, Dovato, up 27% and long acting injectables, Kavanuva and Apretude, which reached billion of sales and contributed more than 50% of total growth. This resulted in a two percentage point increase in global market share compared to the prior period. Cabanueva, the first and only approved complete long acting injectable regimen for the treatment of HIV, grew 47% to over billion of sales in 2024.

[David Redfern, Chief Strategy Officer at GSK]

Growth was driven by strong patient demand across The U. S. And Europe with seventy thousand people living with HIV now benefiting from this transformative medicine globally. In January, we announced European Commission approval for use in adolescents. This marks an important step in bringing this medicine to younger people in line with our commitment to leave no person living with HIV behind.

[David Redfern, Chief Strategy Officer at GSK]

Apretude, the first and only approved long acting option for HIV prevention, delivered sales of nearly £300,000,000 in 2024, continuing its strong growth trajectory at 93%. With 99% effectiveness, we are confident in its strong efficacy, safety and overall tolerability. In 2024, of the 13% growth, 10% was volume with the remainder favorable in year pricing dynamics. In 2025, we anticipate sales growing by mid single digit percentage supported by ongoing growth in volume, partly offset by pricing headwinds with the introduction of the Inflation Reduction Act, which we expect to be a million to million impact. The potential for the long acting market remains significant with the market today for treatment and prep together worth more than £22,000,000,000 with treatment accounting for around 90% of this, and we believe treatment will continue to be the much larger market going forward.

[David Redfern, Chief Strategy Officer at GSK]

Next slide, please. Our pipeline is founded on integrase inhibitors or INSTES, the gold standard of HIV treatment and prevention due to their potency, long term tolerability and high barrier to resistance. We have a clear roadmap to deliver more long acting innovation with three new institutes in development and five planned launches by the end of the decade. In December, our registrational study for cabotegravir four monthly long acting injectable PrEP began and we are on track to start our registrational study for every four months long acting injectable treatment this year. Early data on assets with the potential for six monthly dosing will be available in 2025, including selected presentations

[David Redfern, Chief Strategy Officer at GSK]

at

[David Redfern, Chief Strategy Officer at GSK]

the Croix Congress in San Francisco in March. We are on track to confirm in 2026 the assets that will deliver sixth monthly dosing. For PrEP, this will be one of three long acting insties and for treatment, one of those insties in combination with our bnAb N6LS or our capsid inhibitor. As pioneers in long acting injectables, we are confident we have a strong and innovative pipeline to secure and deliver future competitive performance. With that, I will hand back to Luke.

[Luke Miels, Chief Commercial Officer at GSK]

Thanks, David. Turning to vaccines. Total sales were billion, down 3% in the year, largely due to lower sales of Orexvy in The US. Overall, Orexvy continues to be the market leader in The US, with around ten million adults now protected. However, demand for the vaccine was lower in 2024 following new ACIP recommendations, a late RSV season, and an unfavorable comparison to launch stocking in 2023.

[Luke Miels, Chief Commercial Officer at GSK]

Going forward, we continue to assume no revaccination or expansion of age cohorts in 2025, but we do expect both in time. Given the protection RSV can offer against RSV. Outside of The US, RSV has now launched in 36 markets, and we are seeing good momentum in uptake with national recommendations in 17 markets and national reimbursement programs in six. We expect more this year. Moving to Shingrix.

[Luke Miels, Chief Commercial Officer at GSK]

Sales grew 1% in the year with growth in Europe and international offsetting lower sales in The US, whereas anticipated, the pace of penetration is slowing. The US Immunization rate at the end of the third quarter was 40%, up five percentage points, in line with our expectations for around three to five percentage points per year. Ex U. S, growth was driven by higher uptake across European countries and a national immunization program in Australia. Shingrix has now launched in 52 countries, and the average immunization rate across the top 10 markets outside The U.

[Luke Miels, Chief Commercial Officer at GSK]

S. Is now around seven percent. In meningitis, our portfolio achieved another year of double digit growth with sales up 18%. Excera reached blockbuster status with sales up 23%, aided by CDC purchasing and positive recommendation in Germany. Minveyo grew 5%, impacted by comparison to stockpile replenishments in 2023.

[Luke Miels, Chief Commercial Officer at GSK]

And in February, we anticipate U. S. FDA approval of our new pindovalent MEN ABCWY vaccine, combining the antigenic components of Bexsero and MenVeyo. In time, we expect this to simplify immunization schedules, increasing coverage and protection against a serious life threatening illness. Medium and long term, we expect vaccines to remain a key source of future growth.

[Luke Miels, Chief Commercial Officer at GSK]

In the short term, given the challenging China macro environment and the potential for changes to US Vaccination policies and uptake in the next twelve to eighteen months, we're expecting vaccine sales to decrease low single digit percent in 2025. Next slide, please. General medicine sales grew 6% in a year, and this was largely driven by Trilogy, up 27% with strong demand across all regions, strengthening its position as a top selling brand in asthma and COPD. In 2024, increased use of authorized generic versions of Advair and Flovent fully offset the headwind from the removal of the Aptcap on Medicaid drug prices. This year, we are excited to launch jepertitosan, the first completely new antibiotic to treat uncomplicated urinary tract infections in more than twenty years.

[Luke Miels, Chief Commercial Officer at GSK]

And we expect to see demand increase from twenty twenty six once payers have completed their review process and put jeopardizing on formally. Overall, looking across the general medicines portfolio, while we expect volume growth across key brands to continue, we expect that to be broadly offset by pricing and genericization pressures and so anticipate sales to be broadly flat in 2025. I'll now hand over to Julie.

[Julie Brown, CFO & Executive Director at GSK]

Thank you, Luke, and good morning, everyone. Next slide, please. Building on the comments made by Luke and David, this slide shows a significant growth contribution from Specialty Medicines, having delivered more than 80% of the growth this year by building scale and momentum in our respiratory immunology and oncology business, as well as ongoing growth in our HIV portfolio. Next slide, please. Moving to the income statement for the full year with growth rates stated at CER and ex COVID.

[Julie Brown, CFO & Executive Director at GSK]

Sales increased 8% and core operating profit 13% despite a 6% headwind from the loss of Gardasil royalties. Within this, gross margin grew 80 basis points benefiting from the positive mix from specialty medicines and the supply chain efficiencies despite incorporating a million charge to drive future supply chain productivity. SG and A increased 2% year on year, benefiting from our returns focused disciplined approach to investments, supporting global market expansion for key assets, including Gemperley, Nucala, long acting HIV, Eurexue and Shingrix as well as a one off credit from the Zizula royalty dispute in quarter one. R and D grew 7% broadly in line with sales as we invested in phase three trials, particularly in RINI and oncology. Core EPS grew 12%, slightly below operating profit, as anticipated, due to an expected increase in the core tax rate.

[Julie Brown, CFO & Executive Director at GSK]

And turning to the total results, operating profit decreased materially year on year to billion. The reduction reflected a billion charge relating to the resolution of the Zantac litigation and the higher CCL charge driven by the improved long term outlook for our HIV business. Next slide, please. Core operating margin improved to 29.2%, up 130 basis points year on year at CER and ex COVID, notwithstanding the absorption of 140 basis points due to the loss of Gardasil royalties. This marked improvement demonstrates productivity, efficiency and optimized resource allocation to the key commercial and R and D assets in the business.

[Julie Brown, CFO & Executive Director at GSK]

The gross margin benefited from the outperformance of specialty medicines, positive channel mix and supply chain productivity. Next slide, please. Turning to cash. Cash generated from operations was billion, impacted by settlement payments relating to the resolution of Zantac. Excluding this impact, we continued our track record of improving cash every year with CGFO up $400,000,000 totaling $8,500,000,000 This improvement primarily reflected the increase in core operating profit together with favorable working capital largely due to lower receivables and lower pension contributions.

[Julie Brown, CFO & Executive Director at GSK]

These benefits were partly offset by lower other payables due to the reduced rebates and returns from MCAT. Free cash flow improved to 3,500,000,000.0, excluding the Zantac payments, notwithstanding increased investment of 400,000,000.0 in BD intangibles. Next slide, please. This slide demonstrates how we have deployed our cash in line with the capital allocation framework. Free cash generation, pre capital expenditure and excluding Zantac was strong at over €6,000,000,000 dollars Our first priority is to invest for growth.

[Julie Brown, CFO & Executive Director at GSK]

And in 2024, we deployed $3,600,000,000 on CapEx and BD. Our second priority is returns to shareholders. And today, we have declared a dividend of 61p, an increase of 5% year on year and ahead of guidance, reflecting the strong outperformance of our 2024 results compared with our original position. In 2025, we anticipate paying a dividend of 0.64p, a further 5% increase year on year. And finally, we had two one off factors, the monetization of Halion, which generated 2,300,000,000.0 and the resolution of the Zantac litigation.

[Julie Brown, CFO & Executive Director at GSK]

At December 2024, net debt reduced to billion driven by strong free cash generation and the Halion proceeds. As we've previously said, we will look to deliver incremental returns when business needs have been fulfilled and the balance sheet allows. And given the significant transformation since the demerger, we now have a strong balance sheet, which gives us a high level of flexibility for the acceleration of organic investments and further business development, whilst also enabling a step up in shareholder returns. As Emma said, we will augment our dividend with a 2,000,000,000 share buyback program to be completed over the next eighteen months. So to summarize, our focus is on investing for growth and there is no change to our capital allocation priorities And we remain fully committed to maintaining a balance sheet with a strong investment grade credit rating.

[Julie Brown, CFO & Executive Director at GSK]

Next slide, please. Now turning to guidance at constant rates, I'll cover 2025 and phasing and then move to the outlook for 'twenty one to 'twenty six. So first, for 2025, we expect another year of good profitable growth for GSK. Sales are expected to increase between 35%, core operating profit and EPS to increase between 68%, with EPS impacted by higher interest charges and the tax rate rising to around 17.5%, offset by up to a 1% benefit from the share buyback. Some points to note for modeling purposes.

[Julie Brown, CFO & Executive Director at GSK]

Firstly, we expect our sales growth to be driven by specialty medicines in 2025 which also benefits gross margin. Secondly, in terms of OpEx, we expect SG and A to grow at a low single digit percentage with strong investments behind product launches whilst focusing on competitive precision analytics and an AI enabled approach driving increased ROI. R and D is expected to grow broadly in line with sales as we prioritize investment in key pipeline assets, including RINI, oncology and next generation vaccines. And finally, we expect royalty income to be in the range of GBP $650,000,000 to GBP 700,000,000. As previously stated at Q3, our guidance incorporates a GBP 400,000,000 to GBP 500,000,000 revenue headwind from the introduction of the IRA.

[Julie Brown, CFO & Executive Director at GSK]

Next slide, please. In terms of phasing, we anticipate growth in 2025 to be second half weighted, largely due to a significant sales comp base effect, particularly in vaccines as well as benefits last year that will not repeat, namely, Zejula in Q1 and return rebate adjustments in Q2. Next slide, please. Emma has covered the overall outlooks. And therefore, I would just like to give more color on the change in the product mix outlook from 'twenty one to 'twenty six.

[Julie Brown, CFO & Executive Director at GSK]

The contribution from specialty medicines has increased significantly with growth accelerating due to strong RINI, oncology, and HIV performances. This performance momentum means we now expect a low to mid teens 2026 CAGR ahead of the previous guidance and for HIV specifically to grow high single digits across this period. For vaccines, the recent performance has been volatile. And whilst we continue to expect material contributions from vaccines in the medium and long term, in the near term, we have reduced our expectations for the 2026 CAGR to a mid to high single digits. Where we ultimately land in the range will depend on a number of factors, most notably the overall US environment for vaccination, ACIP recommendations, disease incidence and the China macro backdrop and its implications for Shingrix uptake.

[Julie Brown, CFO & Executive Director at GSK]

General medicines has also outperformed, which means we expect a low single digit contribution to our 26 CAGR. Alongside sales, we continue to focus on margin improvement with no change to our guidance of more than 31% margin by 2026 and more than 500 basis point improvement over the five years. And we continue to expect a broadly stable operating margin through the dolutegravir patent expiry. Next slide, please. Turning to our IR road map.

[Julie Brown, CFO & Executive Director at GSK]

We have made significant progress this year in our pipeline and execution and the deployment of capital to support growth. Next slide please. And turning to twenty fivetwenty six as mentioned, we expect five major approvals this year including Blenrep and Depemocumab. Over the coming twenty four months, we also anticipate phase three readouts for camlopixent for refractory chronic cough and bepravirsen for hepatitis B as well as pivotal phase two's for our four monthly HIV prep and rectal cancer. Next slide, please.

[Julie Brown, CFO & Executive Director at GSK]

Before I finish, I just wanted to take a minute to reflect on the progress we've delivered over the last few years, which demonstrates a marked improvement in capital management, operational efficiency and our commitment to improving outlooks. Firstly, operating margin improved three sixty basis points. And we have moderated the growth of SG and A as we leverage investments and take a disciplined returns based approach together with supply chain efficiencies and mix benefits. Importantly, over the period, our investment into R and D has increased at a 10% CAGR. And going forward, R and D growth is expected to be broadly in line or ahead of sales.

[Julie Brown, CFO & Executive Director at GSK]

Secondly, cash generated from operations has been growing to about $8,000,000,000 per year since 2021 with 2024 being a record year adjusting for the one off impact of Zantac. We anticipate this rising further to more than £10,000,000,000 by 2026. This strong cash generation has allowed us to commit to a progressive dividend policy with more than 5% growth over the last three years alone. And it has allowed us to announce the 2,000,000,000 share buyback program today. Including this, we will have returned in excess of 8,000,000,000 of cash to shareholders over the three year period to 2025.

[Julie Brown, CFO & Executive Director at GSK]

Our balance sheet is now very strong with net debt to EBITDA at just 1.2 times, allowing us significant firepower for future BD and shareholder returns. We will continue to benchmark all future deals against stringent criteria to ensure capital is deployed optimally And ultimately, you will only see us investing in opportunities that are strategically aligned to our main therapeutic areas. And with that, I'd now like to hand back to Emma for her closing remarks.

[Emma Walmsley, CEO at GSK]

Thanks, Julie. So in summary, GSK is powering forward. This comes on the back of a strong track record of operational delivery and accelerating progress in innovation and pipeline development, where of course, there is always more to do. Our portfolio is demonstrating both growth and resilience built around high quality specialty medicines and vaccines with more to come in key areas of therapeutic strength for GSK. As we head into 2025, we expect another year of profitable growth and we have further improved our long term outlook to sales of now more than £40,000,000,000 by 02/1931.

[Emma Walmsley, CEO at GSK]

Our outperformance and stronger balance sheet support our future investment plans, including for more investment in R and D, more business development, as well as providing us with the opportunity to deliver enhanced shareholder returns. All of this underscores GSK's opportunity to deliver scale health impact to patients through this decade and beyond. Combining science, technology and the talent of our people to get ahead of disease together. Thank you very much. And I will now open up the call for Q and A with the team.

[Operator]

Okay. Thank you. For the Q and A portion of our call, please use the hand raise feature feature in the Zoom webcast if you would like to ask a question. And as a reminder, we ask that you limit yourself to only one to two questions so that we may accommodate as many participants as possible. For our first question, we will go to Emily Field from Barclays.

[Operator]

Emily, can you please ask your question?

[Emily Field, Director at Barclays Capital]

Hi. Thanks for taking my taking my questions. I'll ask two hopefully quick ones. Firstly, I know you you mentioned impact, from sort of the China macro on Shingrix. Obviously, with the Merck announcement yesterday on Gardasil, a lot of concern that this has that deterioration in this outlook has accelerated.

[Emily Field, Director at Barclays Capital]

So I was just wondering if you could provide a little bit more granularity on your expectations for Shingrix in China, in 2025. And then secondly, within the mid single digit growth for HIV for for 2025, are you are you assuming much of a competitive impact from the launch of Lenacapavir in the second half of this year? Thank

[Emily Field, Director at Barclays Capital]

you.

[Emma Walmsley, CEO at GSK]

Thanks. We'll we'll come to David in a minute on, on HIV and our confidence there. And let's go to Luke first on China. I just would flag this is something that we addressed last year with the repositioning of our deal with our trusted partner, ZhiFei.

[Emma Walmsley, CEO at GSK]

And I think, you know, still remain ambitious, although the short term pressures were acknowledged both through 2024 and, of course, in the guidance that we've given to 2025. But none of that takes away from our longer term ambition. Luke, do you want

[Luke Miels, Chief Commercial Officer at GSK]

comment on China? Thanks, Emily. I mean, as Emma said, look, there's not much more to add than what I covered on the Q3 call. I mean, our market share is around 70% and that's our target population there. We're very happy with the partnership with GFA, but the intent to extend it out to 02/1934 is to was to address exactly what we're seeing right now, which is just to navigate these short term headwinds.

[Luke Miels, Chief Commercial Officer at GSK]

Our focus operationally is partnering on the ground with GFA to expand in those high tier cities. And initial signs are encouraging, but again, I wouldn't expect too much in 2025. This is a mid to longer term play here.

[Emma Walmsley, CEO at GSK]

Nice. HIV?

[David Redfern, Chief Strategy Officer at GSK]

Yeah. Thanks, Emily. So firstly, very pleased obviously with the continued strong growth momentum in HIV in Q4 contributing almost £2,000,000,000 of sales. I think on your specific question, look, we certainly expect Apertude to continue to grow this year. First and foremost, the PrEP market in The U.

[David Redfern, Chief Strategy Officer at GSK]

S. US is actually significantly underdeveloped. The CDC estimates, I think, about one point two million Americans could benefit from PrEP, and today only about a third of those are getting any form of PrEP treatment. And we also know that the prep market is very well suited to long acting options. And I think Apertude and now the competitor product have very similar, like, strong efficacy probably or definitely better than the overalls mainly due to compliance.

[David Redfern, Chief Strategy Officer at GSK]

So I think with a second long acting entrant coming into the market this year, it should help grow the market for all of us. And then secondly, the competitive product definitely won't be for everyone. We now know that there's quite a high frequency of nodules that people experience in their abdomen, where the two injections are given. I think in the pivotal studies, about sixty three percent of participants, experienced nodules with a mean duration of about six months and seven cases of ulceration. I expect we'll learn a lot more as the year goes on through more data and more real world evidence of exactly what type of patients and the size of these nodules and so forth.

[David Redfern, Chief Strategy Officer at GSK]

But for potential prep users who are body image conscious, which will be quite a proportion of them, I think, You know, that potentially is an issue. And then I'd also flag that the competitive product has quite a high number of drug drug interactions, maybe 14 classes of commonly prescribed prescription medicines, corticosteroids, erectile dysfunction meds, and so forth. And also DDIs are recreational and, PEM sex drugs, opiates, fentanyl, and so forth. And, you know, these DDIs can be serious and in very extreme cases potentially cause fatal respiratory depression. So again for PrEP users or potential PrEP users who are taking these meds, it may not be for them.

[David Redfern, Chief Strategy Officer at GSK]

So we'll see how this unfolds, but I think we expect to grow in a growing market.

[Emma Walmsley, CEO at GSK]

Thanks, David. And just to underpin, we welcome the opportunities to grow the market. But even if this market triples in size and we get to the 100% participation, so the part of the market that the the CDC said, you know, could could be. Treatment is still where most of the businesses and here we obviously lead the way. So next question, please.

[Operator]

Great. The next question will be from Richard Parks at BNPP Exane. Richard?

[Richard Parkes, Head of Pharmaceutical & Biotechnology & Equity Research at BNP Paribas]

Hi. Thanks for taking my questions. So I've got a couple of questions on vaccines and the targets. So in on RxV, obviously you saw rapid penetration of The U. S.

[Richard Parkes, Head of Pharmaceutical & Biotechnology & Equity Research at BNP Paribas]

Market, but there's still a large international opportunity. Can you discuss how prepared you are to access that in 2025 and what the key factors are in driving that or limiting your ability to access the opportunity? And then again on vaccines, obviously you talked about moderating expectations for RxC Shingrix. Can you talk about what's assumed for peak sales of both those products now? Because I think the market's quite skeptical about your prior peak sales targets given given the current headwinds and, just wondering what the offsets are to raising your 2,031 targets.

[Richard Parkes, Head of Pharmaceutical & Biotechnology & Equity Research at BNP Paribas]

I know, blend reps obviously been included, but it sounds like there's other offsets there where you're more optimistic. So helping understand those moving parts would be helpful. Thank you.

[Emma Walmsley, CEO at GSK]

Yeah. Thanks, Richard. And I'll come to Lou to add a bit more color on how we see the opportunities for growth over time on a risk because we really are at the foothills of this vaccine, which as you know, you know, we're really thrilled with the data that's come through on its efficacy and a high burden of disease area. Explicitly, there's no change to our ambitions for our assets, be that our existing ones or some exciting pipeline that's coming through later in the decade. The real question is actually the area under the curve.

[Emma Walmsley, CEO at GSK]

And obviously, last year, you saw us you know, recalibrate our expectations in 'twenty four. We did say Q3, we expected to recalibrate those or sorry to maintain that the the and acknowledge the short term pressures on vaccines in 'twenty five. Julie flagged then that we expected the mix to change. She's been more explicit today. We've been more explicit today on how that mix changes.

[Emma Walmsley, CEO at GSK]

And obviously, that has flowed through to our updated 02/1931 outlooks alongside, as you suggest, Richard, the impact of 13 positive Phase 3s, the momentum in our specialty business more broadly. And as Judy said, we've upgraded whilst acknowledging the pressures on vaccines, we've upgraded 26 outlooks for total specialty, for HIV, also for Gen Meds. These have rolled through and we've added in Glenrep. And, you know, as I outlined in my introduction, this doesn't yet include our intent to invest in progressing the early stage pipeline or our intent to pursue further BD like the kind of assets that you've, you've worked right at the January, IDRX isn't yet in there. So, you know, I think the key takeaway on this is the strength of our broader portfolio.

[Emma Walmsley, CEO at GSK]

The progress we're making in the broader pipeline means we can digest these, what we think are short term pressures in both The US and in China. And we remain optimistic about, you know, broader vaccines pipeline. And, you know, lots more to come, particularly in oncology and RNI, be it Blenheim or ADCs or the other pipeline that's coming through. So with that, I think let's come back explicitly to Orexvi, Luke, and how you see the international opportunity, whatever the weather in The US is at the moment?

[Luke Miels, Chief Commercial Officer at GSK]

Sure. Thanks, Emma. And thanks, Richard. I mean, you know, last year we had about 15% of revenue was ex US. I'm very encouraged by what we're seeing.

[Luke Miels, Chief Commercial Officer at GSK]

It's early days, but we know what we're doing in this context. I think with these national immunization programs, which I said earlier, we've got six that's in The UK, Greece, they want to check, Saudi, strong tender there, as well as critical success, with Steco in Germany, in addition to The US, I think it's an encouraging start. I think what also is important is these systems will differentiate based on clinical data. In these key markets is certainly very encouraging in terms of the perception of orexy, the efficacy, efficacy of high risk groups as well as the durability and cost effectiveness of the vaccine. So, look forward

[Luke Miels, Chief Commercial Officer at GSK]

to updating you more this

[Luke Miels, Chief Commercial Officer at GSK]

year. But so far, it's a good start.

[Emma Walmsley, CEO at GSK]

Thanks, Luke. Next question, please.

[Operator]

Great. The next question, we will go to Steve Scala from TD Cowen. Steve?

[Emma Walmsley, CEO at GSK]

Hi, Steve. Thanks for joining us early.

[Operator]

Just asking Steve to unmute himself. Alright. Steve, we'll come back to you. And instead, let's go to Peter Welford at Jefferies. Peter?

[Peter Welford, Research Analyst at Jefferies & Company Inc]

Hi. Thanks. Two questions. Firstly, just sticking with the REX view at this time in The US, I wonder if you could talk a little bit about the commercial environment there if you can, because I guess in the last particularly the last two parts of the season that we can see the prescription data for, you know, it looks as though Pfizer is beginning to claw back, you know, quite a bit of share compared to what we've seen in the past. Can you just talk a little about, you know, contracting that you're seeing, I guess, for this year and perhaps also reluctance, I guess, on that from from pharmacies and buyers, I guess, to engage given what I imagine from their part must be pretty uncertain demand going into the next season, which I appreciate is still months and months away.

[Peter Welford, Research Analyst at Jefferies & Company Inc]

And then secondly, just on the buyback, I mean, clearly reflects your confidence in the longer term pipeline that you already have, I'm guessing, internally relative to how the market perceives, you know, the the the R and D and and what you have for new launches. So I guess could you talk a little bit about how, I guess, how much of when we look at that chart, how much of it do you think is reflecting also things like long acting HIV? And maybe you could put a number on, you know, how big do you think the HIV long acting business could be beyond the sort of LOE expires that we're seeing? And I guess trying to just sort of build some commentary to what is it that the market's missing, do you think, in terms of the sort of resilience perhaps in the base business that gives you the confidence to do to allocate capital to a buyback today?

[Emma Walmsley, CEO at GSK]

Yes. Well lots of questions in that detail. I'll come back in a minute to Luke on The U. S. Commercial environment in vaccines.

[Emma Walmsley, CEO at GSK]

Obviously lots of external commentary and speculation on that for 2025, which also depends where we see the sort of pressured external environment, but, Luke can add further comment on the commercial side. Look, buyback is completely consistent with the capital allocation framework that we've laid out and the first priority continues to be, as both Julie and I said, to invest in the future growth of the company, to invest in the pipeline, to invest it competitively in these exciting new launches that we've got coming through, be that the five approvals we hope to have this year or hopefully as they progress, the 14 key assets that are in the with commercial partners, you know, working together on bringing forward. We also want to continue to supplement that and plan to continue to supplement that with further business development. The point is that alongside that priority, we also continue to demonstrate our focus on improving shareholder returns. And obviously, considering the momentum in the business, the progress in the business, the strengthening of the balance sheet, we are very confident that we have both the circumstances and the opportunity to deliver really compelling returns to shareholders with this announcement that we've made today.

[Emma Walmsley, CEO at GSK]

Now I am not going to guide by individual product forecast in terms of what we will deliver in 02/1930. We've given a, I think, a reasonable schematic that we've presented you that shows most importantly, and this is really the key thing I think people should take away from today, is our biggest business for 19% in 2024 with every single therapy area growing at double digits. It's still a nascent business, but the progress we're making in on cology is very exciting. And we have a potentially really material contribution to make even if the launch is staged. And it's really about the contribution to '26 to '31, certainly not to '25, but we're very excited about Blenheim coming through.

[Emma Walmsley, CEO at GSK]

And remember that doesn't yet include first line, but we were pleased to start the study. Let's see. But, you know, the data we have on overall survival is, we think, you know, game changing as well as life changing. And so very excited to see what comes there and what could be added with ADCs, you know, and further progress we want to set want to make. Explicitly on HIV, the six monthly drugs are not yet included in this outlook.

[Emma Walmsley, CEO at GSK]

So that's also worth, bearing in mind. So I think that's where people should focus. No one should doubt for one second our commitment to our vaccines portfolio, but really, it's this shift in the mix, which as Julie also said, secures the profitability of the business and the gross margin too. So with that, maybe Luke, you can comment specifically on the commercial world

[Emma Walmsley, CEO at GSK]

and flexi's event.

[Luke Miels, Chief Commercial Officer at GSK]

Yes. Thanks, Peter. Look, I mean, I think when ACIP came out with its surprising decision in June, I mean, we call it a spade a spade and we said it was going to be tough. And I think the evidence has indicated that that was

[Luke Miels, Chief Commercial Officer at GSK]

correct. If you

[Luke Miels, Chief Commercial Officer at GSK]

look at penetration rates in The U. S, the most recent data we have is in November. If you contrast that with December of twenty twenty three, I mean, what ASIP signal has clearly happened, people follow ASIP. If you look at penetration in the 75 population

[Luke Miels, Chief Commercial Officer at GSK]

at the end of

[Luke Miels, Chief Commercial Officer at GSK]

twenty three, it's about 17% that only increased up to 26% over 2024. And if you look at high risk individuals in the sixty to seventy four population, it went from eleven percent to eighteen percent. And in the generally healthy population where ACIP was steering people away, it just increased from nine point four percent to around fourteen percent. So there is a shift here in terms of demand. If we look at market research and profile, physicians still prefer Orexvy.

[Luke Miels, Chief Commercial Officer at GSK]

But, and I've said this a couple of times, for me, the key element here is to navigate what we think is going to be a transition from a three vaccine market to a two vaccine market. There's a huge amount of pressure, competitive pressure in the market, through the contracting cycle last year. I think we've navigated that quite well. Our focus remains on retail. And what I would strongly stress is we need to compare apples with apples when we're talking market shares.

[Luke Miels, Chief Commercial Officer at GSK]

So you need to adjust the market shares for maternal volumes where we don't have the label. So if you do that, the end of twenty twenty four, we had about a 58% market share. So about four point one doses out of 7,000,000 were with Orexie. I think we're happy with that. The key thing is to preserve value and position ourselves for the future when we do think ASIP ultimately will move to expand this population.

[Luke Miels, Chief Commercial Officer at GSK]

Based on the evidence, there will be a revax at some point and we want to be positioned to compete with Pfizer very actively at that point.

[Emma Walmsley, CEO at GSK]

Thanks. And David, I think you want to add something on six monthly?

[David Redfern, Chief Strategy Officer at GSK]

Yes. Just on

[David Redfern, Chief Strategy Officer at GSK]

six monthly, Peter, I mean, as Emma said, it's not in our forecast, but I'd certainly agree with you that it could be a potential upside. This year will actually be an important year for six monthly. We will have proof of concept data on 01/1984 and also the two options that we could put with either 01/1984 or one of the other entities. So N6LS, the EMBRACE study at six months, I think we'll have at CROID and also our Capsid. So the aim is to look at that data this year and then make a regimen selection for treatment, and also choose our IntiD for PrEP next year and potentially run start running the pivotal studies in 2027.

[David Redfern, Chief Strategy Officer at GSK]

So as we go into next year in 2027 that's probably the time when we think about formalizing the forecasts.

[Emma Walmsley, CEO at GSK]

Right. So and let's remember it was only four years ago that we said we were expecting more than 33,000,000,000 in 02/1931. Today, it's more than 40. And you can see we're already close to that number in the near term. So yes, we are confident in our prospects.

[Emma Walmsley, CEO at GSK]

And yes, we know we've always got more to do. Next question, please.

[Operator]

Great. Let's go back to Steve Scala from TD Cowen and Steve, see if you can ask a question.

[Steve Scala, Pharmaceutical Analyst at TD Cowen]

Thank you. That was my mistake. Two questions. For Nucala, is the exacerbation data competitive with Dupixent? And have you shown an FEV benefit?

[Steve Scala, Pharmaceutical Analyst at TD Cowen]

I mean, if not, your statements that you will lead in COPD might seem less secure. And secondly, you noted that GSK expects changes to U. S. Vaccine policy. This contrasts with what another major vaccine company said just last week when they reported.

[Steve Scala, Pharmaceutical Analyst at TD Cowen]

That company expects no changes. So in practical, on the ground, everyday terms, what exactly do you expect to happen and to which vaccines or is this more of kind of a vague concern? Thank you.

[Emma Walmsley, CEO at GSK]

Well, thanks Steve. I'll come to Tony in a second on Nucala. The only point I would make is our ambition in COPD is across a portfolio of pipeline that Tony did share in December. So as well as Newcala, I'm sure he'll want to comment on that. Newcala is just the first foray into biologics for us there.

[Emma Walmsley, CEO at GSK]

And then in terms of changes to U. S, I think our point was we note the significant speculation. And let's face it, there's been a lot of it over the last few months around what kind of changes there might be to US vaccine policy. And, you know, that is definitely one of the contributors to our view around the short term pressures on the environment in The US. We also, as Luke reemphasize, are still living with the decisions that were made by ACIP last year.

[Emma Walmsley, CEO at GSK]

And the key assumption is from us in that context is that there will be no further indications or cohort expansion assumed on RSV this year, although we do over time expect them to be added and as Lou said, rebacs as well. I think the only point I would add without wishing to predict exactly what's going to happen is it was good to hear and through the nomination process, RFK reiterate his recognition of the value of vaccines, that his own children have been vaccinated, and also obviously over the weekend, to hear that in the discussions with Senator Cassidy, the CDC vaccine guidance is, and and the, an ACIP, should remain unchanged. So let's see how this plays out. We'll know we'll all know a lot more through 2025 and look forward to some of the speculation being settled here. Tony, do you want to

[Tony Wood, Chief Scientific Officer at GSK]

Yes. Let me start. Steve, the first thing I'd say say is that we're looking forward to being able to share the the, total new collar dataset with you soon. I'm obviously not going to get into the details of that ahead of publication, but perhaps I might just stress, a few aspects of this and, in particular, in the context of exacerbations and and the patient population. So if approved, your call is gonna be the first monthly biologic proven to reduce exacerbations across the full spectrum of COP disease COP disease.

[Tony Wood, Chief Scientific Officer at GSK]

And in particular, that includes individuals with emphysema who are the most difficult to treat. You you'll recall from the data that we've previously published around the two prior phase three studies across that population, an exacerbation reduction risk in the order around about twenty percent is typical in the in in the broader population. I'd also stress that we went to great lengths to ensure that we removed comorbid asthma patients from that study as well. And so I don't think it's it's difficult to to compare side by side. However, we are we have a broader population, about a third of the COPD population have emphysema.

[Tony Wood, Chief Scientific Officer at GSK]

And I'd ask you just to comment on that. But one final thing, if you again, if you look back in our data at similar populations, and we've published, similar sorts of headline efficacy on exacerbations, but it's important not to compare across headline data because it's a very different patient characteristics in the two studies.

[Luke Miels, Chief Commercial Officer at GSK]

Yeah. Thanks, Steve. I mean, Tony and I spent a lot of time talking about this. I think you just need to look at it practically on the ground. You know, Tony mentioned about a third of those patients have emphysema alone, about a third of them have bronchitis, but also a third of them have mixed and can be difficult to separate those.

[Luke Miels, Chief Commercial Officer at GSK]

So just practically, also when you look at the Dupixent population, they were not sick. They have a gold two to three, so moderate to severe, whereas we were two to four, which included very severe. And I think, you know, if you look at what the gold report, which just came out last year said, it's pretty much positioning Dupixent, in that bronchitis subset. So again, I don't want to preempt our data, but I think we have a broader argument here. And the also the important thing is to focus on hospitalizations, because when people go into hospital, obviously, many of them don't come out.

[Luke Miels, Chief Commercial Officer at GSK]

And it sets off a cascade here. So, you know, in summary, we've got efficacy and tougher to treat patients, a broader population. And, yeah, let's see what the publication and the reception from the community says that we intend to compete. There was a request from Dupixent for more competition and we intend to provide it.

[Emma Walmsley, CEO at GSK]

I mean, this is what's great, is the opportunity to grow biologics on the back of, by the way, our fantastic trilogy business in COPD. And I am really excited to see what long acting drugs are going to bring here. So good to see that we're going to be going into COPD study for DEPI. We've also got the ILs and TSLIP as well that Tony laid out. So I think this is the beginning of some exciting prospects in biologics that will get much stronger through the end of the decade too in a disease that is the third leading cause of death.

[Emma Walmsley, CEO at GSK]

And so when you're talking about scale opportunities to address health in a field that we really know what we're talking about, this is a good one. Next question, please.

[Operator]

Excellent. Next question is from Rajan Sharma from Goldman Sachs. Rajan, you're up.

[Rajan Sharma, Executive Director at Goldman Sachs]

Hi. Thanks for taking my question. Just first one was on HIV. HIV. Could you just discuss the dynamics driving that positive impact from channel mix?

[Rajan Sharma, Executive Director at Goldman Sachs]

Is that implying that there's a lower proportion of Medicaid patients? And do you expect that to continue into 'twenty five and 'twenty six? And then the second question is just on the 02/1931 guidance update. So you've taken up guidance by February in revenue, which includes Blenrep, which you've previously talked to as a 3,000,000,000 peak sales opportunity. So just to be clear, should we read that as kind of a a billion, reduction in the guidance, excluding Glenrep?

[Rajan Sharma, Executive Director at Goldman Sachs]

Or are you not expecting Glenrep to reach its peak until after that? And then just related, there's obviously quite a bit of a a difference between where consensus is right now. Is there anything particularly that you'd call out as where the where that delta is?

[Emma Walmsley, CEO at GSK]

Yeah. I mean, Julie, you might want to comment in a minute on consensus as much as you wish to, and I'll come to, to David on HIV. But first of all, to be clear, the outlook for '31 is more than 40,000,000,000. And we're pleased to have moved that up, as I've said, which is a combination of rolling forward the mix shift in '26, progress in our Phase III results and across the portfolio and the inclusion of a Blenrep second line launch as well. There is no change to our ambition for Blenrep to be more than 3,000,000,000 peak year sales.

[Emma Walmsley, CEO at GSK]

There was no time put on that. And we're looking forward to the contribution of the five approvals that we flagged and more to come, really contributing to that twenty six to thirty one outlook. So David, do

[Emma Walmsley, CEO at GSK]

you want

[Emma Walmsley, CEO at GSK]

to come up on HIV?

[David Redfern, Chief Strategy Officer at GSK]

Rajan, I think the main channel mix evolution we expect this year is just the ongoing rise of 340B, which is somewhat sort of a headwind, but not huge. Other than that, I think it's going to be more of the same. I mean, Medicaid and the related programs like Ryan White, ADAP and so forth are about 40% of The US HIV book of business. Medicare is about twenty percent. That is steadily increasing over time obviously as patients get older and the rest is private insurance.

[David Redfern, Chief Strategy Officer at GSK]

So very much apart from 340B, I think pretty much the same trends continuing.

[Emma Walmsley, CEO at GSK]

Thanks. So Julia?

[Julie Brown, CFO & Executive Director at GSK]

So in terms of

[Julie Brown, CFO & Executive Director at GSK]

the difference with consensus in terms of our outlook, which is more than 40,000,000,000, the two main therapeutic areas where we've got a difference are oncology and respiratory immunology and inflammation. And within the oncology category, the two biggest ones are Glenrep, and obviously people are probably waiting for the Lord, And then also, Gemperley. So we've got life cycle indication, and you've seen the track record we've got on Gemperley already with some important breed outs coming up. So those are two big differences. And then with the within the respiratory immunology and inflammation area, We've got Camofixent, where obviously people are waiting for the readout that's coming in about a year.

[Julie Brown, CFO & Executive Director at GSK]

And then also dapamocumab, interestingly, even though we've now got a successful filing, clearly we've got the approval expected towards the end of the year and the launch at the beginning of twenty six. So those are the main areas of difference which we have got with consensus.

[Emma Walmsley, CEO at GSK]

Thanks, Julie. And, you know, let's remember, I think it's seventy two percent of reductions in exacerbations that cause hospitalization on, on Depay. So even if that's, you know, really a '26 launch hopefully with an approval at the end of this year, Just considering the burden of disease, the cost of hospitalization, the enthusiasm, and Luke's presented this research before from HCPs as well as patients for this, that's definitely one to watch. Next question, please.

[Operator]

Right. Next question will be from Justin Smith at Bernstein. Justin?

[Justin Smith, Director at Bernstein]

Yes, many thanks indeed. It's just one on Blenrep. Sorry, if this is a slightly ignorant question, but with regards to that Dream 10 Phase three first line and the MRD endpoint, just could you share a few thoughts how that endpoint resonates with payers and community docs, particularly those outside The U. S?

[Tony Wood, Chief Scientific Officer at GSK]

Yes. Let me just start with the dynamics and data plan associated with MRD and remind you of what we've already seen with molecular measures in Dream seven and Dream eight. And then, Luke, perhaps I can hand over to you in terms of the resonance with with key docs. So we're expecting and and, again, a reminder that an ODAC approval of the use of MRD as an endpoint was only just last year or a recommendation of the use of MRD as an endpoint. We started the studies Emma mentioned in December.

[Tony Wood, Chief Scientific Officer at GSK]

We're expecting the first readout on MRD data in '27. What needs to occur over the intervening period and others will be driving this based on their own first line studies is a relationship between an understanding of MRD and a more established regulatory endpoint like PFS. What we know from our own analysis in, Dream seven, Dream eight, and indeed other first line studies for Benroep is when we look at the characteristic, details of MRD readouts, then we see a similarly improved outcome for BRAIN rep relative to competitive assets. But, Luke, you might wanna comment on that. Yeah.

[Luke Miels, Chief Commercial Officer at GSK]

Yeah. I mean, thanks, Justin. Just to build on Tony's point, I mean, the market research we get is exactly what the FDA is signaling, which is MRD, is a practical response to very long durations and clinical trial feasibility in first line. What it is not is a replacement for survival in second line. And I think that's absolutely critical and we see that.

[Luke Miels, Chief Commercial Officer at GSK]

So, you know, and as we've covered earlier, we've got very strong data in second line and look forward to talking more about it over the year.

[Emma Walmsley, CEO at GSK]

Thanks. Next question, please.

[Operator]

Great. Next question will be from Graham Perry at Bank of America.

[Graham Parry, Senior European Pharmaceuticals & Healthcare Equity Analyst at Bank of America Merrill Lynch]

Graham. Thanks, Sue. I have

[Graham Parry, Senior European Pharmaceuticals & Healthcare Equity Analyst at Bank of America Merrill Lynch]

two few questions. So first question is just on the guide mix, for 2025. So relative to consensus, it looks like the guide is a little bit worse than consensus is looking on vaccines, but Gen Med is better and stable. I think most were looking for a decline there. So could you give us some little bit more color behind the outlook on Gen Med, especially as I think there was some rebate adjustment benefits to Trelegy in 2Q last year.

[Graham Parry, Senior European Pharmaceuticals & Healthcare Equity Analyst at Bank of America Merrill Lynch]

So you're actually looking for underlying growth. So what gives the confidence in that holding flat in the year and maybe the durability of that beyond 2025? And then secondly, on the buyback and free cash flow allocation, just perhaps give us a little bit of a sense where you see free cash flow in 2025. If you're generating around 3,000,000,000 in 2024, you're moving to 2,000,000,000 share buyback and you highlighted low leverage. Are you now assuming you're going to increase leverage through the year as you see opportunistic to fund opportunistic BDL to make sure you're still funding the pipeline?

[Graham Parry, Senior European Pharmaceuticals & Healthcare Equity Analyst at Bank of America Merrill Lynch]

Thank you.

[Emma Walmsley, CEO at GSK]

Thanks, Graham. Well, two great questions for Julie. So over to you. Okay.

[Julie Brown, CFO & Executive Director at GSK]

Thanks, Graham. So in terms of the RAR adjustment we had last year in the second quarter, it was largely there was there's a high level. Obviously, Trelegy was performing extremely well and that attracts high levels of RAR. We had a true up in the second quarter simply because when the claims were coming in they were at a lower level than expected, whether people were moving into the catastrophic coverage quicker and that was causing that. Obviously, we don't know, but it was a benefit in the second quarter of of last year.

[Julie Brown, CFO & Executive Director at GSK]

In terms of, the leverage point, obviously, we've ended the year really well. We've got leverage of 1.2 times net debt to EBITDA. We'd expect to run the buyback, as we've mentioned, over a period of within eighteen months. Obviously, the waiting will be more towards 2025. So the leverage will move up during the course of the year.

[Julie Brown, CFO & Executive Director at GSK]

In terms of cash flow expectations for 2025, obviously, slightly below 2024. We've got the Zantac settlement going through, which is expected in the second quarter. And then we will have an upside from obviously operating profit growth, RAR likely and trade payables.

[Emma Walmsley, CEO at GSK]

Okay, great. Next question, please. That's the last question.

[Operator]

Yeah. So let's go with one final question from James Gordon. James, you're up.

[James Gordon, Vice President at JP Morgan]

Hello. Thanks for taking the questions. Two quick ones, please. One was just capital allocation building on one of the earlier questions. So where is the ceiling in terms of how levered the company would now be?

[James Gordon, Vice President at JP Morgan]

I think you'll now be about 1.6 times. Could you go much above that and say you could still do multibillion pipeline deals, or is that optionality off the table, really? That's the first question. And the second question, just camlopixin was mentioned. So I think we're gonna get one of the phase threes end of this year and one early next year.

[James Gordon, Vice President at JP Morgan]

But Merckx Gefu, which is also p two x three, that had maybe similar efficacy to you in phase two, and also didn't come to market. So what is the latest thinking and what you actually need to show in camapixin? And how confident are you still this is going to be a blockbuster product for GSK?

[Emma Walmsley, CEO at GSK]

Thanks. Well, look, I'll come to Tony to answer on that and the two studies that we've got coming. And Luke, you might want to add also a reminder on why we wanted to do this deal and what the patient opportunity is. In terms of capital allocation and business development, I'm just going to repeat what we've said, which is our number one priority is to invest in growth. We do want to do more BD.

[Emma Walmsley, CEO at GSK]

I'm really pleased with the discipline that has gone into the kind of business development that we've been doing, the bolt ons in our core areas, some with you know, that might be high risk but very high return and, you know, really nice tuck ins including the IDRx one that we just announced. You should expect, James, the kind of BD we've been doing at the kind of scale and pace and with the focus and with the discipline that we've been doing. Obviously, we want to underpin all of that capital allocation with a strong balance sheet. And, you know, Judith, I don't know if there's a sentence or two you want to say on leverage, but

[Julie Brown, CFO & Executive Director at GSK]

No, I think in terms of the ceiling, your question about the ceiling. Obviously, we want to retain the strong investment grade rating. Clearly, the rating agencies give you a period of leeway with regard to that. So we're not going to set a number because it's not a scientific number. But we're basically very comfortable with where the balance sheet is.

[Julie Brown, CFO & Executive Director at GSK]

As Emma mentioned, very clear priorities about capital allocation. They haven't changed. It's just the robustness of the balance sheet that allows us to do the buyback complemented with what we're already doing in BD.

[Emma Walmsley, CEO at GSK]

Yeah. And all supported by the strong momentum in the delivery of the business, which we're planning to maintain. So Champlain Pixel. Champlain Pixel.

[Tony Wood, Chief Scientific Officer at GSK]

And just quickly then, James, I think it's really important when you look at this area in P2X3, not just to think about efficacy, but in particular to think about therapeutic index. And if you remember, camlopixent has a far improved therapeutic index, particularly with regards to taste disturbance. We have less than six point five percent adverse events in our study so far. Compare that with Gefepixent, which had a nearly seventy percent taste disturbance. So it makes it hard to run the study when you're unblinding your your treatment group.

[Tony Wood, Chief Scientific Officer at GSK]

I think we have, just to keep it short, a a far superior asset and a clinical trial program, which has been designed to take account of the aspects of frequency of cough. And as I mentioned, we will not be blinded functionally by the taste disturbance in the way that Jefferpixon was.

[Emma Walmsley, CEO at GSK]

Luke, anything to add?

[Luke Miels, Chief Commercial Officer at GSK]

Yeah. I mean, just to build on Tony's point, I mean, the smooth, Phase 2b, we saw around 34% cost reduction. I think Tony's team is doing an excellent job in terms of execution of that study. Merck's molecule was basically a product, right? It validated the target, but had flaws in its selectivity.

[Luke Miels, Chief Commercial Officer at GSK]

And there were some challenges in study design around cough counter. These have all been incorporated into our program. When we talk to pulmonologists, they still express high enthusiasm. The numbers are quite big. If we model out to 02/1930, we expect around just under three million patients in The U.

[Luke Miels, Chief Commercial Officer at GSK]

S. Will have had chronic cough for more than a year and actually over that number in Europe. So we're talking large numbers of patients sitting in primary care and also pulmonologists, respiratory physicians offices and there are unlimited options for those people at this point.

[Emma Walmsley, CEO at GSK]

Really high dissatisfaction with current standard fare options. So thanks, everybody. Again, after a strong '24, we really are looking forward to another year of profitable growth and pipeline progress, and we're really pleased to be upgrading together our 02/1931 outlooks again with prospects of 50% of our business by then more than 50% being in Specialty Medicines. And this continued performance and the stronger balance sheet are really underpinning our plans to continue to increase investment in the 14 key assets that we're focused on in the pipeline, in BD and in the the successful launches ahead and of course, staying focused on improving our direct returns to shareholders. With thanks to everyone, we look forward to catching up with you in coming days.

Participants

Executives

• Jeff McLaughlin, Director of Investor Relations
• Emma Walmsley, CEO
• Luke Miels, Chief Commercial Officer
• David Redfern, Chief Strategy Officer
• Julie Brown, CFO & Executive Director
• Tony Wood, Chief Scientific Officer

Analysts

• Emily Field, Director at Barclays Capital
• Richard Parkes, Head of Pharmaceutical & Biotechnology & Equity Research at BNP Paribas
• Peter Welford, Research Analyst at Jefferies & Company Inc
• Steve Scala, Pharmaceutical Analyst at TD Cowen
• Rajan Sharma, Executive Director at Goldman Sachs
• Justin Smith, Director at Bernstein
• Graham Parry, Senior European Pharmaceuticals & Healthcare Equity Analyst at Bank of America Merrill Lynch
• James Gordon, Vice President at JP Morgan