Slide 1: Q2 2019 Results
do more feel better live longer Q2 2019 Results 24 July 2019
Slide 2: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements This presentation may contain forward-looking statements. Forward-looking statements give the Group’s current expectations or forecasts of future events. An investor can identify these statements by the fact that they do not relate strictly t
Slide 3: Agenda
Agenda Q2 2019 progress Emma Walmsley, Chief Executive Officer Q2 2019 financial results Iain Mackay, Chief Financial Officer R&D update Hal Barron, Chief Scientific Officer, President R&D Summary Emma Walmsley, Chief Executive Officer Q&A: David Redfern, Chief Strategy Officer, Chairman of ViiV Luk
Slide 4: Emma Walmsley, CEO
do more feel better live longer Emma Walmsley, CEO
Slide 5: Q2 delivers good sales and earnings growth
Q2 delivers good sales and earnings growth Pharmaceuticals Respiratory* +12% Group sales growth -1% CER HIV -2%; dolutegravir +0% of +5% Benlysta +25% Zejula sales of £57m Group Adjusted operating margin Vaccines down 1.4pp +23% CER Shingrix sales of £386m, +>100% Meningitis +26% Total EPS of 19.5p,
Slide 6: Q2 progress made on our priorities
Q2 progress made on our 3 priorities 2019 focus ✔ Continued strong performance with new product launches Innovation ✔ Positive headline results in PRIMA study for Zejula • Strengthen pipeline • Execution of launches ✔ Positive data in GEMINI and TANGO studies for Dovato in HIV ✔ Positive data in CAP
Slide 7: Data and additional approvals support new product momentum
Data and additional approvals support new product momentum Respiratory: continued strong uptake Oncology: PRIMA data supports for Trelegy and Nucala expansion into 1L OC maintenance ZEJULA: now approved in 36 countries: launched in US, Germany, UK and Italy, TRELEGY: launched in 36 countries includi
Slide 8: Q2 2019 financial results
Q2 2019 financial results Iain Mackay, CFO
Slide 9: Headline results
Headline results Q2 2019 Reported growth % H1 2019 Reported growth % £m AER CER £m AER CER Turnover 7,809 7 5 15,470 6 5 Total operating profit 1,484 90 80 2,912 44 37 Total EPS 19.5p >100 >100 36.3p 80 70 Adjusted operating profit 2,171 3 (1) 4,334 8 4 Adjusted EPS 30.5p 9 4 60.6p 15 11 Free cash f
Slide 10: Results reconciliation
Results reconciliation Q2 2019 Disposals, Total Intangible Intangible Major Transaction significant Adjusted results amortisation impairment restructuring related legal and other results Turnover 7.8 7.8 (£bn) Operating 1.5 0.2 <0.1 0.3 0.2 (0.1) 2.2 profit (£bn) EPS 19.5 3.3 0.3 5.1 2.7 (0.4) 30.5
Slide 11: Pharmaceuticals
Pharmaceuticals Q2 2019 Sales Operating margin Sales All figures £m -1% CER -650bps CER +2% AER -610bps AER New launches: Trelegy, Nucala, Juluca, Dovato 4,229 4,307 35.3% Ventolin Authorised Generic 650 752 Continued Benylsta performance 29.2% First full quarter of generic Advair 1,189 1,209 1,492
Slide 12: Vaccines
Vaccines Q2 2019 Sales Operating margin Sales All figures £m +23% CER +960bps CER +26% AER +1010bps AER Shingrix demand 1,585 Meningitis growth 38.6% Infanrix, Pediarix CDC stockpile 386 1,253 MMRV supply constraints 167 235 184 28.5% 612 885 947 357 Operating profit Shingrix operating leverage High
Slide 13: Consumer Healthcare
Consumer Healthcare Q2 2019 Sales Operating margin Sales All figures £m +4% CER +80bps CER Power brands performance +5% AER +110bps AER 1,917 Strong performance in US 1,828 20.4% 19.3% Stabilisation in Europe 475 428 Divestments & phasing out of contract manufacturing c.1% 573 578 391 352 827 864 Op
Slide 14: Sales and Adjusted operating margins
Sales and Adjusted operating margins Q2 2019 Sales Adjusted operating margin All figures £m Q2 2018 sales at '18 rates 7,310 Q2 2018 operating margin 28.8% Pharma down -1% CER 25 COGS up 7% CER 0.8% SG&A up 2% CER 0.7% -1.4% Vaccines up 23% CER 290 CER R&D up 16% CER 1.3% Consumer up 4% CER 64 Royal
Slide 15: Adjusted operating profit to net income
Adjusted operating profit to net income Continued delivery of financial efficiency Q2 18 Q2 19 £m £m Operating profit 2,102 2,171 Net finance expense 165 220 Share of associates 2 (4) Tax 388 300 Tax rate 20.0% 15.4% Minorities 170 138 Net income 1,381 1,509 15
Slide 16: 1H 2019 free cash flow of £0.5bn
1H 2019 free cash flow of £0.5bn £m Key Drivers H118 free cash flow 821 Lower CCL 259 Comparison to Novartis milestone in 2018 Higher net Capex* 172 Including upfront to Merck KGaA of €300m Lower net operating cash** 318 Improved operating cashflow & working capital offset by expected RAR phasing du
Slide 17: 2019 guidance
2019 guidance Previous guidance Upgraded guidance Operational performance Adjusted EPS Adjusted EPS Down 5 to 9% CER Interest expense/ Down 3 to 5% CER Share of associates All expectations and targets regarding future performance should be read together with the “Outlook assumptions and cautionary s
Slide 18: R&D update
R&D update Dr Hal Barron, Chief Scientific Officer
Slide 19: Science x Technology x Culture
Strengthening our R&D Science pipeline through a focus on x science related to the immune Technology system, the use of human x genetics, and advanced Culture technologies
Slide 20: Significant progress since setting out our new approach to R&D 12 months ago
Innovation Significant progress since setting out our new approach to R&D 12 months ago Science Accelerated our pipeline • 8 assets advanced into Phase 1, 3 into Phase 2, 4 into Phase 3 (Zejula 1L OC, dostarlimab EC, bintrafusp alfa BTC, otilimab RA), plus 3 vaccines progressed into Phase 1/2, 3 app
Slide 21: Our R&D pipeline progress over the last 12 months
Innovation Our R&D pipeline progress over the last 12 months 18 progressions, 11 terminations, 3 approvals^ Phase 1 Phase 2 Pivotal/Registration Vaccines 3008348 (aVb6 integrin antagonist) IPF 2798745 (TRPV4 antagonist) cough Benlysta + Rituxan SLE** Rotavirus – Phase 3 2831781* (LAG3) ulcerative co
Slide 22: Our R&D pipeline
Innovation Our R&D pipeline 44 medicines and 13 vaccines Phase 1 Phase 2 Pivotal/Registration Vaccines 2831781* (LAG3) ulcerative colitis 3640254 (HIV maturation inhibitor) HIV Benlysta + Rituxan SLE** Rotavirus – Phase 3 3358699* (targeted BET inhibitor) RA 3389404*/3228836* (HBV ASO) HBV cabotegra
Slide 23: Pipeline progress in the last 6 months
Innovation Pipeline progress in the last 6 months Achieved 9 positive outcomes from 11 milestones 1H 2019 2H 2019 1H 2020 Submission Cabotegravir LA + rilpivirine LA HIV treatment2 ✓ fostemsavir (attachment inhibitor) HIV Nucala HES Zejula 4L ovarian cancer sNDA (QUADRA) ✓ Trelegy asthma belantamab
Slide 24: Accelerating our oncology pipeline
Innovation Accelerating our oncology pipeline In July 2018: 8 assets in clinical development Mechanism Phase 1 Phase 2 Phase 3 (FTIH) (dose expansion) (pivotal) Anti-BCMA ADC (belantamab mafodotin, GSK ‘916)† Multiple myeloma † ICOS receptor agonist (GSK3359609) NSCLC, HNSCC, other solid tumors † NY
Slide 25: Accelerating our oncology pipeline
Innovation Accelerating our oncology pipeline Now: 17 assets in development with 3 potential launches in 18 months Mechanism Phase 1 Phase 2 Phase 3 (FTIH) (dose expansion) (pivotal) PARP inhibitor (Zejula, niraparib)* First line maintenance ovarian, other solid tumors under investigation Anti-BCMA
Slide 26: Zejula
Innovation Zejula On track to file in ovarian cancer 1L maintenance setting by end 2019 High grade serous ovarian cancer Positive headline results from PRIMA * – US regulatory submission planned by end 2019 with other regulatory submissions to follow. As per Myriad test – HRD+ percentage may be high
Slide 27: Zejula: Broad development plan in ovarian cancer
Innovation Zejula Broad development plan in ovarian cancer Development strategy for use in: Study start Read-out 4L treatment QUADRA pivotal following 3-4 regimens of chemotherapy open label, single arm study n= 461 2017 2019 sNDA accepted recurrent OC and niraparib + pembrolizumab (MK-3475) Publish
Slide 28: belantamab mafodotin (GSK '916)
Innovation belantamab mafodotin (GSK ‘916) On track to file in multiple myeloma 4L setting by end 2019 Development strategy for use in: Study start Est launch relapsed/ Belantamab mafodotin monotherapy, DREAMM-1 pilot 2014 --- refractory patients single arm, n=73 Belantamab mafodotin monotherapy, DR
Slide 29: bintrafusp alfa (M7824)
Innovation bintrafusp alfa (M7824)+ Encouraging clinical efficacy, pivotal study started in BTC Non small cell lung cancer (NSCLC) 2L Biliary tract cancer (BTC) 2L • Durable responses across all PD-L1 expression • Overall Response Rate (ORR) of 20% levels in 2L NSCLC • Median Overall Survival (mOS)
Slide 30: dostarlimab
Innovation dostarlimab On track to file in 2L endometrial cancer setting by end 2019 • Endometrial cancer is the most common gynecological cancer in the US • GARNET is the largest study of anti-PD-1 monotherapy in patients with advanced/recurrent endometrial cancer – ORR of 49% in patients with MSI-
Slide 31: GSK'609 ICOS receptor agonist
Innovation GSK’609 ICOS receptor agonist Differentiated MOA with encouraging clinical data at ESMO 2019 ICOS Monotherapy Activity: Melanoma • ICOS belongs to the B7 – CD28 family of immune receptors and provides a co- stimulatory signal augmenting T-cell proliferation, survival, cytokine production
Slide 32: Broad clinical pipeline with encouraging data
Innovation Broad clinical pipeline with encouraging data Good progress in I-I, hepatitis B, respiratory and infectious diseases otilimab / GSK ‘165 (RA) GSK ‘836 / GSK ‘404 (CHB) aIL-33r (asthma) • Fully humanised Ab targeting aGM-CSF. • Novel Antisense Oligonucleotide in collaboration • Human IgG2
Slide 33: Approach to technology is gaining pace
Innovation Approach to technology is gaining pace Power of human genetics and functional genomics combined with ML Human Genetics + Functional Genomics Functional Gene x Gene annotation of the Acceleration of drug discovery human genome Prediction of x ~200 million combinations Deep learning disease
Slide 34: Collaborations will be key to our technology success
Innovation Collaborations will be key to our technology success Outstanding talent working with and for GSK Human Genetics Functional Genomics Cell Therapy AI / Machine Learning Anne Wojcicki Jennifer Doudna Rick Klausner (Founder) Kim Branson SVP, AI and ML Kenneth Hillan Jonathan Weissman Stan Rid
Slide 35: Established the Laboratory for Genomics Research
Innovation Established the Laboratory for Genomics Research Uniting with CRISPR pioneers to accelerate drug discovery Translating clues from genetics into drug targets requires us to understand the fundamental language of cell biology Based in Mission Bay, San Francisco Innovative hybrid model Advan
Slide 36: Pipeline momentum anticipated to continue
Innovation Pipeline momentum anticipated to continue On track to deliver 6 submissions and 3 pivotal read-outs by end 2019 1H 2019 2H 2019 1H 2020 Submission Cabotegravir LA +rilpivirine LA HIV treatment2 fostemsavir (attachment inhibitor) HIV mepolizumab HES Zejula 4L ovarian cancer sNDA (QUADRA) T
Slide 37: Focus on delivering business priorities
Focus on delivering business priorities 2019 focus New global Innovation Pharmaceuticals and • Strengthen pipeline • Execution of launches Vaccines company with R&D focused on science of the immune system, human genetics and – Drive operating advanced technologies performance Performance • Driving g
Slide 38: Appendix
Appendix
Slide 39: 2019 outlook
2019 outlook Adjusted EPS/Dividend Operating costs Other Adjusted EPS guidance: SG&A and R&D Royalties Decline of 3 to 5% Addition of Tesaro cost base Broadly similar to 2018 Dividend R&D spend to pick up significantly Net finance expense Expect 80p for 2019 Around £900m Tax rate Around 19% Pharmace
Slide 40: Our R&D pipeline
Innovation Our R&D pipeline 44 medicines and 13 vaccines Phase 1 Phase 2 Pivotal/Registration Vaccines 2831781* (LAG3) ulcerative colitis 3640254 (HIV maturation inhibitor) HIV Benlysta + Rituxan SLE** Rotavirus – Phase 3 3358699* (targeted BET inhibitor) RA 3389404*/3228836* (HBV ASO) HBV cabotegra
Slide 41: Upcoming milestones that will inform our progress
Innovation Upcoming milestones that will inform our progress 1H 2019 2H 2019 1H 2020 2H 2020 1H 2021 Anticipated cabotegravir LA +rilpivirine LA HIV treatment2 ✓ fostemsavir (attachment inhibitor) HIV mepolizumab HES mepolizumab NP Benlysta + Rituxan SLE submission Zejula + dostarlimab 2L+PROC sNDA
Slide 42: Changes in portfolio since Q1 2019
Innovation Changes in portfolio since Q1 2019 Changes to pipeline New to Phase I New to Phase II New to Pivotal New to Registration GSK3186899* (CRK-12 inhibitor) visceral bintrafusp alfa (TGFβ trap/anti-PDL1 bispecific) leishmaniasis biliary tract cancer (BTC) GSK3732394 (combinectin HIV entry inhi