Slide 1: 2019 Full Year Results
2019 Full Year Results 5 February 2020
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 2019 progress and preparing for Emma Walmsley, the future Chief Executive Officer 2019 results and 2020 guidance Iain Mackay, Chief Financial Officer R&D update Hal Barron, Chief Scientific Officer, President R&D 2020 focus Emma Walmsley, Chief Executive Officer Q&A: David Redfern, Chief Stra
Slide 4: Emma Walmsley, CEO
Emma Walmsley, CEO 5 February 2020
Slide 5: Significant progress on our long term priorities in 2019
Significant progress on our long term priorities in 2019 Driving new Innovation 6 positive data read-outs approach from pivotal studies Innovation Driving transition to 2DRs 8 submissions and 4 new in HIV assets into pivotal studies Strengthened commercial Increased Shingrix Performance performance
Slide 6: Group sales and earnings growth in year of progress
Group sales and earnings growth in year of progress Pharmaceuticals Respiratory* +15% Group sales growth flat CER HIV +1%; dolutegravir +2% of +8% (pro forma +4%) Benlysta +25% Zejula sales of £229m 26.6% Group Adjusted Vaccines operating margin +19% CER Shingrix sales of £1,810m,+ >100% Meningitis
Slide 7: New product momentum continues to build
New product momentum continues to build Respiratory: continued strong uptake Oncology: Regulatory submissions made for for Trelegy and Nucala Zejula, belantamab and dostarlimab TRELEGY: launched in 44 countries including Japan & China ZEJULA: approved in US for use in 4L+ ovarian cancer in patients
Slide 8: Driving our growth outlook to 2022 and beyond
Driving our growth outlook to 2022 and beyond 2023+ Pivotal Pivotal Phase 1-2 ‘165 otilimab (aGM-CSF)1 ‘091 (TLR4) ‘609 (ICOS agonist)1 ’254 (HIV MI) ’836 (HBV ASO) now-2022 ‘863 daprodustat (HIF-PHI) ‘944 gepotidacin1 ‘595 (PRMT5 inhibitor) (topoisomerase II inhibitor) ‘656 (leucyl tRNA) bintrafusp
Slide 9: Integration progressing rapidly
Integration progressing rapidly #1 in OTC • Leadership positions in Integration initiated and Pain Relief, Respiratory progressing on track and VMS1 Complementary #1 position in strengths in innovation, Therapeutic Oral Health2 digital and retail Strong geographic Value creation footprint • £0.5bn c
Slide 10: Preparing for 2 new companies
Preparing for 2 new companies Investment in R&D and future growth drivers New GSK: a leading biopharma company with R&D focused on science of the immune system, genetics and New Common approach to R&D and capital allocation advanced technologies Capabilities and efficiencies in support functions 2-y
Slide 11: 2019 results and 2020 guidance
2019 results and 2020 guidance Iain Mackay, CFO
Slide 12: Headline results
Headline results 2019 Reported growth % £m AER CER Turnover* 33,574 10 8 Total operating profit 6,961 27 23 Total EPS 93.9p 27 23 Adjusted operating profit* 8,972 3 - Adjusted EPS 123.9p 4 1 Free cash flow 5,073 (11) n/a * For 2019 on a pro-forma basis, Turnover growth was 4% CER and Adjusted operat
Slide 13: Results reconciliation
Results reconciliation 2019 Disposals, Total Intangible Intangible Major Transaction significant Adjusted results amortisation impairment restructuring related legal and other results Turnover 33.8 33.8 (£bn) Operating 7.0 0.8 0.1 1.1 0.3 (0.3) 9.0 profit (£bn) EPS 93.9 12.6 1.3 18.2 1.2 (3.3) 123.9
Slide 14: Pharmaceuticals
Pharmaceuticals 2019 Sales Operating margin Sales All figures £m flat CER -720bps CER New launches: Trelegy, Nucala, Juluca, +2% AER -710bps AER Dovato 17,269 17,554 33.3% Ventolin AG 2,612 Continued strong Benlysta performance 3,081 26.2% Impact of generic Advair 4,722 4,854 5,744 4,595 Operating p
Slide 15: Vaccines
Vaccines 2019 Sales Operating margin Sales All figures £m +19% CER +730bps CER +21% AER +850bps AER Shingrix demand 7,157 Meningitis growth 41.4% 541 5,894 MMRV supply constraints 523 1,810 784 33.0% 881 1,018 2,966 1,943 Operating profit 3,706 3,788 Operating leverage Higher royalty income 2018 201
Slide 16: Consumer Healthcare
Consumer Healthcare 2019 Sales Operating margin Sales All figures £m +2% CER Close of JV on 31 July +50bps CER 8,792 8,995 Power brands performance 20.8% 20.2% 7,658 Strong growth in International 2,451 2,583 19.8% Divestments & phasing out of contract 1,828 manufacturing c.1% Respiratory performanc
Slide 17: Sales and Adjusted operating margins
Sales and Adjusted operating margins 2019 Sales Adjusted operating margin All figures £m 2018 sales at '18 rates 30,821 2018 operating margin 28.4% Pro Forma sales at '18 rates 1,178 Pro forma impact on margin 0.2% 2018 sales at '18 rates (PF) 31,999 2018 Proforma margin 28.2% Pharma up 0% CER 1 COG
Slide 18: Adjusted operating profit to net income
Adjusted operating profit to net income Continued delivery of financial efficiency 2018 2019 £m £m 2020 Outlook* Operating profit 8,745 8,972 Net finance expense (698) (810) Between £850-900m Share of associates 31 74 Tax (1,535) (1,318) Tax rate 19.0% 16.0% Around 17% Non-controlling interests (674
Slide 19: 2019 free cash flow of £5.1bn
2019 free cash flow of £5.1bn £m Key Drivers 2018 free cash flow 5,692 Lower CCL 244 Comparison to Novartis milestone in 2018 Improved operating cashflow / working Lower net operating cash** 242 capital and benefit from FX offset by RAR Higher net Capex* 292 Including upfront to Merck KGaA of €300m
Slide 20: Preparing for 2 new companies
Preparing for 2 new companies New GSK Major restructuring savings and costs Common approach to R&D and capital allocation £ bn, 2019 FX 0.7 0.8 Capabilities and efficiencies in support functions Leaner organisation, leveraging recent and ongoing technology investments, consistent operating models an
Slide 21: 2020 guidance and considerations for the next two years
2020 guidance and considerations for the next two years 2020 2021 2022 Guidance: Adjusted EPS decline -1 to -4 % at CER Shingrix slight improvements to Q4 2019 run rate Shingrix limited opportunity for further growth Pharma revenues slight decline Increasing revenues from new launches Investment in
Slide 22: R&D update
R&D update Dr Hal Barron, Chief Scientific Officer
Slide 23: Science x Technology
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 23
Slide 24: 2019 saw our new approach to R&D come to life and drive significant progress
Innovation 2019 saw our new approach to R&D come to life and drive significant progress Science Strengthened our pipeline • 3 major approvals - Dovato, Dectova, Nucala pre-filled syringe • 8 submissions - Zejula in 1L OC, belantamab mafodotin in 4L+ MM, dostarlimab in dMMR/MSI-H recurrent EC, cabote
Slide 25: Our R&D pipeline of 39 medicines and 15 vaccines
Innovation Our R&D pipeline of 39 medicines and 15 vaccines In 2019: 20 progressions/additions, 14 terminations^ and 3 approvals Phase 1 Phase 1 Expansion/Phase 2 Pivotal/Registration Vaccines 3358699* (BET targeted inhibitor)^ RA 3640254 (maturation inhibitor) HIV Benlysta + Rituxan SLE** Shingrix
Slide 26: In the last 12 months we have achieved 23 positive pipeline milestones
Innovation In the last 12 months we have achieved 23 positive pipeline milestones 1H 2019 2H 2019 Submission Cabotegravir LA +rilpivirine LA HIV treatment Fostemsavir HIV Key: Zejula 4L ovarian cancer sNDA (QUADRA) Trelegy asthma +ve data in-house, decided to progress belantamab mafodotin
Slide 27: At Q2 2018 we said: X
Innovation At Q2 2018 we said: Functional genomics combined with machine learning will be powerful Deep X learning 27
Slide 28: Zejula: PRIMA showed clinically significant benefit in all biomarker subgroups
Innovation Zejula PRIMA showed clinically significant benefit in all biomarker subgroups HRd/BRCAmut HRd/BRCAwt HR-proficient* Hazard ratio: 0.40 (95% CI, 0.27–0.62) Hazard ratio: 0.50 (95% CI, 0.31–0.83) 100 100 100 Hazard ratio: 0.68 (95% CI, 0.49–0.94) 90 p<0.001 90 p=0.006 90 p=0.020 Progression
Slide 29: Zejula: A unique PK profile may explain the benefit in HR-proficient patients
Innovation Zejula A unique PK profile may explain the benefit in HR-proficient patients BRCAmut TNBC model BRCAwt ovarian model “Our results show that at steady state, tumor exposure to niraparib is 3.3 times greater than plasma exposure in tumor xenograft mouse models. In comparison, the tumor expo
Slide 30: Developing the most compelling PARP inhibitor in ovarian cancer
Innovation Zejula Developing the most compelling PARP inhibitor in ovarian cancer Study start Read-out 4L treatment QUADRA pivotal following 3-4 regimens of chemotherapy open label, single arm study n= 461 2017 Complete Approved recurrent OC and niraparib + pembrolizumab (MK-3475) TOPACIO POC advanc
Slide 31: belantamab mafodotin: DREAMM-2 showed a clinically meaningful benefit with both doses
Innovation belantamab mafodotin DREAMM-2 showed a clinically meaningful benefit with both doses mPFS was 2.9 and 4.9 months in the 2.5-mg/kg and 3.4-mg/kg groups, not reached in patients with MR or better A. PFS survival by response B. PFS survival by response (belantamab mafodotin 2.5-mg/kg) (belan
Slide 32: belantamab mafodotin: DREAMM-9 initiated and DREAMM-7 on track
Innovation belantamab mafodotin DREAMM-9 initiated and DREAMM-7 on track to start 1H 2020 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, BLA accepted, M
Slide 33: belantamab mafodotin: Lower dose provides similar efficacy with a better safety profile
Innovation belantamab mafodotin Lower dose provides similar efficacy with a better safety profile Belantamab mafodotin, 2.5 mg/kg (N=95) Belantamab mafodotin, 3.4 mg/kg (N=99) Number of patients with event (safety population), n (%)* Grade 1-2 Grade 3 Grade 4 Grade 5 Grade 1-2 Grade 3 Grade 4 Grade
Slide 34: Progressing our innovative new medicines
Innovation Progressing our innovative new medicines Building momentum with impactful programmes across the portfolio GSK ‘836 in chronic Hepatitis B gepotidacin in uUTIs and gonorrhoea • Programme in-licensed from Ionis Pharmaceuticals in Q3 2019 • uUTI and GC not addressed by new oral antibiotics i
Slide 35: Accelerating our innovative vaccine candidates
Innovation Accelerating our innovative vaccine candidates Key data anticipated this year for RSV and COPD Respiratory syncytial virus (RSV) vaccine COPD therapeutic vaccine • 177,000 hospitalisations and 14,000 deaths in older adults • Targeted at reducing acute exacerbations • 50% of infants are in
Slide 36: Improving our lifecycle management
Innovation Improving our lifecycle management Strengthening the partnership between Development and Commercial Benlysta for lupus nephritis Nucala for HES, COPD and NP Trelegy for asthma • Lupus nephritis (LN) is a common and • First treatment to demonstrate significant • ~30% of asthma patients on
Slide 37: Embedding our approach of using human genetics, functional genomics and AI/machine learning
Innovation Embedding our approach of using human genetics, functional genomics and AI/machine learning Human genetics is Functional genomics AI/ML capability is growing starting to deliver work is initiating fast 23 and Me collaboration Laboratory for Genomics Research • ~50 engineers based across 5
Slide 38: Upcoming GSK R&D pipeline milestones
Innovation Upcoming GSK R&D pipeline milestones Potential for a number of approvals in 2020 1H 2020 2H 2020 1H 2021 Anticipated belantamab mafodotin 4L MM monotherapy (DREAMM-2) Fostemsavir HIV Nucala HES approval dostarlimab for dMMR/MSI-H recurrent endometrial cancer Zejula 1L ovarian cancer (PRIM
Slide 39: Significant progress on our long term priorities in 2019
Significant progress on our long term priorities in 2019 Driving new Innovation 6 positive data read-outs approach from pivotal studies Innovation Driving transition to 2DRs 8 submissions and 4 new in HIV assets into pivotal studies Strengthened commercial Increased Shingrix Performance performance
Slide 40: Focus on execution as we prepare for the future
Focus on execution as we prepare for the future 2020 focus Innovation New GSK: a leading • Execution of launches biopharma company with • Continue to strengthen pipeline R&D focused on science of the – Progress pipeline immune system, genetics and – Drive operating advanced technologies Performance
Slide 41: Q&A
do more feel better live longer Q&A
Slide 42: Appendix
Appendix
Slide 43: 2020 outlook
2020 outlook Adjusted EPS/Dividend Operating costs Other Adjusted EPS guidance: SG&A and R&D Royalties Decline -1% to -4% at CER excluding R&D investment to grow at a similar Around £300m divestments rate to 2019 Net finance expense Dividend Continued investment in new launches Between £850-900m Exp
Slide 44: Currency
Currency 2019 currency sales exposure 2020 Adjusted EPS ready reckoner US $ 41 % US $ 10 cents movement in average exchange rate for full year Euro € 18 % impacts Adjusted EPS by approx. +/- 5.5% Japanese ¥ 6% Other* 35 % Euro € 10 cents movement in average exchange rate for full year impacts Adjust
Slide 45: Expected costs and savings under Major Restructuring Programmes
Expected costs and savings under Major Restructuring Programmes £bn Cumulative 2019 2020 2021 2022 2023 Date Actuals to Announced 2019 Average Rates 2018 Actuals Projected 1 Combined Savings 2 3.9 4.2 4.3 Integration & 2015 Total charges 5.2 0.1 0.1 Restructuring Programme 3 Cash payments 3.6 0.3 0.
Slide 46: Our R&D pipeline
Innovation Our R&D pipeline 39 medicines and 15 vaccines Phase 1 Phase 1 Expansion/Phase 2 Pivotal/Registration Vaccines 3858279* (CCL17 antagonist) OA pain 3640254 (maturation inhibitor) HIV Benlysta + Rituxan SLE** Shingrix immuno-compromised* – Registration 3745417 (STING agonist) cancer 3228836*
Slide 47: Upcoming milestones that will inform our progress
Innovation Upcoming milestones that will inform our progress 2H 2019 1H 2020 2H 2020 1H 2021 2H 2021 Anticipated fostemsavir (attachment inhibitor) HIV Nucala HES Nucala NP Benlysta + Rituxan SLE bintrafusp alfa BTC submission Trelegy asthma Benlysta lupus nephritis belantamab mafodotin 4L MM mo
Slide 48: Changes in portfolio since Q3 2019
Innovation Changes in portfolio since Q3 2019 Changes to pipeline New to Phase I expansion/ New to Phase I New to Pivotal New to Registration Phase II TSR-033 (LAG3 antagonist) cancer started GSK3359609 (ICOS receptor agonist) started belantamab mafodotin (BCMA Phase I expansion Ph2/3 study in HNSCC