AstraZeneca PLC

LSE:AZN

Earnings Call Transcript 2023-Q1

[Operator]

Good morning to those joining from the UK and the U.S., good afternoon to those in Central Europe and good evening to those listening in Asia. Welcome ladies and gentlemen to AstraZeneca's Q1 2023 Results Webinar for Investors and Analysts.

Before I head over to AstraZeneca, I'd like to read the safe harbor statement. The company intends to utilize the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Participants on this call may make forward-looking statements with respect to the operations and financial performance of AstraZeneca. Although we believe our expectations are based on reasonable assumptions, by their very nature, forward-looking statements involve risks and uncertainties, or may be influenced by factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements made on this call reflect the knowledge and information available at the time of this call. The company undertakes no obligation to update forward looking statements. Please also carefully review the forward-looking statements disclaimer in the slide deck that accompanies this presentation.

There will be an opportunity to ask questions after today's presentations. Please use the raise your hand feature to indicate your wish to ask a question at any time during the call.

With that, I will now hand you over to the company.

[Andy Barnett, VP Global Head of IR]

Thank you, operator and good afternoon, everyone. It's Andy Barnett, here Head of Investor Relations at AstraZeneca and I'm very pleased to welcome you to AstraZeneca is first quarter 2023 conference call. As usual, all materials presented are available on our website.

This slide contains our usual Safe Harbor statements. We will be making comments on our performance using constant exchange rates CER, core financial numbers and other non-GAAP measures. A GAAP and non-GAAP to GAAP reconciliation is contained within the results announcement. Numbers today are in millions of U.S. dollars unless otherwise stated.

This slide shows our agenda for today's call. Following prepared remarks, we will open the line up for questions. We will try and address as many questions as we can during the allotted time. Although I would ask that participants limit the number of questions you asked to allow others a fair chance to participate in the Q&A. As a reminder, to ask a question, please use the raise of hand function in Zoom. Alternatively, you can click on the Q&A button and write your question.

With that Pascal, over to you.

[Pascal Soriot, CEO]

Thank you, Andy and the hello everyone. Please advance to Slide 5. We delivered total revenue of $10.9 billion in the first quarter, which was stable compared to the prior year. This performance is really quite remarkable when you consider the 15% growth in revenue from our ex-COVID medicines offset a decline in revenue from our COVID-19 medicines of $1.5 billion in the quarter.

Core earnings per share grew 6% compared to the first quarter of 2022. This growth reflects both the decline in COVID-19 medicine revenues, as well as important investments we're making in our business to advance our pipeline, and deliver on the full promise of our recently launched medicines. Based on our strong fundamentals and outlook for the year, we are reiterating our 2023 guidance.

Please move to the next slide, excluding our COVID-19 medicines and in addition to our broad base of growth across these areas, we delivered strong growth across all regions. Importantly, in the emerging markets of ex-COVID-19 medicine grew by 22%. In China, we have not seen three successive quarters of growth as we continue to launch innovative medicines, and growth outpaces anticipated declines in some of our older medicines. This growth is a clear reflection of the value of our broad portfolio, and a sustained focus on emerging markets overtime. Our business is highly resilient with pipeline momentum accelerating as a result of both internal and external innovation.

Please move to Slide 7. One illustration of this momentum is our focus on initiating 30 Phase 3 trials in 2023. I'm pleased to announce, we have already dosed patients in six new Phase 3 trials since the start of the year. This include two trials of Dato-DXd, in combination with other medicines are reflecting our confidence in the polemics of these regimens to enhance outcomes for patients with lung cancer.

Given that inflammatory cells play a key role in eosinophilic esophagitis, and we still being at the top of the inflammatory cascade, we've initiated the crossing trial for this player, [Indiscernible] antibody in EoE.

SUPERNOVA is a trial of one novel antibody AZD3152 for the prophylactic treatment of COVID-19, with potential approval in the second half of this year. Here our aim is to protect people who don't mount an effective immune response to vaccination, which represents about 2% of the population. And we CAMBRIA-1 is our first trial investigating camizestrant, our next-generation oral serve in the adjuvant breast cancer setting, where there is significant opportunity to improve long-term outcomes.

Finally, we initiated a trial of Ultomiris for the prevention of acute kidney injury associated with cardiac surgery. This represents an area of high unmet need with currently no approved therapies. Acute kidney injury can occur and above -- up to 20% of patients undergoing cardiac surgery, but the risk increases to over 60% in patients with chronic kidney disease.

The ARTEMIS trial focuses on those patients with kidney ischemia where complement plays a key role. While we plan to provide an update each quarter on our new Phase 3 trial start, we expect the majority to those in the second half of this year.

Now please turn to Slide 8, and Aradhana can take you through our financial highlights in the quarter as well as provide some insights into how we are fully embracing artificial intelligence and machine learning across our business. Over to you, Aradhana.

[Aradhana Sarin, CFO]

Thank you, Pascal, and good afternoon, everyone. As usual, I will start with our reported P&L. Please turn to Slide 9. Total revenue in the first quarter was stable compared to the prior year. Recall that Q1 of last year benefited from around $1.6 billion in COVID-19 medicine sales, which have declined as anticipated by 89% to $155 million. Excluding COVID-19 medicines, total revenue increased by 15% in the first quarter.

In an effort to increase transparency, starting in Q1, we will break out recurring revenues from partnered products into separate line called Alliance revenue. This line will include royalties and profit shares from partnered medicines, such as in Enhertu and Tezspire in geographies where our partner books product sales.

Upfront and milestone payments will continue to be reported as collaboration revenue. Hopefully, this results in improved visibility to revenue from partner medicines.

Finally, we saw some relatively large core adjustments last year as a result of the unwind of the Alexion fair value inventory uplift. However, we only had $36 million of this in the quarter, and it will be minimal in the future.

Please turn to the next slide, which depicts our core P&L. Our core gross margin in the first quarter was 83.3%, an increase of 4 percentage points compared to the prior period, which was negatively impacted by higher COVID-19 sales. Q1, 2023 core gross margin also benefited from product mix and lower production cost from prior quarters. On a full year basis, we still anticipate a slight improvement in gross margin compared to pre-pandemic levels.

This is driven by lower COVID-19 revenue, higher oncology and Alexion sales, but impacted by increasing contribution from partnered medicines and higher costs relating to inflation. In the second half of the year, we expect the usual seasonal impact from FluMist as well as incremental costs relating to the production of our new COVID-19 antibody is at AZD3152.

Core operating expenses increased by 9% in the quarter. However, this was partly due to lower cost in the prior year period. As Pascal mentioned, we started six new trials in year-to-date, and we anticipated starting 30 during the full year, which will affect quarterly R&D cost phasing with R&D expenses in subsequent quarters expected to be higher than in Q1.

On the SG&A side, we continue to invest behind our launches, including new indications for Imfinzi and Enhertu and our respiratory portfolio. On a full year basis, we still expect core operating expenses to increase by low to mid-single-digit percentage, but there will be quarter-on-quarter variability

Other operating income of $379 million in the quarter includes a gain from the divestment of Pulmicort FlexHaler in the U.S. on top of some background level of other operating income from historical divestments. Taking these elements together, core EPS increased by 6% at constant exchange rate to $1.92 in the quarter.

Earlier this month, we announced the simplification of the agreement with Sobi and Sanofi on nirsevimab. This will simplify our P&L and result in us recognizing $718 million of other operating income in the second quarter following the release of the liability on our balance sheet much of which had been expensed through our core P&L.

Now please turn to Slide 11. Our cash flow from operating activities of $3.1 billion was stable in the quarter despite the significant decline in COVID-19 revenue. We continue to work on improving cash conversion and have already made significant progress on that journey.

Net debt increased by $2.1 billion to $25.1 billion driven by the second interim dividend payment of around $3 billion and approximately $2 billion in deal payments, including a second payment of around $900 million to Acerta shareholders and roughly $800 million for the recent SynCor acquisition. For the full year, we still expect deal payments tied to prior business development transactions to be at a similar level as last year. Our current net debt-to-EBITDA ratio is 2.3 times or 1.9 if adjusting for the Alexion fair value uplift.

As Pascal stated earlier, our guidance for the full year remains unchanged. We continue to anticipate total revenue, excluding COVID-19 to increase by low double-digit percentage. Including COVID-19 medicines, we anticipate total revenue to increase by low to mid-single-digit percentage. Core EPS is anticipated to increase by high single-digit to low double-digit percentage. Based on average March FX rates, we anticipate a low single-digit adverse FX impact on both total revenue and core EPS.

Please turn to Slide 12. As a company that thrives on innovation, we are constantly evolving our ways of working and have embedded AI broadly across the organization. Over the course of this year, we plan to update you with some real-world examples each quarter on how this has helped us to improve productivity and drive innovation. This will help you to understand why we're making significant investments in this area.

First, we'll focus on R&D, where we have over 400 data scientists employed and over 100 active AI projects underway. Later in his prepared remarks, Mene will provide examples of AI and drug discovery.

With that, please turn to Slide 13, and I will hand over to Dave to take you through our oncology business performance.

[Dave Fredrickson, EVP of Oncology Business Unit]

Thank you, Aradhana. Slide 14, please. Oncology delivered a solid performance in the first quarter with total revenues of over $4 billion, up 19% versus 2022. We saw double-digit product sales growth across the U.S., Europe, emerging markets and established Rest of world driven by new indication launches and continued demand generation.

Now turning to our individual medicines. Tagrisso Global revenues grew by 15% in the quarter. In the U.S., we saw sustained demand in both the Dora and Flora, coupled with improved duration of therapy and Flora. In Europe, growth of 8% was offset by pricing clawbacks in certain markets.

Tagrisso performance in China was strong, recovering as expected following fourth quarter hospital budget management dynamics resulting in first quarter growth of 17% in emerging markets. Lynparza, the leading PARP inhibitor globally delivered first quarter product sales growth of 10%. The U.S. was impacted by destocking following an inventory build in the fourth quarter in anticipation of the PROPEL approval.

While there are opportunities for continued demand expansion in the U.S., these growth areas are more challenging. Specifically, we continue to work on improving HRD testing rates in ovarian as well as BRCA testing and prescribing rates and hormone receptor positive breast cancer. Outside the U.S., we're encouraged by Lynparza growth in Europe of 18%, including strong launch trajectory for PROPEL in Germany.

Turning now to Imfinzi. Total revenues inclusive of Imjudo grew an impressive 56% fueled by new launches. This performance was driven by 66% growth in the U.S. with strong uptake across new indications, particularly TOPAZ-1 and HIMALAYA. And in Europe and Japan, early launch momentum from TOPAZ-1 has been encouraging. Calquence's total revenues increased 31% year-on-year, supported by ex-U.S. demand growth. As expected, U.S. performance in the first quarter was impacted by destocking following maleate tablet approval in the third quarter of last year.

Looking at new starts in TRx share in the frontline CLL setting, Calquence remains the clear standard of care in the face of increasing class competition. That said, we do see some impact on new share in both the relapsed/refractory and frontline settings.

Turning now to Enhertu. Total revenue was up 203% in the first quarter to $257 million. In the U.S. Enhertu new patient share is now approximately 50% across both second-line HER2-positive and hormone receptor positive HER2 low, post-chemo metastatic breast cancer, reflecting the strength of our underlying clinical data. Across European markets, we're seeing rapid uptake in HER2-positive metastatic breast cancer.

Finally, we achieved exciting regulatory milestones in the quarter, including first approvals in China for Calquence in mantle cell lymphoma and Enhertu in second-line HER2-positive metastatic breast cancer.

Now please turn to Slide 15. In the past, we've made clear our ambition to transform patient outcomes in breast cancer, and you've seen our teams deliver towards achieving that goal. Now for the first time, we're laying out our ambition in lung cancer. And by the year 2030, we are aiming for at least half of all lung cancer patients to be eligible for an AstraZeneca medicine.

While this is a high bar, we've built a clear road map to deliver on this ambition, focusing first in late-stage non-small cell lung cancer have a broad portfolio of life cycle management and novel programs, and our success depends on our ability to deliver innovative medicines in both IO sensitive and biomarker-driven tumor settings.

Tagrisso is the established standard of care in adjuvant and frontline EGFR mutated non-small cell lung cancer and we're looking to solidify its position as the backbone TKI therapy in EGFR mutated space through additional combination trials. We are accelerating development of our next wave IO assets, leveraging experience with Imfinzi across multiple tumor types and continuing to advance our ADC portfolio with Enhertu and Enhertu-expressing tumors and our TROP-2 targeted ADC Dato-DX.

Furthermore, we have recently disclosed multiple registrational trials for both novel combination regimens and bispecifics. Underpinning this roadmap is also continued an important investment behind new technologies, including screening and testing tools as well as innovative platforms such as cell therapies. We're excited about the year ahead with important lung cancer data to support achievement of our 2030 ambition.

And with that, please move to the next slide, and I'll transition to Susan to cover key R&D highlights.

[Susan Galbraith, EVP of Oncology Research & Development]

Thank you, Dave. Continuing on the theme of lung cancer. It's been an exciting quarter for early-stage disease, during which we've shared details of two key data sets that further validate the importance of moving lung cancer diagnosis and treatment to earlier stages of disease where patients have the highest potential for cure.

First, at AACR, we shared the updated data from the AGEAN trial. This tested the impact of adding Imfinzi to neoadjuvant chemotherapy and then continuing as adjuvant monotherapy. We'd already reported encouraging pathologic complete response data for this trial in June last year.

At AACR, we reported the planned interim analysis of event-free survival, which demonstrated that patients treated with the Imfinzi-based regimen had a 32% reduction in the risk of recurrence, progression events or death versus chemotherapy alone. We also shared updated pathologic complete response data showing a fourfold increase with the addition of Imfinzi compared to chemotherapy alone. We look forward to discussing these data with global regulatory authorities with the goal of providing this important new treatment option to patients.

Second, last month, we shared positive high-level results from the ADAURA Phase 3 trial reporting that Tagrisso showed a strong overall survival benefit compared to placebo in the adjuvant treatment of patients with EGFR-mutated non-small cell lung cancer. This follows the encouraging data we presented at ESMO last year with continued but for Tagrisso in terms of disease-free survival and a median disease-free survival of nearly 5.5 years.

The overall survival data, which we are delighted have been selected for an ASCO plenary at the first Phase 3 to demonstrate a survival benefit in this adjuvant setting. And they add to the extensive body of evidence generated for Tagrisso, which has now shown a statistically significant and clinically meaningful OS benefit in both the early adjuvant and late-stage metastatic settings reinforcing its standard of care position across lines.

We've also had positive readouts from the DUO-O trial of Lynparza plus Imfinzi added to chemotherapy and bevacizumab in patients with newly diagnosed ovarian cancer without a BRCA mutation as well as a clinically meaningful data for Enhertu across more multiple expressing tumor types from the DESTINY pan tumor 02 trial. Both these data sets will be showcased at ASCO this year.

Please turn to Slide 17. In addition to AGEAN, AACR provided an opportunity for us to share data from across our diverse industry-leading oncology portfolio, including several highlights from our early-stage pipeline. We shared the first clinical data from the ARMO GPC3 CAR-T therapy, CCAR-31 in patients with advanced hepatocellular cancer as well as preclinical data for our armoured STEAP 2 CAR-T AZD-0754 in prostate cancer models. Both these therapies have been designed using our dominant negative transforming growth factor beta receptor armouring, which aims to resist the immunosuppressive tumor microenvironment and enhance the potential effectiveness of CAR-T in solid tumors.

We're encouraged by three out of six deep and durable responses at the second dose level and the persistence of CAR-T copies out to at least 149 days, which is substantially more than has been observed with any other GPC3 CAR-T products.

We also presented preclinical data from our in-house ADC platform. Our ADCs have been designed to maximize therapeutic index with a proprietary link of payload. The platform has a novel potent to price on rose 1 inhibitor, which provide by standard tumor kill activity and a linker designed to provide a high degree of stability in the peripheral circulation with minimal free payload exposure.

AZD9592, a bispecific ADC targeting EGFR unmet and AZD8205 targeting B7-H4 are already in Phase 1. And AZD5335 targeting folate receptor alpha will enter the clinic later this year.

Finally, we provided our first disclosure for the novel lead epigenetics molecule. AZPRMT5 inhibitor, which is a potent MTAP selective PRMT5 inhibitor with antitumor activity in MTAP-deleted tumors. Loss of the MTAP gene occurs across approximately 15% of all tumors, and this provides an opportunity to selectively target these tumors and spare healthy tissue. This program will enter Phase 1 shortly.

And with this, please advance to the next slide, and I'll hand over to Ruud to cover biopharmaceuticals performance.

[Ruud Dobber, EVP of BioPharmaceuticals Business Unit]

Thank you, Susan. Please turn to Slide 19. Total revenue from biopharmaceuticals was $4.5 billion in the quarter with CVRM growing 22% and R&I growing 8%. Revenues from our COVID-19 medicines declined to $155 million due to the completion of our vaccine contracts last year and lower average shelf sales in the United States and Europe.

Farxiga continued to be the main driver in global CVRM, growing 39% to $1.3 billion, driven by multiple geographies, including the U.S., Europe, Japan and the emerging markets. Although it's worth noting that Farxiga enjoyed some gross to net benefits in quarter one that may not recur in future quarters.

We also saw over 60% growth for roxadustat in China and for Lokelma globally. Lokelma is now available in 27 markets, having achieved potassium binder market share leadership in eight of these markets. R&I's growth to $1.6 billion was helped by a recovery of demand for inhaled products in China as lockdown restrictions eased and also strong growth in Europe and other emerging markets.

Please turn to Slide 20. Over the last two years, the downward trends in Symbicort, Pulmicort and other older brands has been more than offset by growth from Fasenra, Tezspire, Saphnelo and Breztri. These combined brands grew at 46% in quarter one, and they now make up over one third of R&I revenue.

Biologics are a fast-growing class of medicines and only fifth of patients who are eligible for biologic medicine are currently receiving one. Fasenra continues to sustain leadership in total market share in severe eosinophilic asthma. And Tezspire's launch momentum continues at a rapid pace. In quarter one, we saw continued growth in the U.S. and rapid uptake elsewhere in Japan -- and rapid uptake elsewhere. In Japan, Tezspire has already captured neutral brands [ph] absolute leadership just a few months after launch. Tezspire is now available in 6 markets, and the auto-injector was approved in the U.S. and the EU at the start of the year.

Our inhaled portfolio also contains innovative medicines that have a long life cycle ahead. Next year, Airsupra Supra will add a fifth medicine to our newly launched brands. And in quarter one, Breztri grew 73%. Breztri fee is benefiting from increased awareness of triple therapies, which was boosted by the 2023 report for the global initiative for chronic obstructive lung disease. The report advocated a shortened path to triple fixed dose therapies in order to reduce mortality.

In recent quarters, Breztri has accelerated new patient share gains in the U.S. and Europe and retained its leadership position in China with a 70% share of new-to-brand prescriptions. This quarter, we also announced a new production site in Qingdao, which will support Breztri's continuous growth in China, which is home to 100 million patients with COPD.

With that, I will now hand over to Mene, who will discuss the development programs that will drive future innovation of our biopharmaceuticals portfolio.

[Mene Pangalos, EVP of BioPharmaceuticals R&D Iskra Reic]

Thank you, Ruud, and please turn to Slide 21. This slide outlines our assets across asthma and COPD. And as Ruud highlighted, we have a strong legacy in respiratory medicine with our broad portfolio, we're committed to continued respiratory leadership.

Here, we highlight the breadth of our commercial portfolio and illustrate our focus on emerging science involving immune mechanisms, lung damage and cell repair processes. Our on-market inhaled medicines are already considered frontline standard therapies. And we're also developing a number of novel add-on oral inhaled and biologic therapies for patients whose diseases are not adequately controlled by existing medicines.

Our IL33 targeted antibody to zurakumab offers a differentiated mechanism of action. The reduced form of IL33 regulates the ST2 pathway responsible for inflammatory drive whilst the oxidized form of IL33 regulates the rage pathway responsible for epithelial dysfunction and mucus production. And tozorakimab inhibits signaling pathways with the potential to reverse key pathogenic features of COPD.

Tezspire our anti [indiscernible] remains the first and only biologic in asthma approved without biomarker or phenotype. Dyslip is an epithelial cytokine that sits at the top of multiple inflammatory cascades and is critical in the initiation and persistence of multiple drivers of airway inflammation. We also have several other early stage assets in our pipeline, including inhaled Dyslip, an inhaled JAK, which should enter phase two in the second half of this year. Based on solid proof of mechanism data. We're confident this rich pipeline will provide the right building blocks to continue to drive leadership in respiratory diseases over the long term.

Please turn to the next slide. At AAN we presented 66 weeks data for eplontersen in hATTR polyneuropathy, building on the 35-week data presented last year at ISA. We saw a statistically significant and clinically meaningful change from baseline versus an external placebo on the co-primary endpoints of reduction of Transthyretin and on the modified neuropathy impairment score plus seven as well as the Norfolk quality of life questionnaire. It was really encouraging to see the continued improvement on the quality of life questionnaire, which is designed to capture and quantify the impact of neuropathy on the lives of patients.

hATTR-PN patients have identified sensory deficits and autoimmune GI symptoms as the most difficult symptoms to manage, and thus continued and sustained improvement in the quality of life questionnaire is an important indication of clinical benefit for these patients. We look forward to sharing this data with the regulators globally as we seek approval for Eplontersen.

At ACMED [ph] we also provided new data on AZD3152 our COVID-19 long-acting antibody. In-vitro studies demonstrated that AZD3152 neutralizes all COVID-19 variants including Arcturus, the latest version of concern, and we hope to make AZD3152 available as a new prophylactic treatment in the second half of this year.

Please turn to Slide 23, as the Aradhana discussed earlier, artificial intelligence is embedded across our organization. And within R&D, we're using AI across all our therapy areas to discover new medicines more efficiently. Understanding the biology of disease is critical to identifying the right drug targets and pathways is one of the most important decisions we make in drug discovery. We're applying AI and machine learning to build biomedical knowledge graphs across all our disease areas. And these visual representations depict relationships between vast datasets derived both within an external to AstraZeneca. Now scientists use these knowledge graphs to glean novel insights into disease biology, as well as new pathways and targets to prosecute.

AI-enabled processes are also transforming the discovery of small and large molecule leads. Within small molecule drug discovery, we use proprietary AI enabled platforms to generate small molecules twice as fast as our traditional discovery processes. These algorithms use both generative models and novel scoring functions.

In antibody discovery, we use AI-enabled deep screening programs to identify potential lead antibodies in as little as three days compared to traditional methods which takes several months. The scale and pace with which these new AI and machine learning innovations can accelerate drug discovery is really exciting, and we look forward to providing additional examples of AI-driven innovation over the balance of the year.

Please move to the next slide. Now I will now hand over to Marc to cover rare diseases.

[Marc Dunoyer, CEO of Alexion & Chief Strategy Officer]

Thank you, Mene, please move to Slide 25. In the first quarter, rare disease total revenues grew 14% contributing $1.9 billion. The strong performance in the quarter was primarily driven by patient demand as well as some benefit from certain tender market orders.

Ultomiris grew 61% in the quarter, reflecting successful and accelerated conversion from Soliris across shared indications. In myasthenia gravis we saw an increased number of complement naive patients treated with Ultomiris, advancing our ambition to expand Ultomiris into a broader option population, which we estimate to be two to three times larger than the addressable Soliris patient population. Consequently, Soliris declined 13% in the quarter as conversion accelerated. However, this decline was partially offset by growth in NMO and tender market order timing in certain emerging markets.

Though we are excited by this strong performance in the quarter, I want to mention a couple of key dynamics. First, as we continue to execute a conversion strategy from Soliris to Ultomiris, Ultomiris annual treatment cost is approximately one third lower than Soliris. Furthermore, additional indication from Ultomiris require negotiation in some legislations as the eligible patient population expands. Therefore, as we move from ultrarare such as PNH to rare population, such as myasthenia gravis, we anticipate increased pricing pressure. We fully expect the patient volume growth to offset the impact of this negotiation, although they present pricing headwinds in the near term. We remain confident in our C5 franchise, conversion and expansion strategies. And for the full year, we expect Ultomiris revenue to be broadly in line with that of Soliris.

Beyond the complement, Strensiq grew 28% and Koselugo grew over two times in the first quarter, driven by strength of patient demand and geographic expansion. Please move to next slide.

At the American Academy of Neurology Congress earlier this week, we presented data across myasthenia gravis, NMO and dermatomyositis. Notably, we presented real-world data, highlighting the clinical benefit of C5 inhibition, evaluating the change in concomitant therapies for patient receiving Soliris in practice, HCPs initially treat patients with high-dose oral corticosteroids to manage symptoms. And then when symptoms are under control, they evaluate the use of additional therapies to sustain symptom control and ultimately look to minimize steroid usage.

At one year treatment with Soliris, 76% of patients reduce the high-dose steroid use further demonstrating the clinical benefit of C5 inhibition on patient outcomes. We hope to show a similar reduction in Ultomiris registry where analysis is ongoing.

We have highlighted new Phase 1 data in our third-generation C5 inhibitor, gefurulimab, a novel bi-specific heavy chain antibody. Its low molecule weight enable kinase self-administration, binding to albumin to extend half-life, which allows for convenient weekly dosing. The results demonstrated gefurulimab, favorable safety and tolerability profile as well as its ability to achieve near complete terminal complement inhibition. This data further supports our ongoing direct to Phase 3 PREVAIL trial in adult myasthenia gravis.

Separately, following discussions with regulatory authorities, I'm disappointed to announce the termination of our Alexion 1840 Wilson disease program despite positive results from the Phase 3 FOCUS trial announced in 2021. Data from the program will be presented at an upcoming medical congress.

Please turn to next slide. In addition to our strength in C5, I also wanted to highlight our complement Factor D inhibitor. Factor D is the regulator of the alternative pathway upstream of C5. The selective inhibition of the alternative pathway allows the other pathways to remain intact to fight infection, and this may provide a safety advantage. We believe that Factor D is the most tractable target given its stable circulating concentration in the plasma.

With three differentiated assets, our Factor D portfolio has the potential to unlock value in several indications, including PNH, myasthenia gravis geographic atrophy and renal indications. Our most clinically advanced is danicopan, which most recently was submitted for regulatory approval in PNH patients with clinically significant extravascular hemolysis.

We have also seen, positive Phase 2 from denicopan as a monotherapy in PNH and Alexion 28 the third Factor D has recently to -- recently dosed in Phase 1. We look forward to providing further updates on our Factor D portfolio and our border pipeline in future quarters.

Please turn to Slide 29. And I will hand the call back to Pascal for closing remarks.

[Pascal Soriot, CEO]

Thank you, Marc. So if we move to the next slide, please. So for the remainder of 2023, we have a number of important trial readouts that have the potential to redefine care for patients. This include the first Phase 3 trial of Dato-DXd in lung cancer. And I'm pleased to tell you that we now expect the results from a second trial of Dato-DXd tropaeolum TROPION-Breast01 in the second half of this year. Finally, we are making excellent progress towards our medium and long term strategic ambitions. And I'm thrilled to announce we were the top-ranked pharmaceutical company on the Financial Times 2023 Europe Climate Leaders list. Looking ahead. This is shaping up to be another exciting year for our company and I look forward to updating you on our progress.

With that I'll hand the code back to Andy.

[Andy Barnett, VP Global Head of IR]

Thank you, Pascal. Will now move to the Q&A with all of our executive team members participating shown here. As a reminder, raise your hand in Zoom or type your questions into the Q&A button. We will try and answer as many questions as we can during the call or there. Please do limit the number of questions you asked to allow others a fair chance to participate in the Q&A.

With that, let's move to the first question.

[A -Shawn Bevec]

Thanks. The first question is -- thanks, Andy from Sachin at BoA. Sachin go ahead.

[Unidentified Analyst]

Thanks, everyone. Two questions please. First at Dato-DXd two part and TLA2 and 04 at ASCO. So I was wondered Susan if you could just give us some color what we should be looking for are we expecting PFS data. And is it fair to be comparing that 189 as we think about confidence into 07 and 08.

And then just on the breast data, you mentioned Pascal, TB01 and you've also got TB02, and TB03 next year. I wonder if Dave could just frame for us how you thinks about the commercial opportunity of these two indications that haven't really been discussed much by investors feels to us like they could be $2 billion $3 billion opportunity combined. Any thoughts there?

And then a quick follow on for Dave on [Indiscernible], just wanted to give a bit more detail on the Beijing competition you're seeing. Thank you.

[Pascal Soriot, CEO]

Thanks very much, Sachin. So Susan, do you want to take the first one? Or should we see and then, Dave, you take the other one?

[Susan Galbraith, EVP of Oncology Research & Development]

Yeah, sure. So obviously, with the TLO 2, we're going to have updated data with the combination of Dato-DXd with immuno-oncology agents. And again, with TLO4. And we have data in combination with chemotherapy plus other agents.

So I think you can look at durable response rate. It's always difficult to look at endpoints like recussion-free survival and single-arm studies because there are differences in patient populations that are accrued versus ones that are out there. But that's what I suggest you look for.

[Dave Fredrickson, EVP of Oncology Business Unit]

Great. So on -- Sachin, your first question around the opportunity with Dato in breast cancer. Maybe the first thing that I would just point out here, and we talked about this in the context of DESTINY-Breast04 and DESTINY-Breast06, a large number of breast cancer patients in the metastatic setting, hormone receptor positive and triple-negative were treated today with systemic chemotherapy. And we think we've got one of the leading antibody drug conjugate portfolios between Enhertu and Dato to be able to hopefully replace much of that chemotherapy use today with antibody drug conjugates. And so there's certainly a multi-blockbuster opportunity in breast cancer replace that systemic chemotherapy.

Now exactly how the puzzle piece is in the overlap between 04-06, and TROPION-Breast01. I think we need to see some of the data and how that plays out. But I'd encourage you to think about and that's the reason we talk about kind of the breast cancer as a portfolio. I talked about lung cancer as a portfolio today because I think that we've got an opportunity across those assets to be able to really create very good commercial opportunity by replacing systemic chemo.

Maybe the last just kind of point here of note on TB01. So that study is in a post endocrine therapy and post first systemic therapy. That's an earlier line than what we've seen out of TROPiCSO2. So I think that, that gives you a sense competitively too, that it's well positioned competitively depending on the data.

On Calquence, and what we've been seeing there, we continue to win the overwhelming majority of new starts in the frontline CLL setting. This is really our key area of promotional focus. In terms of market share, we are seeing impact from Zeno as a new entrant. We've seen the majority of their impact come in the relapsed/refractory setting. We have seen some impact come in the frontline setting. Some of their impact in the frontline setting has come at the expense of Calquence, though the majority of it has come at the expense of ibrutinib, the first generation BTK-I.

I would also say that within this context, we certainly expect the BTK market to be competitive going forward. I'm quite confident that our team is very well prepared. We have important data coming out at ASCO on a matched analysis indirect comparison between Ascend and Alpine that we're hearing early positive response from investigators on and we'll continue to work hard to keep Calquence as the clear standard of care within the frontline setting.

[Andy Barnett, VP Global Head of IR]

Thanks, Dave. James Gordon at JPM. Go ahead, James.

[James Gordon, JPMorgan]

Hello, James Gordon from JPMorgan. Thanks for taking the questions. Two, please. What about the C5 franchise and also competition. So Novartis presented their detailed danicopan, Factor D data. And it did suggest potentially competitive efficacy versus Soliris and Ultimiris and it's oral. But -- do you think it does look competitive? How should we read that data? Can we compare it to what you've shown for Soliris and Ultomiris in PNH?

And you mentioned you've got a few things of your own. So you've got to Factor Ds, but is the focus more the Factor Ds now? Or is the excitement more actually on 1720? And when do you think you could have either 1720 or a monotherapy, a Factor D in the market to compete with Novartis?

And the second question was just Imfinzi and really strong performance in Q1. Can you break down the performance a bit? Is much of that -- the acceleration coming from HIMALAYA in liver or POSEIDON. And is the performance very front-end weighted because in June, you charge more upfront and then it sort of tapers off over the patient's treatment? Or is this like a clean Q1 number we can extrapolate from for the rest of the year?

[Pascal Soriot, CEO]

So James, actually, thank you. The first question was actually two questions. So it's three questions in total. Marc, do you want to take the first two and C5 franchise and danicopan and also then the Factor D portfolio versus 1720?

[Marc Dunoyer, CEO of Alexion & Chief Strategy Officer]

Yeah. So first of all, the first -- the question on danicopan recent data versus C5. So first of all, I would like to caution everybody on doing indirect comparison of very different clinical trials especially when the population that are included in the trials are very different just to provide an illustration of that, the C5 inhibitors of Alexion [Indiscernible] usually include bone marrow failure patient, who do represent about 30% to 40% of the actual PNH population.

The second difference, the second visible difference is that the trials of danicopan, are enriched with EVH, extravascular hemolysis and anemia patients suffering from anemia. And therefore, when you measure improvement of hemoglobin, it's probably easier to demonstrate the benefit.

But just to go back to the comparison, we -- as you have said, James, we also believe in the potential for proximal inhibitors Factor B or Factor D to play a role in the treatment of PNH. Whether this will be in cotherapy as we have already demonstrated with danicopan, or first Factor D or whether it will be in monotherapy as we are trying to demonstrate in danicopan. We -- this needs -- remains to be seen.

The key objective for PNH are obviously the control of intravascular hemolysis and to prevent them both this, otherwise, you are increasing significantly the mortality risk. So we need to be seeing these results over time. Again, cotherapy versus monotherapy.

To turn to your second question -- or third question, all in all, is 1720. For us, 1720 is an improved generation over the first two C5, it's a subcu formulation provided on a weekly regimen. We are still continuing the development. We see -- we have a trial in myasthenia gravis that is progressing very well. So we are not abandoning the third generation of C5. We're also exploring the Factor D. And as I described in my script, we have three of these Factor D and each of them will be positioned slightly differently across the development momentum.

[Pascal Soriot, CEO]

Thanks, Marc.

[Dave Fredrickson, EVP of Oncology Business Unit]

So James, there are two parts to your question, as I understand it, the first is around the sources of growth that sit within the Imfinzi number. And then the second is really the durability of that growth.

On the first piece, I'm really pleased to say that the growth is coming from multiple areas for Imfinzi and Imjudo. We see across geographies and also across indications that the performance was really driven for the quarter. Maybe to start first. And importantly, we do see, albeit a minority still an important part of the growth coming from the existing indications. So PACIFIC has strengthened, Caspian continues to grow across the globe as we work against it. The lion's share of the growth has come from new indications. TOPAZ-1 being the most significant of those. And we've seen really brisk uptake across U.S., Japan, Europe.

HIMALAYA is also growing and continuing to grow nicely. And in fact, POSEIDON is an area where approved. So in the U.S. in particular, but also now getting underway in Japan. We're beginning to make inroads there as well.

On your question specifically about Imjudo, just to share and to be helpful, Imjudo sales for the quarter were $37 million. And for last quarter, they were $15 million. So it's actually a minority of the $900 million in the quarter. So it's not a front-loaded Imjudo effect that you're seeing here. This really is Imfinzi TRxs that's driving this. And I expect us to continue to grow going forward. I do think we've probably got a little bit of bolus on TOPAZ-1, but I think all the other dimensions that I've described are ones that we expect to continue to move ahead.

[Pascal Soriot, CEO]

Thank you, Dave. Peter Welford, Jefferies. Go ahead, Peter.

[Peter Welford]

Hi, thanks for taking question. So I've got two R&D ones. And firstly, just looking at the tazorokimab, that many outlined the profile. Just wondering if you can give us any thoughts following the recent COPD data that we've had in biologics success there in terms of does that impact your thinking at all in development in this space and equally more broadly, biologics in COPD, and actually just outlined the population in particular, you're looking at in the tazorokimab COPD Phase 3 study and how that differs?

And then secondly, on FOXP2 combos. I know this comes up every quarter, but can you just give us an update if there is any data you have for both, I guess, the MRA, the [Indiscernible] in-house and also the ERA and your latest thinking in terms of where we may see those programs move into Phase 3? Thank you.

[Mene Pangalos, EVP of BioPharmaceuticals R&D Iskra Reic]

So the first question on tozo and our COPD programs. I mean, I think overall, and I think I said this in the last quarter, I'm encouraged to see a molecule -- a biologic molecule work in COPD because I think it sort of gives us confidence that actually the programs we have with Fasenra with Tozo, hopefully, with our T-state molecules as well will ultimately be positive.

I think in terms of -- obviously, we need to see the Phase 2 data from our Phase 2 studies that are running with tozo, although we've obviously started Phase 3 as well based on some of the data we've already seen. But I think I would say our comment is high. The profile of the patients that we have in our NTL33 program, looking at both smokers and former smokers and current smokers. People got with more than two exacerbations and ultimately will be held defined by the Phase 2 study that's reading out.

For the Fasenra program in COPD, which is the most advanced program we have, we're basing it off our two failed Phase 3 programs. And that's in patients that have had exacerbations, again, three or more exacerbations and also have higher initial counts. So overall, I think I'm more optimistic now that I've seen a program work in the biologics space, but ultimately, it will be determined by readouts from our data.

[Pascal Soriot, CEO]

Barsega Combo?

[Mene Pangalos, EVP of BioPharmaceuticals R&D Iskra Reic]

Barsega combos, again, I think the Phase 2 data is moving well, I can't talk about it too much because we haven't announced the data. But I would say we're very much still on track both in terms of the Zibo DAP program, the MR program and baxtestat as a monotherapy but also in combination and hopefully, during the course of the year, we'll be able to talk about the Phase 3 investment decisions. But it's a little bit too soon yet to talk about data specifically, but I would say they still on track in terms of our expectations for Phase 3 IDs and launches.

[Pascal Soriot, CEO]

Thank you, Mene. And then ultimately, Peter, the objective is really to develop a portfolio of combinations that will address different patient segments and complement each other and cover the whole field very well. But of course, this is still depending on a series of data sets.

Emily Field at Barclays. Go ahead, Emily.

[Emily Field, Barclays]

Sorry, I was on mute. Yeah, twoquestions from me. One, just you mentioned on Tagrisso, one of the drivers this quarter was improved duration of therapy for FLAURA. I was just wondering if you could provide more color around that as we're getting asked a lot, particularly ahead of whenever we may see MARIPOSA.

And then just chemistry in adjuvant. I know the design of Cambrian does allow for prior CDK4/6 for two years, but does a potential change in adjuvant standard of care, we'll see at ASCO change your thinking about that study or just any thoughts on adjuvant there?

[Pascal Soriot, CEO]

Dave, do you want to take the first one and Susan the second one.

[Dave Fredrickson, EVP of Oncology Business Unit]

Yeah. So in terms of Emily, the duration of therapy that we're seeing in the real-world context. In the U.S. and in Europe, we are seeing it longer than the median PFSs and DOT that we saw in ADAURA. So obviously, that was in the high-18s. I would say that we're now sort of seeing it depending upon where we are, somewhere between kind of 21 and 24 and the exactness of that is to be determined. But I think to the point that you're making, it's obviously quite relevant as we think about how clinicians see the efficacy that they get from monotherapy Tagrisso.

And it's something that I've commented on in past quarters that certainly the efficacy that's coming through the monotherapy together with the tolerability is what gives us confidence that monotherapy is going to continue to be the first choice for many patients based upon that DOT that we're seeing in the real work from FLAURA.

[Susan Galbraith, EVP of Oncology Research & Development]

So thanks for the question about camizestran. So the CAMBRIA-1 study is designed to capture that patient population have had two to five years of adjuvant endocrine therapy with or without a CDK4/6 inhibitor. So the reinforcement of the benefit that you see of a CDK4/6 inhibitor in the adjuvant setting, I think, actually, makes this trial even more relevant because there are patients that can benefit from extended adjucant therapy in adjuvant setting. And these are patients with intermediate or high-risk of recurrence.

So I think the changes in the adjuvant setting are in line with our expectations. And of course, can be one does allow for both [indiscernible].

[Pascal Soriot, CEO]

Thank you, Susan. Andrew Baum at Citi. Over to you, Andrew.

[Andrew Baum, Citigroup]

Yeah, thank you. Question for Mene and then one for Susan. So for Mene, you have been at asteric oral PCSK9 inhibitor that doesn't have a full interaction, which differentiates itself from Merck's agent. You have got an open-label Phase 2 trials, you're seeing data, but it's very difficult to find any published clinical data, including your patents of indications of efficacy of LDL lowering, just to give some sense of contrast versus both Repatha Praluent, but also Merck's data.

So perhaps you could share with us, given you have highlighted it. I know you're excited about the product. Given the data that you have seen animal as well as human. Are you comfortable that it's going to deliver efficacy in a similar ballpark to the Praluent Repatha and Merck at least in terms of LDL lowering? So that's the first question.

And then the second question to Susan. PARP inhibitors are absent from your lung cancer domination master plan. I'm just curious whether this is because you're concerned about toxicity and combining with topiary inhibitors, whether you think that the efficacy doesn't have a strong enough rationale or there's something else I might be missing here? Thank you.

[Mene Pangalos, EVP of BioPharmaceuticals R&D Iskra Reic]

So I'll show you first little pieces because it's a great question. And we're being somewhat cagey, I think, on purpose because obviously, it is a very competitive space, Andrew. So am I confident that we're going to have a target profile that's competitive? What I'll say is that we've given ourselves like we did actually for the injectable PCSK9, I think a tough threshold for what we would take forward into more expensive late-stage studies. And so that's the profile we need to hit.

I'm hoping we're going to get there. I'd like to see a few more patients dosed. I'm encouraged by what I'm seeing, but I won't I won't get too excited yet until we've seen a bit more patient data. And of course, when we have then we'll be able to share it more broadly. But I think it looks encouraging, but I wouldn't -- it's not a home run yet.

[Susan Galbraith, EVP of Oncology Research & Development]

So thanks for the question about PARP inhibitors in non-small cell lung cancer. So there are a subset of lung cancer patients that have mutations 7:42 AM in HR genes that may have increased it PARP inhibition. We're awaiting the readout of studies that looking at the combination of PARP inhibition plus therapy. And we're also in dose escalation in combination with ADCs in a number of the trials.

So I think it just reflects the -- the map that you see is as we see that evolution with the things that we currently have in hand are ready to move into Phase 3 or close to Phase 3. Then of course, we anticipate that the standards of care can continue to evolve as data evolves.

[Pascal Soriot, CEO]

Thank you, Susan. Tim Anderson at Wolfe. Over to you, Tim.

[Tim Anderson]

Okay. Thank you. On Tagrisso, Astra usually maintains that Tagrisso monotherapy, like to remain the backbone for most patients in frontline lung, yet you started this small combination study with Amivantamab in frontline. So can you talk about the rationale behind that? And why start that one recently, why wouldn't you have started that many months ago even all the way back in 2022? What was the trigger? And why such a small size trial? Is that so you can quickly advance it into a larger Phase 3?

And then just on Dato-DXd are you as confident as ever ahead of the readout of Tropion Lung01? Thank you.

[Pascal Soriot, CEO]

Okay. Dave, you take the first one and Susan second one.

[Dave Fredrickson, EVP of Oncology Business Unit]

Yeah. So Tim, I just again, to ground on our view for the EGFR mutated space, we see Tagrisso clearly as the backbone of therapy for all patients being treated for EGFR mutated within, obviously, our labeled indication. And we think the majority are mono. But we've also made really clear that we do know that there is a desire to treat some patients with combination therapy and really here we see FLAURA2 as being, hopefully, if the results in the Phase 3 look like those from Opel appropriate for a certain subset of patients.

We also have acknowledged and seen that as the CRYSTALIS data and the Mariposa data were unfolding, that there may indeed be a role for some subset of patients to be treated with the amavantinab combo. It's within that context that we've initiated the study that you described. It's called OSTARA. It's a non-registrational medical affairs led study. It's a relatively small practice-informing study as opposed to something with registrational intent, really trying to answer questions for those who might have it down the road around the safety and the combinability of Tagrisso and amevantinab in the future if there was a physician who was interested in that.

So I would say that this isn't in any way a departure the view that we've got on Tagrisso, it is an additive component to a belief that Tagrisso is the backbone of therapy moving forward.

[Susan Galbraith, EVP of Oncology Research & Development]

Okay. And in terms of Dato-DXd, the risk of being boring, I want to be entirely consistent with what we said before, which is that the profile that we have for Dato-DXd, we're confident about based on the design of the ADC with the linker warhead combination. And the data in lung cancer, in particular, from the data from the Phase 1 study, which is not just showing a response rate in later lung cancer patients, but the durability of response is what gives us confidence in the ability to beat the standard of care in the second-line study.

But we run Phase 3 trials in order to get the results, and we're eagerly awaiting the results of the TROPION lung01 as everybody on the call.

[Pascal Soriot, CEO]

Thanks, Susan. Simon Baker, Redburn, over to you, Simon.

[Simon Baker, Redburn]

Thank you, Pascal. Two questions, if I may. Firstly, on Dato, and apologies if I missed a comment on this. But the timing on TROPIAN Breat01 to have accelerated quite significantly. I just wonder if there's anything you could comment on that?

And also with Dato, there was a very interesting poster at AACR looking at resensitization in resistant cell lines, a specific example being TROPIAN 11 loss being resensitized with ATR inhibitors. So I just wonder how that fits in with your clinical development programs and the potential that would open up for multiple treatment lines with Dato?

And then secondly, changing the subject entirely, probably one for you, Pascal. I just wondered what your initial thoughts were on yesterday's proposals for pharma legislation reform proposed by the European Commission. Thanks so much.

[Pascal Soriot, CEO]

Susan, do you want to cover the first two?

[Susan Galbraith, EVP of Oncology Research & Development]

Yeah. So for TROPION-Breast01, I think we're delighted that the accrual for this trial was six months ahead of schedule, which I think just reflects the level of unmet need and the level of interest in the Dato program, but this particular setting. So that's really the explanation for the acceleration.

Thanks for spotting the data that we had at AACR. I do think the combination is an interesting one. That's one of a number of different combinations that we're looking at with our ADC portfolio.

[Pascal Soriot, CEO]

Thanks, Susan. The European question, Simon. I mean, there are two parts to it. I think one part is really the sort of a long-term impact of something like this on Europe. And I think really that -- as it relates to Europe, I mean this is the wrong response to an important issue to an important issue. And the issue is access to medicines in Europe. And we know that Europe has been behind the U.S. in terms of access. But quite frankly, it's also falling behind Japan and it rapidly falling behind China as well. And that has been associated with Europe also falling behind the U.S., but now also China in terms of clinical trials and emergence of biotechs. I mean I was in China the last couple of weeks.

And you can see the innovation is really impressive in that country. So that's really -- this potential legislation is really not a good idea in terms of securing a strong life sciences sector in Europe.

In terms of the impact on the industry and our company, it really is something that will evolve over because, first of all, it will take a couple of years for various stakeholders and participants to comment and discussions will take place. Nothing will be coming into a legislation for another two years. So in terms of commenting on the impact, I think it is a little bit early in details, and we should wait for the end result of this discussion and see what comes out of the legislation.

But I guess, really, again, the sort of general underlying message that this kind of approach stands is that Europe is not really the most attractive place for the industry to invest in. And the reality is that there is an enormous amount of innovation in the U.S. to tap into we've all known that but is rapidly increasing, a very, very large amount of innovation in China, actually.

So the next question is Mattias Haggblom at Handelsbanken. Mattias, over to you.

[Mattias Haggblom, Handelsbanken]

Pascal, I have two, please. So staying on China, which you touched upon in the previous question. I was just curious to hear a bit more on why you decided to bring it up in the CEO statement in this report, emphasizing the growth in pace of innovation if it was something in particular that made it sensible to bring up in this quarter and not earlier?

And then secondly, I'm curious to understand if there is more color to provide on the decision to terminate Alexion 1840. Marc mentioned it on the call. I know that regulators asked for two mechanistic stats was the outcome of those the final piece. And does this, to an extent, change the character of what rare disease assets that would interest AstraZeneca going forward? Thanks so much.

[Pascal Soriot, CEO]

So thanks, Mattias. I'll take the first one, and I'll ask also Leon to jump in. And Marc, maybe you want to take the Wilson termination question.

The reason I've brought it up is that I really think that we wanted to signal that China is back. I mean the economy is bouncing back. The government is very focused on what they call high-quality growth. Science and Innovation is one of their priorities across all sorts of industrial sectors, of course, not only life sciences. They're focused on a green development. They're focused on collaboration and they really are implementing a very impressive program in terms of stimulating economy and driving innovation.

And that plays into a whole series of new innovative technologies and products that are coming out of the biotech sector. So we wanted to signal this because first of all, China is an important market, of course. And then it's also not only an important market in terms of helping patients and driving growth, but it's also an important market in terms of tapping into innovation.

Leon can talk about this, and maybe also Susan could comment on some of the deals we did, and Suzanne was also in China for a couple of weeks. So we both came back. They're definitely impressed with the progress that has been made in this country.

And the last reason I wanted to signal it is that it plays to our strength as company. We are the largest pharma company in China. We have a tremendous team, and really positions us very well to benefit from everything that's happening in that country.

Leon, do you want to sort of comment and maybe you could also comment on some of the things we are doing across China and the various headquarters, et cetera.

[Leon Wang, EVP of International & China President]

Yeah. I think before I comment on China, I think emerging market is overall quite exciting and China is about 14%-15%. And outside the China emerging markets are growing much faster, also 14%-15%. So it's really worth looking at.

And within China, I think we are number one company with a quite solid position. And we actually speed up our global import product portfolio rapidly to benefit the Chinese patients. So this year, we have incur two and also Calquence and also we launched our rare disease portfolio. So all these things are very exciting for imported portfolio. And also, we have a $1 billion fund venture fund, investing into companies we are familiar and also an attractive, I think, Susan, and Mene's global research team helping us to identify interesting targets to invest.

And plus we are also closely working with many China rising start-up companies. And we -- like we work with Hutchmed developing their symmetric drug, savolitinib and also as a starting point. And in the future, I mean, Susan's team also signed several deals in cell therapy and also in [Indiscernible] 18.2. And also, we hope also to tap into the non-oncology rising innovation in China.

So I think China innovation as Pascal put it in the past two, three weeks. We traveled across meeting a lot of interesting start-up companies. And it is really exploding. So we hope instead of watching, I think we are a leading company in China. So we should benefit from rising innovation in China who make this innovation also accessible to the patients outside China.

[Susan Galbraith, EVP of Oncology Research & Development]

So thanks, Leon. Just a couple of comments on the deals that we've done. So as you said, building on the relationship we've had with Hutchmed for savolitinib done three deals in the last 12 months with Cellular Biomedicine Group for the cell therapy asset where they're helping by running the investigator-initiated trial with our GPC3 constructs, and this actually helps us accelerate that program and gain clinical experience faster than we could otherwise.

We also have done a deal with Harbour Biomed for a T-cell engager targeting 19.2, which is an important target on gastric and pancreatic cancer. And then with team had access to an antibody drug conjugate with an MMA warhead, again, targeting 19.2. So I do think, as Pascal said, we come back from China excited and energized by the interactions that we've got there, the level of innovation and the science, the quality, the number of companies that are starting up in that space. It's very exciting. And the quality of the investigators that you can work with is also really good.

So I think it is an opportunity for us to leverage our position there help us to actually not just think about China delivering for China, but China innovation delivering for globally relevant indications and accelerating that. So I think that's the opportunity that's there to be had.

[Pascal Soriot, CEO]

Thanks, Susan. Marc?

[Marc Dunoyer, CEO of Alexion & Chief Strategy Officer]

First of all, let me remind you of the reason why Alexion invested in 1940, Wilson disease -- this with an extreme high medical need where no innovation has taken place for decades beyond the copper chelator. So this is why, Alexion, you invested in it.

Regarding the recent decision that we made, it's basically a case of looking at the totality of data and also a close interaction with regulators. The Phase 3 that we produced in 2021 produced positive results. But then we conducted, as you mentioned, two mechanistic study whose results were less clear. So when you look at the overall -- the totality of the data, it was not possible for us to demonstrate clearly risk for the Wilson population, and then we decided to discontinue.

[Pascal Soriot, CEO]

Thank you, Marc. James Quigley at Morgan Stanley. Go ahead, James.

[Mark Purcell, Morgan Stanley]

Hey, it's Mark Purcell from Morgan Stanley. Apologies, with mix up. Two questions. Firstly, Pascal, could you help us understand and put into context the PanTumour opportunity for Enhertu? So firstly, the sort of probability and breadth of the PanTumour approval you may get for the PanTumour02 trial, plans to move into earlier lines. And then the importance of the PanTumour01 trial in HER2 mutant cancer in terms of wrapping up a sort of broader opportunity there?

And then sort of secondly, the lung cancer Slide 15 is super helpful. I just wondered, given the sort of progress of the investment that's been made in gastric and GI tumors, could you sort of provide us some perspective of where you're heading here? I sort of know as Susan just mentioned, the 19.2 ADC opportunities, obviously validated with the Astellas multiple antibody and response rates of over 75% and potential combination there. So the gastric opportunity, firstly, and then secondly, the colorectal cancer opportunity where the EGFR CM bi-specific ADC looks super exciting. So your thoughts there would be great. Thanks.

[Pascal Soriot, CEO]

Thanks so much. Susan, do you want to cover those?

[Susan Galbraith, EVP of Oncology Research & Development]

Okay. So thanks for the interest in PanTumour and HER2 data, which, as I said, are going to be shared at ASCO. So I think we probably have detailed conversation there about that. Obviously, this is something we're going to need to discuss with regulatory authorities and there will be a question about the appropriate biomarker cutoff across different indications.

So I think we are also, of course, looking at the HER2 mutant setting. There is an overlap between the HER2 mutation and the HER2 overexpression of the HER2 mutant tumors quite often highly overexpressing as well. But I think there will be data that we'll look at that, which I think helps support the data that we'll have from the pan HER2 overexpressing segment.

And then in terms of moving into GI cancers with the TOPAZ and HIMLALAYA data that Dave has already referenced. I think we have a beachhead into these tumors with Imfinzi, but I think there is significant opportunity to improve on the current standard of care. And that's why we're excited about the 19.2 ADC asset there. Obviously, we're also looking at combinations of ADC plus IO agents across the portfolio.

With regards to the EGFR format bispecific in colorectal cancer, yes, there is overexpression of both of these targets within colorectal cancer. I think we also have to look at the activity level in patients that have had prior to primarize inhibition in some of the GI tumors, which is something that is relevant. And of course, colorectal cancer often overexpresses membrane pumps that can pump out warhead. So I think we just need to see the clinical data in order to understand what the real potential is for these molecules. But you're right that this is an area of interest for us.

[Pascal Soriot, CEO]

Thank you, Susan. Seamus Fernandez, Guggenheim. Seamus, over to you.

[Seamus Fernandez, Guggenheim]

Thanks for the question. So really my only question is on Eplontersen. We saw some impressive data presented at the recent neuro meeting. Just hoping that you could comment on that. And also follow-up with the broader plans an opportunity that you see in the overall ATTR setting, particularly given your plans on the cardiac side and the overall competitive landscape? Thanks.

[Pascal Soriot, CEO]

Thanks. Mene, do you want to cover it from R&D? And maybe Ruud could jump and also give a sense of the potential.

[Mene Pangalos, EVP of BioPharmaceuticals R&D Iskra Reic]

So I think we were particularly pleased with the functional data in terms of the quality of life because we continue to see an improvement, which I think is -- looks, I think, quite compelling. And obviously, I think the data that we've seen now the consistency of our data gives us more confidence given the mechanism this is going to work well in cardiomyopathy as well. So I think overall, we're very pleased. We're excited with the submission on the filing in polyneuropathy and waiting with anticipation for the cardiomyopathy data at the moment. Ruud?

[Ruud Dobber, EVP of BioPharmaceuticals Business Unit]

Yeah. So a little bit the scoping of the opportunity, there are roughly 40,000 patients with ATTR-PN. So it's a relatively small population, but there's a very large overlap with the main indication in cardiomyopathy. As we have announced, the FDA has accepted our filing and we are expecting, hopefully, a positive outcome in the second half of this year, and the team in the United States is working, of course, on the prelaunch activities.

And equally, we are preparing ourselves for the CM indication, the much larger indication. Roughly there are between 300,000 and 500,000 patients worldwide with the CM, but there's also a tremendous underdiagnosis in the CM. Most of those patients are detected very late in the disease state. Clearly, with our activities in the HFpEF indication with Farxiga, we are expecting that the diagnosis rate will at least double moving forward. So all in all, a very substantial population in order to promote our product in the CM category. Of course, that will be a little bit later. That will be after 2024. But all in all, all the lights at the moment are clearly green.

[Pascal Soriot, CEO]

Thanks, Ruud. Emmanuel Papadakis, Deutsche Bank.

[Emmanuel Papadakis, Deutsche Bank]

Thanks for taking the question. Perhaps first one on PROPEL ahead of the advisory review tomorrow. Any perspective you could give us on the FDA stance at a bit keen to potentially restrict approval to not just the HR [ph] actually the BRCA subgroup patients. So I'd be interested to hear your thoughts on those documents and expectations into tomorrow.

And then perhaps a question on HER2, ahead of the imminent HER2 headline data perhaps you could help frame our expectations on PFS in light of the Opel data that was presented at ASCO last year where you saw a 70% PFS rate at 24 months. Should we be thinking of very high-20s median PFS is achievable? Or is the number radically different to that, either below or above also possible? Thank you very much.

[Pascal Soriot, CEO]

Thanks, Emmanuel. I think they are both for you, Susan. You are [Indiscernible] today as always.

[Susan Galbraith, EVP of Oncology Research & Development]

Yeah. So obviously, we'll know tomorrow the outcome of the PROPEL ODAC. But I'd make three points. First of all, there was a mechanism of action for interaction of the androgen receptor, downstream signal link and olaparib. So AR is involved in DNA repair in AI-driven cells and actually depends on PARP 1. So with the combination you get increased DNA damage selectively in AR-driven cells regardless of the BRCA status, and we have data to demonstrate that. So this is different from the monotherapy setting such as ovarian cancer late-line settings.

And that difference in mechanism of action is reflected in the data from three randomized clinical trials, the Study eight Phase 2 study, the PROPEL study and TALAPRO-2, which recently read out, which all showed similar effects with strong benefit both in BRCA wild type as well as in BRCA mutant. This effect, however, is dependent on dose because it's dependent on the PARP chopping effect and hence, the difference, I think, with magnitude.

The second point I'd make is the effect size in the BRCA wild type cannot be explained by false-negative ctDNA testing. There's high agreement with her ctDNA and tissue testing at 94%. So if you look at the patients that are ctDNA negative and tissue undetermined, that's 226 patients in the PROPEL study, only six could be effectively misclassified. This cannot explain the effect size.

And third point is that the evidence does not support that there's an OS detriment, I think, identifying the double negative, both ctDNA and tissue-based as is looking at a subgroup of a subgroup. And in fact, in the BRCA undetermined group, the OS hazard ratio is 0.1. So if you look at the totality of the data and the totality of the secondary endpoints, I think it supports a good benefit risk profile for olaparib in this patient population in combination with [Indiscernible]. So that's our position. We'll represent that strongly at the ODAC tomorrow, and

we look forward to seeing what the results of that are.

In terms of FLAURA2, the OPL data that was published is in a reasonable size patient population about 60 patients. So I think it gives you a reasonable confidence about the limits of the medium PFS which in that study was 31 months. So I think that's the basis for assumption for FLAURA2, you can obviously get some to the mean as you move from Phase 2 to Phase 3, but I think we're confident in that effect the tolerability profile that we actually see for the combination.

So I think this is going to be an important potential new opportunity for Tagrisso and represents a choice that then patients can have, not every patient will want a combination therapy, but I think it represents a potential opportunity for those patients with bulkier disease or the end-to-end perspective.

[Pascal Soriot, CEO]

Thanks, Susan Matthew Weston, Credit Suisse.

[Matthew Weston, Credit Suisse]

Thank you very much. Two questions, if I can. The first is a follow-up on TROPION-Breast01. Susan, you mentioned that recruitment was six months ahead of expectations, but the readout has been brought forward, I think, nearly 18 months. So can you explain the difference? Is it that you've shifted the focus to the PFS endpoint or co-primary endpoint rather than OS? Any further commentary would be very helpful.

And then secondly, a question on TROPION-Lung01 similar to the one we've just had on FLAURA2. We're all looking forward to that press release, and we're hoping that we're going to see that Astra favorite comment of clinically meaningful. Can someone on the call set out what clinically meaningful would be in your view so that we aren't surprised when we subsequently see the data?

[Susan Galbraith, EVP of Oncology Research & Development]

So thanks for the questions. To start with TROPION-Breast01, we have a dual primary endpoint of PFS and OS in this study. The endpoints haven't changed, but the rapid accrual just gives us the opportunity for that to be read out at an earlier point. And I think what we've guided before was beyond the end of this year versus now coming into this year. So I don't think it really is as big a shift in the time lines as you're indicating.

[Pascal Soriot, CEO]

I think, Susan, maybe this is a good time to give yourself a pat on the back and your team because the recruitment has been incredibly fast, and the team has done a beautiful job.

[Susan Galbraith, EVP of Oncology Research & Development]

Yeah. Well, let me give all the credit to the team because they are the ones that have done the work. So Christine Masters [ph] team and Michel Shanpo [ph] who's led the operations team have done a great job here.

In terms of TROPION-Lung01, what we said before in terms of clinical meaningfulness, you're expecting -- if you look at the contact one data set, something in the range of four to five months median PFS for the control arm, I think, is a reasonable assumption. And it's well sized for a clinically meaningful benefit, which would probably be in the range of two to three months on that background. So I don't think that's changed either. So that answers your question.

[Pascal Soriot, CEO]

Thank you. Luisa Hector, Berenberg. Luisa, go ahead.

[Luisa Hector, Berenberg]

Hi, there. Thanks, Pascal. So maybe just a quick one again for Susan on when we might see the first response rate data for the internal ADCs that you highlighted? And then perhaps just if you can quantify in anything on price impact. There seem to be various movements, particularly European clawbacks were mentioned in the press release. So maybe split between U.S. and Europe, any impact on price and then stocking or gross to net impacts, which were also scattered throughout the press release?

[Pascal Soriot, CEO]

Thank you, Luisa. Susan, do you want to take the first one? And Ruud, you would take the second one -- and if Dave, you want to step in, also, please do so, but maybe start with one.

[Susan Galbraith, EVP of Oncology Research & Development]

Yeah, I would anticipate that we would share data probably next year for the early phase ADCs.

[Ruud Dobber, EVP of BioPharmaceuticals Business Unit]

Okay. And regarding, Luisa, the clawbacks in itself in Europe specifically are not unusual. We are facing that year after year, it's our normal business practice, and we are just flagging at in order to provide a little bit more color to our business performance. That's also true in the United States. As you know, very well, of course, in the United States, we are negotiating our prices on an annual basis, and there are rebates and, of course, gross to net adjustments. And we -- at least in the foreseeable future, we expect to continue that. And of course, there is new legislation potentially coming on our way in the United States with the IRA. But all in all, currently, it's clearly business as usual.

[Dave Fredrickson, EVP of Oncology Business Unit]

I mean I think the only piece, Luisa that I'd add to that is that I commented in my remarks on Calquence and Lynparza stocking in the quarter. I don't have much more to add, but that certainly was relevant for both of those brands.

And then on price in the U.S. -- and while seeing that we took some price increases in line with what we thought was appropriate. But keep in mind that in the quarter, the impact of that is relatively negligible because you've got price protections that are in place for a lot of the distributors and the payers and the GPOs just to try to put a bit more color on your question.

[Pascal Soriot, CEO]

Michael Leuchten, UBS.

[Michael Leuchten, UBS]

Thank you. Two questions, please. Just going back to the speed of recruitment for both FLAURA2 and MARIPOSA. How do you square that with your view that monotherapy EGFR is going to be the standard of care if it has to be squared at all. Just interested in you thought that both of these trials have recruited very, very quickly.

And a quick question for Dave. What was the underlying growth for Lynparza in Q1 if you strip out the inventory work down that I presume, came out of the PROPEL expectations.

[Susan Galbraith, EVP of Oncology Research & Development]

I just want to clarify, TB01 is a breast cancer.

[Pascal Soriot, CEO]

FLAURA2, MARIPOSA recruited fast and what does that mean in terms of physicians' interest in this indication -- in this combination?

[Susan Galbraith, EVP of Oncology Research & Development]

Right. Well, I mean, there are patients who will want even more benefit than can be achieved with monotherapy Tagrisso. But I'm just pointing out that if you look at the totality of patients that you're treating with EGFR mutant lung cancer, a lot of them elderly oral monotherapy that they can take at home is an attractive option. But if you're looking at patients that want to accrue clinical trial sites and academic centers, that's a different patient population and we're often looking for more options.

So I think there's a large number of patients that have got first-line metastatic non-small cell lung cancer, it's a big indication. There's lots of opportunity to improve on the current standard of care.

[Pascal Soriot, CEO]

Dave, maybe you could comment on the Lynparza but also from a commercial viewpoint? How do you see this FLAURA2 and MARIPOSA combination and physician reactions to those?

[Dave Fredrickson, EVP of Oncology Business Unit]

Absolutely. So on Lynparza, Michael, on a sequential first versus fourth quarter, on the global sales, we see growth across Europe in demand. We see growth in Rest of World also within international. In terms of within the U.S. right now, I would say the demand is relatively stable net of the stocking that we described, again, made comments on this. There is opportunity for us to continue to grow Lynparza. Some of these opportunities are more challenging. It's about driving testing rates in ovarian in the HRD population. It's about really creating even further imperative and driving testing for BRCA in breast cancer among hormone receptor positive patients, where the unmet need and -- or the perceived unmet need is not quite the same as it is in triple negative.

Transitioning, again, just to go to Pascal's question to me around the opportunity for FLAURA2, we know that there are certain patients with presentation of more aggressive disease. We also know that certainly, if we're able to replicate the PFS results and the response rates of nearly 90% that we see in Opel along with the PFS of 31 months that we are seeing within Opel that there will be a subset of patients for whom that combination is something that physicians may very well want to be utilizing.

And so as Susan said, while we believe that the majority of patients will be seen as most appropriate for monotherapy because it's oral because we're getting good approaching two years and because the side effect profile is well understood for certain patients where the disease appears more aggressive, getting that response rate using FLAURA2 will be seen as attractive.

And I think that, that could translate into further growth in terms of duration of therapy as well in terms of the period of time that they stand Tagrisso.

[Pascal Soriot, CEO]

Thank you, Dave. We'll take the last question, [Indiscernible]. Go ahead, [Indiscernible].

[Unidentified Analyst]

Thanks, this is [Indiscernible]. Just a question on -- or a couple of questions on [Indiscernible], please. Some work we've done suggests that encasing into that CLL space. Just could you help us understand how fast the BTK class is growing? And then secondly, how do you see pricing evolving for the BTK and particularly from Calquence? It seems to us improve pricing fallen quite materially over the last year or so. Thank you.

[Dave Fredrickson, EVP of Oncology Business Unit]

So thanks for the question. On the first of the questions, and really, I guess I'll focus my answer the U.S. What we're seeing is that venetoclax has been relatively stable in terms of its frontline second line and, frankly, third-line CLL share. I think that -- within that context, we have actually seen growth in the BTKI class. I think one of the benefits that's come from a new entrant in this next-generation BTKIs is that it's created class growth, which I think has been certainly beneficial to Calquence.

In terms of your second question, it's a good one and an important one. Historically, I've commented that contracting pricing gross to net has been relatively, I would say, sort of rational and lower pressure, we do see mounting gross to net pressures in the U.S. within the BTKI class. And I do think that as we look forward towards IRA and negotiation and the possibility that first-generation BTIs enter in that, that's something that we certainly expect to see more pressures on the class moving forward.

[Pascal Soriot, CEO]

Thanks, Dave. So thank you so much for all your great questions, and we wish you a great rest of the day. Thanks. Bye-bye.