AstraZeneca PLC

LSE:AZN

Good morning to those joining from the U.K. 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 Full Year and Q4 2024 Results Conference Call for investors and analysts.

Before I hand 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 and 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 meeting. [Operator Instructions] I must advise you that this presentation is being recorded today.

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

Thank you, Andy. Welcome, everybody. It's great to see you all here today.

Next slide, please. 2024 was a very strong year for our company. I would say, a very, very amazing year, I have to say, with total revenue up 21% and our core EPS up 19%, as you can see here, a clear illustration of the strong underlying momentum of our company. I've also listed here 14% on core OpEx to show that we continue to work on leverage with a lower growth of our expenses relative to the growth of our total revenue.

We also delivered important pipeline advancements with 9 high-value pivotal trials readouts in 2024. Combined, these trials represent over $5 billion in non-risk-adjusted peak revenue. We had, of course, more readouts than those 9, but those are the most high-value readouts we had last year. At our Investor Day in May, we communicated our ambition to deliver 20 new medicines by 2030. And I'm pleased to report that we have new -- we have 8 new medicines approved to date, including the recent approval of Datroway, which was previously called Dato-DXd earlier this year.

So if you move to the next slide. We continue to benefit from our broad-based diverse portfolio of products and diverse geography. And we have strong growth across all our therapy areas, as you can see here, in our key geographies in 2024. In the year ahead, we anticipate sustained demand for our innovative medicines and our growth across geographies. In our results announcement, we provided an update on ongoing investigations in China. We've received a notification from the Shenzhen City Customs Office regarding suspected unpaid importation taxes totaling $900,000 which, to the best of our knowledge, relates to Imjudo. So if actually AstraZeneca was found liable, a fine of between 1 to 5x the amount of avoided import duties could have to be paid by AstraZeneca. We are continuing to cooperate with the government towards resolution of those investigations.

I'm pleased to have Iskra, we call her Super Iskra, joining us today in her new role as Head of International. I would now like to invite Iskra to share early perspectives on her new job and, in particular, China. Over to you, Iskra.

Thank you, Pascal. No pressure with the nickname. I'm very honored to have assumed responsibilities in the international region that, as you all know, combines China, Emerging Markets as well as Australia and New Zealand. Initially, when I started in my new role, my focus was really in how best to support our colleagues in China at an unsettling time for them. And I have been really truly impressed by their continued efforts and passion to deliver on the values and our purpose. And I have a real strong confidence in the leadership that we have in place in China.

China revenues last year had increased by 15% throughout the first 9 months. And overall year 2024 growth is 11% because of the quarter 4 decline of 3%. It is very important to note that, that decline was primarily driven by year-end hospital ordering dynamic, which affected a few products, specifically Tagrisso and Farxiga as well as demand for our respiratory products that is lower given the mild start of the winter. And while we do expect some headwinds, specifically driven by VBP inclusion for our several medicines, we do expect the growth in China will continue. And especially in the longer term, we see a strong opportunity, and we are fully committed to continue growing in China.

If I think about Emerging Markets more broadly, I think you all know that we have been building our presence and capabilities for many years, accelerating our regulatory approvals and also doing our best to broaden our equitable access. And we have seen strong growth over the past several years, and we do expect that growth to continue. In 2024, overall Emerging Markets growth was at 22%. The unmet need across the Emerging Markets is unprecedented or enormous, I mean if you look at any therapy area. But specifically, if you look at the areas where we work, just to give you one example, in emerging markets, it's estimated that 1.8 million people will be diagnosed with lung cancer. That represents actually 70% of the overall lung cancer diagnosis over the -- in the globe. The substantial unmet need, coupled with the increased investment in the health care as well as increased willingness to pay for the health care, gives us an opportunity to deliver and sustain significant growth going forward.

Thank you. Please advance to the next slide, and I will give the floor back to Pascal.

Thank you, Iskra. So as you heard from Iskra, there is enormous opportunities in the Emerging Markets, not only in China but also outside of China. And Iskra knows the region very well. So it will definitely have a big impact on our future growth, and we look forward to resolving the issues that we've been facing in China, of course.

2025 marks the beginning of an unprecedented catalyst-rich period for our company. We have talked about it before. We're looking forward to the results of high-value trial readouts this year for several of our existing medicines, including Enhertu, Datroway, Imfinzi, Breztri and Fasenra. And importantly, we also anticipate the first Phase III data for 7 NMEs, 7, including camizestrant and baxdrostat, two medicines which each have a potential to generate more than $5 billion in peak revenue. The value of our pipeline has been increasing steadily. And as Aradhana communicated earlier this year, we now have more than 90, 9-0, late-stage trials underway with an average non-risk-adjusted peak revenue per trial over $1 billion. Looking only on the -- at the anticipated readouts in 2025 shown here, taken together, this represents over $15 billion in non-risk-adjusted peak revenue potential. And that's why we have said a few times, by the end of this year, early 2026, everybody will have a good sense as to our chances to get to the $80 billion. You'll see the momentum that we have in our company, plus you will see the outcomes of those trials.

With that, please advance to the next slide, and will hand over to Aradhana who will take you through our financials.

Thank you, Pascal, and good morning, everyone. As usual, I will start with our reported P&L. Next slide, please.

As Pascal highlighted, our company delivered very strong performance in 2024. Total revenue grew by 25% in the fourth quarter with full year revenues up 21%, exceeding our twice updated guidance range of high-teens percentage increase. Product sales grew by 19% in the full year, driven by strong underlying demand for our medicines across regions. Alliance revenue increased by 55%, reflecting growing demand for Enhertu and Tezspire in regions where our partners book product sales. Collaboration revenue increased by 54%, driven primarily by a $600 million Lynparza sales milestone recognized in the fourth quarter as well as smaller sales milestones for Beyfortus and Koselugo.

Next slide, please. This is our core P&L. Our core product sales gross margin in 2024 was 81.2%, in line with our indication for a slight decrease compared to full year 2023. Core operating expense increased by 14% in 2024, well below the top line growth of 21%. Core R&D expense increased by 19% and consistent with our prior commentary as a percentage of total revenue, core R&D expense was towards the upper end of the low 20s percentage range. This increase supported multiple new trial starts, including Phase II trial starts for our weight management portfolio and the acceleration of our cell therapy program. It also reflects costs following the closure of several business development transactions in 2024.

Core SG&A costs increased by 11%, reflecting continued investments behind launching brands. SG&A decreased to 28% of total revenue on a full year basis. Other operating income declined significantly as we booked more than $700 million in 2023 relating to the update of the contractual agreement on Beyfortus as well as $250 million relating to the U.S. divestment of Pulmicort. Core EPS of $8.21 represents 19% growth, placing us at the top end of our full year guidance.

Next slide, please. Our net cash flow from operating activities increased by $1.5 billion in 2024. CapEx of $2.2 billion was broadly in line with the indication of a 50% projected increase over 2023. This includes both tangible and software-related intangible assets. We completed a number of business development transactions in 2024, including the acquisition of Amolyt, Icosavax and Fusion and incurred total debt payments close to $7 billion. We anticipate deal payments relating to past transactions of approximately $3 billion in 2025. Net debt increased by $2.1 billion to $24.6 billion, which is a level we are comfortable with. Given the growth in our EBITDA, our current net debt-to-EBITDA ratio stands at 1.5x.

We increased the full year 2024 dividend to $3.10 per share and announced this morning that we intend to increase our full year 2025 dividend to $3.20. Today, we issued guidance for 2025 and expect total revenue to increase by a high single-digit percentage and core EPS to increase by low double-digit percentage. We anticipate our strong growth momentum to continue in 2025, more than offsetting the headwinds that we have previously indicated. These dynamics also adversely impact our product sales growth margin, and we anticipate an incremental 60 to 70 basis points decline driven by the net effect of the IRA in the U.S., the anticipated inclusion in VBP of Farxiga, Lynparza in China as well as the growth of our partnered products that have lower gross margins.

Operating leverage remains a priority for our company. We continue to anticipate SG&A costs to grow at a slower pace than revenue. We are beginning to see benefits from the redeployment of our global footprint and continue to optimize our commercial investments across key disease areas to support new launches. R&D expenses are expected to remain in the low 20s percentage range of total revenue.

Our full year guidance is, as usual, at constant exchange rates. Based on average January 2025 rates, we anticipate a low single-digit adverse FX impact on total revenue and a mid-single-digit adverse impact on core EPS. The recent strengthening of the U.S. dollar also affects our core operating margin percentage, and we estimate an adverse impact of roughly 20 basis points in 2025 based on average January 2025 FX rates compared to average rates for full year 2024 and roughly 50 basis points as compared to average FX rates in first quarter 2024.

Please turn to the next slide. In 2025, we expect expenditure on tangible and software-related intangible assets to increase by approximately 50%, driven by manufacturing expansion projects and investments in systems and technology that will support our long-term growth ambitions. Today, we have a diverse and resilient supply chain with 26 production facilities in 16 countries that affords us optionality and agility while addressing global demand for our medicines. The increased manufacturing investments we are making include investments into next-generation capabilities for both small molecules and large molecules as well as transformative technologies such as ADCs, cell therapies and oligonucleotides globally.

Already in progress are a new end-to-end ADC manufacturing site in Singapore, a cell therapy manufacturing site in Rockville, Maryland and an API facility in Dublin, Ireland and a site in Qingdao, China for inhaled therapies. In November last year, we also announced several investments in the U.S., including a specialty manufacturing facility in Texas. All of these are multiyear projects that illustrate how we are supporting our growing pipeline, including potential drivers of growth post 2030. Lastly, we are upgrading our data and ERP systems to set the data foundation to support our growth and enable us to more fully leverage innovation in AI and make our business more efficient.

With that, please turn to the next slide, and I will hand over to Dave, who will take you through the Oncology performance.

Thank you very much, Aradhana. Next slide, please. So in 2024, Oncology delivered total revenues of $22.4 billion, which was an impressive increase of 24% with key medicines surpassing new multi-blockbuster milestones with Tagrisso achieving over $6.5 billion, Lynparza over $3 billion in product sales, Imfinzi and Imjudo combined approaching $5 billion, Calquence and Enhertu achieving over $3 billion and almost $2 billion in full year revenues, respectively. This strong growth really does signal clear progress on our mission to deliver medicines with potential to transform outcomes for patients globally.

Turning now to fourth quarter performance for our key medicines. Tagrisso global revenues grew 21%, reflecting strong growth across all indications, partly offset by the customary fourth quarter hospital ordering dynamics that you heard about earlier in China. In the frontline setting, Tagrisso achieved over 75% market share globally, with close to 85% market share in the U.S. We continue to make steady gains in the adjuvant setting with ADAURA and saw encouraging early launch uptake for LAURA in early-stage unresectable lung cancer.

Calquence total revenues increased 20% in the fourth quarter, driven by sustained BTK inhibitor leadership in the frontline CLL setting and continued international expansion in the face of pretty fierce competition. In the fourth quarter, Imfinzi and Imjudo delivered 18% and 28% growth, respectively, reflecting continued demand across lung and liver cancer in the U.S. as well as accelerating adoption of TOPAZ and HIMALAYA in Europe. As expected, we saw continued impact on established rest of world revenues following the two mandatory price reductions in Japan that took effect in 2024.

Lynparza achieved global sales of over $3 billion in 2024, triggering receipt of a $600 million milestone payment in the fourth quarter, which was recorded in collaboration revenue. As the established standard of care across HER2-positive and HER2-low metastatic breast cancer, Enhertu delivered total revenue growth of 54% in the fourth quarter, partly offset by stock compensation following recent NRDL listings in China for DESTINY-Breast03 and DESTINY-Breast04. Last week, we received FDA approval and NCCN guideline inclusion for DESTINY-Breast06, which will further drive adoption in the ultralow setting.

Truqap delivered $163 million in fourth quarter revenues, which partially benefited from stocking following the launch of the blister packs in the U.S. And I'm pleased to report Truqap is now the market leader in the second-line biomarker-altered patient population. We received a number of landmark regulatory approvals since third quarter results, including U.S. and Japan approvals for Datroway in HR-positive, HER2-negative breast cancer; U.S. approval for Calquence in mantle cell lymphoma; Imfinzi in limited-stage small cell lung cancer; and European approval for Tagrisso in early-stage unresectable lung cancer. And finally, we received priority review designations for Datroway in late-line EGFR-positive lung cancer based on the TROPION-Lung05 study; and Imfinzi in muscle-invasive bladder cancer, signaling the potential value of our rapidly advancing Oncology pipeline.

Next slide, please. So coming off this remarkable year of growth, we see continued momentum for our oncology medicines in 2025, particularly Tagrisso, Enhertu and Imfinzi despite the incremental impact from Part D redesign and the anticipated inclusion of Lynparza in VBP batch 11 in China. Tagrisso is positioned to remain the market leader in frontline EGFR-mutated non-small cell lung cancer, and we expect continued expansion of ADAURA and LAURA in early-stage disease in the year ahead. Longer-term combination trials are designed to reinforce Tagrisso as the backbone TKI, addressing late-line MET-driven disease resistance with SAFFRON and SAVANNAH and investigating novel ADC combinations with TROPION-Lung14 and 15.

For Enhertu, we anticipate new international launches for HER2-positive and HER2-low breast cancer as well as further expansion from DESTINY-Breast06 to drive growth over the course of this year. Moreover, the HER2-positive breast cancer trials reading out this year represent the next meaningful leg of growth for Enhertu. On Imfinzi, following positive Phase III readouts in lung and bladder last year, we anticipated ADRIATIC, AEGEAN and NIAGARA launches to initiate the next wave of Imfinzi growth, bolstered by continued adoption of HIMALAYA in liver cancer. And beyond '25, we expect bladder and GI to unlock further expansion for Imfinzi and Imjudo.

We expect Calquence to remain the leading BTK inhibitor in frontline CLL, supported by accelerating volume over the balance of the year. However, we do anticipate gross-to-net pressure both from Part D redesign and where we've taken contracting decisions to secure preferred formulary access in the United States. We expect meaningful demand growth upon the approval of AMPLIFY, which will allow us to grow into the finite therapy segment, which represents nearly half of the CLL frontline market today. And finally, for Truqap, our most recently launched medicine, we see continued market leadership in the core second-line biomarker-altered population. We're set to deliver another year of strong growth, which is supported by continued global demand for our medicines as well as meaningful indication expansion opportunities.

And with that, please advance to the next slide, and I will hand it over to Susan to cover R&D.

Thank you, Dave. So 2025 is shaping up to be a very exciting year across our Oncology pipeline. We look to maximize the reach of our innovative medicines across lung, breast, GI and bladder cancers and present additional data for some of our transformative technologies, including our IO bispecifics, ADCs and T cell engagers.

In the second half of 2025, we plan to announce the high-level results from the Phase III AVANZAR study of Datroway in combination with Imfinzi and platinum chemotherapy in patients with first-line non-small cell lung cancer. AVANZAR will be the first of 5 Phase III trials in frontline non-small cell lung cancer to read out and has potential to not only confirm combination efficacy with IO, but also serve as the first prospective validation of the TROP2 QCS-NMR biomarker.

Importantly, we recently amended the primary endpoint to focus on the non-squamous population and to look at the benefit in both TROP2-positive non-squamous and the broader non-squamous population, which we believe increases the probability of the trial's success. Additionally, we expect results from the TROPION-Breast02 trial of Datroway in triple-negative breast cancer in the first half of this year.

In 2025, Enhertu will move into earlier lines of treatment for HER2-positive breast cancer. DESTINY-Breast09 aims to bring Enhertu to the first-line metastatic setting with both monotherapy and pertuzumab combination options. DESTINY-Breast05 and 11 are the first two readouts for Enhertu in the early breast cancer setting, where the opportunity for cure is even higher.

Our Imfinzi bladder and gastric programs continue to advance with readouts for VOLGA, which builds on NIAGARA, the combination of enfortumab vedotin and Imfinzi plus/minus Imjudo in patients with muscle-invasive bladder cancer with POTOMAC in non-muscle-invasive bladder cancer and with MATTERHORN in gastric cancer. Together, these trials represent meaningful new opportunities for Datroway, Enhertu and Imfinzi as we look to expand the reach of these transformative medicines.

This year, we'll also report Phase III results from a very promising NME in our pipeline, camizestrant, which has potential to be the best-in-class next-generation oral SERD. As a complete estrogen receptor antagonist, camizestrant not only binds to the receptor, inhibiting transcriptional activity, but it also induces degradation of the receptor itself. In contrast, aromatase inhibitors only reduced production of the ligand estrogen, reducing ligand-driven transcriptional activity but leaving the estrogen receptor in place. This dual action of camizestrant gives us confidence that it can provide greater benefit to patients than aromatase inhibitors regardless of ESR1 mutation status.

Our confidence is supported by the data from the Phase II SERENA-2 trial, where we saw a similar median progression-free survival of 6 to 8 months with camizestrant regardless of ESR1 status, and a benefit over fulvestrant in head-to-head data with a hazard ratio of 0.58 in the ITT population and 0.33 in the ESR1 mutant population. These data, taken together with the low discontinuation rates, low rates of GI toxicities, which can be bothersome to patients and the ability to combine camizestrant with all 3 major CDK4/6 inhibitors, these together drive our confidence across the SERENA and CAMBRIA studies.

SERENA-6 is the first Phase III trial to read out and investigate switching the endocrine partner of any CDK4/6 inhibitor from an aromatase inhibitor to camizestrant on emergence of an ESR1 mutation during first-line treatment. The goal of SERENA-6 is to extend the duration of benefit in first line. ESR1 mutations are treatment acquired with low prevalence at the time of metastatic diagnosis, around 5%, increasing to around 40% of the time of disease progression at the end of first-line treatment. SERENA-6 addresses the pool of patients currently on first-line aromatase inhibitor plus CDK4/6 inhibitor treatment who have these emerging ESR1 mutations without disease progression on clinical scan. And we estimate this to be around 30% of all endocrine-sensitive first-line patients.

Whilst SERENA-6 focuses on these first-line patients that have emergence of ESR1 mutations, SERENA-4 targets a broader first-line population, those patients with newly diagnosed hormone receptor-positive, endocrine-sensitive metastatic breast cancer and investigates upfront combination of camizestrant and palbociclib. Similarly, we have two ongoing adjuvant trials, CAMBRIA-1, which looks as a switch strategy to extend treatment after 2 to 5 years of endocrine therapy with or without a CDK 4/6 inhibitor; and CAMBRIA-2, which investigates the upfront combination of camizestrant with or without abemaciclib. We look forward to updating you on our camizestrant clinical program, which is designed to support our ambition to establish this new endocrine therapy as a backbone in hormone receptor-positive, HER2-negative breast cancer.

Finally, we continue to progress our transformative technologies into Phase III. We now have 9 ongoing Phase IIIs for our IO bispecifics and plan to share early data for combinations of rilvegostomig with Datroway and Enhertu later this year. Last year, we progressed AZD0901, our CLDN18.2 ADC into Phase III. And this year, we plan to advance our B7-H4-targeted ADC with our proprietary linker topo I payload, puxitatug samrotecan, otherwise known as P-Sam, if you find puxitatug samrotecan difficult to pronounce, into a Phase III trial in endometrial cancer. In addition, we recently initiated the SOUNDTRACK-F1 trial, our first Phase III trial for the CD19-CD3 T cell engager, AZD0486, in follicular lymphoma. These transformative technologies help support delivery of sustained growth beyond 2030.

And with that, please advance to the next slide, and I'll pass over to Ruud to cover BioPharmaceuticals' performance.

Thank you so much, Susan. Our BioPharmaceuticals medicine saw another very strong year of performance in 2024 with total revenue growing 21% to $21.9 billion. In the fourth quarter, BioPharmaceuticals' growth was 24%. R&I grew by 28%, an impressive performance despite softer demand in China due to the mild start to the winter season for respiratory viruses. CVRM grew 17% with strong Farxiga growth of 22%, which was partly offset by year-end hospital budget dynamics in China.

Alongside Fasenra and Symbicort, Tezspire became the third blockbuster medicine in our Respiratory portfolio with over $1 billion in combined global in-market sales. Soon, we can expect to see a fourth blockbuster on that list as Breztri delivered over $0.25 billion in revenue in the fourth quarter. Given strong global demand and increased production capacity for Beyfortus, we recorded a sales-related milestone payment of $111 million in the fourth quarter. The launch of Wainua in ATTR polyneuropathy is progressing very well, and we are excited about the longer-term opportunity in the broader ATTR cardiomyopathy indication. And following the commercial launch of Airsupra early last year, we have seen impressive volume growth, and we continue to work on broadening the access for patients.

Next slide, please. We look forward to another year of strong performance in 2025 despite the anticipated Brilinta loss of exclusivity and the potential VBP inclusion for Farxiga and roxadustat. Outside of China, we expect to see further growth for Farxiga due to the continued market leadership in the fast-growing SGLT2 class and see potential for increased adoption with millions of patients still not receiving guideline-directed therapy.

Lokelma surpassed $0.5 billion in total revenue last year, and there's a growing body of evidence showing that Lokelma can help CKD and heart failure patients with hyperkalemia while maintaining guideline-directed therapy. We expect continued growth with further adoption and longer duration of treatment due to demonstrated real-world clinical benefits.

Breztri has grown rapidly in the last 2 years and has gained over 2/3 of the market in China, where COPD is a leading cause of death. We anticipate continued growth in China following the recent addition of COPD to the country's national public health program. Our biological respiratory medicines have a strong competitive position in the growing market. Biological penetration in asthma remains relatively low with potential for sustained long-term growth, and the COPD biological market is still immature. In 2025, we anticipate continued growth from our biologic portfolio in asthma, and we're looking forward to the upcoming RESOLUTE Phase III readout for Fasenra in COPD.

Finally, Saphnelo has steadily gained share among systemic lupus erythematosus patients treated with intravenous infusions and remains the leading IV biologic in several markets. Subcutaneous biologics represent more than half of the market for SLE today. The ongoing TULIP-SC trial is studying a subcutaneous formulation of Saphnelo and has the potential to open a new market opportunity.

Our BioPharmaceuticals portfolio is poised for continued growth in 2025, and I will now hand over to Sharon to discuss the latest developments from the BioPharmaceuticals pipeline. Next slide, please.

Thanks, Ruud. So 2024 was an exciting year in biopharma. And in 2025, the momentum continues as we rapidly advance both indication expansion and NME pipeline opportunities. In respiratory and immunology, we are building an industry-leading portfolio in asthma and COPD with the opportunity to expand our presence in these diseases, where high unmet medical need remains, with key indication expansion opportunities this year as well as NMEs in late-stage development.

Starting with Breztri, our triple-combination inhaler, already approved in COPD. We have the opportunity to improve care for people suffering from uncontrolled asthma with a new treatment option. In the Phase III KALOS and LOGOS trials, Breztri has the potential to demonstrate asthma control by improved lung function versus current dual-combination ICS/LABA treatment, and we look forward to these data readouts in the first half of this year.

Fasenra, our IL-5 monoclonal antibody, represents another meaningful opportunity to expand our reach beyond severe eosinophilic asthma and EGPA into COPD with the Phase III RESOLUTE trial. Characterized by airway blockage and long-term respiratory symptoms, COPD remains the third leading cause of death globally. Many patients are not well managed and remain at risk of exacerbations that increase the risk of hospitalization and mortality. With our strong foundation in biologics, we are seeking to address a broad spectrum of this highly complex and heterogeneous disease through differentiated mechanisms of action to address the underlying inflammatory pathways that may trigger COPD.

As a key contributor to inflammation, eosinophils are potent effector cells that are believed to play a role in COPD. The Phase III RESOLUTE trial for Fasenra addresses a population with eosinophilic COPD with baseline blood eosinophils of 300 or above, which represents about 30% of the market. To further broaden our reach in COPD, we look forward to initiating a Phase III Tezspire trial later this year in patients with eosinophils greater than 150.

And lastly, with our IL-33 monoclonal antibody, tozorakimab, we look forward to the results from our Phase III LUNA program next year, which is targeting a COPD population irrespective of eosinophil levels and smoking status. Tozorakimab received FDA Fast Track Designation at the end of 2024, emphasizing the high unmet medical need for this disease. With a robust pipeline of differentiated mechanisms, we have an opportunity to transform outcomes in COPD.

Now turning your focus to the right-hand side of the slide. In CVRM, we eagerly await the first Phase III data from baxdrostat, our novel aldosterone synthase inhibitor. Both as a monotherapy and in combination with dapagliflozin, baxdrostat represents a multi-blockbuster opportunity across areas where patients urgently need new options. In the second half of this year, we will see data from the Phase III BaxHTN trial, assessing baxdrostat as a monotherapy in uncontrolled or resistant hypertension We have already seen encouraging blood pressure reduction in Phase II. The PK profile supports 24-hour systolic blood pressure control, which we are looking to confirm in the Bax24 trial also reading out in the second half of 2025.

The Phase III combination trial of baxdrostat with dapagliflozin, BaxDuo-Arctic, for those living with kidney disease and high blood pressure was also initiated this past year. This reinforces our unique ability for multi-mechanism combinations to address interrelated diseases across our CVRM portfolio.

Lastly, as we continue to build the next wave of transformative medicines in CVRM, I am excited to share that we have recently completed the Phase IIb PURSUIT trial for AZD0780, our oral PCSK9 inhibitor, and we look forward to sharing the data at the American College of Cardiology Annual Meeting next month.

With that, please move to the next slide, and I will hand over to Marc to cover our Rare Disease portfolio.

Thank you, Sharon, and next slide, please. The Rare Disease delivered total revenue of $8.8 billion in 2024, up 16% year-over-year, driven by an increased patient demand and launches in new markets. Total revenue growth included a 2% benefit from a sales milestone for Koselugo received in the fourth quarter. In the quarter, Ultomiris grew 33%, driven by neurology indications with the vast majority of growth coming from generalized myasthenia gravis patients who are naïve to branded treatments.

Outside of emerging market, Soliris revenue continued to decline due to the successful conversion to Ultomiris, some competition and, in Europe, biosimilar pressure. As a reminder, we expect biosimilars to enter the U.S. market in March of this year. Beyond the complement, Strensiq and Koselugo grew 37% and 97%, respectively, driven by continued patient demand, new launches and a favorable tender order timing in Emerging Markets. 2024 was another year of double-digit growth for rare disease medicine, and we see momentum continuing in 2025.

Can I advance to the next slide? Ultomiris continue to grow, driven primarily by neurology indications, including patients who are new to branded medicine and Soliris switch patients as well as further market expansion. We indicated peak year sales for Ultomiris to be above $5 billion with contribution from both existing and new indication opportunities, including HSCT-TMA, CSA-AKI and IgAN.

For Strensiq, we anticipate further adoption supported by new hypophosphatasia guidelines, which have led to an increased disease awareness, diagnosis rates and accelerated new patient starts. As we continue to launch Strensiq in new markets globally, we are focused on disease education, which prepare markets ahead of the next-generation efzimfotase alfa launch.

Patient demand and geographic expansion continue to drive Koselugo growth in pediatric patients with NF1-PN. And following the positive Phase III trial results in adult with NF1-PN. And following the positive Phase III trial results in adults with NF1-PN, we expect KOMET to drive growth beyond 2025. We are well placed to deliver another year of strong growth, supported by global demand for rare disease medicine as well as meaningful indication expansion opportunities.

Please advance to the next slide. We anticipate 2025 to be a catalyst-rich year, unlocking the next wave of innovative rare disease medicine. We expect 5 Phase III readouts across multiple indications, 4 of which 4 new molecular entities. Following Phase II data, we believe eneboparatide, a PTH receptor agonist, has the potential to normalize serum calcium levels, decrease urinary calcium and preserve bone mineral density, all clinical priorities of hypoparathyroidism.

Novel depleter, anselamimab, has been developed to remove toxic light-chain amyloid fibrils that accumulate in the heart and kidneys. In light-chain amyloidosis, these fibrils cause systemic and progressive organ damage, hospitalization and high mortality when accumulated.

Efzimfotase alfa, our next-generation enzyme replacement therapy, is being studied in a broad hypophosphatasia population. With an improved profile, which allows for lower dosing and lower frequency, it has the potential to address 6x the patient population versus Strensiq.

Third-generation C5 inhibitor, gefurulimab, a VHH that allows for weekly subcutaneous administration has the potential to expand our reach in myasthenia gravis to treat an earlier and broader population. And lastly in -- for Ultomiris in HSCT-TMA, the product has the potential to address life-threatening complication of stem cell transplant and represent the first indication expansion opportunity for Ultomiris beyond the Soliris label. These trials combined represent a significant peak revenue potential, marking a meaningful contribution to the Rare Disease portfolio.

And with this, I will hand over to Pascal.

Thank you, Marc, and I will try to conclude quickly so we can move to the Q&A session. Next slide, please. So as you can see here, we are making very important step toward the achievement of our strategic ambitions, in particular, the $80 billion sales in 2030. And we are progressing high-value readouts that will unlock further growth.

So if we move to the next slide, this is an important slide because it really shows the investments we are making. And of course, those investments create R&D budget expansion. But those are investments that are not only supporting the growth of our existing and late-stage portfolio, but we're also building capabilities and capacity with potentially transformative technologies shown here. Our goal is to be a growth company until 2030 but also beyond 2030, and anticipate today what will shape the future of medicine and how we will actually continue to grow despite patent expiries that may happen post 2030.

And with this, I'm really pleased to report that we're making very good progress in all of these areas with multiple pivotal trials planned or initiated for our ADCs, our bispecifics, and most recently, our CAR-T and our T-cell engager programs. These transformative technologies have the potential to drive sustained growth beyond 2030.

Next slide, please. We continue to make progress against all the ambitions outlined at our Investor Day in May 2024. We set our sights on $80 billion in total revenue by 2030, as we communicated at the Investor Day. By the end of this year, early 2026 latest, we'll have a very good idea as to whether this ambition can be achieved. We're also working hard to drive operating leverage throughout our company, and we continue to make good progress towards achieving our ambition for mid-30s operating margin in 2026.

And finally, and most importantly, we have actually delivered 8 new medicines toward our goal of 20 by 2030, and that demonstrates our ability as a team to deliver life-changing medicines for patients globally.

Please move to the next slide. As Andy mentioned at the start of the call, limit the number of questions you asked to allow others a fair chance to participate. I must say this is what I say each time, but I'm never very successful with that one. [Operator Instructions]

And with that, let's move to the first question. Thank you. Let's start with this table and we go around the table and move to the next table.

Yes, James, maybe you can start.

James Gordon from JPMorgan. I'll stick to one theme, which will be China. So a couple of questions on China. So one would be so revenue is down 3% in Q4. But how did it evolve during the quarter? So what did it look like before there was the investigation on November 5 versus afterwards? And more recently, like the start of this year, are things getting better or worse in China?

Also in China, so for 2025, so you've given us a group guide, but what does that assume for China? And I can see we've got Lynparza and probably Farxiga VBP. So should we assume that China is going to decline overall, not just because of the investigation but also but VBP, but EM overall still grows? How to think about that?

And then just finally on China. So I think there have been investigations going for some time, but I've not seen any provision for a fine or other penalty in your disclosures. So how should we read that? Does that mean you don't think there is likelihood that you're going to have to pay something material? Or is it just you wouldn't provision for it at this time? When would you have to have a provision for something?

Thank you, James. So let me start with the last question, and then for the business development and business growth, I'll ask Iskra to comment and maybe Aradhana will take the guidance question. So we actually disclosed things as we learn about this investigation. And the important piece is that we disclose anything that we believe will have a potential liability dimension. We disclosed this in our release, and you could -- I would like to refer you to this and look at it.

So if you look at these things in turn, first of all, the illegal importation. We've communicated $0.9 million of avoided import duties. To the best of our ability, to the best of our knowledge, as we said, it relates to Imfinzi and Imjudo. The fine that could be associated with that if AstraZeneca is found liable for it would be 1 to 5x the amount of avoided import duties. So 5x -- maximum 5x the $0.9 million.

Now it is possible that Enhertu, for instance, will be affected as well because those products, the products that are affected are essentially products that were approved in Hong Kong, not yet approved on the Mainland. And there is a limited period of time during which patients actually can totally legally go to Hong Kong and get their medicines. But of course, some people found the opportunity here to take this product from Hong Kong and deliver them to the patients on the Mainland, and that is illegal. Patients can go get their medicines. Other people are not allowed to do the transportation, if you want, of those medicines to patients. So we know Enhertu, of course, had a period of time when it was approved in Hong Kong, not on the Mainland.

So that could be another one. But again, the turnover associated with Enhertu was a bit bigger than Imfinzi, but it's not going to be massively bigger. So that's the illegal importation case. And that's basically what we know in terms of the so-called fraud case. Again, I just like to remind you, we disclosed in the litigation section anything that could have a liability dimension for the company.

Now some of you would like to, I'm sure, understand better the sort of individual responsibility, corporate responsibility, legal aspects as it relates to a fraud case like this. My best advice is to suggest that you contact one of the Magic Circle firms here in London, make sure you to get advice, independent advice from them. Make sure you ask a firm that has an affiliate in China or a partner in China that has a license to comment on Chinese laws because global firms are not allowed to comment on Chinese laws. So if you want a precise, reliable answer, you have to get it from someone who has a license in China. So ask them and you'll get, I believe, a very clear answer to that question. And that's really the most we can actually talk about this case.

If I go back to your first question, James, the sales at the end of last year in Q4, I mean, when people -- when hospitals manage their inventory, manage their budgets, they start doing this in November, December. So that's what we saw and that's what typically you see. But the biggest thing is that -- to keep in mind is that the impact was very much our respiratory products. And into January, we see, I think, a pretty good trend. But of course, the respiratory products are still affected. Iskra, over to you and then maybe, Aradhana.

Yes. Thanks, Pascal. So thanks for the question. So I think the -- as Pascal mentioned, I mean, there is not much to read in the dynamic of the quarter 4 because it's really you will see the same trend in the respiratory products given the mild winter. And it's interesting to look at because it's -- because of the mild winter, clearly, you have a lower level of the flu infections that drives lower rate of the hospitalization. And particularly in China, those products, Pulmicort in particular, are really used for the hospitalization and exacerbation.

And if you look at the overall inhaled market, you will also see the significant slowdown in growth. Quarter 4, growth of the inhaled market was 9% versus 23% in quarter 3. So I would argue that's a very clear dynamic that you can see throughout the quarter. As you know, the winter is back and the flu infections in China are quite up. So you would argue that you may expect the respiratory portfolio performing as expected as normal in the quarter 1.

I think the second mentioned dynamic was the hospital capping. And I think it's -- you see the similar trend, I would argue, the same trend as you saw last year for the top 10 brands in the -- listed in the hospitals in China. The only difference is that this year, that effect was a bit bigger because more hospitals were introducing the hospital capping, trying to manage their budgets and the pressure at the end of the year.

But overall, it's looking in 2025, obviously, early days. But you do expect the portfolio to continue to grow. We have a few good news in the start of the year with Enhertu being included in NRDL with the 8 other renewals in NRDL and the regulatory approvals of the 2 new indications for Tagrisso and Lynparza.

So despite the headwinds that we expect from the VBP inclusion in Farxiga, Lynparza and roxadustat, we do you expect the rest of the portfolio to continue to grow.

The biggest headwind really is VBP for 2025. Iskra, maybe you wanted to say a little bit about the team, where they are at. I think it's important to get a sense for potential momentum into 2025 but also our interactions with the medical community in China.

Yes. I just spent 4, 5 weeks in Shanghai, it's really impressed on one side, as I mentioned in my remarks, on the commitment and of the team. Equally, I was impressed that -- it was unsettling moment in November and December, but I was really impressed how -- with the stability that we introduced in December and the clear focus on what the team needs to do both in the office and on the ground are very much focused and keen to continue doing what we do best, and that is delivering our innovative medicines to the patients in China.

And I think the message of the company commitment and our belief that our strategy in China is the right one that we believe in the -- in our ability to deliver for patients, but equally to use a growing innovation in China for China and for global is very much -- landed very well internally as well as externally. I think from my external interactions with many different stakeholders there, I think it's also clear that our partners and stakeholders in China are willing and happy that we will continue to invest and partner with them in order to bring innovations together.

Aradhana?

Sure. So on the guidance, obviously, the China is included in our guidance. We do assume growth from our underlying brands as well as the NRDL inclusions that Iskra talked about. But at the same time, there is headwind from VBP, again, 3 large products obviously being included in VBP this year as well as some disruption from some of the ongoing investigation and team stability and so forth.

Luisa Hector from Berenberg. I have just one more on China and then some on the outlook. So for China, can you confirm if there have been no notable changes in your market shares for key drugs in China?

And then for the outlook, perhaps just to quantify, if you can, the Part D impact for 2025 redesign. I think I only heard mention of Calquence from Dave, but perhaps other products to be aware of. And Aradhana, you mentioned $3 billion of deal-related payments. I'm just curious whether you can provide any color on the components. And should we assume that the majority of those come essentially with success, so pipeline success, sales success?

Thank you, Luisa. And I can see that I'm totally failing once more, 3 questions at a time. So should we start, Iskra, with you. And then Dave, you cover...

So a quick response on the market share. As I mentioned, the initial market is -- I mean, the whole market obviously slowed down. So clearly, you will not see any major difference in market share. With Farxiga, you will see some difference and there is some decline in the end of the year. And the reason is that the hospital capping that I mentioned really applies only for the 10 top performing brands.

Clearly, as you know, Farxiga is competing with many different SGLT2 generics in the China market. So in the December due to the capping, you will see some decline. We saw the same trend, as I mentioned last year, and you would expect that to bounce back.

But net-net, for important products like Tagrisso, et cetera, so far, we have seen no impact. Of course, we looked at that because market share is the best way to actually assess whether you're impacted. And when the market moves up and down, we see no impact at all, yes. Early days and so far, we only have hospital data. We need retail data. It takes more time to get there. But it's very encouraging to see our market share actually not moving differently from what we would expect. Dave, you cover Part D?

Yes, please. So I think the first point, Luisa, on Part D is that the IRA we've continually said we think is manageable, it's part of guidance, it's in our outlook. So it's built in. So why do we think it's manageable? Well, first and foremost, it predominantly affects our oral oncology portfolio. There is some biopharmaceuticals and rare disease impact.

But in terms of where we see the greatest impact, it's on oral oncolytics. There is a downside to increase manufacturer liability that now is happening in terms of picking up what was previously catastrophic. But there is a partial offset, and we saw that happening in 2004 from improved adherence and compliance on medicines and also lower free drug utilization. And that volume is directly a result of improved patient affordability. And so that's the first dynamic for manageable.

I think the second thing that's most important here is that we just look at the growth opportunities that we've got in '25, right? So Tagrisso, we have continued opportunities, ADAURA, LAURA, FLAURA2; Imfinzi, HIMALAYA, ADRIATIC, CASPIAN, NIAGARA; Enhertu, DV06, DV0 and Truqap. Those are all in hand. And so it allows us to be able to work through the headwinds that we're getting in from IRA and that's why it's included within our outlook.

Aradhana?

So just to build on Dave's point, the guidance, especially the gross margin guidance that I provided in terms of 60 to 70 basis points, that does include the net effect of the IRA. Again, we haven't given an absolute quantification, but that as well as the VBP as well as some of the impact from biosimilars, that's included in the gross margin indication.

As it relates to the $3 billion for past deal-related payments, yes, most of them are success-based. But success could not necessarily be Phase III. Some of them have already happened with Daiichi, for example, but it could also be progression events. So when the product moves into Phase II or into Phase III, so -- which is also success-based because obviously, we won't move them into the next phase if we weren't confident. So yes, all of those related to -- some of it is Daiichi but also CinCor. Again, baxdrostat reads are positive, again, the CD19/CD3, so it's a multitude of smaller payments that are all progression or success-based.

Just since we talked about Part D, keep in mind that basically, the headwinds we have in 2025 are, of course, IRA. Two is VBP China, we mentioned it. Another couple of smaller ones, Brilinta patent expiry and the usual maybe more intense this year [ cottage ] industry of price cuts and rebates and whatever in Europe. But the momentum in the portfolio and in the new indications we hope to launch certainly will continue to support our growth and move through these challenges in '25. There's one last question on the table.

Jo Walton from UBS. A couple of clarifications, I think. Aradhana, I didn't catch what you said about the gross margin impact for 2025. Could you just tell us again what you're expecting to happen there? You spoke very quickly. And is that something that we should continue to see through into '26 as well? Or is it just a onetime impact?

And just to go back to Part D again, if we can, you say you -- are you already seeing increased adherence? In 2024, the payment levels were lower, but they aren't as low as they're going to be in 2025. So are you anticipating a further improvement in adherence? And is there any chance of things being even better in the first quarter because of the all-you-can-eat buffet that you get if you pay your [ $2,000 ] across the year rather than have to pay a big lump sum in January? So just whether we should be seeing anything in the short term.

So I'll address the gross margin point. So the indication is more around the -- so I said 60 to 70 basis point impact on gross margins. And a lot of that comes from the Part D, the net effect of the Part D payments. If you want to think about it, again, it's not a gross to net discount, but it does affect what you pay off of your revenue base. So that's included in there.

When I say VBP, again, VBP, when you get your price for VBP and their stock compensation and so forth, it affects your price, right? It doesn't affect necessarily your volume. There's some impact on volume. But you hope that once there's a reset on volume, obviously, generics will take some share and then you'll start growing from there, which is what we've seen in other VBP situations. So again, that impacts your gross margin because your price is basically reset.

I talked a little bit about -- and Pascal said a whole bunch of other price actions, which you see in Europe and other countries. Soliris biosimilar is another example, right, where we have been transitioning more and more of the market to Ultomiris. Again, Ultomiris is at a 30% lower price than Soliris is. So as more market shift to Ultomiris, again, slightly different -- slightly lower gross margin than Soliris. So it's all of those factors that -- and again, I don't think they are onetime factors, but that's sort of what we expect to point to. Dave?

Thanks, Aradhana. Jo, so yes, in 2024 in the oral oncology portfolio, we saw both a reduction in free goods as well as an improvement in adherence or sometimes we talk about that as abandonment rates. And that came as a result of the co-pay cap being set at $3,300 last year. Now obviously, we didn't have the liability that we needed to pay for within that. So 2024 was a year where the co-pay was capped, but there wasn't the 20% liability. The payment structure was still as it existed before. And so that's one of the things that changes within 2025.

But I think that very importantly, we've had this as an opportunity to help our reimbursement teams and our account managers engage with U.S. customers to understand how they can work together to create education around the new opportunities to be able to think about where charitable programs need to be used, where they might not need to be used and to be able to have an understanding for how the benefit design has changed.

And I think that there's education around that, that that's one of the things that's resulting in patients being able to be on medicines that are not through charitable foundations. And then the charitable foundations are able to have more money available to them because of the co-pay caps to be able to serve more patients.

So it has really been, I think, in many respects, a real improvement in terms of affordability resulting in higher volume on the medicines. And I do expect that we'll see that continue into this year, probably not to the same degree of the bump that we saw when we went from uncapped to $3,300 and now $3,300 to $2,000.

Can we move to another table?

[indiscernible] mentioned the secondary effects if they're -- if we're seeing in the commercial...

No, we're not seeing secondary effects into the commercial [ setting. ]

Sachin, we move to this table and we'll get to this table and move there.

Sachin Jain, Bank of America. Given it's a pipeline, 2 pipeline questions on the 2 assets you called out on the slide. So the first one, I guess, is for Ruud on bax. Of the greater the $5 billion peak, how much is in the resistant hypertension opportunity we're getting this year? And I wonder if you could just give us some feedback. If you deliver the data as per Phase II, what's your physician feedback on adoption of this therapy in a heavily genericized market, third, fourth line agent as a common as pushback?

And then the second question is on the SERD. I think investors are generally very confident on SERENA-6 because of the mutant population, but there's been lower confidence in frontline, lower mutations incidents. So I wondered if you could just touch on the hypotheses that make you confident. You touched on biology, but some of the other stuff we hear from physicians potentially delaying ESR1 mutations, endocrine sensitivity or combination therapies. Just wondering if you could touch on other hypotheses that make you confident.

Thanks, Sachin. It's nice to move to growth opportunities away from headwinds. So Ruud and Susan, maybe?

Yes, let me take the first one. So the baxdrostat is the combination of the composition of the mono component as well as the combination of baxdrostat and Farxiga or dapagliflozin. So that's one. As you can imagine, this will be a crucial for baxdrostat, and we are doing an enormous amount of market research. And it is clear that the high unmet medical need is very clearly resonating with cardiologists and physicians in internal medicine.

I think the big challenge is going to be the GPs because a lot of those patients are undiagnosed or are not well treated in the first line. And so we're working very hard in order to find a way in order to educate the first line moving forward as well. But there is no doubt that this new class of medicine, this new way of treating resistant and uncontrolled hypertension is resonating very well with the specialty care group of physicians.

Before we move to SERD, let me just add that if you look at kidney disease, which is a total epidemic in the world, 800 million people have kidney disease today and it's growing. 40% of those patients have a kidney disease from hypertension, 40% from diabetes and the rest is a few other reasons, but put 40% of these patient.

Now they develop kidney disease is because they have hypertension that is not properly treated and their blood pressure is not controlled. And so we believe that an agent that helps bring those patients to blood pressure control and also potentially affects aldosterone because I -- we believe that the effects of aldosterone is negative, the deleterious effect of aldosterone on the kidney and the heart are totally underestimated. So if you affect aldosterone and you control blood pressue, we really have a very positive effect on kidney disease in particular. Susan, do you want to cover the SERD?

Thanks for the question. So again, the data that has been seen for the current SERDs have been in later line trials to date, where the proportion of patients that are really endocrine sensitive is lower. And I think that's why you've seen the benefit concentrated in the ESR1 mutant. Just as a reminder, and as I said, we saw activity in the overall population with a hazard ratio of 0.58 versus fulvestrant, which is the currently available SERD.

We know that fulvestrant doesn't maximally degrade the issue in receptor. As a reminder, when you go into the first line in SERENA-4, the comparator is with an aromatase inhibitor, but doesn't degrade the receptor at all. And that's why we think you're going to have activity in the ESR wild type.

And again, that builds on the hazard ratio of 0.58. Overall, it wasn't just in the ESR1 mutants that we saw activity. And then we've enriched the patient population in SERENA-4 for patients that are likely to be more endocrine sensitive. So in addition to them being first line, which obviously enriches for endocrine sensitivity, they had to have adjuvant endocrine therapy for more than 2 years without progression.

So again, those patients that progress rapidly, the less endocrine sensitive. You had to have a treatment-free interval more than 12 months since completion of adjuvant therapy without progression unless we had [indiscernible]. And I think those features that we've enriched for were carefully chosen in order to maximize the probability of technical success with SERENA-4 as well as for SERENA-6.

Sorry, the bax peak sales split mono versus combo, just to get an idea of how you think about the mono opportunity this year?

So sorry Sachin.

The greater than $5 billion, do you have a split of that mono versus combo? The study this year is obviously the mono.

Yes. We haven't disclosed that, Sachin. So -- and this is a relatively highly competitive field with 2 components. So we have said this is substantial on both sides, but we haven't given the split.

Mattias Häggblom, Handelsbanken. So 2 questions for Sharon, please. So first, on the ongoing Phase II investigating use of the oral GLP-1s. I'm curious to hear how confident you are the 26-week duration of therapy for the primary end point is enough to meet the recently revised FDA guidance. And if you can talk about enrollment pace in those studies?

And then secondly, for the oral PCSK9 with Phase IIb data now confirmed for ACC in March, help me frame expectations of LDL reductions once the abstract from ACC is out and perhaps talk about time lines to a Phase III start. And perhaps remind me how we win over Merck's oral peptide that has Phase III trials reading out later this year.

Sure. I love these questions. So thank you. Your first one was about AZD5004, that's our oral GLP-1. And we've been very public about the progress of that. We released the data at Obesity Week in November of last year. This is a true small molecule. We are envisioning this as a molecule that we are developing both as a monotherapy and in combination with other small molecules already in our portfolio.

I mentioned that because we are moving beyond short-term weight loss targets really thinking about the interconnectedness of cardiovascular, renal and metabolic disease. So the first step is our 2 Phase IIb studies, one for patients with obesity or who are overweight and one for patients with type 2 diabetes. Those are the VISTA and [ APLICUS ] studies. Both are enrolling well. And we are on track for the time lines that we previously mentioned.

I'll move on then and speak about our oral PCSK9, which was your second question. This is AZD0780. So we have completed the Phase I data, and we released those last year. And in those data, we showed that we were able to reduce LDL at 50% on top of statins, 78% from baseline. We have just completed the Phase IIb study, PURSUIT. We will be releasing those data next month. So hold your breath. But I would expect to share a story that is broadly in line with our Phase I data.

How do we differentiate this molecule from other PCSK9s? Well, unlike some of them, it's orally bioavailable. Unlike the other orally bioavailable molecule, it is a true small molecule. It doesn't require a permeability enhancer and it doesn't require fasting. There is no food effect associated with this. So it is well suited to use as a monotherapy but also potentially in combination with other molecules in our portfolio because it is a small molecule, such as the one that I just mentioned, AZD5004, again, addressing the interconnectedness of cardiovascular, renal and metabolic disease.

So it has a favorable PK profile. It's sets us up well for success and it lines up in a portfolio of small molecules that really allows us to address interrelated disease.

Thanks, Sharon. Maybe, Matthias, I mean, differentiation is one thing. But the -- I think the most important part is to create this market for [indiscernible]. And 2 companies doing this is far better than only one. If you think of PCSK9, they are fantastic drugs. Problem is they're injectable and expensive. So in the U.S., you can sort of get them. But in Europe, in most countries, you have to have an event to be able to get a PCSK9 reimbursed and the steps are complicated.

You have to have a recommendation from cardiologists. Often, you have to get approval from the payer before you can get it. If you move to an oral agent, that is easy to take and then priced at an appropriate level. It can definitely expand the access to these very important medicines. And then you can go into the emerging markets where also the needs are enormous. So I think really expanding this PCSK9 market is going to be a very fundamental priority for our commercial organization.

Yes. Richard Parkes from BNP Paribas Exane. I've got one for Susan and one for Ruud. Firstly, for Susan. You're obviously making a push into next-generation PD-1 bispecific. You don't, as far as I'm aware, have a VEGF in development currently. But you do have a TIGIT where I think confidence in that target has been damaged by recent data. So in terms of VEGF, is that something you would address through partnerships and do combination studies with Dato-DXd? Or would you develop something internally? And can you talk about your confidence on TIGIT still and the bispecific?

Then the second one is for Ruud. You specifically talked about continued growth in the asthma biologics franchise, but you do have GSK coming with a 6-monthly depemokimab in the relatively near future. So if you can talk about that competitive threat and how you manage to -- how you plan to manage that?

Okay. So again, we presented data from the ARTEMIDE-01 study at the World Congress on Lung Cancer for rilvegostomig in non-small cell lung cancer. And again, we focused the development of this asset on the higher end of the PD-L1, expressing agent, which is the area where I think the data are most encouraging for the TIGIT mechanism.

If you just come back to those data, if you look at the PD-L1 greater than 50%, actually, we had a 62% response rate in that population and a median PFS of more than 10 months, which is actually, with all the caveats of cross-trial comparisons and small sample sizes as a health warning, that's in the same range as the other bispecifics, including the ivonescimab data.

What we also have is in the 1% to 49% patient population, again, encouraging data with that asset compared to what you'd expect with a PD-1 agent alone. And importantly, because it's a Fc-silent molecule, it's good combinability with chemotherapy with good safety and low discontinuation rate. I think they have contributed to some of the failures with combination data that we've seen with other molecules. We do have some Phase II trials ongoing for combinations with VEGF-targeted combinations, for example, in our HCC and gastric studies as well. The good news is that we've got good safety for combination of rilvegostomig with that agent.

And I think where the VEGF mechanism has also shown on its own that there's activity, that is the place where you're probably most likely to see the interaction between both an IO and the VEGF mechanism. So I think there's opportunity for us to build on the backbone of rilvegostomig with some combinations with VEGF-directed agents. That's something that we're obviously -- we'll be looking at as well beyond the HCC and the gastric studies that we've already got ongoing.

Thanks, Susan. Ruud?

Sure, I'll take the second one. So first of all, I think the market opportunity in itself is still very, very substantial. The bio penetration of biologics in the asthma segment on average is only 20%. So clearly, there's a substantial room for further improvement there. Secondly, based on our own Fasenra, which is a 2-month injection, we know that, yes, it is important from a convenience perspective, but the end game is always efficacy. It's very important that physicians, but certainly patients feel that efficacy is the most important piece.

And the reason that Fasenra has performed so well in the severe uncontrolled asthma segment is that the efficacy is very high and the level of satisfaction is very high. So in that sense, competition is not bad, but I think the bar in order to move Fasenra away from the market leadership we currently are having the anti-IL-5, I think, is very high.

Equally, of course, we have an unprecedented possibility in China. We will get to the Fasenra, hopefully later this year in NRDL. We're clearly the market leader in China from a respiratory perspective. So in that sense, we are very bullish regarding the outlook of Fasenra moving forward despite potential more competition.

Thank you, Ruud. Let's move to Steve Scala online. Steve, over to you. Can you hear us?

Yes. Two questions. First, regarding Tagrisso. Is your confidence in the outlook predicated on growth in adjuvant? Or do you think Tagrisso will remain dominant in first line or perhaps both? And has the first-line outlook been influenced by the MARIPOSA OS data? So that's the first question.

Second question is the fact that this duty has been assessed against AstraZeneca in China, suggesting corporate Astra has been implicated in the investigation. Previously, Astra was not part of the investigation. So if it's now part of it, what are the implications of that?

Dave?

So Steve, thanks for the question. On the first part of your Tagrisso question, we saw in 2024, very nice growth in ADAURA, LAURA, where we've launched it, but also a really strong launch to FLAURA2. And I'll note that FLAURA2, we've launched now in 65 markets across the globe. So we've had an opportunity to really get out and be able to tell the Tagrisso backbone story and then also the opportunity to be able to do with some combination in FLAURA2.

As we look at the impact that MARIPOSA is having, certainly the overall survival that has been shared as high-level results is something that -- anything at a year of overall survival, I think, is catching attention of the community.

With that said, based on the data that the community saw at ELCC in 2024, for FLAURA2, where we saw really very, very competitive FLAURA2 landmark survival rates of 80% at 24 months, 64% at 36 months. I think that there's a general expectation that FLAURA2 is also moving in absolutely the right direction in this regard. And the utilization that we're hearing is for MARIPOSA is a lot in second line and actually quite a lot of trial, but not repeat use.

And the only last thing that I'd just say, let me take this opportunity. In my prepared remarks, I had mentioned that the market share was 85% in the U.S., and I should have said that, that was in Japan. So that was something that I had said. The global frontline eGFR market share is 75%. That's inclusive of the U.S. And in Japan, it's higher at 85%. So that's just something I wanted to clarify.

Thanks, Dave. And the second question, Steve, is relatively straightforward. The -- as I said before, the notice has been sent to the prosecutor's office, if AstraZeneca is found liable -- the Chinese law is very, very clear, the implication is very clear, which is the company has to repay the import duties, so $0.9 million, $900,000 to be repaid plus a fine that is 1 to 5x the amount of import duties. So it could $0.9 million plus $0.9 million or it could be $0.9 million plus $4.5 million. That's the implication and it's very, very clearly defined by Chinese law.

Andy, you will tell me when we have to run out. We have to stop because I know some of you have to go to another meeting.

Emily Field from Barclays. Two on Oncology. Firstly, on Datroway, a great label from a safety perspective with no box warning relative to other TROP2 ADC. Do you expect that to hold for a potential approval in non-small cell lung cancer? And then another question on the SERD. We will be seeing the all-comers results from the competitor giredestrant this year. I was just wondering if you could help us understand why some of the molecular advantages of camizestrant over the competitor molecule.

Susan?

Yes, sure. So obviously, we're still in discussions with regulatory authorities about the filing for Datroway in the eGFR mutant lung cancer setting. But we did publish the safety data that's the basis of that filing earlier. So you can look at the adverse event profile that is there. And I think within the eGFR mutant population, that's in line with the current label that you've got in the breast cancer setting. So we obviously have to wait for the final label, assuming that the rest of the filing goes well.

In terms of the camizestrant molecule, I think we've got a very good potency. We've got very good linear PK. We've got very good drug-drug clean profile with all of the combination partners that we're looking to combine with, including all of the CDK 4/6s. The safety profile that we're seeing with camizestrant leads to an extremely low discontinuation rate, very low rates of these GI side effects, which I think is important, particularly when you go into the earlier lines of therapy, people want to stay on drug for a long period of time.

So I think the overall profile that we have with this drug is really looking best in class from our perspective. Obviously, we've got to have the trial readouts first, and then we can happily discuss the actual profile that we've seen in the Phase III trials. But at this point, we're confident.

Simon Baker from Redburn Atlantic. Two quick ones, if I may. Just going back to rilvegostomig, Susan, could you give us your updated thoughts and you could touch on this on the scope for TIGIT as a target beyond non-small cell lung cancer based on what you now know.

And then one for Iskra on emerging markets. The growth ex China look very good. I wound if you could give us some highlights of sort of country by country where you are seeing that growth.

Okay. Thank you. So for rilvegostomig, obviously, we've -- in addition to the lung cancer indications with TROPION-Lung10 in combination with Datroway and the ARTEMIDE-Lung02 and Lung03 trials in combination with chemotherapy, we've got the ARTEMIDE-Biliary01 study, which builds on the TOPAZ data that we had with durvalumab in biliary tract cancer, but takes it into the adjuvant therapy. That's I think I would say that the investigators are very enthusiastic about.

And then the next piece in terms of the expansion is clearly building on the combinations that we've already got with Datroway. There's also good combination capability with Enhertu and then with the other ADCs that we've got coming through the portfolio. I think there'll be significant opportunity.

We are focused on those patient populations where TIGIT is likely to be more beneficial. But that has been seen in indications also like gastric cancer, for example, and in HCC cancer, you would expect activity from the TIGIT mechanism of action beyond what you see with PD-1.

So if you look at the emerging markets outside of China, as I mentioned, I mean, growth is quite impressive. It's another strong year to growth of 32%. And the emerging markets, if you exclude China, actually represents up 13% of the global revenues. And we are very confident and positive in the further growth in the emerging market. And therefore, the answer to your question is very difficult because we actually see the super strong double-digit growth across Latin America, Asia, Middle East and Africa areas. And we do see the good reasons and the good -- many growth drivers to see that continue.

And I think one important point is that across the emerging markets, we are actually launching our brands a bit later than when comparing with U.S. and Europe. If you think about that, I mean, the products like Breztri or like Enhertu are still to get the full maximum and full leverage across the international region. So despite the headwinds that we will always see, as Pascal mentioned, a bit of the pricing or the exchange rate, I do believe that underlying growth across all areas in emerging markets is to be continued across all therapy areas as well.

I mean, I think it's -- just to add to this, it's important to remember that the population is there. The global population lives outside the U.S. and Europe, I mean, most of the population. And many of those countries are becoming richer, their economies are developing, more funds can be allocated to health care. And we have the portfolio of products that address most of the pricing needs, medical needs in many of those countries.

The other thing we've done is we've accelerated the approval of new products. In the past, these countries were sort of priority 3, of course, U.S., Europe first. And we had a long delay between the launch in Europe or U.S. and the launch in those countries. We've accelerated this. Team has done an amazing job. And so we're bringing those medicines to all these countries much faster than before.

So there's really good reasons to believe that we will continue to grow. And in many, not all, but many of these countries, we don't experience the impact of patent expiries like we have in the U.S. or Europe because those products are sort of sold as a brand, lower price, but less exposure to patent expiries and you just compete with generics as opposed to losing it all when you lose patent protection.

Eric Le Berrigaud, Stifel. Two questions. First, we do appreciate that your top priority is on top line growth, both short and longer term. But my question is on margin development. We were probably expecting margin to end at around 32% in '24 and ended just above 31%. So you reiterated commitment to reach mid-30s by '26, which leaves a gap by around 400 basis points over the next couple of years. Given the current guidance for '25, it looks like the leverage will be quite minimal this year. So it leaves a lot into '26.

So how should we think about this development? Are we right in assuming that mid-30s means 35%? Or could that be a broader range? And would you be comfortable reaching 34% or just to give kind of a sense also for consensus adjustments?

And the second question is on Airsupra. If I remember correctly, it was supposed to be multi-blockbuster in the end, and you were probably more bullish than consensus. And the start is relatively soft, and we haven't seen much of an improvement in even the fourth quarter. So there was a lot of development around free sampling and probably formulary access. Is it getting better moving into '25? And should we expect a significant improvement on the products in '25?

Aradhana? And then maybe...

Sure. So we do expect to see operating margin expansion this year. So if you look at our guide for revenue and EPS and you can extrapolate sort of what the operating margin could be. So there is clearly an expansion between '24 and '25. I also mentioned in my prepared remarks the impact that FX has. And again, that was not obviously the case in '24, but when you look at where the currencies have moved, particularly in the last 2, 3 months, that does have an impact of, as I mentioned, 20 basis points in -- on our margins for this year and 50 basis points if you compare it to the first quarter 2024 rates.

Other than that, I would say me and all the entire executive team is very much committed to achieving that mid-30s operating profit. So mid-30s is 34% to 36%, which is always what we have signaled. And we have a number of initiatives, whether it's optimizing our commercial footprint, seeing where we do work. So you've probably seen the hubs we have opened in Mississauga and Barcelona and Bangalore and other places, again, taking advantage of work we're doing.

We're also doing a lot of process improvements, whether it's in regulatory filings and so forth. So there are a whole bunch of different initiatives that are happening across the company on driving productivity while still supporting, obviously, a very large and growing portfolio.

Yes. Ruud on Airsupra?

Yes, quickly. First of all, why I'm still very excited about Airsupra. First of all, we see an enormous volume, over 300,000 scripts in 1 year. But equally -- and that's also the challenge in the spirit of transparency, 1 of 2 scripts are not fulfilled at the pharmacy level because still of access issues. This is a very highly generalized market. And clearly, it's much more difficult than we expected in order to get traction because [indiscernible] has a very, very low price. And we don't want to compromise at this stage of the game too much our price. We want to sell it based on the clinical features of Airsupra.

The other big piece of excitement is that we have published why these are the high-level results of the BATURA data, which further expands the potential of using Airsupra in the [ mild ] asthma segment. And last but not least, more than 65,000 physicians in United States have already prescribed Airsupra. So it's all about access.

We were making good progress. By the 1st of January, we have now roughly a coverage of 60% of commercial lives. We have secured one very large Part D access. So it will take some time. The good news is of inhaled therapies, the tail is very long. You see it yourself is the performance of Symbicort. So we are very committed in order to capture this opportunity moving forward, and we are working very hard on the access situation.

Great. I mean you know that when you launch a new product, access is always something that takes time, even more so here because of the reason Ruud described. But we're making good progress. And the important piece, I think, is BATURA that -- the study that Ruud mentioned. Because fundamentally, you've got to convince managed care of the economic value of reimbursing these products when they have, of course, generic [indiscernible] that they can offer patients. And BATURA data will certainly be very important tool in convincing them of the cost effectiveness of reimbursing Airsupra. The clinical data are very, very striking.

It's Justin from Bernstein. I've got one for Marc on efzimfotase, just if you wanted to share any thoughts on the cost of goods versus Strensiq. And the second one for Aradhana, just if you could possibly give any kind of color on CapEx after 2025.

So in short, the cost of good is [indiscernible] efzimfotase is way under that of Strensiq. And our ambition is to be able to reach out to 6x the number of patients as we do for Strensiq, not only for a cost of good reason but also because we are also going to address the adult population and a much wider regional expansion.

So the cost of good is only one factor in this. The development -- the clinical development plan in both pediatric and adult is important, and the regional expansion where today, Strensiq is still relatively limited to a certain number of countries. And we are expanding year after year. But with efzimfotase alfa, this expansion will be much easier and much wider.

As it relates to CapEx, I think a good way to think about sort of from a forward standpoint would be that these are all multiyear projects. So some of them we started last year or the year before, so like the API facility, the cell therapy we started last year. The ADC, we will start this year. Qingdao, we started last year. So you should expect that these go for at least 4 or 5 years, same with the ERP project. And so this would be a good level for the next several years. Again, if there are new projects started, for example, if we have great success with the GLP-1 or something, then we'd announce those separately. But this is a good way to think that these are multiyear projects.

Thank you. It was good you asked the question about efzimfotase because I think this product is underestimated. Potential, we said is quite substantial. There's no competition. Profitability will be good. The unmet need is important and large. So we believe it is going to be a very important product, not only for Alexion but for AstraZeneca.

Should I take maybe the last question online, Andy, and then close? So we -- sorry. There's 2 more in the room. Sorry, I missed that.

It's Rajan Sharma from Goldman Sachs. First question, just to follow up on the oral PCSK9 actually. Do you think that you need a cardiovascular outcomes trial or a positive one to get meaningful uptake? And what would be kind of your thoughts around initiating that trial, particularly thinking that you might need one for the oral GLP-1 as well?

And then the second question was just on AVANZAR and potential filing strategy there. Assuming that it is positive on PFS, do you think that will be enough for a conditional approval?

Sure. So I'll jump in and answer the question on the oral PCSK9. I appreciate the question. I recognize that we are just now completing Phase II and planning for our pivotal study. We're not going to comment today on what our plans are for outcomes trials. We have been public about our expectation for the need for outcomes trials in oral GLP-1. And it's a little early to comment on what we plan to do for AZD0780, but thanks for the question.

In terms of PFS as an endpoint in first-line non-small cell lung cancer, there have been approvals with full approvals based on PFS. In general, the regulatory agencies are going to want to see a positive trend in OS and reasonable maturity of the endpoint. So those are just things to consider.

One question. I appreciate you've got a 2030 target of $80 billion revenue, and that's more of an organic number. If we look at your balance sheet, you will start generating more capacity to redeploy capital. What are your therapeutic area capital allocation priorities? I mean I appreciate Oncology has been very attractive for you. And when we started, TIGIT suddenly was very interesting, and people are now asking if VEGF is more interesting. So are there therapy areas where you think it's getting a bit more difficult to find incremental opportunities? Or you're still excited about equal amount of capital in all therapy areas?

Yes, it's a great question. The exciting part of our industry at this point is, it's also the scary part, I must say, is that, I mean, the innovation is incredible. And the speed of replacement of technology is incredible. And that's why I believe -- I continue to believe that being focused on a few key therapy areas and building competence, building expertise is fundamental because you actually understand much better what are the promising new technologies or products that are emerging and how you develop them, how you commercialize them and you have an end-to-end understanding of a specific therapy area.

So our approach is really we continue to focus on oncology, respiratory disease, cardiovascular disease. Immunology, we want to address it through a few products we are working on, but also cell therapy, we believe, could be a very important angle to treat some of these immune diseases and, of course, finally, rare diseases. But we will continue to stay focused on this and build access to new technologies. We've talked about ADC, T cell engager, cell therapy, bispecifics, radiopharmaceuticals. There is a whole range of technologies that have emerged in the last few years.

And actually, there's reason to believe it will continue to happen. And it's actually fantastic, fantastic for patients, for medicine, fantastic for us to participate in this, bring those medicines to patients. The reason I was saying it's scary is that it actually keeps us all on our toes, right? We have to make sure we actually scan the horizon constantly and we don't get caught with something that is coming from left field that actually replaces our products. I mean, you see it yourself, I mean, products coming out of the woodwork and really transforming the treatment of an indication.

So maybe I'll take the online one and then we'll let you go. Gonzalo, Danske Bank, do you want to go ahead?

Yes, Can you hear me, guys?

Yes. Go ahead.

Okay. Great. Gonzalo Castanon from Danske Bank. Two questions. One on Datroway. And what type of launch do you expect in the TROPION-Breast01 setting? Do you see broad potential in that population? I'm asking this because now DESTINY-Breast06 [ for Enhertu ] will come one line earlier. I was wondering how fair is to assume some patients will go through ADC sequencing, so Enhertu followed by Dato.

And the second question on baxdrostat, not in hypertension but in primary aldosteronism. How big do you think this opportunity is for the drug? I mean there is potentially Phase II coming soon. So I was wondering what type of patients would benefit from baxdrostat in that indication?

So Dave, did you get it? Because the line is not very, very good. But do you...

Gonzalo, I'm pretty sure that you're asking basically a TB-01 market size and market opportunity question. So if that's not the question you're asking, I'm going to answer that anyway. The -- so as we take a look at this, I mean, I think that what we're certainly seeing here is that the size of the market, G7, about 35,000 fourth line plus line hormone receptor positive HER2 negative patients, right? So that's the patient population that we're talking about here that's addressable. And so it's after ET, after chemotherapy.

And I think TB-01 really complements DB04, which is transforming the HER2 landscape, right? So the first part of this is that now with TB-01 at the lowest IHC scores, you've got an option to be able to treat with TB-01. But then as DB06 starts to expand into the earlier treatment segment, there's a portion of the population also that, in later lines, will have seen in ET and a chemotherapy in the form of an ADC that could also be considered for utilization here. So I think that you've got an opportunity, particularly in the null space and then also potentially in the HER2 low space, but HER2 low more likely being kind of after they've seen an ADC upfront.

And I just would lastly say, all of this is part of a strategy in breast cancer to really make sure that there's an option for all patients presenting, right? Camizestrant to replace backbone ET, Truqap to continue to have an opportunity in patients who can benefit from ER drive, multiple ADCs to replace chemotherapies within the space. And it's a comprehensive breast program that we've put together.

Thanks, Dave. Ruud?

Yes. Let me take the second one. So this is a very difficult area in that sense that is highly underdiagnosed. The expectation is that 5% to 8% of patients suffering from hypertension have this disease. The reason we are so excited about it is that physicians came proactively to us in order to study in this patient population because there's an incredible high unmet medical need. So once again, as a ballpark figure, 5% to 8% of the antihypertensive -- of the hypertensive patients are suffering from this disease.

Thank you. So let me thank you all for your great questions and your interest in our company and wish you a good rest of the day. Thank you very much.