gsk investor presentation 2022

GSK to deliver step-change in growth & performance

Issued: 23 June 2021, London UK - LSE announcement

New GSK to deliver step-change in growth and performance over next ten years driven by high-quality Vaccines and Specialty Medicines portfolio and late-stage pipeline

·    Sales growth more than 5% and adjusted operating profit growth more than 10% CAGR 2021-26 [1]

·    Sales ambition of more than £33 billion (CER) by 2031

·    Strategic focus to prevent and treat disease, with R&D leveraging science of the immune system, human genetics and advanced technologies

·    Strengthened balance sheet post separation supports investment in growth

·    Cash generated from operations expected to exceed £10 billion by 2026

·    2022 aggregate dividend from GSK and New Consumer Healthcare expected to amount to 55p

·    New GSK progressive dividend policy starting at 45p in 2023

·    Leading ESG performance to be maintained and key target for New GSK 

·    New GSK to positively impact health of >2.5 billion people next 10 years

·    Demerger to create new world leader in consumer healthcare confirmed mid-2022

Notes on basis of preparation, assumptions and cautionary statements and on reporting definitions on pages 5-7.

At an update to investors today, GlaxoSmithKline plc (GSK LSE & NYSE) will provide details of its strategy, outlook for growth and plans to create shareholder value, following the planned demerger in mid-2022 of its Consumer Healthcare business. The resulting New GSK will be a growth company with new ambitions for patients and shareholders and an overarching purpose to unite science, talent and technology to get ahead of disease together.

Emma Walmsley, Chief Executive Officer, said:   "The benefits of the huge transformation we have driven since 2017 are now clear. We have strengthened our R&D and commercial execution, and transformed our group structure and capital allocation, while driving a profound cultural change with new leadership.  

"Together, we are now ready to deliver a step-change in growth for New GSK and unlock the value of Consumer Healthcare. With world class capabilities across prevention and treatment of disease, New GSK is exceptionally well positioned to positively impact people's health and to deliver strong performance and value to shareholders through the decade."

Key elements of the investor update are summarised below:

Strategic transformation

In 2017, GSK commenced a significant corporate transformation to address historic long-standing issues that have affected performance. Major progress has been achieved across the business to improve performance, strengthen capabilities and prepare GSK for a new future.

The company has substantially strengthened its R&D performance and productivity. Since 2017, GSK has delivered 11 major product approvals* and doubled the number of assets in Phase III and registration to 22. Commercial execution has been transformed with new and specialty products now reaching £10 billion in annual sales. Meanwhile changes to the Group's portfolio and network within Vaccines and Pharma have led to annual cost savings delivery of £0.5 billion and proceeds from divestment of non-core brands of £1.4 billion.

Following two successful global mergers, a new world-leading consumer healthcare business, with a radically transformed portfolio and sector-leading profitability has also been created.

All of this has been achieved with acknowledged sector leadership in ESG performance.

In addition, there has been significant cultural and leadership change across the company, to improve accountability and raise levels of ambition. 85% of the top 125 leaders are new in role since 2017 and new incentives and governance have been implemented in all key areas of the company.

These changes now provide the platform for GSK to separate and create two new global companies which will have major impacts on human health and can deliver compelling performance and attractive returns and value to shareholders.  

New GSK financial outlooks

2021-2026 outlook

Over the next five-year period, New GSK expects to deliver sales growth and adjusted operating profit growth of more than 5% and more than 10%, respectively, CAGR at constant exchange rates (with 2021 as the base year). Profit growth is expected to be underpinned by a combination of strong revenue growth from new vaccines and specialty medicines, improving operational performance and benefits from the transformation of recent years. These financial outlooks exclude any contribution from COVID-19 related revenues. 

The company expects to improve adjusted operating margin from the mid-20s% in 2021 to over 30% by 2026. Improved sales growth, sales mix benefits and realisation of cost savings from previously announced programmes are all expected to contribute to margin improvements. GSK has identified a further £200 million of annual savings from the Separation Preparation (Future Ready) programme and has revised its cost savings target from £800 million to £1 billion with no extra costs for delivery. All restructuring programmes will complete in 2022 and no further major restructuring programmes are planned.

2026-2031 ambition

By 2031, New GSK aims to deliver sales of more than £33 billion (at constant exchange rates).  Achievement of this ambition is driven by commercial execution of New GSK's current late-stage pipeline. The company estimates that certain assets in late-stage development have the potential in aggregate to deliver peak year sales of more than £20 billion on a non-risk adjusted basis + .

The £33 billion sales ambition is before any significant revenue contribution from early-stage pipeline assets or any contribution from business development.  Imp ortantly, New GSK aims to grow sales through to 2031 despite the anticipated loss of exclusivity for dolutegravir in 2028/29.

The new outlooks and ambition will be incorporated into existing incentive plans by the remuneration committee  in due course.  

Maximising Vaccines and Specialty Medicines

New GSK will prioritise R&D and commercial investment in Vaccines and Specialty Medicines, which are expected to grow to around three-quarters of company sales by 2026. As part of its 2021-26 outlook, Vaccines is expected to grow sales at a high single-digit % CAGR and Specialty Medicines at a double-digit % CAGR.

The company is focused across four core therapeutic areas (TAs): Infectious Diseases, HIV, Oncology and Immunology/Respiratory. In addition, New GSK will remain open to opportunities outside these core TAs where there are scale opportunities rooted in immune science and genetic validation.

Capturing the increasing opportunities now seen across the prevention and treatment of disease offers significant scientific and commercial opportunities for New GSK. At the heart of this is the company's R&D focus on the science of the immune system, human genetics and advanced technologies; and its world-leading capabilities in vaccine and pharmaceutical development. 

The company currently has a pipeline of 20 vaccines and 42 medicines - many of which are potential best or first in class opportunities.

Optimising General Medicines

A newly defined General Medicines product group will contain all of New GSK's primary care brands, including older established products as well as the inhaled respiratory portfolio. General Medicines will have differing performance profiles by region and brand, with growth expected most in emerging markets. Overall General Medicines is expected to show broadly stable sales over the period 2021-26 (CER).

General Medicines will be optimised for profitability and cash generation to support investment in Vaccines and Specialty Medicines. As part of this approach, further streamlining of the portfolio is expected through divestment or partnering of non-priority brands.

Strengthened balance sheet to support growth and returns to shareholders

Following separation of the Consumer Healthcare business, New GSK is expected to have a net debt/adjusted EBITDA leverage ratio of less than 2 times. This, together with expected stronger cash flow generation, will provide additional flexibility to support future investments in growth. By 2026, cash generated from operations for New GSK is expected to exceed £10 billion.

New GSK's capital allocation priorities will be: to strengthen the pipeline, including through targeted bolt-on and in-licensing business development transactions; to invest behind successful product launches; to enhance sustainability of its operations; and to underpin its progressive dividend policy.

In 2022, GSK shareholders will receive dividends from GSK and New Consumer Healthcare due to the expected mid-year timing of the demerger. Together, these are expected to amount to approximately 55p per share for the year, assuming a New Consumer Healthcare dividend at the lower end of the previously announced 30-50% pay-out ratio range and subject to approval from the Board of New Consumer Healthcare. This pro-forma full year 2022 dividend would be a 31% reduction compared to the expected 2021 dividend of 80p per share.

New GSK will adopt a progressive dividend policy targeting a dividend pay-out ratio equivalent to 40-60%, starting at 45p per share in 2023, the company's first full year of operation.

Strong focus on ESG performance and to impact the health of more than 2.5 billion people

Maintaining a sector leading ESG performance will be an integral part of New GSK's strategy and a key goal for the new company. 

The company intends to take a focused approach to ESG, driven by its strengths and to address the key challenges faced by the industry over the long-term. New GSK will prioritise resources across six areas it sees as material to its business: pricing/access, global health, inclusion and diversity, the environment, product governance and operating standards.

Accountabilities for these six areas will be at executive level and New GSK expects to further strengthen the alignment of incentives and remuneration to delivery of ESG performance, with increased visibility in corporate reporting.

This approach to ESG will support delivery of sustainable performance and long-term growth; build trust with stakeholders; reduce risk to operations; and enable delivery of very positive social impact.

A critical measure of success for New GSK will be health impact at scale. This is at the core of the company's purpose and it expects to positively impact the health of more than 2.5 billion people around the world over the next 10 years.

Consumer Healthcare separation

The separation of Consumer Healthcare is expected in mid-2022 and the GSK Board's clear priorities are to unlock the potential of New GSK and Consumer Healthcare, strengthen New GSK's balance sheet and maximise value for shareholders.  

The new Consumer Healthcare company will have a portfolio which generated annual sales of more than £10 billion in 2020 and is well-positioned for further growth. Driven by brands, innovation, leading-edge science and human understanding to deliver better everyday health, the company will have nine global power brands holding category leadership positions and major sales presences in the US and China. Altogether the business offers strong prospects for sustainable sales and profit growth, high cash generation and delivery of attractive returns for shareholders. 

Subject to approval from shareholders, the separation will be by way of a demerger of at least 80% of GSK's 68% holding in the Consumer Healthcare business to GSK shareholders, with the new Consumer Healthcare company shares expected to attain a premium listing on the London Stock Exchange, with ADRs to be listed in the US. The company intends to structure the demerger in a manner that is tax efficient for UK and US shareholders, as compared to alternative separation options, and is seeking confirmation of such treatment from the relevant tax authorities.  Details of the expected tax treatment will be provided in the circular sent to shareholders in connection with the approval of the demerger .

New GSK will retain up to 20% of GSK's holding in the new Consumer Healthcare company as a short-term financial investment, which it intends to monetise in a timely manner to further strengthen New GSK's balance sheet and help fund certain pension benefit obligations.  Prior to the demerger, New GSK is also expected to receive a dividend of up to £8 billion from Consumer Healthcare. As previously stated, the new Consumer Healthcare company is expected to have a net debt/adjusted EBITDA leverage ratio of up to 4.0 times. GSK plans to target an investment grade credit rating for the new Consumer Healthcare company.

A comprehensive update on the prospects for New Consumer Healthcare is planned for investors in early 2022.

The Board of GSK is preparing for two new independent boards following separation. A process has started to form a board of directors for the new Consumer Healthcare company, which will include the appropriate mix of skills and experience to represent and maximise the value of this business for shareholders.

In addition, and building on recent non-executive appointments,  further appointments are also expected to the Board of GSK prior to the separation to increase biopharmaceuticals and scientific experience for New GSK. 

*Major product approvals 2017-21

+ See "Basis of preparation, assumptions, and cautionary statement" section on pages 5-7 . Assets in late-stage development with the potential in aggregate to deliver peak year sales of more than £20 billion on a non-risk adjusted basis  

Basis of preparation, assumptions and cautionary statement

Assumptions relating to the 2021-2026 sales and adjusted operating profit growth outlooks, 2026 cash generated from operations outlook, 2031 sales ambition and 2021-2023 dividend expectations

In outlining the growth outlooks for the period 2021-2026, the 2026 cash generated from operations outlook, the 2031 sales ambition and the 2021-2023 dividend expectations (the "Relevant Statements"), GSK has made certain assumptions about the healthcare sector (including regarding possible governmental, legislative and regulatory reform), the different markets and competitive landscape in which it operates and the delivery of revenues and financial benefits from its current portfolio, its development pipeline of drugs and vaccines, its restructuring programmes and its plans for the separation of Consumer Healthcare, details of which are set out in this document. 

GSK expects and assumes the next several years to be challenging for the healthcare industry with continued uncertainty related to the impact of the COVID-19 pandemic on adult vaccinations and continued pressure on pricing of pharmaceuticals.  GSK assumes no premature loss of exclusivity for key products over the period.  GSK also expects volume demand for its products to increase, particularly for Shingrix in the US, as healthcare systems are expected to return to normal following disruption from governments' prioritisation of COVID-19 vaccination programmes and ongoing measures to contain the pandemic, and for Shingrix in China.

The assumptions underlying the Relevant Statements include: successful delivery of the ongoing and planned integration and restructuring plans and the planned demerger of Consumer Healthcare; the delivery of revenues and financial benefits from its current and development pipeline portfolio of drugs and vaccines (which have been assessed for this purpose on a risk-adjusted basis, as described further below); regulatory approvals of the pipeline portfolio of drugs and vaccines that underlie these expectations (which have also been assessed for this purpose on a risk-adjusted basis, as described further below); no material interruptions to supply of the Group's products; no material mergers, acquisitions or disposals or other material business development transactions; no material litigation or investigation costs for the company (save for those that are already recognised or for which provisions have been made); no share repurchases by the company; and no change in the shareholdings in ViiV Healthcare.  

The Relevant Statements also factor in all divestments and product exits announced to date as well as material costs for investment in new product launches and R&D. Pipeline risk-adjusted sales are based on the latest internal estimate of the probability of technical and regulatory success for each asset in development.  

Notwithstanding the Relevant Statements, there is still uncertainty as to whether our assumptions, targets, outlooks expectations and ambitions will be achieved, including based on the other assumptions outlined above. 

The statement that GSK estimates that certain assets in late-stage development have the potential to deliver peak year sales of more than £20 billion on a non-risk adjusted basis is an aggregation, across the relevant portfolio of assets, of the maximum sales that GSK considers might  be achieved from each such asset (including from lifecycle innovation) in the year that that asset attains its highest sales level, in all cases before taking into account any risks that could impair GSK's ability to reach that level of sales for that asset, including risks relating to technical and regulatory success, trial outcomes, launch dates and execution, exclusivity periods and the impact of changes in the market and healthcare landscape for that asset.   The aggregation is of the peak year sales of each individual asset within the portfolio and not for one particular year.  Accordingly, the statement of estimated non-risk adjusted potential peak year sales of the relevant assets in late-stage development does not comprise, is wholly different in nature to, and is subject to very significantly higher levels of uncertainty than the Relevant Statements.   As such, while GSK does not expect to achieve the aggregate amount of those estimated non-risk adjusted peak year sales, a risk-adjusted assessment of sales of relevant assets during the relevant periods is (as stated above) taken into account, where relevant, within the Relevant Statements.

All outlook and ambition statements are given on a constant currency basis and use 2021 forecast exchange rates as a base, assuming a continuation of Q1 2021 closing rates (£1/$1.38, £1/€1.17, £1/Yen 152). 2021-2026 outlook refers to the 5 years to 2026 with 2021 as the base year. 

Assumptions and cautionary statement regarding forward looking statements

The Group's management believes that the assumptions outlined above are reasonable, and that the targets, outlooks, ambitions and expectations described in this document are achievable based on those assumptions. However, given the forward-looking nature of these assumptions, targets and expectations, they are subject to greater uncertainty, including potential material impacts if the above assumptions are not realised, and other material impacts related to foreign exchange fluctuations, macro-economic activity, the impact of outbreaks, epidemics or pandemics, such as the continued COVID-19 pandemic and ongoing challenges and uncertainties posed by the COVID-19 pandemic for businesses and governments around the world, changes in legislation, regulation, government actions or intellectual property protection, product development and approvals, actions by our competitors, and other risks inherent to the industries in which we operate.

This document contains statements that are, or may be deemed to be, "forward-looking statements". Forward-looking statements give the Group's current expectations or forecasts of future events. An investor can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as 'aim', 'ambition', 'anticipate', 'estimate', 'expect', 'intend', 'will', 'project', 'plan', 'believe', 'target' and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, dividend payments and financial results. Other than in accordance with its legal or regulatory obligations (including under the Market Abuse Regulation, the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority), the Group undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The reader should, however, consult any additional disclosures that the Group may make in any documents which it publishes and/or files with the SEC. All readers, wherever located, should take note of these disclosures. Accordingly, no assurance can be given that any particular expectation will be met and investors are cautioned not to place undue reliance on the forward-looking statements.

Forward-looking statements are subject to assumptions, inherent risks and uncertainties, many of which relate to factors that are beyond the Group's control or precise estimate. The Group cautions investors that a number of important factors, including those in this document, could cause actual results to differ materially from those expressed or implied in any forward-looking statement. Such factors include, but are not limited to, those discussed under Item 3.D 'Risk Factors' in the Group's Annual Report on Form 20-F for 2020 and any impacts of the COVID-19 pandemic.

Any forward-looking statements made by or on behalf of the Group speak only as of the date they are made and are based upon the knowledge and information available to the Directors on the date of this document.

Reporting definitions

A number of adjusted measures are used to report the performance of our business, which are non-IFRS measures.   Adjusted results, CER and other non-IFRS measures may be considered in addition to, but not as a substitute for or superior to, information presented in accordance with IFRS. These measures are defined and reconciliations to the nearest IFRS measure are available in our first quarter 2021 earnings release and Annual Report on Form 20-F for FY 2020.

GSK provides earnings guidance to the investor community on the basis of Adjusted results. This is in line with peer companies and expectations of the investor community, supporting easier comparison of the Group's performance with its peers. GSK is not able to give guidance and outlooks for Total results, including Total Operating Profit and Total Operating Margin as it cannot reliably forecast certain material elements of the Total results, particularly the future fair value movements on contingent consideration and put options that can and have given rise to significant adjustments driven by external factors such as currency and other movements in capital markets.  Therefore a reconciliation of the guidance for Adjusted results to equivalent guidance for Total results is not available without unreasonable effort.

Compound Annual Growth Rate (CAGR) is defined as the compound annual growth rate and shows the annualised average rate of revenue or profit growth between two given years, at constant currency, assuming growth takes place at an exponentially compounded rate.

Adjusted EBITDA is defined as Adjusted Earnings before interest and tax, depreciation and amortisation.

GSK is a science-led global healthcare company with a special purpose: to help people do more, feel better, live longer. For further information please visit www.gsk.com/about-us .

Inside information

This announcement contains inside information. The person responsible for arranging the release of this announcement on behalf of GSK is Victoria Whyte, Company Secretary.

Registered in England & Wales:

No. 3888792

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980 Great West Road

Brentford, Middlesex

[1]   Adjusted results are a non-IFRS measure that may be considered in addition to, but not as a substitute for, or superior to, information presented in accordance with IFRS.  Adjusted results, constant exchange rate (CER%) growth and other non-IFRS measures are defined and reconciliations to the nearest IFRS measure are available in our first quarter 2021 earnings release and in our Annual Report on Form 20-F for FY 2020 and in the "Reporting definition" section of this document on page 7.  GSK provides guidance and outlooks on an Adjusted results basis only, for the reasons set out on page 7.  All expectations, ambitions, targets and other statements regarding future performance should be read together with the "Basis of preparation, assumptions and cautionary statements" and "Reporting definition" sections of this document on pages 5-7.

[2] Tesaro asset

[3] Blenrep for earlier lines of therapy for multiple myeloma

[4] Tesaro asset

[5] Maternal and paediatric

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GB00BN7SWP63

Pharmaceuticals.

• GlaxoSmithKline : Q2 2022 results slides

27 July 2022

Half year and Q2 2022 Results

Conference call and webcast for investors and analysts

Cautionary statement regarding forward-looking statements

This presentation may contain forward-looking statements. Forward-looking statements give the Group's current expectations or forecasts of future events. An investor can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as 'anticipate', 'estimate', 'expect', 'intend', 'will', 'project', 'plan', 'believe', 'target' and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, dividend payments and financial results.

Other than in accordance with its legal or regulatory obligations (including under the Market Abuse Regulations, UK Listing Rules and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority), the Group undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Investors should, however, consult any additional disclosures that the Group may make in any documents which it publishes and/or files with the US Securities and Exchange Commission (SEC). All investors, wherever located, should take note of these disclosures. Accordingly, no assurance can be given that any particular expectation will be met and investors are cautioned not to place undue reliance on the forward-looking statements.

Forward-looking statements are subject to assumptions, inherent risks and uncertainties, many of which relate to factors that are beyond the Group's control or precise estimate. The Group cautions investors that a number of important factors, including those in this presentation, could cause actual results to differ materially from those expressed or implied in any forward-looking statement. Such factors include, but are not limited to, those discussed under Item 3.D 'Risk factors' in the Group's Annual Report on Form 20-F for the full year (FY) 2021 and any impacts of the COVID-19 pandemic. Any forward-looking statements made by or on behalf of the Group speak only as of the date they are made and are based upon the knowledge and information available to the Directors on the date of this presentation.

A number of adjusted measures are used to report the performance of our business, which are non-IFRS measures. These measures are defined and reconciliations to the nearest IFRS measure are available in our second quarter 2022 earnings release and Annual Report on Form 20-F for FY 2021.

All outlooks, ambitions, and considerations should be read together with pages 5-7 of the stock-exchange announcement relating to an update to investors dated 23 June 2021, paragraph 19 of Part 7 of the Circular to shareholders relating to the demerger of Haleon plc dated 1 June 2022 and the Guidance, assumptions and cautionary statements in the Q2 2022 earnings release.

Basis of preparation: GSK satisfied the formal criteria according to IFRS 5 for treating Consumer Healthcare as a 'Discontinued operation' effective from 30 June 2022. The amounts presented in this presentation for continuing operations and Adjusted results excludes the Consumer Healthcare business discontinued operation. Comparative figures have been restated on a consistent basis. Earnings per share, Adjusted earnings per share and Dividends per share have been adjusted to reflect the GSK Share Consolidation on 18 July 2022.

Dr Hal Barron

Performance

Luke Miels, Deborah Waterhouse and Iain Mackay

Emma Walmsley

Roger Connor and David Redfern

Half year and Q2 2022

Delivering a landmark year

Emma Walmsley, Chief Executive Officer

A new focused biopharma company

Ambition and purpose to unite science, technology, and talent to get ahead of disease together

Highly attractive medium-term 1 target for sales and adjusted operating profit growth of >5% and >10% CAGR 2

Flexibility

Strengthened balance sheet, creating new flexibility to invest in growth and innovation

1. Medium term is 2021-2026, 2. At constant exchange rates (CER).

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April 18 2023

Issued: London, UK

For media and investors only

GSK reaches agreement to acquire late-stage biopharmaceutical company BELLUS Health

• Acquisition further strengthens specialty medicines and respiratory pipeline with camlipixant, a highly selective P2X3 antagonist and potential best-in-class treatment for refractory chronic cough
• Currently in phase III clinical development with anticipated regulatory approval and launch in 2026
• Accretive to adjusted EPS from 2027 with significant sales potential through 2031

GSK plc (LSE/NYSE: GSK) and BELLUS Health Inc. (TSX/NASDAQ: BLU) today announced that they have entered into an agreement under which GSK will acquire BELLUS, a Canada-based, late-stage biopharmaceutical company working to better the lives of patients suffering from refractory chronic cough (RCC) for US$14.75 per share of common stock in cash representing an approximate total equity value of US$2.0 billion (£1.6 billion). The acquisition provides GSK access to camlipixant, a potential best-in-class and highly selective P2X3 antagonist currently in phase III development for the first-line treatment of adult patients with RCC.

It is estimated that 28 million patients suffer from chronic cough, with 10 million patients globally and 6 million in the United States (US) and European Union (EU) suffering from RCC for over a year. 1 RCC is defined as a persistent cough for more than eight weeks that does not respond to treatment for an underlying condition or is otherwise unexplained. 2 RCC significantly impacts quality of life, with patients suffering from depression (53%), urinary incontinence (~50%), pain, rib fractures, social withdrawal, and loss of sleep. 3, 4 There are no approved medicines for RCC in the US and EU.

P2X3 is a validated biological target implicated in cough reflex hypersensitisation, and camlipixant is a highly selective P2X3 antagonist. Current clinical data show that by selectively inhibiting P2X3 receptors, camlipixant may reduce cough frequency for patients suffering from RCC with a relatively low incidence of dysgeusia, the taste disturbance adverse event associated with other medicines that broadly target the P2X2/3 receptor. These taste disturbances frequently lead to patients discontinuing treatment. Notably, low rates of taste-related adverse events were reported at all doses in the phase IIb trial (≤6.5%). 5

Luke Miels, Chief Commercial Officer, GSK said: “Patients suffering from severe forms of refractory chronic cough can experience over 900 coughs daily, resulting in quality-of-life issues. Camlipixant, a novel, highly selective P2X3 antagonist, has the potential to be a best-in-class treatment with significant sales potential. This proposed acquisition complements our portfolio of specialty medicines and builds on our expertise in respiratory therapies.”

The acquisition of BELLUS is highly synergistic with GSK’s expertise in respiratory medicines and is further supported by GSK’s leading R&D, manufacturing, and commercialisation capabilities.

Following the anticipated regulatory approval and launch of camlipixant in 2026, the acquisition is expected to be accretive to adjusted EPS from 2027 and has the potential to deliver significant sales through 2031 and beyond.

In December 2021, BELLUS announced positive data from the SOOTHE phase IIb trial, indicating that it met its primary endpoint for the 50 mg and 200 mg twice-daily doses. Based on these data, BELLUS initiated the CALM phase III development programme consisting of the CALM-1 and CALM-2 trials, with data anticipated in H2 2024 and 2025, respectively. BELLUS is also evaluating a QD (once-daily) formulation for camlipixant, which is currently in phase I.

Roberto Bellini, Chief Executive Officer of BELLUS, said: “This acquisition recognises the value of our highly selective P2X3 antagonist camlipixant and validates the hard work and dedication of all the BELLUS employees in advancing camlipixant to date. As a leader in respiratory research for over five decades, GSK shares our commitment to bettering the lives of individuals suffering from a persistent cough and is the ideal Company to rapidly bring camlipixant to the millions suffering from refractory chronic cough around the world.”

The transaction remains subject to regulatory approvals.

Financial Considerations

Under the terms of the agreement, the acquisition will be effected through a Plan of Arrangement pursuant to the Canada Business Corporations Act in which the shares of BELLUS outstanding will be acquired by the Company in consideration of US$14.75 per share in cash. Subject to customary conditions, including court approval, the approval of the acquisition by at least 66.67% of the votes cast at a meeting of BELLUS’ shareholders and a majority of the votes cast by non-interested shareholders at such meeting, and approval by the appropriate regulatory agencies, the transaction is expected to close in the third quarter of 2023 or earlier.

The per-share price represents a premium of approximately 103% to BELLUS’ closing stock price on 17 April 2023 and a premium of approximately 101% to BELLUS’ volume-weighted average price (VWAP) over the last 30 trading days. BELLUS’ Board of Directors has unanimously recommended that BELLUS’ shareholders vote in favour of the approval of the acquisition.

GSK will account for the transaction as a business combination and expects it to be accretive to adjusted EPS in 2027, the expected first full year of camlipixant’s sales.

There is no change to GSK’s full-year 2023 guidance or the medium-term outlook for 2021-2026 of more than 5% sales and 10% adjusted operating profit CAGR* at CER**.

* CAGR: Compound Annual Growth Rate; **CER: Constant Exchange Rate

PJT Partners is acting as the exclusive financial advisor to GSK. Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Stikeman Elliott LLP serve as legal counsel to GSK in connection with the transaction. Centerview Partners is acting as the exclusive financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP, and Davies Ward Phillips & Vineberg LLP serve as legal counsel to BELLUS.

About BELLUS

BELLUS is a late-stage biopharmaceutical company working to better the lives of patients suffering from persistent cough.

About GSK in respiratory

For over 50 years, GSK has led the way in developing medicines that advance the management of asthma and COPD, from introducing the world’s first selective short-acting beta agonist in 1969 to launching six treatments in five years to create today’s industry-leading respiratory portfolio.

RCC is a cough that persists for more than eight weeks despite optimal treatment of any underlying conditions or where there is no identifiable underlying cause. 6 Cough hypersensitivity syndrome – excessive coughing, often in response to relatively innocuous stimuli – is now identified as the primary pathology in RCC. RCC is a frequent, yet often under-recognised, medical condition with significant physical, social, and psychological consequences on a patient’s quality of life. Two-thirds of patients are women averaging between 50-60 years old. 7 There are currently no approved treatments for this condition in the US or the EU.

About camlipixant

Camlipixant is an investigational, twice-daily oral P2X3 receptor antagonist for the treatment of RCC, which is currently being evaluated in the CALM phase III clinical development programme. Given the need for novel and effective medicines for RCC, camlipixant has the potential to be a breakthrough in the treatment landscape.

Camlipixant is not currently approved anywhere in the world.

GSK is a global biopharma company with a purpose to unite science, technology, and talent to get ahead of disease together. Find out more at gsk.com/company .

Cautionary statement regarding forward-looking statements relating to BELLUS Health

This press release may include “forward-looking statements” within the meaning of the applicable securities laws, including with respect to the timing and completion of the arrangement, the proposed timing of filings, the impact of the proposed transaction on BELLUS Heath, and the operations of BELLUS Heath post-transaction. Each forward-looking statement contained in this press release is based on the current expectations of management and is subject to known and unknown risks and uncertainties and other unknown factors that could cause actual results to differ materially from historical results and those expressed or implied by such statement. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labelled with the terms “believes,” “belief,” “expects,” “intends,” “anticipates,” “will,” or “plans” to be uncertain and forward-looking. Such statements include, but are not limited to, the potential of camlipixant to successfully treat RCC and other hypersensitization-related disorders, the success of BELLUS Health’s preclinical studies and clinical trials, and the timing and outcome of anticipated regulatory approvals. Additional risk factors include, but are not limited to, the impact of general economic conditions, general conditions in the pharmaceutical industry, the impact of the COVID-19 pandemic, including impact to the initiation and completion of clinical trials in a timely manner or at all, changes in the regulatory environment, supply chain impacts, fluctuations in costs, changes to the competitive environment, reliance on third parties to conduct preclinical studies and clinical trials for camlipixant. Furthermore, the risks and uncertainties include, among others, the risk that a condition to closing of the arrangement may not be satisfied, the risk that any required shareholder, court or applicable regulatory approvals for the arrangement may not be obtained or be obtained subject to conditions that are not anticipated, the failure to realize the anticipated benefits of the transaction, the occurrence of any event that could give rise to termination of the transaction, and potential litigation in connection with the transaction or other settlements or investigations that may affect the timing or occurrence of the transaction or result in significant costs of defence, indemnification and liability.

BELLUS Heath cautions investors not to rely on the forward-looking statements contained in this press release when making an investment decision in their securities. Investors are encouraged to read BELLUS Health’s filings available on the SEC website at www.sec.gov and on the SEDAR website at www.sedar.com, for a discussion of these and other risks and uncertainties. The forward-looking statements in this press release speak only as of the date of this press release and BELLUS Heath undertakes no obligation to update or revise any of these statements, whether as a result of new information, future events or otherwise, except as required by law.

Cautionary statement regarding forward-looking statements

GSK cautions investors that any forward-looking statements or projections made by GSK, including those made in this announcement, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Such factors include, but are not limited to, those described in the Company's Annual Report on Form 20-F for 2022, GSK’s Q4 Results for 2022 and any impacts of the COVID-19 pandemic.

[1] Song et al. The global epidemiology of chronic cough in adults: a systematic review and meta-analysis. Eur Respir J. 2015; 45: 1479–1481.

[2] Meltzer et al. Prevalence and Burden of Chronic Cough in the United States. J of Allergy Clin Immunol Pract. 2021; 9:4037-44.

[3] Dicpinigaitis et al. Prevalence of Depressive Symptoms Among Patients With Chronic Cough. CHEST. 2006; 130 (6): 1839 – 43.

[4] Chamberlain et al. The impact of chronic cough: a cross-sectional European survey. Lung. 2015 Jun;193(3):401-8.

[5] BELLUS Health Inc. Investor Presentation, Dec 2021.

[6] Meltzer et al. Prevalence and Burden of Chronic Cough in the United States. J of Allergy Clin Immunol Pract. 2021; 9:4037-44.

[7] Morice et al. A worldwide survey of chronic cough: a manifestation of enhanced somatosensory response. Eur Respir J. 2014 Nov;44(5):1149-55.

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21 May 2024

Issued: London, UK

For media and investors only

GSK announces positive results from phase III severe asthma trials of depemokimab

• Primary endpoints met in SWIFT-1 and SWIFT-2 trials with statistically significant and clinically meaningful reductions in exacerbations over 52 weeks vs. placebo
• Depemokimab has the potential to be the first approved ultra-long-acting biologic with a six-month dosing schedule for severe asthma
• Six-month dosing could simplify treatment to support millions of patients with severe asthma

GSK plc (LSE/NYSE: GSK) today announced positive headline results from the phase III clinical trials SWIFT-1 and SWIFT-2, which assessed the efficacy and safety of depemokimab versus placebo in adults and adolescents with severe asthma with type 2 inflammation characterised by blood eosinophil count. 1,2  Both SWIFT-1 and SWIFT-2 met their primary endpoints of a reduction in the annualised rate of clinically significant exacerbations (asthma attacks) over 52 weeks. 1,2 Across both trials the overall incidence and severity of treatment-emergent adverse events were similar in patients treated with either depemokimab or placebo. Further analysis of these data is ongoing.

Depemokimab is the first ultra-long-acting biologic to be evaluated in phase III trials with a binding affinity and high potency for interleukin-5 (IL-5), enabling six-month dosing intervals for patients with severe asthma. 1,2,3 IL-5 is known to be a key cytokine (protein) in type 2 inflammation. 4,5 This inflammation, typically identified by elevated blood eosinophil count, is the underlying pathology responsible for more than 80% of people with severe asthma and can lead to unpredictable exacerbations. 5,6    

Kaivan Khavandi, SVP, Global Head of Respiratory/Immunology R&D, said: “These results add to the established body of evidence that targeted inhibition of IL-5 plays a key role i n reducing type 2 inflammation that drives severe asthma exacerbations. D epemokimab could offer the possibility of sustained inhibition of this pathway, with a dosing schedule of just two injections per year. This is important as research shows that 73% of physicians 7 believe longer dosing intervals would be beneficial to patients who are often juggling multiple therapies.”

Expertise in respiratory diseases and the science of IL-5 has informed the ongoing evidence generation program evaluating the impact of six-month dosing of sustained IL-5 inhibition in patients achieving clinical remission in severe asthma. 5 The full results of SWIFT-1 and SWIFT-2 will be presented at an upcoming scientific congress and will be used to support regulatory submissions to health authorities worldwide.

Depemokimab is currently not approved anywhere in the world.

About the depemokimab development programme

The phase III programme consists of SWIFT-1 and SWIFT-2 in severe asthma, along with an open label extension study (AGILE). 1,2,8 SWIFT-1 and SWIFT-2 were replicate 52-week, randomised, double-blind, placebo-controlled, parallel-group, multi-centre phase III clinical trials. 1,2 The trials assessed the efficacy and safety of depemokimab adjunctive therapy in 375 and 380 participants who were randomised to receive depemokimab or a placebo, in addition to their standard of care treatment with medium to high-dose inhaled corticosteroids plus at least one additional controller. 1,2  

An additional study (NIMBLE) is underway to assess the efficacy and safety of depemokimab when participants with severe asthma are switched from mepolizumab or benralizumab. 9

Depemokimab’s extended half-life has the potential to provide sustained inhibition of broad inflammatory functions and is being investigated in a variety of type 2 inflammatory conditions. 1,2,8-13 Depemokimab is also currently being evaluated in phase III trials across a range of other IL-5 mediated diseases, including eosinophilic granulomatosis with polyangiitis (EGPA), chronic rhinosinusitis with nasal polyps (CRSwNP) and hypereosinophilic syndrome (HES). 9-12  

About severe asthma and type 2 inflammation

Severe asthma is defined as asthma that requires treatment with high-dose inhaled corticosteroids plus a second controller (and/or systemic corticosteroids) or biologic therapy, to prevent it from becoming ‘uncontrolled’ or which remains ‘uncontrolled’ despite therapy. 5,14 In more than 80% of patients with severe asthma, their condition is driven by type 2 inflammation in which patients exhibit elevated levels of eosinophils (a type of white blood cell). 5,6 Blood eosinophils count can be measured via a simple blood test. IL-5 is a core cytokine (protein) in type 2 inflammation alongside IL-4 and IL-13. 5 Type 2 inflammation drives the underlying pathology in a variety of immune-mediated conditions. IL-5 is responsible for the growth, activity and survival of eosinophils. 5  

About GSK in respiratory

GSK continues to build on decades of pioneering work to deliver more ambitious treatment goals, develop the next generation standard of care, and redefine the future of respiratory medicine for hundreds of millions of people with respiratory diseases. With an industry-leading respiratory portfolio and pipeline of vaccines, targeted biologics and inhaled medicines, we are focused on improving outcomes and the lives of people living with all types of asthma and COPD along with less understood refractory chronic cough or rarer conditions like systemic sclerosis with interstitial lung disease. GSK is harnessing the latest science and technology with the aim to modify underlying disease dysfunction and prevent disease progression.

GSK is a global biopharma company with a purpose to unite science, technology, and talent to get ahead of disease together. Find out more at gsk.com.

Cautionary statement regarding forward-looking statements

GSK cautions investors that any forward-looking statements or projections made by GSK, including those made in this announcement, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Such factors include, but are not limited to, those described under Item 3.D “Risk factors” in GSK’s Annual Report on Form 20-F for 2023, and GSK’s Q1 Results for 2024.

References:

ClinicalTrials.gov. Placebo-controlled Efficacy and Safety Study of GSK3511294 (Depemokimab) in Participants With Severe Asthma With an Eosinophilic Phenotype – (SWIFT-1) Available at: https://classic.clinicaltrials.gov/ct2/show/NCT04719832 Last accessed May 2024.

ClinicalTrials.gov. A Study of GSK3511294 (Depemokimab) in Participants With Severe Asthma With an Eosinophilic Phenotype (SWIFT-2) Available at: https://classic.clinicaltrials.gov/ct2/show/NCT04718103 Accessed May 2024.

Singh D, et al. A Phase 1 study of the long-acting anti-IL-5 monoclonal antibody GSK3511294 in patients with asthma. Br J Clin Pharmacol . 2022;88:702-712.

Principe S, et al. S evere asthma: Targeting the IL-5 pathway. Clin Exp Allergy. 2021 Aug;51(8):992-1005

Global Initiative for Asthma. Global Strategy for Asthma Management and Prevention,2024. Updated May 2024. Available at: https://ginasthma.org/ .  Accessed May 2024.

Heaney L, et al. Eosinophilic and Noneosinophilic Asthma: An Expert Consensus Framework to Characterize Phenotypes in a Global Real-Life Severe Asthma Cohort. Chest . 2021;160(3):814-830.

Research Partnership Quant uptake Market Research, 200 HCPs Top two box on a seven-point scale where seven equaled “highly beneficial”. 

ClinicalTrials.gov. An Open-Label Extension Study of GSK3511294 (Depemokimab) in Participants Who Were Previously Enrolled in 206713 (NCT04719832) or 213744 (NCT04718103) (AGILE). Available at: https://clinicaltrials.gov/study/NCT05243680 Last accessed May 2024.

ClinicalTrials.gov. A Study of GSK3511294 (Depemokimab) Compared With Mepolizumab or Benralizumab in Participants With Severe Asthma With an Eosinophilic Phenotype (NIMBLE). Available at: https://clinicaltrials.gov/study/NCT04718389 Accessed May 2024.

ClinicalTrials.gov. Efficacy and Safety of Depemokimab Compared With Mepolizumab in Adults With Relapsing or Refractory Eosinophilic Granulomatosis With Polyangiitis (EGPA) Available at: https://clinicaltrials.gov/study/NCT05263934 Accessed May 2024.

ClinicalTrials.gov. Efficacy and Safety of Depemokimab (GSK3511294) in Participants With Chronic Rhinosinusitis With Nasal Polyps (ANCHOR-1) Available at: https://clinicaltrials.gov/study/NCT05274750 Accessed May 2024

ClinicalTrials.gov. Efficacy and Safety of Depemokimab (GSK3511294) in Participants With Chronic Rhinosinusitis With Nasal Polyps (ANCHOR-2) Available at: https://clinicaltrials.gov/study/NCT05281523 Accessed May 2024.

ClinicalTrials.gov. Depemokimab in Participants With Hypereosinophilic Syndrome, Efficacy, and Safety Trial (DESTINY) Available at: https://clinicaltrials.gov/study/NCT05334368 Accessed May 2024.

GINA Difficult-to-treat and severe asthma in adolescent and adult patients: diagnosis and management. Global Strategy for Asthma Management and Prevention 2021. Available at: https://ginasthma.org/wp-content/uploads/2021/08/SA-Pocket-guide-v3.0-SCREEN-WMS.pdf . Accessed May 2024.

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Nvidia, Powered by A.I. Boom, Reports Soaring Revenue and Profits

The Silicon Valley company was again lifted by sales of its artificial intelligence chips, but it faces growing competition and heightened expectations.

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By Don Clark

Reporting from San Francisco

Nvidia, which makes microchips that power most artificial intelligence applications, began an extraordinary run a year ago.

Fueled by an explosion of interest in A.I., the Silicon Valley company said last May that it expected its chip sales to go through the roof. They did — and the fervor didn’t stop, with Nvidia raising its revenue projections every few months. Its stock soared, driving the company to a more than $2 trillion market capitalization that makes it more valuable than Alphabet, the parent of Google.

On Wednesday, Nvidia again reported soaring revenue and profits that underscored how it remains a dominant winner of the A.I. boom, even as it grapples with outsize expectations and rising competition.

Revenue was $26 billion for the three months that ended in April, surpassing its $24 billion estimate in February and tripling sales from a year earlier for the third consecutive quarter. Net income surged sevenfold to $5.98 billion.

Nvidia also projected revenue of $28 billion for the current quarter, which ends in July, more than double the amount from a year ago and higher than Wall Street estimates.

“We are fundamentally changing how computing works and what computers can do,” Jensen Huang, Nvidia’s chief executive, said in a conference call with analysts. “The next industrial revolution has begun.”

Nvidia’s shares, which are up more than 90 percent this year, rose in after-hours trading after the results were released. The company also announced a 10-for-1 stock split.

Nvidia, which originally sold chips for rendering images in video games, has benefited after making an early, costly bet on adapting its graphics processing units, or GPUs, to take on other computing tasks. When A.I. researchers began using those chips more than a decade ago to accelerate tasks like recognizing objects in photos, Mr. Huang jumped on the opportunity. He augmented Nvidia’s chips for A.I. tasks and developed software to aid developments in the field.

The company’s flagship processor, the H100, has enjoyed feverish demand to power A.I. chatbots such as OpenAI’s ChatGPT. While most high-end standard processors cost a few thousand dollars, H100s have sold for anywhere from $15,000 to $40,000 each, depending on volume and other factors, analysts said.

Colette Kress, Nvidia’s chief financial officer, said on Wednesday that it had worked in recent months with more than 100 customers that were building new data centers — which Mr. Huang calls A.I. factories — ranging from hundreds to tens of thousands of GPUs, with some reaching 100,000. Tesla, for example, is using 35,000 H100 chips to help train models for autonomous driving, she said.

Nvidia will soon begin to ship a powerful successor to the H100, code-named Blackwell, which was announced in March. Demand for the new chips already appears to be strong, raising the possibility that some customers may wait for the speedier models rather than buy the H100. But there was little sign of such a pause in Nvidia’s latest results.

Ms. Kress said demand for Blackwell was well ahead of supply of the chip, and “we expect demand may exceed supply well into next year.” Mr. Huang added that the new chips should be operating in data centers late this year and that “we will see a lot of Blackwell revenue this year.”

The comments may ease fears of a slowdown in Nvidia’s momentum.

“Lingering concerns investors had in the short term regarding an ‘air bubble’ for GPU demand seem to have vanished,” Lucas Keh, an analyst at the research firm Third Bridge, said in an email.

Wall Street analysts are also looking for signs that some richly funded rivals could grab a noticeable share of Nvidia’s business. Microsoft, Meta, Google and Amazon have all developed their own chips that can be tailored for A.I. jobs, though they have also said they are boosting purchases of Nvidia chips.

Traditional rivals such as Advanced Micro Devices and Intel have also made optimistic predictions about their A.I. chips. AMD has said it expects to sell $4 billion worth of a new A.I. processor, the MI300, this year.

Mr. Huang frequently points to what he has said is a sustainable advantage: Only Nvidia’s GPUs are offered by all the major cloud services, such as Amazon Web Services and Microsoft Azure, so customers don’t have to worry about getting locked into using one of the services because of its exclusive chip technology.

Nvidia also remains popular among computer makers that have long used its chips in their systems. One is Dell Technologies, which on Monday hosted a Las Vegas event that featured an appearance by Mr. Huang.

Michael Dell, Dell’s chief executive and founder, said his company would offer new data center systems that packed 72 of the new Blackwell chips in a computer rack, standard structures that stand a bit taller than a refrigerator.

“Don’t seduce me with talk like that,” Mr. Huang joked. “That gets me superexcited.”

Explore Our Coverage of Artificial Intelligence

News  and Analysis

Google’s A.I. capabilities that answer people’s questions have generated a litany of untruths and errors  — including recommending glue as part of a pizza recipe and the ingesting of rocks for nutrients — causing a furor online.

News Corp, the Murdoch-owned empire of publications like The Wall Street Journal and The New York Post, announced that it had agreed to a deal with OpenAI to share its content  to train and service A.I. chatbots.

The Silicon Valley company Nvidia was again lifted by sales of its A.I. chips , but it faces growing competition and heightened expectations.

The Age of A.I.

D’Youville University in Buffalo had an A.I. robot speak at its commencement . Not everyone was happy about it.

A new program, backed by Cornell Tech, M.I.T. and U.C.L.A., helps prepare lower-income, Latina and Black female computing majors  for A.I. careers.

Publishers have long worried that A.I.-generated answers on Google would drive readers away from their sites. They’re about to find out if those fears are warranted, our tech columnist writes .

A new category of apps promises to relieve parents of drudgery, with an assist from A.I.  But a family’s grunt work is more human, and valuable, than it seems.