AstraZeneca PLC (AZN) 2014 Q2 法說會逐字稿

Good afternoon, everybody. I'm Pascal Soriot, and I'm joined today by Briggs Morrison, our EVP of Global Medicines Development and our Chief Medical Officer. I also have with me Marc Dunoyer, our CFO; Mene Pangalos, our EVP of Research and Early Development at AstraZeneca; Luke Miels, our EVP of Global Product and Portfolio Strategy. I also have with me here a number of members of our investor relations and our finance teams.

Thank you for joining us today and giving us the opportunity to spend a short time updating you on the second quarter and the half year, and reiterating our commitment to achieving scientific leadership and returning to growth.

We have posted a set of slides on the investor page of our website and we'll follow along with this presentation. We'll try to give you the slide number as we go through.

If I move to slide 4, I will provide a brief overview of our financial performance to date, and as we promised, I'll provide the quarterly update on our strategic priorities. I will then hand over to Briggs, for an update on the progress we've made on our R&D pipeline, and finally to Marc to run through the financial performance in more details. And we'll also give you an overview of the deal we announced yesterday with Almirall. I'll then give my closing remarks before opening up for questions.

Moving on to slide 5, starting with our second-quarter result, it has been another quarter of significant progress. We've seen genuine momentum across our business. I'm particularly pleased to note this is our second consecutive quarter of revenue growth.

We had sales of $6.5b in the quarter, which was up 4% at CER. We've also grown core EPS by 13% in the quarter. This reflects the good work by the teams across AstraZeneca in successfully executing on our strategy.

I would also like to highlight the second consecutive quarter of double-digit growth in the emerging markets, one of our key growth drivers, and over 23% growth in China, where we continue to outpace the market.

We've also seen strong progress from our younger brands this year, including the successful launch of Farxiga in the US, our treatment for adults with Type II diabetes which we launched in early February.

Yesterday, we announced a deal we are progressing with Almirall, which will be important to bolster the growth of our respiratory franchise. Marc will outline the key financial details and the new assets we'll benefit from in his presentation. I'm really looking forward to welcoming the new colleagues from Almirall who will join AstraZeneca.

Turning to scientific leadership, I'm pleased to report that this has been another productive quarter for AstraZeneca. We've had the opportunity to provide updates on our rapidly progressing pipeline at various congresses in May and June, including ATS, the ASCO and the ADA. We now have a total of 14 compounds in our late-stage pipeline, on which Briggs will give you a more detailed update. This has increased from last year, when we had eight compounds in Phase III or registration.

Significant advancement has been made in our immuno-oncology portfolio since we presented the pipeline update at Q1. As you know, this is one of our key scientific areas and one of the most exciting growth areas across our entire industry. During the quarter, we also had a positive advisory committee vote for Movantik and look forward to an FDA approval decision in September.

You will have seen the recent FDA vote on olaparib, which of course was a disappointment. However, our discussions with the FDA continue. The agency has now extended the review time by three months to early January, after we submitted a major amendment in July.

Let me turn to slide 6. You can see key data for the first half. We had revenue growth in all key regions except in Europe, where we're still facing price challenges and generic challenges. The emerging markets, however, grew in double digits, with China being the key driver at 23%. We also had good 26% growth in Russia.

In Europe, as I said, we continued to face the effects of loss of exclusivity on key drugs as well as pricing challenges.

In Japan, we've seen strong underlying demand for our recent launch brands, but overall growth is only marginally up over the half year. I will talk about that later.

Core EPS for the Group was marginally down over the first half of the year, with a 13% growth for the quarter.

Slide 7 is a reminder of the three key strategic priorities we've outlined for AstraZeneca. I will now review the return to growth platforms in more details before Briggs gives his R&D update.

If we move to slide 8, I'm pleased to say that our five growth platforms contributed $6.8b of revenue during the first half of the year. That is an increase of 14% here. I will shortly review each one of these in more details.

If you look at slide 9, it's important to note that our revenue performance is helped not only by the growth platforms but also by the resilience of some of the mature products, like Pulmicort and Crestor, essentially driven by the emerging markets. This has helped us offset the effects of the loss of exclusivity of some of our off-patent products.

On slide 10, if we now take each of these growth platforms in turn, I'll look first at Brilinta on slide 10, on this slide, which has continued to make good progress in Q2, with revenue up 77% globally. Brilinta has seen good uptake in Europe, in the emerging markets and the established rest of the world, and we continue to hold leadership positions in a number of our European markets and elsewhere. What is nice to see is that the US was the fastest growing area in the second quarter and we're making good, steady progress in the United States.

You can see on slide 11 that we continue to take market share in the US, and the new-to-brand market share was around 7%. We've always believed in the potential of this product, and we are pleased with the steady progress it continues to make with our ongoing investment.

And slide 12 gives you a little bit more of a granular view of the product. We can see improved momentum for Brilinta in hospital initiations as a share of the total anti-platelet market.

It's really pleasing to see the figure on the right, which shows the recent good share performance among STEMI ACS patients who are discharged from hospitals. During the last quarter, Brilinta has overtaken Prasugrel in this setting. So we have now renewed momentum, even though the DoJ investigation is not yet totally concluded, and we are looking forward to a conclusion of that investigation in the near term, hopefully.

Slide 13, looking now at diabetes, we've seen strong performance over the quarter. We focused on the successful integration of BMS' assets and the excellent US launch of Farxiga, which so far is one of the most successful launches in the overall non-insulin anti-diabetic market since Januvia. Onglyza, Byetta and Bydureon have also grown on last year, but Onglyza has seen a 0.3 point share decline in total prescription share in the quarter.

If we look at slide 14 now, which gives you a view of the Farxiga, you can see the launch aligned new prescriptions volume uptake of recent launches for Type II diabetes in the US. Farxiga is the blue line and is striking very nicely during the first five months of this launch.

If you look at the right-hand side of the slide, you can see the effect of the Farxiga launch on the monthly new prescription volume in the SGLT-2 class, and the figure shows the growth of the class since the launch of Farxiga. So we're not only taking share from our competition; we certainly are growing the class, which is a very exciting class of new oral agents.

Then you move to slide 15, to outline the strong performance of Symbicort in the first quarter -- in the quarter, which I'm pleased to report has continued from Q1, as seen on slide 15, and is up an impressive 30% in the US and 9% globally. In the quarter, the US price was broadly flat for Symbicort.

Symbicort sales in Europe are down 7%, due to competitive and pricing pressures in the market. We see now the introduction of analogs and the development of sales in Europe is as per our expectations. This is, however, somewhat offset by strong double-digit growth in the emerging markets, with revenues in China more than doubling, and the potential for Symbicort in China is very important.

If you look at slide 16, and we look more closely at the Symbicort performance in the US, you can see the new-to-combination therapy market share is up to 37.7% in the US, 3.8 share point increase in the first half. Total prescriptions in the US were up 32% for Symbicort in the quarter, compared to a mere 2% increase for the fixed combination market.

On the slide 17, I have already mentioned our strong performance in the emerging markets for the second consecutive quarter, but if you look at the slide you can see how our growth in China compares to the rest of the industry. We are outperforming our competitors.

We, as you know, are the second largest pharmaceutical -- international pharmaceutical company in China, just behind Pfizer, and we have the highest growth rate as of first half of this year. Actually, it's as of May. The purple bars show the growth in May and the green bars denote the growth in China year to date by the end of May.

On slide 18, if you look at the total moving annual total sales in China from the beginning of 2013, you can see how AstraZeneca, in purple, continues to outpace the rest of the market. We have a strong portfolio and strong team in China, and our investments in the country are bearing fruit.

I'm also pleased to say again that we had very strong growth in Russia as well; we grew in Brazil. So it's not only a success in China. We experience nice growth in a variety of emerging markets.

Slide 19, looking at Japan, we've seen positive underlying demand for our launch brands in Japan. Crestor, Symbicort, Nexium have shown good market share progression. We posted only 1% here growth in the first half. However, we saw 8.4% in market growth by the end of May year to date.

Our performance -- our in-market performance, however, has been impacted by the price reductions in April this year. We've also been impacted by the increased use of generic medicine in oncology, which has impacted our oncology brands.

But finally, I'm pleased to report that Forxiga is off to a good start in Japan. It's still early days since the launch in May, but the early signs are quite positive.

So I will conclude my initial remarks and now hand over to Briggs to take you through our exciting pipeline, after which Marc will discuss the quarter's financial highlights. Briggs, over to you.

Great. Thank you very much, Pascal. I'm pleased to be able to report on our pipeline progress over the second quarter and the first half of the year, and to give you some guidance on items you want to track as the second half of the year unfolds.

If we go to slide 21, I'd like to first note that we continue to make really good progress in growing our late-stage pipeline. On the left side of the slide, I show new pivotal programs that have started in the second quarter.

Roxadustat has started Phase III trials both in chronic kidney disease and in patients with dialysis. We've decided to increase the sample size of our randomized Phase II trial with our CTLA-4 antibody tremelimumab in mesothelioma to support a possible registration. And we've started Phase III trials for both 9291, our third-generation EGFR inhibitor, and MEDI4736, our PD-L1 antibody in non-small-cell lung cancer.

We've also started additional indications for a Phase III program in COPD for our anti IL-5 receptor antibody benralizumab and an adjuvant trial in BRCA mutant breast cancer with our PARP inhibitor olaparib.

As Pascal noted, as a result of these progressions, you can see on the right-hand portion of the slide that we now have 14 new molecular entities in pivotal studies, up from eight at this time last year and up from 11 at the beginning of this year. We are of course extremely excited about this progress, and our colleagues all across MedImmune and AZ are working diligently to deliver these programs.

If we move to slide 22, we've had continued momentum in the late-stage pipeline as measured by regulatory milestones, a number of accomplishments. The approval of Epanova in the US. The favorable vote for Movantik, indicating that for this class of agents we do not -- the FDA is not going to require cardiovascular outcome trials. AZD0914, a drug for drug-resistant gonorrhea, gained fast-track status from the FDA.

Bydureon Dual Chamber Pen received a positive opinion from the CHMP. I'll note that's a little bit earlier than we thought. In the first quarter call, I told you I thought that would happen in the fourth quarter. It happened a bit earlier. And we filed for Bydureon in Japan.

As Pascal noted, we of course were disappointed in our negative AdCom vote for olaparib, but we have submitted additional data which the FDA is reviewing and they've extended the PDUFA date till the end of -- to early January of next year.

I use slide 23 simply to turn our attention to our immuno-oncology effort. This slide simply highlights that in a patient with cancer there may be one or more obstacles to an effective immune response, and we are seeking to understand and address as many of these obstacles as we can.

There are a number of ways to theoretically improve antigen presentation, on the far left of this slide, including a recent clinical collaboration we have announced in the second quarter with the Advaxis HPV vaccine. We are clearly fully exploring mechanisms that can enhance T-cell function and memory, on the upper right of this slide, with PD-1, PD-L1 and CTLA-4. And we've entered into two additional collaborations both with Incyte, KHK to explore blocking known mechanisms that exist in the microenvironment of tumors to inhibit immune activity.

I want to note here that our approach is to explore as many of these potential obstacles to an effective tumor response in small Phase I and II trials that are designed and conducted by our translational scientists at MedImmune. These clinical investigative trials allow a detailed analysis of pharmacokinetics, pharmacodynamics and, importantly, relevant tumor biology.

As the science is advanced in these early trials, we then move the programs into our late-stage group, which is really focused on designing and conducting registration trials. These registration programs could be single-arm, uncontrolled Phase II trials, or they could be larger randomized trials.

If we go on to slide 24, we show on the left side ongoing trials in our immuno-oncology portfolio. Now, some of these are these early translational trials that I just referred to. Some of them are Phase II or III registration trials. And the asterisks indicate new trials that have initiated since ASCO.

On the right side of the slide, we show trials that are currently in the planning stage, but could start in the second half of this year. And again, there's a mixture of these early translational trials as well as more advanced registration trials, again with the asterisks indicating new plans since we discussed the immuno-oncology portfolio with you at ASCO.

I'd like to emphasize one set of new planned trials, and that is the registration program in squamous cell carcinoma of the head and neck region.

If you go on to slide 25, at the top of this slide is a before and after picture of an elderly patient who had a significant response to our PD-L1 antibody MEDI4736. We anticipate that a paper will be presented at ESMO that will summarize the safety and efficacy of MEDI4736 in a cohort of patients with squamous cell carcinoma of the head and neck region.

This data that will be presented at ESMO has encouraged us to plan a pivotal program in this tumor type. So we have plans for a pivotal program with both PDL-1 monotherapy and the combination of PDL-1 plus our CTLA-4 antibody tremelimumab. We will be exploring both PDL-1 positive patients as well as patients who have tumors who do not stain for PDL-1.

We are in ongoing discussions with regulators to inform the final set of designs, but I want to highlight to you that we believe that these trials will start in the second half of this year, and we'll give you further details on the head and neck program at ESMO.

If we move to slide 26, I wanted to spend a moment on highlighting our participation in what we think are really very exciting novel collaborative trial designs, one in the US and one in the UK. In both of these studies, we are really seeing the future of the practice of medicine, where patients' tumors are molecularly characterized and specific medicines offered based on the specific molecular defects identified.

On the top of the slide is the so-called lung-MAP trial, which is a very nice trial put together by FDA, NCI, Friends of Cancer Research, in which patients with squamous cell carcinoma of the lung are genotyped, and depending on the specific mutations that are found in their tumors, they are put into one of different treatment groups.

So, for example, if the patients have abnormality of the FGF receptor, they will be randomized in a Phase II portion of the study to our drug AZD4547 versus a standard of care docetaxel. If there's a signal in that Phase II portion, this is a seamless Phase II/III trial, the arm is then expanded into a Phase III registration trial. If there is no activity, then that arm of the trial can be stopped.

Similarly, you'll see on the bottom of this schematic, for patients who do not have one of the four currently identified abnormalities in their squamous cell carcinoma, those remaining patients will be randomized to our PDL-1 antibody versus docetaxel, again in the Phase II portion. If there is a signal seen in progression of free survival, that will extend out to a Phase III trial in squamous cell lung cancer.

So, again, we've used a very innovative design. We really applaud NCI, the FDA, Friends of Cancer Research, for putting this together. A very similar program has been put together in the UK, again where we have patients who are molecularly genotyped. We've contributed a number of molecules to the Cancer Research UK trial to do a similar type of thing in the UK.

So, again, we just want to highlight a great opportunity for very innovative trial designs, and we're eager and excited to participate.

Now, I'd like to move away from oncology just for a moment to talk about some other molecules in our pipeline that we're quite excited about. I'll talk about both Movantik and roxadustat.

So, on slide 27 is some information on Movantik, which potentially could be the first once-a-day oral peripherally acting mu-opioid receptor antagonist for treatment of opioid induced constipation.

On the upper right-hand side of this slide, you'll see some data on the frequency of opioid induced constipation amongst patients treated with opioids. So about 80% of people who get opioids will develop opioid induced constipation, and about half of them do not in fact achieve a desired treatment outcome. It's that half of patients that we believe that Movantik offers a new therapeutic option.

On the upper left-hand side, I've just summarized the primary efficacy end points. You will have seen the reporting of the pivotal Phase III trials in The New England Journal in June of this year. This is a quick summary of that, and so we are very excited about both the efficacy and the safety of this compound.

On the bottom of this slide are the anticipated key regulatory milestones. On the far left, you'll see that we -- how the Advisory Committee were again -- the Advisory Committee recommended to the FDA they do not need see the outcomes of trials prior to approval. In the third quarter, we anticipate a potential approval in Canada, and our PDUFA date is September 16 here in the US. We should potentially get EU approval as well before the end of the year.

Now, I'll highlight that the launch for the US is not until the end of the first quarter or early second quarter of next year, and the reason for that gap from the approval, we hope, anticipated approval in September until the launch has to do with the scheduling of this drug. Remember that Movantik structurally is related to opioid. It is an opioid antagonist, and as such must go through the DEA process on scheduling.

Now, our assumption, of course, is that it will not be scheduled, but it must go through that process in addition to the actual FDA approval. That process will take a little bit of time, and that's why we're anticipating -- and that process must be completed before we can launch the product. And that's why there's a gap between the actual planned anticipated approval in September and the launch at the end of the first quarter or second quarter.

If we move to the slide 28, I just want to again remind you about roxadustat, a compound we're developing in collaboration with FibroGen.

On the left-hand side is a diagrammatic slide to emphasize that this molecule, although it does induce local production of EPO, it has a number of other mechanisms that allow in a very coordinated way the treatment of anemia of chronic renal disease. And therefore we believe that the levels of EPO that are induced by this molecule are considerably lower than they are with recombinant EPO, which we believe could be of aid both as oral agent and a better safety profile than recombinant EPO.

On the right-hand side of the slide, just to highlight the number of patients with chronic kidney disease in some of the major markets and the percent of patients with various stages of chronic kidney disease who will develop anemia. It is a very important unserved medical need.

And we're excited, if we go on to slide 29, that we have now begun some of the -- our components of the Phase III program. The Phase III program is a very large program conducted by us and Astellas and FibroGen, characterizing both the safety and efficacy of the compound.

Two key programs that we have undertaken have started in the second quarter. One is in patients who are not on dialysis but have chronic kidney disease. Those patients are randomized to placebo versus roxadustat, and the primary end point here is major adverse cardiovascular event, cardiovascular death, stroke or MI. And the intent here is to show that roxadustat has an event rate comparable to placebo.

And the second trial is in patients who are already undergoing dialysis, where the standard of care is EPO. And there the patients are randomized to roxadustat versus EPO. Again, the primary end point is MACE and the anticipation is that roxadustat will have a lower incidence of MACE than EPO.

As you can see on the far right of the slide, it will be a couple of years until we have the results from these trials, but we are very excited and encouraged to be getting these trials underway.

If we move to slide 30, this is the slide that I showed you, a version of this slide, in the first-quarter call. On the far left are the pivotal study starts. This is now a summary for the first half of 2014. I think I've talked about all those pivotal study starts at this point.

In the middle are pivotal study decisions that we have made in the first half, and I'll just highlight here the Forxiga Type I diabetes indication, where we've decided to progress that into a pivotal program. And as I've mentioned earlier, 9291 -- no, I did not mention it. 9291 in first line non-small-cell lung cancer, we've made that decision to undertake that study and the study should start the end of this year. And then the two bottom ones, the PDL-1 plus or minus treme program in squamous cell carcinoma of the head and neck, and PDL-1 and treme in non-small-cell lung cancer.

I'll also note that on the far right we still have additional molecules that are completing their Phase II programs which we may be able to make additional investment decisions to progress yet additional molecules into Phase III before the year is over.

Moving on now to slide 31, I just want to highlight a couple of congresses that are coming up. The European Society of Cardiology Congress in Barcelona at the end of August, beginning of September; I'll highlight this one trial from Brilinta which you may want to take a look at when it's reported out.

This was an investigator initiated trial in which they asked the question if you start Brilinta earlier in the ambulance, could you improve TIMI flow and ST-segment resolution, so the patients are randomized to get either Brilinta or Brilinta at the normal time. And we encourage you to take a look at that. That will be at ESC Hotline Session in September. We have a number of other abstracts that have been accepted, and we think for those of you who are attending, we ask you to look forward to those.

On slide 32, I'll also highlight ESMO, which will be held in Madrid in September for immuno-oncology. We'll be presenting abstracts on additional monotherapy data, both in non-small-cell lung cancer and, as I alluded to earlier, in head and neck cancer.

You'll remember at ASCO we did not actually present at the scientific session our PDL-1/CTLA-4 combination data in non-small-cell lung cancer. We presented a very high-level summary at the investors' meeting. But this will now be presented at the scientific session, with abstracts there. There will be more patients, further dosing cohorts, some information on the biomarker status and some additional information on treme CTLA-4 inhibitor in mesothelioma.

There'll also be updates on 9291 in non-small-cell lung cancer, including with the duration of response -- of data on duration of response in the T790M second line population, and some data on patients who've been treated with 9291 in a first line setting and patients with brain metastases.

Now, as the year unfolds, on slide 33, there are some significant data readouts. The first three lines here are lesinurad, CAZ AVI, brodalumab. The data readouts here will define for us the actual profile of these exciting molecules.

For lesinurad, you'll remember that we talked with you about the monotherapy data that came out end of last year, where we did see an increase in renal adverse effects from lesinurad. We've talked about the scientific reasons why lesinurad in combination, which was the additional trials coming out now with febuxostat or allopurinol, potentially will have a lower incidence of adverse renal effects. Obviously, what we don't know until the data reads out is whether those adverse renal effects will be the same as placebo.

And so we're still -- we don't know what the profile will be here for lesinurad. I will just note that we do have a second generation molecule against the same target, 3170, which we've talked a little bit about with you previously, which at least in preliminary studies looks to have an even better renal safety profile than lesinurad. So we'll know very soon what the profile of lesinurad is in treatment of gout.

The CAZ trial, the initial trial in complicated intra-abdominal infections, should read out in the third quarter. And in the fourth quarter, the data -- the additional Phase III data from brodalumab, these are the head-to-head trials against Stelara.

The other molecules on the slide I think we've talked about previously, and I've highlighted for you congresses where there'll be more information on the molecules.

On slide 34, we have some additional key regulatory milestones. The filing of Iressa for non-small-cell lung cancer in the US. Hopefully the approval of Movantik, PDUFA date is September 16, and signs are looking positive with our interactions with the FDA that that will be a successful approval. We're also on track, as I noted earlier, for the approval of Movantik in Europe.

We are still under review in Japan for the potential approval for the ACS indication for Brilinta. I've talked already about the olaparib delay to the PDUFA date until early next year. We are on track for an approval of -- for Xigduo XR, the combination of metformin plus dapagliflozin in the US.

And then the three lines -- I'm sorry. The saxagliptin fixed dose combination filing at the end of the year. And then both lesinurad and CAZ AVI, depending on the data readouts, we would be on track to file both in the EU and US for lesinurad and in the EU for CAZ AVI.

And slide 35 is a slide I've shown you a number of times of the potential new molecular entity and lifecycle extension submissions. The only thing I want to point out here are the things that have changed since we showed this to you at the end of the first quarter.

One is AZD9291, where we now believe we will be able to file that in 2015. Our base assumption right now is that it will be in the second half of 2015. And based upon the work that we've been doing in our non-small-cell lung cancer program with MEDI4736, if the data reads out as we anticipate, we will be on track to file that in 2016.

So I'll stop there and turn things over to Marc.

Thank you, Briggs, and good afternoon, everyone.

Today I will provide a little more detail on the drivers of the headline result for the second quarter and investment we are making in our growth platforms and rapidly progressing pipeline as we work towards returning AstraZeneca to growth. I will also discuss the key drivers of operating profit and margin, and briefly comment on the impact of exchange rate movements against the prior-year period. As Pascal said, I will give you an overview of the key aspects of the deal we announced yesterday with Almirall.

Turning to slide 37, we can see that revenue for the second quarter grew by 4% at constant exchange rates to $6.5b, our second consecutive quarter of growth. The currency impact on second-quarter revenues was negligible. It was more of an impact at the bottom line. Core EPS for the quarter was $1.30, growing by 13% at constant exchange rates. The impact of foreign exchange lowered core EPS by 5 percentage points.

I will now turn to the P&L for the quarter, and I will focus here on core margin and profit. The press release contained the statutory numbers and a detailed reconciliation to the core measures. As a reminder, when I refer to growth rates they will all be at constant exchange rates.

Core gross margin was 82.1% of revenue. There are a number of moving parts in the quarter, but as was the case in the previous quarter, the benefit from lower Crestor royalties was more than offset by the inclusion of diabetes related costs.

Core R&D expenditures were up 12% go $1.2b in the second quarter. Having nearly doubled our late-stage portfolio over the last 12 months, together with the strong progression across all stage of development of oncology portfolio, there is pressure on our cost base. We are focused on delivering the pipeline to drive long-term value and are continuing to seek ways to contain costs.

Core SG&A expense was up 13% compared with last year. The increase in SG&A was driven by the inclusion of all the costs associated with the diabetes portfolio, as well as the investment behind the launch of Forxiga in the United States and continued investment in the emerging markets, and in particular China. This increase in sales and marketing investment is not mirrored in the G&A, which declined in the quarter.

Core other operating income for the quarter increased by 120%. This growth was driven by milestones related to the launch of Nexium OTC in the United States and Forxiga in Japan, without which other income would have declined.

Core operating profit was $2b, 2% higher than last year. Core operating margin was 31.5% of revenue.

I don't intend to go in detail on this slide for the first half, since many of the drivers are the same as those discussed for the quarterly margin, in particular the growth rate of R&D or that of SG&A. However, I would like just to highlight the strong performance year to date and note that the revenue would still have grown if original assumption for generic Nexium in the US had transpired.

The impact of the acquisitions of the other 50% of the diabetes franchise corresponds to more than 3% of growth. Currency movements, most notably the appreciation of sterling and depreciation of the yen, negatively impacted operating profit by around $200m.

As you have seen, yesterday we announced a strategic transaction with Almirall. I would now like to take you through the key aspects of this deal, starting on page 41.

This is a great deal for AstraZeneca. It strengthens our inhaled portfolio in asthma and COPD. In the short term, it brings greater device choice for patients and adds DPI option to complement Symbicort and the Pearl asset.

In the medium term, this deal brings novel MABA and LABA bronchodilators, which will offer once-daily treatment options and novel combination for severe patients. The innovative assets of both companies are going to be pooled, and potential revenues will flow to Almirall regardless of the origin of the molecule.

The deal is structured to reduce risk and enhance returns. It immediately brings revenue and is neutral to core earnings in 2015 and accretive from 2016.

As shown on slide 42, with this deal we acquire the Aclidinium franchise, assuming all Almirall rights, an excellent pipeline assets, most notably the MABA platform, as well as option to in-license further preclinical assets. Importantly, also, we will gain the rights to the Almirall Sofotec subsidiary with its device expertise and employees, subject to relevant consultations.

We will pay an initial consideration of $875m upon completion of the transaction, followed by up to $1.22b in development, launch and sales related milestones. There are also some sales related payments, but these are less than 10% of the total consideration.

The scope of the transaction includes assets as well as people, and this means the deal will be accounted for as a business combination. We will give you more details on the contingent considerations and the total value of the asset on the balance sheet once the deal closes.

Slide 43 summarizes the benefit to the AstraZeneca respiratory franchise. It brings an on-market portfolio and accelerates their entrance into the LAMA/LABA market, as well as bringing us an option for patients who prefer the DPI device. It strengthens our pipeline with once-daily MABA and MABA, as well as access to interesting preclinical assets. And finally, it strengthens our device portfolio and brings a highly regarded team with a track record of technical and regulatory expertise.

As a result of the strong performance highlighted in the earlier slides, we now anticipate revenue to be in line with 2013 on a constant currency basis. You may want to know that this guidance is based on the business planning assumption of the entry of generic Nexium in the United States from October 1.

With continued investment in the pipeline and growth platforms, we now anticipate core EPS to decline in the low double digitsat CER.

The Company continues to pursue multiple productivity initiatives and redeploy resources to fund its pipeline and growth platform, whilst managing its cost base.

Today we have announced a first interim dividend of $0.90, and again reaffirm our commitment to a progressive dividend policy.

In conclusion, AstraZeneca has made further significant progress this quarter, and we're investing in the business to drive continued momentum over the course of the year.

With that, I will now hand back to Pascal.

Thank you, Marc. So let me just close by saying that, as you can see, it's been a very busy and important quarter for us. We're making good progress, not only rebuilding our pipeline and progressing our important projects, but also through achieving a second consecutive quarter of revenue growth. Our underlying performance gives us confidence in our strategy for returning to growth by 2017 and it underpins our long-term prospects.

I hope to see you all at our Investor Day. We will be holding it in London in November. And I hope you enjoy the rest of the summer. So with that, I'd like to open for questions. Over to you, operator.

We have a question from Alexandra Hauber at UBS. Alexandra, go ahead.

Thank you very much. I have a couple of (inaudible) questions and a financial question. Starting with roxadustat, can you give us some idea about what you -- given that we don't see that many studies which have MACE as an end point, would the diabetes guidelines be the right ballpark to what kind of risk reduction you need to roll out in a placebo study, and typical 50% risk reduction versus the EPO in the dialysis patients? Would that be the right ballpark to think about it?

The second question, today you announced head and neck studies for both the PDL mono and the combination. I'm not quite sure, since we talked about additional tumor types, are you likely to initiate or at least announce registrational studies in yet another additional tumor type this year?

And one compound which I didn't see on the list but has data at the upcoming ERS meeting is the CXCR-2 antagonist, the 5069. As I said, that has data at the ERS, but from the headlines we cannot see whether it is actually positive or not. From the fact that you don't mention it, should we assume it's something which you're not going to take forward?

And the final question is obviously your R&D budget is expanding rapidly. It seems to move towards $5b and potentially expanding from that, so that makes it increasingly harder to hit the magic $4.20 EPS in the future years which you need for the 1.5 times dividend cover. Now, given where you are with your pipeline, is that something that you even still care about at this stage?

Thank you so much, Alexandra. A series of very good questions. So that my colleagues can think about it, roxadustat, Briggs, I'll ask you to cover this one and maybe head and neck, if you don't mind. CXCR-2, since we have many here, many who probably want to cover this one, I'll start with the last one.

Alexandra, this year, as you can see, we're doing very well, number one. Number two, we've had a couple of additional incomes that are one-off, but very much a lot of additional income driven by our very good in-market sales performance. So we've reinvested in our pipeline, but also in growing the business even faster in the emerging markets and the diabetes launches.

So we will be managing our cost base in line with the revenue we get, and certainly next year we are preparing ourselves for the loss of Nexium, which we assume at this stage to lose in the fourth quarter of this year. And as Marc mentioned before, we have a number of productivity initiatives that will help us manage those costs.

So bottom line is we are very committed to our dividend policy, and we're also very committed to the remuneration policy that goes with it. I'd like to remind you the dividend policy is that we have to deliver a progressive dividend which is flat or growing, and we have a dividend cover of 1.5. So certainly we will be managing our costs next year to protect profitability.

Remember that on the SG&A front, we said it at the beginning of the year, we incorporated or integrated the other half of the diabetes franchise, and we now have a pretty large primary care presence in many countries around the world. And we decided to stay focused and not disrupt the organization, but there is potential for us to improve our productivity, for sure, across the entire business, but certainly very much in SG&A. And that's certainly what we will be doing next year.

So, Briggs, do you want to cover the roxadustat question and the head and neck? Briggs?

I have it. So, I'll do the roxadustat. You're thinking about it the correct way. We have a lot of experience with cardiovascular outcomes trials that use MACE as an endpoint. So the comparison to placebo, the conversations we've had with regulators are in the ballpark of the diabetes guidelines and an improvement, as you've noted, over EPO in the EPO comparators.

In terms of your question about another tumor type, you'll see on slide 30, I went through it a bit quickly but we have additional pivotal study decisions pending in the second half of the year, including additional tumors for PD-L1.

So at this stage we are not in a position to say what that will look like, but obviously we have, in our expansion cohorts, been looking at other tumor types. And there is the potential we would announce an additional tumor type beyond head and neck and non-small-cell lung cancer by the end of the year.

Thank you very much, Briggs. Mene, do you want to cover the CXCR2 question?

Yes. The CXCR2 antagonist 5069 did read out in our severe asthma study. It engaged the mechanism, so the molecule did what it said on the tin, but it didn't have any efficacy or the required efficacy. So that program and mechanism has been terminated for asthma and COPD, but the team is actually looking now at alternate indications because we know we have a molecule that modulates the pathway, and that includes also some of the immuno-oncology opportunities that might exist with CXCR2 antagonism.

Thanks, Mene. So I should have mentioned earlier that if you want to ask a question, just a reminder, press star one, of course, to indicate to the operator you have a question to ask. Let me ask Matt Weston at Credit Suisse. Matt, do you want to go ahead with your question?

Thank you very much, Pascal. Three questions, if I can. The first, your ASCO analyst meeting slide highlighted a novel NME in the microenvironment section of immuno-oncology. Can I check whether that is the CCR4 now in-license?

And then, with the other secret NMEs you highlighted at ASCO, can I ask, are they all partnered opportunities or are some of those in-house molecules?

Regarding respiratory, GSK recently flagged an aggressive pricing situation in the US respiratory market. Can I ask, are you seeing similar trends in the period where you're negotiating for 2015 formulary access? And are you confident that you'll keep the same formulary positions where you are preferred going into next year?

And then finally, a simple financial question. Tax treatment for the Nexium and Forxiga, one-times, should we assume that they are taxed at the normal corporate rate?

Thanks, Matt. Briggs, probably you could, if you don't mind, take the ASCO slide question and the NME. I must say, Matt, you are calling on our memory here, certainly. This NME in-house slide, I don't remember the slide, but we could comment on this one. So in the meantime, I could start with the respiratory question. Luke, do you want to cover this one? And then we'll go to Briggs and then we'll go to the tax treatment, Marc, if you want.

Sure.

So, Matt, year to date we've been able to hold prices flat. I think if we look forward, we've successfully grown market share, as we've shown, so far, but it remains a very competitive market. So we expect further price pressure in the market. Our view is that we'll compete. We'll win some; we'll lose some. But having said that, we're taking the long view, and as you can see we've got good momentum.

Thanks, Luke. So, yes, we certainly can see that this market is becoming competitive, Matt, but it's not the only one. Markets in the United States are competitive across the board. Briggs, do you want to cover the ASCO question and the NME question?

Yes, I'd be happy to. So, Matt, thanks very much for the question. The novel NMEs that we were referring to on the ASCO session was not the CCR4 there. We have a combination of internal and external opportunities. So there's more than the CCR4 clinical collaboration.

We have quite a number of internal programs, Matt. Of course you're aware of the OX40 program, but behind this one we have quite a number at preclinical stage internally. We're working on those and we're certainly also looking at external collaboration. We've mentioned some of them in Briggs' presentation today, but we have a couple of others that we're exploring. So, as Briggs says, a variety of internal and external options.

Tax treatment, Marc.

I can confirm that the other income received for Nexium and Forxiga are taxed at normal corporate rates.

Good.

-- much.

So we'll move to the next question, Tim Anderson. Tim, do you want to go ahead?

Hi. Yes. Thank you. A couple of pipeline questions and then a third question. So you talk about filing your PD-L1 using the Atlantic study, which as you know, it is a Phase II single-arm trial looking at response rates. As a late entrant product, I'm wondering if it could be too late to rely on this type of a trial for registration, because others may have beat you to the punch. The other anti PD-L1s may have launched in lung by that point.

The second question is on tremelimumab. I'm just clarifying something you've said previously. I believe that was at your ASCO analyst meeting, where you said tremelimumab was better than ipilimumab, and I'm wondering if that's a fair characterization of your current view of why you think that drug would be better. The reason I ask is Pfizer said on its conference call recently that they didn't view it as a mistake to let go of that program, but that wouldn't seem to be congruent with your more bullish view.

And then, last question, you've no doubt been in constant communication with Astra shareholders over the last few months, and I'm wondering if you can give us an idea of what the majority of shareholders you've met would want you to do in terms of engaging in discussions with Pfizer or not. So in what direction did the majority of shareholders lean?

Thanks very much, Tim. So, Briggs, it will be over to you again in a minute. I'll take the easy question, the last one. And it's easy, Tim, because unfortunately, as you probably would expect, we're not able to comment here. We are under the London Takeover Panel rules, sorry, and it is completely impossible for us to comment on this.

So, Briggs, two questions, the PD-L1 Atlantic Phase II, is it too late, and also the treme versus ipi question.

Yes. Tim, thanks very much for your questions. So first, for Atlantic, I'll make two comments. One is, as you're well aware, it's the specific indications that you ask for when you go in for approval. So if somebody asks for -- somebody was approved in second line and you're going for third line, that's still considered an unmet need. So it depends on the indications.

And it also depends on if the person who's there before you has full approval or has accelerated approval. So if there's an accelerated approval and there's still pending full approval, then obviously others can come in and still get accelerated approval.

So, based upon our understanding of the competitive landscape and our program and discussions with FDA, we do think it is not too late for us to file in 2016.

The question on treme, you'll remember at ASCO Dr. Rachel Humphrey went through a side-by-side comparison of treme versus ipi, and of course Rachel knows ipi very well since she was at BMS at the development of that molecule. There are differences between the two antibodies; that's for sure. And the best we can tell of the data that has been generated on treme prior to our taking over the molecule, it does appear to be an active molecule and we do remain bullish on it.

Good. Tim, does it address your question?

Yes. I guess if you could just clarify what exactly it is about tremelimumab. Is it better safety? Do you think it's going to have better efficacy? I know it doesn't seem to kill off Tregs within the tumors, but that would seem like it could even work against efficacy.

Yes. So maybe, Tim, just for the sake of this call, we'd be happy to talk with you offline about further details, molecular details of why we have those differences of opinion on treme, but maybe we'll turn it on to -- probably not the place to go through all that fine detail. We can do that with you offline.

Okay.

Thanks, Briggs. If you also go back to the presentation at the ASCO, Tim, we actually highlighted the reasons why we believe that they could be different at the time. Let's move to Nicolas Guyon at Morgan Stanley. Nicolas, do you want to go ahead?

Hi. Thanks for taking my question. I have three. The first one is about the rationale (technical difficulty) and given you already have the rights to very similar assets, although with a different device. In that regard, do you have any particular reason for changing your mind with regard to those assets or technologies (technical difficulty) device?

Second, the recent (technical difficulty) elaborate the dose you plan to use for that compound in combination (technical difficulty) PD-L1 or (technical difficulty) that's the risk of (technical difficulty). Is it the technological (technical difficulty) is better, or wondering whether or not it's better or (technical difficulty) for the safety profile of that drug when used in combination.

And the last one is about Farxiga. You mentioned a very successful launch in the US, but I couldn't find the precise figures in your press release. Any chance you can give it to us now? Thank you.

Nicolas, thank you so much. I think I heard the first question, but the other two it was impossible to hear. So maybe what we could do is try to cover your first question. And if you have access to email, if you could send your questions by email we can address them, because I suspect it's the telephone line is actually not optimal.

Seems that your first question -- Luke, I think, did you hear it and understand it also?

Yes. I think your question was is there an overlap and if we have a pMDI in a number of markets and DPI why do we need another one. So I think, firstly, the deal reflects a broader commitment and confidence in respiratory as one of our growth drivers, and we see the Almirall assets as complementary on several levels.

The first one is, if you look at the splits, in a number of markets there's a clear need for both active and passive devices. You see splits of 60/40 in the US and 30/70 in rest of world. So that's a segment of the market that we didn't want to leave untapped. We can launch now in Europe with the Almirall assets, and then we can continue to do that with Pearl later on. And we're confident we have the commercial capacity and infrastructure to maximize both assets.

And we also gain access to something that we've discovered through our device testing, to a very attractive and popular device which has good optical and auditory aspects to it and is popular with patients. And that's a device that potentially we can load a number of existing and also future compounds on.

Finally, we get access, as Marc covered earlier, to a number of pipeline assets, particularly the MABA, which offers a number of potential combinations in the future. And also we get access to the group of people that created that device and are currently selling the other products. So that's the rationale behind the deal. We see it as very complementary.

Thanks, Luke. Remember, actually, that today the market in the US is 70% in DPI, 30% in MDI, and in fact it's 30% because Symbicort has done well and we've developed it. And it also explains some of the success that Symbicort has met in the US, because it's the only pMDI formulation available there. But we're not going to be able to address 100% of patients' needs with only an MDI. We need pMDI, and that's certainly what the Almirall assets will bring to us, and Pearl will bring us similar asset combinations but in a pMDI formulation.

The other two questions I'm not sure we heard, so if you can email them that would be great. And in the meantime, we'll move to Andrew Baum. Andrew at Citi, do you want to go ahead?

Yes. Morning. Three questions, please. Firstly, on the Almirall acquisition, have you already approached Actavis in terms of buying them out of their US rights?

And then just to confirm that you have 100% rights on using the Genuair device to put potentially the Pearl compound through; Actavis has no rights on that?

Second, in relation to China, to what extent does the local difficulties of a dominant respiratory competitor help you in driving market share gains and growing the respiratory market within China with Symbicort?

And then finally, in the indication of triple negative breast cancer, you have a cohort of patients in one of your Phase Is ongoing. When should we expect data from that trial and further steps to be made public? Thank you.

Okay. Great. Thanks, Andrew. Briggs, I'll ask you later if you could take this triple negative breast cancer question.

As far as the first one, Andrew, the answer to the Genuair question is, yes, we have full rights for the Genuair device globally, and Forest have rights for products that have been licensed to them in the United States, but certainly not to the Genuair device. We can put other products in that device, as you wish.

In terms of extending the rights, if you allow me, I will not comment on this one.

As far as China, sometimes we are asked that question, but I think it is always good to step back a little bit and look at -- and consider the size of China. We often forget that. There is an enormous population, there is an enormous economic development, and there is a growing problem with respiratory diseases because of a high level of pollution but also a high level of smoking. So COPD and asthma, and certainly COPD, are expected to grow quite a lot.

On the other hand, the market is very under-developed, especially as it relates to maintenance therapy. We've made enormous progress in the last few years, and certainly this year, with Pulmicort in asthma attacks in kids. But as far as Symbicort, it is still quite small and the unmet need is enormous.

So I can't say that the difficulty that our competition has in China doesn't impact Symbicort, but the growth of Symbicort is by and large driven by the investment we've made. We've expanded the sales force. We're reaching out to hospitals in the regions we were not visiting before. We've increased the sales force substantially. We've introduced an educational campaign around the treatment of respiratory disease.

Our team has just done a tremendous work developing this product, so it's really what is driving the growth. And quite frankly, we're only beginning, at the very beginning here. There's an enormous need to develop this market for maintenance.

So, Briggs, if you want to cover the triple negative breast cancer question?

Yes. Thank you very much, Andrew. So, as you noted, our triple negative population was part of -- is part of our cohort expansions in our early trials. At this point, we've enrolled really a limited number of patients that we've treated so far, so I think it's a little bit early for us to say anything about our approach to triple negative breast cancer.

Thanks, Briggs. So more to come later this year on that one, Andrew. The next question is from Sachin Jain. Sachin, do you want to go ahead?

Hi. Thanks for taking my questions. A couple of product questions. So firstly around ESMO on the PD-L1, CTLA-4 combo; any color on what dose cohort you've achieved at this stage and any visibility on how many patients' worth of data we should expect by ESMO?

Secondly, for that conference, beyond PD-L1, I was just wondering if you could comment on any earlier stage data on other assets that we might see. I know at ASCO there was some excitement internally around the c-Mets or the PI3-kinase and the mTOR, so any color there.

And then finally, on lesinurad, you made in your introductory comments, Briggs, some comments around the renal profile and a follow-on compound. Would you please clarify for us what renal toxicity profile you think would be acceptable in this population? Is anything other than placebo a no-go here? Thank you.

Thanks, Sachin. So, Briggs, maybe you could start with the PD-L1, CTLA-4 question. And maybe, Mene, you'll take the question about other early stage assets outside immuno-oncology. And also the renal question for you, Briggs. Quite a few questions. Go ahead.

So, Sachin, first let me talk about the combination with PD-L1 and treme. And as we talked about at ASCO, the Q4 week schedule that we've been studying, we've completed enrollment in a cohort where we have 15 mgs per kg of PD-L1 and 10 of treme, and are enrolling a cohort at 20 mgs per kg of PD-L1 and 3 of treme. As of now, I'd say there's -- if I remember correctly, about 18 patients have been treated as three per cohort, and that will be updated when we get to ESMO but that's about where we are.

It's quite encouraging, of course, we believe. This goes back to Tim's question about the fact that we can get essentially the full -- we're almost up to full doses of both PD-L1 and treme in combination in that non-small-cell lung cancer program at a (inaudible) and that's tolerable. So that's where we are with CTLA-4, PD-L1.

I'll just make a comment on lesinurad. It's a fabulous question. Obviously, nameless placebo would be brilliant. A slight difference from placebo could still be an important profile, so I wouldn't say that we have a definitive answer on that. We'll have to see the data as it comes out, just how different it is from placebo. But I'll let Mene comment on early stage assets that will be at ESMO.

Yes. So what I would say is that we've obviously submitted our abstracts and the decision dates for what's accepted and what's not is September 17. Until that time, we can't really talk about what's going to be or not going to be from the early pipeline, but obviously we've got a number of submissions in.

Yes. Thanks. Thanks, Mene. So the -- just maybe to add on this, as Briggs said, we'll have to wait for more data and it's really hard to predict what we'll get. We expect better results than monotherapy, but certainly we have to wait until the data reads out.

The good thing about the combination of PD-L1 and CTLA-4, Sachin, is that we haven't met safety issues. So we've been continuously escalating treatment. And as Briggs said, we've added cohorts with higher doses. And of course, the consequence of this is that we're taking a little bit more time exploring those additional doses.

What I could do is maybe take one question online. Eric Le Berrigaud at Bryan Garnier. Eric, we'll -- I'll read your question and ask Marc maybe to cover it, to answer it. So the question is, as the first quarter with full impact from diabetes full ownership, meaning the quarter two was a full quarter, could you clarify the amount of royalties paid to BMS former shared products and where it is reported in your accounts in Q2? Marc?

Yes. So, as you will remember, the accounting treatment for the BMS rights acquisition is a business combination. So we do capitalize all the payments at fair market value, and then we amortize those, all those rights, in (inaudible).

Now, regarding the specific question of the royalties, I can't give you the number of the royalties separately, but I can tell you the number that we have paid as royalties for the first half. The number is $58m for the first half, so quarter one plus quarter two. And as you noted, we took over the business from February 1. So $58m of royalties paid in the -- from February to June of 2014.

Thanks, Marc. So, James Gordon at JPMorgan. James, do you want to go ahead?

Hello. Thanks for taking my questions. A couple of questions on Almirall respiratory. One would be that Almirall's got a once-daily LABA/ICs in Phase II. And my question is just, based on the initial performance of GSK's Breo, do you think such a product as a once-daily LABA/ICS is a very promising product to bring to market, bearing in mind that at the time it might come to market in the US there would probably be a generic out there in the market at that time as well?

Another respiratory question I had was on triple therapy. You've got now two MABAs and then you're also talking about doing a conventional triple therapy. These seem like two different routes to really get to the same end of giving people effective -- both would effectively give people triple therapy. Would you consider developing both the MABA and a conventional triple? For instance, GSK seem to have de-prioritized their MABA and just be going for the conventional triple.

And then I just wanted one clarification, which was in the Q1 pipeline presentation it looked like there was going to be some combo PD-L1/CTLA-4 data in a mixture of solid tumors. So it's a different study to the lung study. I think it's the 562 study? Would that data still be at ESMO, or has that data been a little bit delayed and that's now next year?

Thanks, James. So maybe, Mene, you could cover the questions regarding the MABA. Maybe just one quick point, actually, James. The MABA, this is a -- the arrangement here is a pooling of assets. So we basically, of course, will pick the best MABA to develop, to move forward in Phase III. Do you want to cover the --?

Yes. I think we're interested in both, and I think it's not -- obviously the conventional triple is something we're moving very aggressively and plan to move into Phase III as fast as we can with our Pearl colleagues. What the MABA brings you isn't just a -- it's combined with [adezumab], but it's also with our other novel anti-inflammatory agents. So it gives us a level of flexibility both in terms of combinations and device that we wouldn't otherwise have, which I think is very exciting.

Thanks, Mene. Briggs, I'll ask you to take the PD-L1/CTLA-4 question on other tumor types. But in the meantime maybe, Luke, you could cover the once-daily LABA/ICS question.

Sure. So I think, James, for asthma and COPD we can confidently say there's no one-size-fits-all solution. So there is room for both dosing frequencies. And as we've announced, we do gain access to a Phase II QD LABA. And also, if that resulted in a QD MABA, that would certainly be interesting for us as a platform for triple or even further beyond that. So really, I think there's room for both.

Having said that, the ID remains attractive for patients with nighttime symptoms, and I think, to reinforce that, Symbicort continues to be well received in the market.

So your question, James, was also about the competitive intensity there, and I think the one thing we would say is that in the short term what this acquisition gives us is a LABA/LAMA in a DPI formulation. And we will have the same in an MDI formulation with Pearl in the long run. We have MABA combinations, as we explained a minute ago. It is clear that LABA/ICS is a competitive marketplace, but it's -- and this decision will have a place, but it's probably not our priority.

Briggs, do you want to cover the Q1 -- the pipeline question about PD-L1, CTLA-4 on other tumor types?

Yes. So, James, you are correct; there are two trials. There's the one trial on -- that I referred to earlier about the dose escalations on the every four weeks schedule in non-small-cell lung cancer, and then a second trial that's being run by our partners at the Ludwig in a variety of tumor types. To my knowledge, only the trial that I referred to in non-small-cell lung cancer will be at ESMO.

Thanks, Briggs. Mark Clark at Deutsche Bank. Mark, do you want to go ahead?

Yes. Good afternoon, gentlemen. Two quick questions. Firstly, on the quantum of accretion from the Almirall deal, you don't give any explicit guidance but looking at the sales levels that are currently being generated and forecast, my assumption is we're talking about low single-digit accretion. Would you agree or have anything you could add there?

And secondly, on roxadustat, you gave us some timelines on the Phase III readout, Q1 2017, but the pipeline filing chart includes that in 2016. So are you assuming you can file on interim data, or is that simply an oversight? Thank you.

Thanks, Mark. So we'll ask Briggs to cover it. In the meantime, the accretion question, the first question regarding the accretion for Almirall, we will not comment on this, Mark. I think we'll -- this is not something we would like to give an indication on at this point in time. We're not going to give guidance to 2016 on this one.

Actually, maybe what I can do, Briggs, is save you a bit of time. I suspect the filing date, Mark, you see on the pipeline chart relates to the filing in China. You may remember there is a special local development in China for this product which was started by FibroGen. It's a very smart approach to approval in China. And China -- actually, this product is potentially the first one that would be filed in China first before it's filed anywhere in the world. So I think that's what you see in the pipeline chart.

Let me move back to Nicolas' question. We've received it on email now. And the question was, on the recent NTCC for the deal with [Kiowa Co], you elaborate on the dose used for compound in combination with PD-L1 and CT -- I'm not sure I understand the question. Can you -- sorry. Can you elaborate on the dose? It's a question for you, Briggs, actually. Can you elaborate on the dose used for the compound in combination with PD-L1 or CTLA-4 in the tumors?

And there's a further comment here that says it seems that there is a risk of skin toxicity in -- I'm sorry. I struggle a bit to read it here. In hematology in Japan, do you have comments regarding the safety profile of drug used in combination? Do you want to cover this one, Briggs?

Sure. I'd be glad to, Pascal. So, no, at this point I can't comment on the dose of either CTLA-4, PD-L1 or CCR4. We've entered into the agreement and we're in the process of designing that trial. It is true that -- in fact, you're correct that there has been skin toxicity noted with the molecule in some of the trials they've done in peripheral T-cell lymphoma, and we are aware of that going into the collaboration.

Thanks, Briggs. So we'll move to the next question, which is a question from Mattias Haggblom at Danske Bank. Mattias, go ahead.

Thanks so much. Your 2023 guidance for the exenatide franchise seems to point to $2.5b, $3b in sales. We have seen some new long-acting GLP-1 analogs enter the market at a pretty huge discount, it appears, and others will join the market as well over the next couple of years. We'll see combinations with basal insulin and possibly oral GLP-1s as well. Has any of the recent news, including GSK's price (inaudible), changed your view of this franchise going forward? Thanks so much.

Okay. So maybe, Luke, you can take this one. Thanks, Mattias. Related to -- I think there are two questions in that one. One is GSK, the launch of the GSK product, and two is the level of discounts in the competitive marketplace.

So I think, as a general statement, we expect it to be more competitive, both in terms of promotional activity and of course access. And that being said, we have good access with the product and we have a well-established team. We've integrated the BMS team as well, and we have good targeting. I think on top of that we have the next stage in our device strategy, which we'll be launching in the second half of the year, which is the dual chamber pen, and it's very much on track.

And I think ultimately, when we look at the competitive situation, we recognize the importance of device and that's why we're launching that pen. And we're very confident around the profile of Bydureon, which again has shown consistent A1C reductions in the range of 1.3% to 1.9%, and it's very durable in terms of A1C effect and weight with six years in data. So the parameters of efficacy and convenience of device I think will remain core factors. In terms of oral GLP-1s, I think they're further out. There's a number of questions over the feasibility and the amount of volume of drug.

Thanks, Luke. I think, Mattias, your question was also related to the Glaxo product and the pricing strategy. I would say that we don't expect this product to really have a substantial impact, because probably the pricing reflects the clinical profile of the agent. Certainly, other competitors will come in that certainly will have a bigger impact.

So our strategy here relies on a couple of things. One is the devices, as Luke was mentioning, and two is the development of the volume here. The GLP-1 class is a class that has really an important place in diabetes. And if prices decline, you could also expect growth in volume and we certainly would expect growth in the emerging markets.

So very competitive; there's no doubt about it. But we also see a good complementarity with Forxiga. For instance, the combination of GLP-1 and Forxiga will be a very competitive combination. So we'll leverage the portfolio as much as we can.

Let me move to Seamus Fernandez. Seamus, go ahead.

Thanks very much for the question. Just wondering if we could get a quick update on some clinical trials. In terms of the trials that are ongoing with Bydureon and the look at cardiovascular outcomes, potential cardiovascular outcomes benefit, can you just update us on how those events are accruing in that study and when you anticipate that study to read out?

The second question is if you could provide us your thoughts in the diabetes space on the prospects and interest in a combination of GLP-1s with SGLT2s. We're seeing some interesting case reports around that.

And then lastly, if you could give us an update on your thoughts on olaparib. Are you preparing for potential approval in the US, or should we anticipate that the negative FDA panel really puts that as a requirement for full Phase III data? And maybe you could update us also on the international prospects for olaparib. We haven't really heard anything, although that filing is -- was filed, I think, in the second quarter of last year in Europe. Thanks so much.

Thanks, Seamus. I'll ask Briggs in a minute to comment on the Bydureon CV outcome study and maybe olaparib. As you know, they have extended the PDUFA date to January 3 to consider additional data we submitted.

Let me start maybe with the diabetes study question, because it really is a nice bridge to what I was saying a minute ago. There is indeed a very strong logic to combine GLP-1 and SGLT2, Forxiga and it is clearly a combination we will be exploring. And that's really a place where we believe the two products can support each other.

As you know, the potential problem with SGLT2s as a class is that they up-regulate glycogen and liver glucose production. And combining with DPP4, but even more so with the GLP-1, should actually lead to a very substantial clinical benefit, so we certainly will be exploring that one.

Briggs, do you want to cover the Bydureon CV outcome questions and olaparib?

Sure, I'd be glad. Seamus, thanks very much for your question. So the EXSCEL trial for Bydureon is rolling actually very well. We just hit our 75% enrolment target, a little bit early, actually. And if I recall correctly, I don't think the data will read out until 2018 for the Bydureon outcomes trial.

In terms of olaparib, we remain committed to the molecule and remain, I would say, somewhat optimistic. Because of the conversations we've had with the FDA and the additional data that's been submitted, I would say we remain somewhat optimistic that we could still get accelerated approval.

Thanks, Briggs. Sorry, there was a question about Europe as well. In Europe, we are very much on track and so far we have no reason to believe that we cannot get approval, but of course we have to wait for the final CHMP decision. Briggs, do you want to add anything to that?

No. I agree entirely, Pascal, that the process is proceeding nicely. We've been able to address their questions with competent review, and we do believe we're still on track for the CHMP opinion in the fourth quarter of this year.

Good. So I'll maybe quickly touch on a question we received from Nicolas Guyon on -- by email, and Nicolas' question is about Farxiga. And we mentioned we have a very successful US launch, but we haven't given any sales number. Actually, we will not give for the time being sales numbers. We decided not to do that. In fact, I am sure you've noticed we're not the only ones doing it.

The only thing I can tell you is, as I mentioned earlier, the launch is going very well in the US. It's actually going very well in Germany as well, by the way. And so -- also in Japan, even though it's really early days in Japan. But in the US, we've captured 40% of the new 2 gram prescription, so we are pretty happy with the performance to date.

Keyur at Goldman Sachs. Keyur, do you want to go ahead?

Good afternoon. I have two questions, please. First, Pascal, just as it relates to the Almirall assets, if you could confirm whether you have any marketing rights or co-promotion rights to those assets in the US as it stands today. If not, what is the optionality for you on that end?

And secondly, as it relates to the asset moving forward in the space, and I think, Briggs, you answered that earlier, but I just wanted to confirm I heard you right, which is as it relates to the Phase III trial, you're (inaudible) the missing points, what is the powering for that trial? Do you need for it to be superior to placebo and to EPO, or do you need roxadustat to just be similar to those two agents? Thank you.

Thanks, Keyur. Maybe, Marc, you can take the Almirall question and Briggs the roxa question.

So I can confirm that Almirall has co-promotion rights in the United States. And as we are taking over the rights and obligation of Almirall, there is a possibility for us to have co-promotion rights on the aclidinium in the United States, but this requires the consent or some discussion with the -- with Forest, Actavis. At this stage, we haven't engaged in these discussions.

Thanks, Marc. Briggs, do you want to cover the roxa Phase III question?

Yes. So for Roxa, you'll remember the issue with erythropoiesis stimulating agents was the concern that they increased cardiovascular risk. So we don't believe that we have to be superior to placebo, but we do believe we have to be superior to the erythropoiesis stimulating agent. And then that's the hypothesis of the trials that we're conducting.

Thanks, Briggs. There is a question from Kristofer Liljeberg at Carnegie about would we do the Pearl acquisition if we had already done the Almirall acquisition. The answer is a clear yes, because the other way around is also true; having Pearl we make the Almirall acquisition.

I think it's really important to keep in mind that in most countries around the world, and in fact every country, it varies country by country, but if you ask patients' preferences, it's not exactly half and half, but depending on countries, not far from that. Some like MDIs. They (inaudible) better. Others like DPIs better. Elderly patients tend to prefer what's better for you.

Really, if you want to cover the whole spectrum of needs, you have to have both MDIs and DPIs, and Pearl will bring us a very nice MDI technology that will help us with combination products, LABA/LAMA, but also the triple. And certainly the Almirall acquisition brings us all the benefits we've talked about, in particular a number of products but also the device technology, which is a very nice device technology.

So, we have a question from Dani Saurymper at Barclays. Dani, go ahead.

Yes. Hi there. Thank you. We've heard from some companies that they've been having conversations with companies like Express Scripts, who have already indicated potential exclusion from their formulas for 2015, and I was wondering whether you could comment as you to whether you've had any of those discussions and been given any verbal indication as to any of your major products potentially being excluded from coverage next year.

I also wanted to just clarify on the Nexium assumption within your guidance. Is there anything that's driving that particular assumption in terms of it being an October event? And we've seen obviously with Novartis and its case with Diovan that these issues can drag on, and I just wanted to confirm that any excess Nexium revenue is going to be reinvested in the business.

And then, just lastly, can you maybe comment on a legal matter, but I noticed on the newswires you're talking about Brilinta and hope to have an outcome to that probe soon. Can you maybe update us as to why you think that the timing of that is imminent and what we can plan for?

Thanks, Dani. I may have missed one question. Let me cover the last one. I think it relates to the DoJ investigation, I suspect. Well, our understanding from what we know is that the investigation is well advanced, but it's hard to comment. We have to wait till we hear from the DoJ, and we hope that it will conclude rapidly so that we can return to -- we can remove this concern some of our customers may have.

As far as ESI or other listings, as Luke said before, we expect to win some, lose some. There is a very competitive market out there, but we're not going to comment on individual customers, ESI or others. But certainly, no doubt that as we move into 2015, there will be some wins and some losses.

And finally, the Nexium guidance, it's our best estimate, October, but it is indeed possible that the generics launch is further delayed, in which case we'll have a further upside and we'll see how we manage that upside. But certainly, if we had an upside in sales, some of it would fall to the bottom line; some of it may be reinvested. We'll manage that as we go, keeping in mind always our commitment, as I said before, to defending our profitability next year and in particular our dividend policy.

I'll move to Lars Hevreng at SEB. Lars, go ahead. Lars?

Yes, sorry. With the COPD, could you just give some back answer why -- and then additional, of course, some back answer why you have moved out the baseline eosinophil count on -- as an inclusion criteria in the COPD trial, as these are fairly big, at least the three of them that you have, including clinical trials?

So, Lars, I am not sure I got the question, but, Briggs, it's a question for you. So, did you get it or would you --?

No, I didn't get it.

Okay, so.

I can repeat it. Why baseline eosinophil count is not an inclusion criteria in the COPD trial, in contrast to the asthma trials.

Yes, I got it. So I think you're talking about benralizumab COPD trial?

Yes.

So for the benralizumab COPD trial, we are enrolling all-comers. It's not a -- there is not a cut off on eosinophil inclusion. And in the Phase III program, we hope to identify -- as you remember from the Phase II data, it did appear that the treatment effect was greatest as eosinophil counts increased, and so we hope to identify a cut off in the Phase III program. But it's not in inclusion criteria.

Thanks, Briggs. So we have maybe time for one more question from Naresh Chouhan at Liberum. Naresh, go ahead.

Hi. Thanks for taking my question. Firstly, just on Crestor, in the US it's managed to hold up quite well due to, I think, around a 7% price increase. So you're saying that price increase is in 2015 -- or sorry, price pressure in 2015 is to increase significantly. Should we assume that those Crestor price increases aren't repeated from now on, because that was quite a big driver of Crestor sales growth?

And then secondly, on cash, by the end of the year you should have very low levels of debt. You've talked essentially about returning cash in the future. Can you talk us through just philosophically how you think about uses of cash in the coming years?

Obviously, you've just done the Almirall deal, filling a gap in your portfolio. Are there other gaps in your portfolio that you think you need to fill? If possible, would you like to do a mid-size deal to get you through the next few years or are buybacks the priority? Just some help around how you think about this would be useful. Thank you.

Thanks, Naresh. I think we are going to have a relatively challenging telephone lines, but -- telephone line. But I think I got two -- your two questions. One, the first one is about Crestor US, pricing in the US, and, Luke, maybe you want to cover this. And the cash utilization question, Marc, perhaps you could take.

Sure. So I think overall we expect to hold a net price in what is a very competitive market with generics. We expect to maintain commercial and Part D, which is around 80% of the volume, through access programs and also promotional activity. And by the yearend, we do expect some net realized price appreciation, and these are flattered by one-time prior-year adjustments. And overall, Crestor has reclaimed its top position as the most prescribed branded product in the US.

Thanks. So, Marc, do you want to cover the cash?

Yes. I think your remark is true. Our leverage is decreasing as we go. I am not sure I got your question, but I think you alluded to buyback or the possibility of buyback. So for the time being --

My question was more -- was as you get to the point where you have to start to consider how you use the cash, are there other obvious gaps in your portfolio that you may need to fill, or are there potentially -- would you like to do a mid-size deal to help you get through the next few years, or are buybacks the priority?

Okay. Sorry, I did not catch earlier on your question. So we are continuing our program of business development and bolt-on acquisition. I think the Almirall is a good example of it, provided it is aligned with our strategy in our core areas. It's accretive relatively rapidly and complementary to our portfolio.

So we will continue to look for big opportunities or bolt-on acquisition. We are not actively looking at medium or large acquisition, but obviously, as we have said repeatedly, if we were to see a very great opportunity which would be aligned with our strategy, accretive and complementary to what we have, we would of course like to consider it. And we have also said that our buyback policy is suspended, but obviously, if we could not find any opportunity and if we had too much cash on our balance sheet, we would have to revisit that question.

We have an ongoing process of strategy review every year. In the last part of the year, we review our long-range strategy with the Board and we review our long-range plan, and we're going to go through that again in the last quarter this year. And we'll review our strategy and use of cash, and that's the decision the Board has to take, of course, based on what we think the opportunities are and what's the best use of our cash. It's a little bit early to comment, as Marc was saying, but certainly we will keep looking for bolt-on acquisitions with the caveat that Marc gave you.

So I think we maybe should stop here, because we're a little bit over time. Let me thank you again for all your attention.

And I remind you that certainly the strong -- the good sales growth we've experienced in the first half helped us invest in our priorities, platforms and pipeline, and we'll continue to do this, but we'll continue to do this as long as our topline allows us to do it, of course. And as we move into 2015, our productivity programs will be targeted at defending our profitability. Certainly, the pipeline is a priority, but there is potential for us to improve our productivity in a number of areas.

With that, I'll thank you again.