AstraZeneca PLC (AZN) Q2 2014 Earnings Report, Transcript and Summary

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 & Early Development of 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 of updating you on the Second Quarter and 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 along with this presentation. We'll try to queue the slide numbers as we go through. Slide 4, we 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 results, it has been another quarter of significant progress. We've seen genuine momentum across our business. I am particularly pleased to note this is second consecutive quarter of revenue growth. We had revenue of $6.5 billion 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, a treatment for adults with type 2 diabetes, which we launched in early February. Yesterday, we announced the deal. We are progressing with Almirall, which would be important to bolster the growth of our respiratory franchise. Marc will outline the key financial details in new assets 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 it has been another productive quarter for AstraZeneca. We've had the opportunity to provide updates on our rapidly progressing pipeline, as 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 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 submit the 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 continue 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 recently launch brands, but overall growth is only marginally up over the half year. And we'll 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. We now review the return to growth platforms in more details before Briggs gives his R&D update. So move to Slide 8. I'm pleased to say that our five growth platforms contributed $6.8 billion of revenue during the first half of the year. That is an increase of 14% at CER. I will shortly review each one of this 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, 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 European markets as well. 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 is 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 investments. 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 the 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 when discharged from hospitals. During the last quarter, Brilinta has overtaken Prasugrel in this setting. We have now renewed momentum, even though the DoJ investigation is not yet totally concluded and we are looking forward to a conclusion of this investigation in the near term hopefully. Slide 13, looking now at diabetes. We have seen strong performance over the quarter. We're focused on a successful integration of BMS, as I said, and the excellent US launch of Farxiga, which so far is one of the most successful launches in the overall non-insulin anti-diabetic markets since Januvia. Onglyza, Byetta and Bydureon have also grown on last year, but Onglyza has seen 0.3 point share decline in total prescription share in the quarter. If we look at Slide 14, it gives you a view of the. You can see the launch aligned new prescriptions volume uptake of recent launches for type 2 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 origins. Then you move to Slide 15 to outline the strong performance of Symbicort in the first 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 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 Inhalex 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 the revenues 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's 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 multinational pharmaceutical company in China, just behind Pfizer. And we have the highest growth rate as of the end 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 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 a very strong growth in Russia as well as in Brazil. So it's not only a success in China we experienced MAT 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% CER growth in the first half, however we saw 8.4% in market growth by the end of May year-to-date. 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. I'll 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.

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 our Phase III program in COPD for our anti-IL-5R 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're of course extremely excited about this progress and our colleagues all across MedImmune and AZ are working diligently to deliver these programs. Move to Slide 22. With our continued momentum in the late-stage pipeline is 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, it is not going to require cardiovascular outcomes trials. AZD0914, a drug for drug-resistant gonorrhea, acclaimed fast track status from the FDA. Bydureon Dual Chamber Pen received a positive opinion from the CHMP, although it's actually 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. 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 has extended the PDUFA date till early next year. I'll use Slide 23 simply to turn our attention to our immuno-oncology effort. And this slide simply highlights that in a patient with cancer, there may be one or more obstacle to an effective immune response. And we are seeking to understand and address as many of these obstacles as we can. There're a number of ways to theoretically improve antigen presentation, on the far left of the slide, including a recent clinical collaboration we have announced in the second quarter with the Advaxis HPV vaccine. We are clearly full explaining mechanisms that 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 known mechanisms that exist in 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 MediImmune. These clinical investigative trials allow a detailed analysis of pharmacokinetics, pharmacodynamics and importantly relevant tumor biology. As the science has advanced in these early trials, we then move the programs into our late-stage group, which is really focused on designing and conducting registration trial. 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 is a mixture of these early translational trials as well as more advanced registration trials again with the asterisk, indicating new plans since we discussed in an 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 we go on to Slide 25, at the top of the slide is a before and after picture of an elderly patient who has 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 PD-L1 monotherapy and a combination of PD-L1 plus our CTLA-4 antibody tremelimumab. We will be exploring both PD-L1 positive patients as well as patients who have tumors who do not stand for PD-L1. We are in ongoing discussions with regulators to inform the final study design, 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 want to just spend a moment on highlighting our participation what we think are really very exciting novel collaborating 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 MEDI, where patients' tumors are molecularly characterized and then specific medicines are 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, very nice trial put together by FDA and 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 group. So for example, if the patient has abnormality of [DFK] receptor, they will be randomized into Phase II portion of the study to our drug, AZD4547, versus the standard of care docetaxel. If there's a signal in that Phase II portion, this is a seamless 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 PD-L1 antibody versus docetaxel. Again, in the Phase II portion if there is a signal seen in progression-free survival, that will extend out to a Phase III trial in squamous cell lung cancer. So again, with these very innovative designs, we really applaud NCI, FDA, Friends of Cancer Research for putting this together. There's a similar program that's been put together in the UK, again where we have patients who are molecularly genotyped and 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 are very 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 opioid. So about 80% of people who get opioids will develop opioid-induced constipation and about half of them do not in fact achieve the 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 just summarize the primary efficacy endpoint. You'll have seen a recording of the pivotal Phase III trial in The New England Journal in June of this year. It's 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 have the advisory committee, where again the advisory committee recommended to the FDA that do not need to see the outcomes trial prior to approval. In the third quarter, we anticipate a potential approval in Canada and our PDUFA date is September 16th here in the US. We should potentially get EU approval as well before the end of the year. Now a highlight that the launch for 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 is 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 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 process must be completed before we can launch the product. And that's why there is a gap between the actual planned anticipated approval in September and the launch at the end of the first quarter of second quarter. We move to the Slide 28, and this one again reminds you about roxadustat, a compound we are developing in collaboration with FibroGen. On the left-hand side, there 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, a 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 give both as oral agent and a better safety profile than recombinant EPO. On the right-hand side of the slide just highlights the number of patients with chronic kidney disease and some of the major markets and percent of patients with various stages of chronic kidney disease who will develop anemia. And there 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 our components of the Phase III program. 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 are not on dialysis, but have chronic kidney disease. Those patients are randomized to placebo versus roxadustat. And the primary endpoint here is major adverse 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 endpoint 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 this slide, it'll 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 a 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 have 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 1 diabetes indication where we have decided to progress that into a pivotal program, 9291 in first line non-small cell lung cancer. We've made that decision to undertake that study, and the study should start at the end of this year. And then the two bottom ones, the PD-L1 plus or minus treme program in squamous cell carcinoma of the head and neck and PD-L1 and treme in non-small cell lung cancer. I'll also note that on the far right, we still have additional molecules that are concluding their Phase II programs, which we may be able to make additional investment decisions 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 to 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 early or Brilinta at normal time. And we encourage you to take a look at that. There'll be an ESC Hotline session in September. We have a number of other abstracts that have been accepted, and 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 will 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 PD-L1 and CTLA-4 combination data in non-small cell lung cancer will be presented, a very high-level summary at the investors meeting. So this will now be presented at the scientific session with abstract. There will be more patients, further dosing cohorts and some information on the biomarker status and some additional information on CTLA-4 inhibitor in mesothelioma. There'll also be updates on 9291 in non-small cell lung cancer, including the update on duration of response in the 2790M second line population and some data on patients who have been treated with 9291 in the first line setting and patients with brain metastases. Now as the year unfolds, on Slide 33, there are some significant data read-outs. The first three lines here are lesinurad, CAZ AVI, brodalumab. Data read-outs 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, for which the additional trial is coming out now, with febuxostat or allopurinol potentially will have a lower incident 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 don't know what the profile will be here for lesinurad. I will just note that we do have a second-generation module against the same target, 3170, which we've talked a little bit about with you previously, which at least in preliminary study looks to have an even better renal safety profile than lesinurad. So we'll know very soon what the profile of lesinurad is in the treatment of gout. The additional trial in complicated intraabdominal infection should be out in the third quarter and in the fourth quarter. The additional [Phase III] on brodalumab, these are the head-to-head trials. The other molecules on the slide I think we have talked about previously and will highlight for you at congresses. There'll be more information on the molecules. On Slide 34, we have some additional key regulatory milestones, filing of Iressa for non-small cell lung cancer in the US. Hopefully the approval of Movantik PDUFDA in September 16th and signs are looking position 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 for Xigduo XR, the combination of saxa/dapa fixed dose combination filing at the end of the year. And then both lesinurad and CAZ AVI depending on the data read-out, we would be on track to file both in the EU and US for lesinurad and in the EU for CAZ/AVI. On Slide 35, this is a slide I've shown you a number of times as a 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 that we will be able to file that in 2015. Our base assumption right now is it'll 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 results 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 external rate movements against the prior-year period. As Pascal said, I'll 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 rate to $6.5 billion, our second consecutive quarter of growth. The currency impact on the second quarter revenues was negligible. It was more of an impact at the bottomline. Core EPS for the quarter was $1.30, growing by 13% at constant exchange rate. The impact of foreign exchange lowered core EPS by 5 percentage points. I will now turn to the P&L for the quarter and we'll focus here on core margins and profit. The press release contains 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 one of the cases in the previous quarter, the benefit from lower Crestor royalties was more than offset by the inclusion of diabetes-related cost. Core R&D expenditures were up 12% to $1.2 billion in the second quarter. Having nearly doubled our late-stage portfolio over the last 12 months together with this 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 investments beyond the launch of Farxiga 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 $2 billion, 2% higher than last year. Core operating margin was 31.5% of revenue. I don't intend to go into 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 rates of R&D of that of SG&A. However, I would like to just 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 acquisition of 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 $200 million. As you have seen yesterday, we announced the 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's strengthened our inhaled portfolio in asthma and COPD. In the short term, it brings greater device choice for patients and add DPI option to complement Symbicort and the Pearl asset. In the medium term, this deal brings novel MABA and LABA bronchodilators, which will allow for once-daily treatment options and novel combination for severe patients. The innovative assets of both companies are going to be brought 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 employee subject to available consultations. We will pay an initial consideration of $875 million upon completion of the transaction followed by up to $1.22 billion 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 include 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 an accelerator 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 the 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 1st. This continued investment in the pipeline and growth platforms, we now anticipate core EPS to decline in the low double-digit at CER. The company continues to pursue multiple productivity initiatives and redeploy resources to fund its pipeline and growth platforms whilst managing its cost base. Today we have announced the 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.

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, improvising our important projects, but also to 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 you see all at our Investors 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.

Regarding roxadustat, can you give us some idea about, given that we don't see that many studies which have MACE as an endpoint, would the diabetes guidelines be the right ballpark to what kind of actions you need to roll out in a placebo study and typical for the 15% risk production versus the EPO in the dialysis patients, would that be the right ballpark to think about it? Today, you announced a head and neck study for the PD-L mono and the combination. I'm not quite sure since you're talking about the additional tumor types. Are you likely to initiate or at least announce registration studies in yet another additional type this year? And one compound which I didn't see on the list that has data at the upcoming ERS meeting is the CXCR2 antagonist, the 5069. As I said, that has data at the ERS. From the fact that you didn't mention it, should we assume something which you're not going to take forward? And the final question is obviously your R&D budget is expanding rapidly, seems to move toward $5 billion and potentially expanding from that. So that makes it increasingly harder to hit the margin $4.20 EPS in the future years, which you need for the 1.5 times dividend cover. Is that something you even still care about at this stage?

I'll start with the last one. This year, as you can see, we are doing very well, number one. Number two, we've had a couple of additional incomes that are one-off, but a lot of additional income driven by our very good in-market sales performance. So we've reinvested in our pipeline, but also in going to 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're 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 bottomline is we are very committed to our dividend policy and we're also very committed to the innovation policy that goes with it. I'd like to remind the dividend policies that we have to deliver are progressive dividends, which is a flat or growing. And we have a dividend cover of 1.5. So certainly we would be managing our costs next year to protect profitability. Remember that on the SG&A front, we said at the beginning of the year, we incorporated or integrated over 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 would be doing next year.

For roxadustat here, thinking about the same is the correct way. We have a lot of experience with cardiovascular outcomes trials with MACE as an endpoint. So the comparison to placebo, the conversations we've had with the regulators are in the ballpark of the diabetic guidelines and an improvement, as you've narrated, over EPO in the EPO comparators. In terms of your question about another tumor type, you'll see on Slide 30, we have additional pivotal study decisions pending in the second half of the year, including additional tumors of 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's 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.

The CXCR2 antagonist, 5069, did read out in our severe asthma study. It engaged the mechanisms. So the molecule did what was said [to the tee], but it didn't have any efficacy or the required efficacy. So that program 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 non-oncology opportunities that might exist for CXCR2 antagonism.

Let me ask Matt Weston at Credit Suisse. Matt, do you want to go ahead with your question?

Your ASCO analyst meeting slide highlighted a novel NME in the microenvironment section of immuno-oncology. Can I check whether the CTLA-4 is now in-licensed? And then with the other secret NME you highlighted at ASCO, 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. 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?

Year-to-date, we've been able to hold price 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 weeks take for the 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 a long view. And as you can see, we've got good momentum.

We certainly can see that this market is becoming competitive, but it's not the only one. Markets in the United States are competitive across the board.

You 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. Behind this one, we have quite a number of 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 are exploring. So as Briggs said, a variety of internal and external options.

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

So we'll move to next question. Tim Anderson.

You talked about filing your PD-L1 using the ATLANTIC study, which as you know is a Phase II single-arm trial looking at response rates. If that's a late interim product, I'm wondering if it could too late to rely on this type of a trial for registration if the other anti-PD-1s may have launched by at that point. Second question is on tremelimumab and just clarifying something you've said previously 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 will 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. You've no doubt been in constant communication with your 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 a discussion with Pfizer or not. So in what direction do the majority of shareholders lean?

Unfortunately, as you probably would expect, we're not able to comment here. We are under the London Takeover Panel's order and it is impossible for us to comment on this.

First for Atlantic, I'll make two comments. One is as you're well aware, it's the specific indication that you ask for when you go in for approval. So if somebody was approved in second line and you're going for a third line, that's still considered an unmet need. So it depends on the indication. And it also depends on if the person who is there before has full approval or has accelerated approval. So if there's an accelerated approval and they're 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 that ASCO went through a side-by-side comparison of treme versus ipi and of course Rachel knows ipi very well since she was at the MS, led the development of that molecule, there are differences between the two antibodies, that's for sure. And the best we can tell from 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.

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.

Maybe, Tim, just for the sake of this call, we'll be happy to talk with you offline about the molecular details of why we have those differences of opinion on treme.

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

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I think your question was, is there an overlap and if we have the pMDI in number of markets in DPI, and why do we need another one. So I think it does reflect 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 is a clear need for both active and passive devices. You see splits of 60/40 in the US and 30/70 in rest of the 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 very attractive and popular device which has good optical and (inaudible) to it and is popular with patients. And that's a device that potentially we could 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 complementary.

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 it also explains some of the success that Symbicort has met in the US, because it's the only pMDI formulation, 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 Almirall assets will bring to us. And Pearl will bring us similar assets combinations, but in a pMDI formulation. In the meantime, we'll move to Andrew Baum at Citi.

First only Almirall acquisition, have you already approached Actavis in terms of buying them out of their US rights? And then just to confirm, 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 dominant respiratory competitor help you in driving market share gains and growing the respiratory market within China with Symbicort? And then finally, any 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 made public?

The answer to the Genuair question is yes, we have full rights for the Genuair device globally and full rights for products and 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 their rights, we'll 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's an enormous population. There's an enormous economic development. And there is a growing problem with respiratory disease because of high level of pollution, but also a high level of smoking. So COPD and asthma are expected to grow quite a lot. On the other hand, the market is very underdeveloped, 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 difficult 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 are reaching out to the regions we were not visiting before. We've increased the sales force substantially. We've introduced 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.

As you noticed, the triple-negative population is part of our cohort expansion 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.

The next question is from Sachin Jain.

A couple of products questions, first around ESMO on PD-1 CTLA-4 combo. Any color on what dose cohort you've achieved at this stage and any visibility in how many patients worth of data we should expect by ESMO. Secondly for that conference, beyond the PD-L1, I was wondering if you could comment on any earlier-stage data on other assets that we might see. At ASCO, there was some excitement certainly around the CMAPs or the PI3-kinase and the mTOR any color there? And then finally on lesinurad, Briggs, some comments on the renal peripheral and a follow-on compound, maybe you could just clarify for us what renal toxicity profile you're seeing would be acceptable in this population. Is anything other than placebo a no-go here?

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/kg of PD-L1 and 10 mgs/kg of treme. And our enrolling of cohort had 20 mgs/kg of PD-L1 and 3 mgs/kg of treme. As of now, I'd say there's about 18 patients that have been treated. It's 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're almost up to full doses of both PD-L1 and treme in combination in non-small cell lung cancer that is tolerable. So that's where we are with PD-L1. I'll just make a comment on lesinurad. Obviously same as placebo would be brilliant. A slight difference from placebo would still be an important profile. I wouldn't say that we have a definitive answer on that one. We'll have to see the data as it comes out.

We've obviously submitted our abstracts and the decision date as to what's accepted and what's not is September 17th. 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 number submissions in.

On lesinurad, as Briggs said, we'll have to wait for more data. We expect better results on 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 safety issues. So we've been continuously escalating treatment. 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, Bryan Garnier. I'll read your question and ask Marc maybe to answer it. So the question is as the first quarter was fully impacted from diabetes full ownership, meaning the quarter two was full quarter. Could you clarify the amount of royalties paid to BMS commercial products and where it is reported in your accounts in Q2?

So as you will remember, the accounting treatment for the BMS rights acquisition is a business combination. So we do capitalize all the payment at fair market value and then we amortize all those rights in a full onco. Now regarding the specific question of the royalties, I can't give you the number of royalties separately. But I can tell you the number that we have paid as royalties for the first half. And the number is $58 million for the first half, so quarter one plus quarter two. And as you noted, we took over the business from February 1st. So $58 million of royalties paid from February to June of 2014.

So James Gordon at JPMorgan.

A couple of questions on Almirall in respiratory. When will be the Almirall's once-daily LABA/ICS in Phase II? And my question is just based on the initial performance that GSK has posted, do you think such a product like once-daily LABA/ICS is a very promising product to bring to market. And the time it might come to market in the US, there'd probably be generic out there in the market that time as well. On triple therapy, you've got now two MABAs and then you're also talking about doing a conventional triple therapy. Both would effectively give triple therapy. Would you consider developing both the MABA and a conventional triple? GSK seems to have deprioritize their MABA and just begun for their conventional triple. In the Q1 pipeline presentation, I realized there was going to be some combo, PD-L1, CTLA-4 data in the mixture of solid tumors, a different study to the lung study. And is the 562 study, would that data still be at ESMO or is that going to be a little bit delayed and that's now next year?

The MABA, the arrangement here is they're pulling off assets. So we'll basically of course pick the best MABA to develop, to move forward in Phase III.

Obviously the conventional triple is something we're moving very aggressively in and plan to move into Phase III as fast as we can with our Pearl colleagues. The MABA, it best might be sourced 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.

We can confidently say there's no one-size-fits-all solution. 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 to patients with knocked-on symptoms. And I think to reinforce that, Symbicort continues to be well received in the market.

Your question, James, was also about the competitive intensity. And I think the one thing we would say is that in the short term, this acquisition gives us LABA/LAMA in a DPI formulation and we'll have the same in the 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 and these agents will have a place, but it's probably not our priority.

There are two trials. There is the one trial that I referred to earlier about the dose escalations on every four-week schedule in non-small cell lung cancer. And then a second trial that's being run by our partners at Ludwig in a variety of tumor types. MYONAL is only the trial that I referred to in non-small cell lung cancer at ESMO.

Mark Clark at Deutsche Bank.

On the quantum of accretion from the Almirall, you didn't give any explicit guidance. But looking at the sort of sales levels that are currently being generated and forecast, my assumption is we're talking about low single-digit accretion. Would you agree? And secondly, on roxadustat, you gave us some timelines on the Phase III read-out Q1 2017, but the pipeline filing chart includes that in 2016. So are you assuming you can file on the interim data or is that an oversight?

On the Almirall question, we will not comment on this, Mark. 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. 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 and it's a very smart approach to local in 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 e-mail now. Can you elaborate on the dose used for the compound in combination with PD-L1 or CTLA-4 in the tumors? And there is a further comment here that says it seems that there is a risk of skin toxicity. Do you have comments regarding the safety profile of drug used in combination?

No, at this point, I can't comment on the dose of either CTLA-4 or PD-L1 or CCR4. We've entered into the agreement and we're in the process of designing that trial. Your facts are correct that the hands and 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.

So we'll move to the next question, which is a question from Mattias Häggblom at Danske Bank. Mattias Häggblom - Danske Bank: Your 2020 guidance for the exenatide franchise seems to point to $2.5 billion in sales. We have seen some new long-acting GLP-1 antagonists 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 combination with basal insulin and possibly oral GLP-1s as well. Has any of the recent news including GSK's pricing policy change your view of this franchise going forward?

I think there are two questions in that. One is the launch of the GSK product. And two is the level of discounts in the competitive marketplace.

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 are 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 in 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.

I think Mattias' 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 device is, 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 complementary 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.

Just wondering if we could a quick update on some clinical trials in terms of the trials that are ongoing with Bydureon and the look at 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-1 with SGLT-2. 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 was filed, I think, in the second quarter of last year in Europe.

As you know, the FDA has extended the PDUFA date to January 3 to consider additional data we submitted. There is indeed a very strong logic to combine GLP-1 and SGLT-2 Forxiga. And it is clearly a combination we would 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 SGLT-2 as a class is that they upregulate glucagon, liver glucose production. And combining with the DPP4, but even more so with the GLP-1 should actually lead to very substantial clinical benefit. So we certainly will be exploring that one.

So the EXSCEL trial for Bydureon is going actually very well. We just hit our 75% enrollment 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 an accelerated approval.

In Europe, we are very much on track. And so far, we have no reason to belief that we couldn't get approval. But of course we have to wait for the final CHMP decision.

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

I'll maybe quickly touch on the question we received from Nicolas Guyon by e-mail. And Nicolas questions about Farxiga. And we mentioned we had a very successful year at 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'm sure you've noticed we're not the only ones doing it. The only thing I can tell you, 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 to brand prescriptions. So we are pretty happy with the performance to date.

Keyur at Goldman Sachs.

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 you win forward in the space, and I think, Briggs, you kind of answered that early, but I just wanted to confirm I heard you right, which is as it relates to the Phase III trial that you're evaluating it in board kind of the MACE endpoints, 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?

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 of some discussion with Actavis. At this stage, we haven't engaged in the discussions.

So for roxa, you'll remember the issue with the erythropoietin-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 erythropoietin-stimulating agent. That's the hypothesis of the trials that we're conducting.

There's 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 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, 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're also a bit better. Others like DPIs better. If you want to cover the whole spectrum of needs, you have to have both MDIs and DPIs. And they all will bring us a very nice MDI technology that will help us with combination products, LABA/LAMA, but also 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.

We've heard from some companies that they're having conversations with companies like Express Scripts who have already indicated potential exclusion from their formulas for 2015. I was wondering whether you could comment as to whether you've had any of those discussions and been given any verbal indication as to any of your major products is potentially being excluded from coverage next year. I also wanted to just clarify of 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 (inaudible) these issues can drag on, and I just wanted to confirm that any excess Nexium revenues going to be reinvested in the business. And then just lastly, can you maybe comment on (inaudible) matters, but I noticed on the newswire that you're talking about Brilinta and hope to have an outcome into that probe soon. Can you maybe update us as to why you think the timing of that is imminent and what we can plan for?

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 DoJ. We hope that it will conclude rapidly, so that 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's very competitive market out there. But we're not going to comment on individual customers, ESI or others, but certainly know that that has been moved into 2015. There'll be some wins and some losses. And finally, the next year guidance, it's our best estimate, October, but it is possible that generics launches are delayed, in which case we'll have a further upside and we'll see how the manage that upside. But certainly if we had an upside in sales, some of it would fall to the bottomline, 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 particularly our dividend policy. So I'll move to Lars Hevreng at SEB. Lars?

Why baseline eosinophil count is not inclusion criteria in the COPD trial in contrast to the asthma trials?

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

So we have maybe time for one more question from Naresh Chouhan at Liberum.

Firstly just on Crestor in the US, it's managed to hold up quite well due to, I think, around 7% price increase. You're saying that price pressure in 2015 is to increase significantly. Should we assume that as Crestor price increases aren't repeated from now on, because that's a pretty big driver of Crestor sales growth? And then secondly on cash, by the end of the year, you should have low levels of debt. You've talked that you're returning cash in the future. Can you talk us through just about 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 (inaudible) through the next few years or buyback? Just help around how you think about this will be useful.

The first one is about Crestor pricing in the US. And, Luke, maybe you want to cover this. And the cash utilization question, Marc, perhaps you could take.

I think overall, we expect to hold a net price in what is a very competitive market with generics. We expect to maintain commercial (inaudible) which is around 80% of the volume through access programs and also promotional activity. And by the year-end, 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.

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 and our core areas. It's accretive relatively rapidly and complementary to our portfolio. So we will continue to look for the opportunities or bolt-on acquisitions. We are not actively looking at medium or large acquisition, but obviously as we have said repeatedly, if we were to see a very good 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, Naresh, every year. And in the last part of the year, we reviewed our long-range strategy with the board. And we review our long-range and we're going to go through that again in the last quarter of this year. And we're going to 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 overtime. Let me thank you again for all your attention and remind you that certainly the good sales growth we have 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's potential for us to improve our productivity in a number of areas. With that, I'll thank you again.