Good day. Welcome, ladies and gentlemen to AstraZeneca’s Q1 2020 Results Presentation. Before I hand over to AstraZeneca, I’d like to read the Safe Harbor Statement. The company intends to utilize the Safe Harbor Provisions of the United States Private Securities Litigation Reform Act of 1995. Participants on this call may make forward-looking statements with respect to the operations and financial performance of AstraZeneca. Although we believe our expectations are based on reasonable assumptions, by their very nature, forward-looking statements involve risks and uncertainties and may be influenced by factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements made on this call reflect the knowledge and information available at the time of this call. The company undertakes no obligation to update forward-looking statements. Please also carefully review the forward-looking statements disclaimer in the slide deck that accompanies this presentation and webcast. I will now hand you over to the company.

Hello, everyone. It’s Pascal Soriot, CEO of AstraZeneca. Welcome to our first quarter 2020 conference call and webcast for investors and analysts. As always, the presentation can be downloaded from astrazeneca.com, our website. And we’ve also sent it to people on our distribution list. So if you can turn to slide two. This is an updated safe harbor statement. We will be making comments on our performance using Constant Exchange Rates, or CER, core financial numbers and other non-GAAP measures. A reconciliation between non-GAAP and GAAP data is contained in the results announcement, and all numbers refer to million USD and for the third quarter 2020, unless we state otherwise. Please turn to slide three. We plan to spend about half an hour on the presentation and then do Q&A for the rest of the time. [Operator Instructions] Today, I’m joined by Dave Fredrikson, our Executive Vice President of Oncology; Ruud Dobber, the EVP of BioPharmaceuticals; Marc Dunoye, who is our CFO; José Baselga, our EVP of Oncology R&D; Mene Pangalos, our EVP of BioPharmaceuticals R&D. And also for the questions later on, we have Pam Cheng, who is our Executive Vice President for Operations and IT; and Leon Wang, who is our Executive President who is responsible for China and the emerging markets. Please turn to slide four. This is the agenda, where we plan to cover all key aspects of our announcement today. Moving on to slide 5, the first quarter of 2020 was a robust start to the year, despite the ongoing corona crisis, and it was supported by a strong business model and a good pipeline. Our revenue - our total revenue advanced 17%, and we estimate a low to mid single-digit revenue benefit from COVID-19. New medicines advanced by 49%, and we saw continued strong…

Thank you, Pascal. Now a planned update on the performance of our Oncology business before handing over to Ruud for an update on BioPharmaceuticals and emerging markets. We are pleased to report strong growth of 34% for our Oncology business, which is now annualizing at $10 billion. We’re seeing regional expansion, particularly outside the United States, as our key life cycle efforts start to take effect. The new launches are progressing very well, with additional news flow every quarter. Please turn to slide 11. Starting with our new lung cancer franchise, we are pleased to report that both Tagrisso and Imfinzi demonstrated strong growth in the quarter at 58% and 57%, respectively, with sales of $282 million and $462 million, respectively. Tagrisso is now approved in 81 countries in the first-line setting. And in the quarter, we saw continued expansion in countries securing national reimbursement, which now totals 20. US Tagrisso sales were up 43%, as demand continued and as we see a good level of penetration in the frontline setting. We now see strong growth from Europe and emerging markets, as these reimbursements and launches take effect. Japan was impacted by the previously mentioned price cut in November last year. On Imfinzi, the majority of sales are still coming from the US at $286 million, with a growth of 24%, as we’ve reached high levels of penetration in the PACIFIC Stage III non-small cell lung cancer setting. We are now launching in the small cell lung cancer CASPIAN [ph] indication through the US following early approval this month. Outside of the US, we are starting to see the sales of Imfinzi pick up, particularly in Europe and emerging markets with sales of $75 million and $33 million. Japan delivered $56 million. The China launch of PACIFIC still happened in…

Thank you so much, Dave. And today, I’m very pleased to talk to you about the BioPharmaceuticals business. Total sales of biopharma, comprising New Cardiovascular, Renal and Metabolism and Respiratory & Immunology were $2.7 billion in the quarter, growing at 16%. Starting with New CVRM, sales were up by 8% despite intense competition in diabetes with total sales at $1.1 billion. Growth for both Farxiga and Brilinta continued with double-digit increases. Farxiga reached $407 million in the quarter, with 90% growth, maintaining volume market share leadership globally, while benefiting from the SGLT2 class growth. In the United States, Farxiga saw a reduction of 14% as price declines took effect, though volumes continued to grow. Outside of the United States, which accounts for 72% of sales, we saw strong performances, with volume driven growth increasing. Europe sales were up by 34%, with strong volume growth driven by the DECLARE cardiovascular outcomes data. Emerging markets sales were up by 55%, benefiting from the China NRDL listing. Brilinta delivered sales of $408 million, with 90% growth, driven by a strong performance in the emerging markets, up by 42%. We also had continuous growth in the U.S. and Europe, up by 8% and 15%, respectively. The majority of use is still in acute setting, and Brilinta continues to outgrow the market in all regions. Please turn to slide 15. Turning to Respiratory Immunology, we reported sales of $1.6 billion with a 22% growth in the quarter, driven by Fasenra and Symbicort, as well as some COVID-19 stocking. Symbicort growth was strong in the quarter at $790 million, with a growth of 36%. The US saw particularly strong growth, up 76% to $310 million due to demand growth and inventory increases at the partner [ph] following the launch of the authorised generic. Globally, Symbicort remained…

Thank you, Ruud and hello everyone. I want to take you through our financial performance in the first quarter, as well as our financial priorities and our guidance for 2020. Please turn to slide 19. I will start with the reported P&L before reviewing our core results. As Pascal mentioned earlier, total revenues grew by 17% in the quarter, which included only a small element of collaboration revenue. Reported operating expenses increased by 10% on top of the increase of core operating expenses that I will refer to in the following slides, part of the increase was due to an intangible asset impairment for Bydureon. Please turn to slide 20. Moving to our core P&L, our gross margin ratio declined by 2 percentage points to 78%, primarily reflecting the impact of one-off adjustment related to group inventory and the growth in profit share from the collaboration with Merck in respect to Lynparza. Core R&D expenses increased by 9%, as we invested in Enhertu, another oncology medicine, while core SG&A expenses increased by 7%, driven by additional investment in the China expansion and further support for global launches in oncology. Core other operating income of $479 million primarily reflected the sale of legacy hypertension medicine, while our core tax rate was 20%, in line with the indicated range for the full year. Finally, our core earnings per share ended at $1.05 for the quarter, up by 21%, despite a 4% increase in the weighted-average number of shares. Please turn to slide 21. Turning to net debt and cash generation. Our net debt has increased by $2.5 billion since the end of last year to $14.4 billion. This was in line with our expectation, given then the first half scheduled payment of our final interim dividend. Encouragingly, there was a $526 million…

Thank you, José. And hello to everyone on today’s call. This quarter, we announced the Farxiga Phase III trial, DAPA CKD, will also be stocked early after demonstrating overwhelming efficacy in treating chronic kidney disease. With the success of this trial, there are an additional 2.7 million CKD patients in the US without heart failure that could potentially be treated with Farxiga. It’s important to note that currently only 12% of qualifying Stage III CKD patients are formally diagnosed in the United States. Alongside our recently launched Roxadustat and Lokelma, our evolving renal franchise is now really well-positioned to provide a variety of treatment options for patients with CKD worldwide. Farxiga is now the first SGLT2 inhibitor to show clinically meaningful benefits in three distinct patient groups, patients with diabetes, patients with heart failure and now patients with chronic kidney disease. Please turn to slide 28. We’re also taking the opportunity to expand and rename our respiratory therapy area to Respiratory & Immunology. This change reflects the increasing number of immunology indications we have in our pipeline and the acknowledgment of the shared pathways and disease drivers across therapy areas. For example, several of our multi-disease franchises, including Fasenra, Tezepelumab and MEDI3506, our anti-IL33 monoclonal antibody, all have potential across both respiratory and immunology indications. The slide shows the extensive life cycle management program we have launched for Fasenra across a variety of respiratory and immunology indications, most recently enhanced by trials in atopic dermatitis, chronic, spontaneous urticaria and bullous pemphigoid. Please turn to slide 29. And now for an update for biopharma and what’s next in our pipeline, I’d like to highlight a couple of new programs. In CVRM, we have AZD2373, which is targeting Apolipoprotein L1 or APOL1 for short. This is a gene with variants that are…

Thank you, Mene. Before the Q&A session, I will leave this slide for a few moments, the slide 32, for a few moments as a summary of the strategic achievements. Our global presence, balance of specialty and primary care and a leading presence in the emerging markets, also with significant R&D, one of the - I mean, define our global presence. Secondly, we have a very strong pipeline with 17 [ph] Phase III medicines and a significant number of life cycle projects, and as you heard today, a lot more coming in the early and mid-stage pipeline. And finally, our third key message here is our financials are improving, and we’ve delivered on our goals, and we are very much on track with what we said we would achieve. With a number of new medicines and 9 blockbuster products, we have returned to sustainable revenue and earnings growth, and we are now focused on operating leverage and cash flow. So let’s move now to Q&A. For those on the phone please remember to press start one to ask a question. We’ll also take written questions from the webcast. And I please remind everyone, to limit questions to be fair to all. Limit yourself to one question. Thank you in advance for this. And perhaps now, we can take the first question from the conference call. And I believe the first question is from Simon Baker. Simon, go ahead.

Thanks for taking my question. The question is on COVID and its impact. You - I think we’re the only pharma company by virtue of your late reporting for full year that actually included a negative impact from COVID. And so far, in what’s been a strong quarter, we’ve already seen a benefit, albeit one that may unwind later in the year. So I just wonder if you could - if you could update us on how things are tracking against that guidance expectation. Are there underneath the net positive, any negative areas, any factors which still lead you to leave the guidance at this stage intact? And also related to that, for you Pascal, I just wonder if you could give us a flavor of the change in perception of Astra specifically, pharma in general, that you’ve seen from your discussions with governments around the world through this crisis. It seems that pharma is once again being seen more as part of the solution than the problem. I just wanted to see how that’s manifesting itself in your discussions over this period? Thanks so much.

Yes. Simon, thank you for that. I assume you’re referring to the full year on the guidance as opposed to the quarter one, right, because in Q1, we do have an upside.

Yes.

Yeah, sure. So, I’ll ask Marc to add some color to this, but my first response to your question is, there is a lot of unknowns about this crisis, of course. We see a lot of reduction of visits to doctors around the world, not only in China, but also now in Europe and in the US. And our expectation is that it will have - I mean, some of it will come back, of course, because some of it is only delayed. But some of it is not going to come back because patients, for instance, would miss their treatment or - for a chronic condition or would start their cancer treatment a bit later. So there is, we think, a potential, and we will give you more a further update at the half year. But at this point, we see a potential downside to this. On the other hand, we have upside. And one of the main ones is ADAURA, of course, because we expected Tagrisso ADAURA in 2022 and it came very early. And I’m sure we will want to talk more about this later. But it is definitely an upside. And so all in all, we think all of this will balance itself out. And today, we believe it is prudent to reconfirm our guidance and also signal that the balance of risks and benefits and upsides and downside is to the downside a little bit out of this crisis. I think we should be realistic with the impact it has on patients going to see their physician. So, that’s one part of the question. The second and I’ll go back to Marc in the second to add some further color. But possibly, the second part is, yes, I think - I think this crisis has definitely shown that pharma - is part of the solution in many cases. I mean, in that instance, it really is very obvious to everybody that everybody is waiting for a vaccine or treatment. And clearly, a strong pharma sector is important to be able to deliver those. And I think people are realizing this. But hopefully, this is something that helps in the future also that people start looking at us a bit differently because, quite frankly, we’ve always been part of the solution, when you give patients Farxiga and you stop them from being hospitalized for heart failure, you save money, not only you improve lives, you save lives, but you save health care systems, a lot of money because hospitalization costs are high. So, I think this has been the story and the message the industry has been trying to get across but not well heard, I have to say. Hopefully, this crisis helps a little bit people see us in a different light. Back to your first question, Marc, anything you want to add?

No, maybe just - thank you, Simon, for the question. Maybe to just reiterate what we have presented today and also maybe explain how we do our scenario planning. So, first of all, for the quarter results, we have a growth rate of 17%, and we have identified a stocking and an improved adherence and compliance of patients, with representing a low to mid single percentage. So, you need to take the underlying growth, probably 3% or 4% under the 17%. So, still remaining either at 13% or 14% are very good. On the rest of the year, we are - and for our COVID-19 scenario planning, we envisage two scenarios, which are - we see the most likely, a three months continuation of the crisis or six months. So we are looking at these two scenarios, and we believe that these are the most likely scenario. And then by computing all these two scenarios, we have reconfirmed, and we believe that we can leave our guidance unchanged for total revenue, high single-digit and low double-digit percentage growth. So that’s the way this is constructed. Obviously, we monitor this constantly, and we will provide for our second quarter results. At the end of July, we’ll provide the best update that we can at that time. We just anticipated in February, we anticipated the impact on the Chinese business, which I think wasn’t too far off, but we had not anticipated then the expansion to the rest of the world of the COVID-19 crisis. Thank you.

As a quick point, Simon, on your question is, we sell medicines that treat chronic conditions. And so chronic conditions are less affected actually because people or patients have their medicines at home, they keep taking them. And then we sell cancer medicines and cancer is a severe disease, of course, you need to be treated, and in that, we sell oral medicines. Now all in all, we tend to be less affected by the crisis. But still, I think it is a responsible thing to acknowledge that there has to be some negative impact, limited hopefully, but some negative impact overall, which we, of course, cover with some of the upsides we have. And so that’s all I will say. We’ll move to the next question by Mark Purcell at Morgan Stanley.

Good afternoon. It’s Mark Purcell from Morgan Stanley. Just following up from Simon’s question actually and specifically focusing on emerging markets, the performance is clearly very strong in the face of the COVID pandemic growth rate in line with last year. China is 17% growth versus 35% last year. So specifically, could you help us understand the impact of COVID in Q1 on China, where the new normal is emerging? It would be useful maybe to understand the demand cycle that Pulmicort has gone through in China in Q1. It appeared to be significantly down by about 54% in February as you’ve switched Pulmicort across to Symbicort outside the hospital setting? And could you help us frame the outlook for 2020 in China, where you continue to invest? And if I could squeeze in, just this week, the NS - sorry the NHSA released draft guidelines on the pricing and procurement of drugs under NRDL. So it appears the objective here is to engage manufacturers on older medicines covered by NDRL on sort of centralized procurement and potential sort of price negotiations. So sort of framing that with the China question, it would be useful to get your thoughts on that?

Okay. Thanks, Mark. I’ll ask Leon to cover this one. Leon, can you address it?

Yes. I think emerging markets in quarter one continued to show resilience, especially in China. I think in quarter one, China is impacted by this COVID-19, definitely. I think two major products Nexium and the IV injection, mainly for hospital usage and also Pulmicort for the pediatric asthma nebulization center. And these two parts of business, there’s no patient visit and there are no surgery happening in the hospital almost two months. And all these things are actually recovering now, in the month of March, even though not fully, but it’s very partially step-by-step gradually. So towards the end of April, we still see a partial hospitalization, and the patient needs to go through COVID-19 testing before they’re even hospitalized. The unnecessary surgery are still postponing. Every day is improving, but still not yet fully recovered. So we expect in late quarter two, early quarter there will be fully rebound of surgery and outpatient department visit. So this is about China. China performance is actually really exciting and 16% emerging market performance is historical. So, emerging market is not just about China. And Russia, Middle East, Gulf and also Saudi and North Africa and Latin America, Brazil, Argentina and also Mexico, Korea, I think we have a lot of strong growing countries. So, most of the markets in the emerging markets are growing double-digits. So we maintain quite optimistic on the low double-digit growth in the emerging market. And also in China, we are continuing investing for new launches. And last year, we have three new drug inclusion, Roxadustat and Forxiga and Lynparza, very important reimbursement inclusion. So we are now rolling out and getting hospital listing for all these three products. And we are launching three new products during the virus and Imfinzi [ph] and the Breztri, also very, very major product for inhalation, which is the most important product to mitigate the long-term risk of Pulmicort in China and we will continue investing in China, expansion and also launching new products quickly, successfully in China. And the VBP is something that definitely is happening now. In quarter one we already have Iressa and also Iressa VBP and also Cresta VBP actually hitting also our top line. But even though with these COVID-19 and some VBP impact in quarter one, we are showing resilience. I hope we can show a good performance in the second half of this year.

Thank you, Leon. Just as an example, Russia was up 66% in Q1 at CIA. So I’d like to here congratulate our Asian team they are doing a beautiful job. Next question is Luisa Hector at Berenberg. Luisa, over to you.

Hello. Thank you for taking my questions. I’d love to hear a bit more on Tagrisso, Pascal, it sounds like you’re thinking it may even contribute to 2020 sales, the ADAURA study. So just to check on the timing of filing and potential approval, how you see the market, especially with the labeling in the metastatic patients already. So do you see adjuvant and metastatic as two discrete patient groups, i.e., what proportion of metastatic patients have already had adjuvant therapy? And any comments on price as you move into a broader patient group. And if I can also just ask one more because I noticed in the press release in terms of adapting to the COVID era, you talk about SG&A collaborating with e-pharmacies and also new platforms, investing to communicate with healthcare professionals. So would love to hear a little bit more color on those. Thank you.

Right. So the first question, Tagrisso, I’ll ask Dave to cover it. It’s clear actually that we said that we are not promoting off-label. But it’s also clear that we’re going to present this data at the medical conference this year. And we know very well in oncology, physicians tend to follow the data. But - and so of course, very clear, we cannot promote until we get the indication. And Dave, can you cover the Tagrisso question? And for SG&A, I’ll ask Leon to talk about e-pharmacy, and e-platforms and also Ruud could step in on that one. Go ahead, Dave.

Absolutely. Thank you, Pascal. So Luisa, on your question, we’re clearly thrilled about the data from ADAURA. And as Pascal mentioned, we’re really looking forward to sharing as soon as possible at an upcoming congress. Today, EGFR-TKIs are only used in the metastatic setting. And one of the questions you asked was around what percent of the patients are metastatic, that are de novo versus having been treated in the adjuvant setting. The overwhelming majority of patients are de novo, unfortunately, in lung cancer. It’s one of the reasons that we see such abysmal survival rates actually within the disease. We don’t see EGFR-TKIs used in the resectable stage IB, through IIA setting. And about 30% of patients are diagnosed within this setting. So I think that, in large part, we should see that this is a new additive patient population. It’s not one that likely will lead to too much cannibalization. I do think, it’s important to keep in mind that a considerable amount of education and promotional work is going to need to take place though. Testing is not a standard within this early setting. So EGFR testing today is not the norm. That’s something certainly that we’re going to have to be a part of. Driving active surveillance, post-surgery is also something that today is happening as a therapeutic strategy, if you will, for a number of patients. So we’re going to really need to ensure that there’s an imperative to treat with Tagrisso post-surgery or post-chemotherapy following surgery. And then finally, there’s education on longer durations. We don’t know yet what the duration of therapy median was within the ADAURA study. We’ll obviously see those data when we present them out. But we know that the study itself had longer duration, three years, as part of the protocol. So the extent to which that’s a longer duration than what we’re seeing in the metastatic setting in terms of within the study that will also require work on compliance and adherence to that longer time frame.

Thanks, Dave. Leon, and then maybe, Ruud.

Yeah. I think during this COVID-19 pandemic, we see the trend of digital platform widely used. I don’t think after this virus, and it will become a new norm that doctor very used to a digital platform. So, digital platforms are very good to do doctor education. So just to give you an example, in China, we have a disease, but not product portal that attracts millions of doctors visiting the portal to get information. So, it will become more and more popular that doctors get information instead of face-to-face meeting as looking to online resources. But also, we’re organizing COVID-19 cross-country, physician experience sharing on how to treat diseases in the background of COVID-19 and how to manage COVID-19 patients. So, every online web casting, we are attracting 50,000 to 100,000 doctors across countries everywhere, Europe, U S and also emerging markets and also China. So – and during the virus, we find very useful digital tools connecting doctors and patients. So some of the digital tool is using robots to help the doctors and nurses talking to patients, handling simple questions and these are quite useful digital tools, we think, that will continue even after the virus, very efficient. And online pharmacy, AstraZeneca is actually working with a lot of online pharmacy in order to help the patient to get their prescription refilled, without visiting the doctor to create unnecessary crowd of people in the hospitals. So after this virus, I think, all the governments are paying a lot of attention to not just for convenience purpose, but also for within hospital infection, crossing packaging [ph] purpose, so obviously will become also popular. And another thing is Internet hospital and the patients during the virus, actually more patients affected by – not by the virus, but by their normal disease, they are no longer going to do consulting and also to do surgery. So Internet hospital will also become a very, very viable thing. And also the government are also encouraging internet hospital, making doctors consulting their patients and also having some second prescription and even first prescription are starting to discuss – to be discussing the policy. So I think all these three things will be quite prosper after this COVID-19.

Okay. And thank you so much, Leon. Of course, based on the learning’s of – in China, we have been able to quickly roll out remote detail into most of our physicians around the world, which has been a phenomenal effort of our IT and digital teams in our company in order to help our field forces around the world in order to stay in contact with their physicians. And in some cases, it has been extremely successful. In other cases, depending on the severity of the disease in a certain country, of course, it’s less easy. On top of that, we are working on a number of areas to optimize care. For example, we are rolling out home-based treatments and medicine delivery solutions. We’re working with other companies in order to do that. And just to give you a little bit of flavor about the impact and the importance of digital platforms. Recently, we hosted a meeting about COVID-19 with 45,000 HCPs from 90 countries on a conference call, led by Pascal himself. And that has been extremely well received by physicians around the world. So we are doing everything in order to stay in close contact with our prescribers and to help them to navigate through these very difficult times. Back to you, Pascal.

Thank you, Ruud. So the next question is about Tezepelumab, James Gordon at JPMorgan. James, go ahead. It sounds like we don’t have James. Maybe we move to the next question, and we’ll return to James a little bit later, probably again later. Tim Anderson at Wolfe Research. Tim, go ahead.

Thank you. I’d like to go back to Tagrisso and get an update on where you are with getting first-line lung on NRDL, what your latest thinking is. And also the ADAURA trial results, does that help you secure NRDL in first-line lung just by creating even more of a halo effect around that brand? And then does ADAURA itself lend itself to NRDL listing in China eventually? Or do you think that’s a long shot? And then on Calquence, if I could ask a couple of questions. I think your Q4 slide deck noted you were capturing 60% of US CLL new patient starts. And then in this most recent slide deck, I think you said it’s a quarter of new patient starts. It may have just been the way you phrase it, maybe there’s no change, but it seems like it’s a different number? And then also on Calquence, if you can just mention, if used as a therapeutic in COVID, the reason I ask is only because I heard the Head of NIH actually call out acalabrutinib in a discussion that I participated in, and I was kind of surprised to hear it, but I know you’re running a trial there. And I don’t know if that was just an off-the-cuff mention or if there’s actually some promising activity that you’ve seen as a treatment for COVID?

Thanks, Tim. We will try to be fast. But let’s start with the last question. Actually, José could cover it Calquence and potential use in COVID immune responses. Then, we’ll move up to the Calquence, the other Calquence question, Dave could cover it. And we’ll – and then maybe, Dave, you could hand over to Leon for the Tagrisso China question. José Baselga: Thank you very much, Pascal. So on the Calquence question for COVID-19, Francis Collins, I was on that call, the NIH Director, was commenting on data that they have from the NIH that is very positive. So I guess what he was commenting was on his own data, and this data has made us really go so far forward. So we have this full program now that we’re launching with clinical studies in the US, in the UK, in the rest of Europe. And basically, the data shows Calquence BTK inhibition interferes with one of the main mechanisms of respiratory failure, which is to be [indiscernible] prevented. So we are very, very hopeful.

Thank you, José. Dave?

Sure. So, Tim, just in terms of further clarification on your question on the numbers. In Q4, what we had said was that 60% of the new patient starts in CLL are coming from new to Calquence prescribers, which is the same as when we say 60% of demand from prescribers are new to Calquence. The point that we’re trying to make here is that, when we take a look at all of the scripts that we’re getting in CLL, that we see that we’re actually getting new prescribers to the brand. So it’s not just the MCL physicians and prescribers, but we’re getting new prescribers. And that’s important because it means that we’re making inroads into the community. And so the 60% from Q4 is the same as the 60% that we’re sharing here. On the new patient start dimension, what I talked about in my remarks is that we’ve achieved now where one in four new starts for BTKI in CLL are Calquence new starts, and that’s up slightly from where it was within the fourth quarter.

Thanks, Dave. Leon, Tagrisso…

Yeah. I think definitely, Tim, so that we will be applying for NRDL first-line, because we already have the indication in FLAURA in China. And we are already penetrating the first line patients, we have a patient affordability program in place on top of our already quite attractive reasonable pricing for second-line reimbursable price. So I think both second-line is doing well – second-line is doing well in the reimbursement situation and still penetrating, while the first-line T care market is continually expanding, replacing chemotherapy in the market. So with the BVP of order major first TKA – first-line TKA happening, so second-line market is getting bigger and bigger. And also, first-line, I think with PAP will be penetrating already self-patients before NRDL. And we definitely will talk with government about NRDL and waiting for the new negotiation policy for this round of NRDL. And adjuvant ADAURA result, of course, that result is exciting and definitely will add weight to our application. But of course, it’s largely dependent on when we will get approval for this new indication.

Thanks, Leon. So the next question, maybe we could return to actually James Gordon at JPM. James, I think you’re online. Do you want to ask your question?

Hello. Yes, James Gordon from JPMorgan, and thanks a lot for your patience that I wasn’t there for you before. Yes, two questions, please. The first was on teze. So we get the Phase III results in Q4. And if you look as a good as Phase II, it could be the best and broadest efficacy for all the asthma biologics. But to what extent would this just be cannibalized in Fasenra? And there, you’ve got the full rights rather than half the economics. And would that complicate things with Amgen and how that works with co-promotion? So that’s the first question, please. And if I could just squeeze in the second question, which would be Tagrisso, ADAURA had been stopped for overwhelming efficacy in the resectable patients is great news. But can we extrapolate from that in that - if you’ve shown very strong efficacy there, can we read that through to the LAURA study in the unresectable population? Could that be a similarly big opportunity as well? And how should we now think about that study, please?

Thank you, James. Could I ask Mene to cover the teze question and then José the Tagrisso question.

Sure. I can take - I guess Ruud will be able to cover cannibalization from a commercial perspective, Pascal. But ultimately, we see teze is having a different profile in terms of the types of patients it can treat. As you know, Fasenra is in higher eosinophil patients, and we’d see tezepelumab as being in a broader population. So we think scientifically we’ll be able to separate the two. I don’t know whether Ruud wants to talk about the conversely, how we will do that or not?

Yeah. First of all, as always, James, we need to see the data. What we know from Fasenra is that the data set in the eosinophilic asthma population is incredibly strong, and we are showing that in real life as well. So the hurdle is high. But in the end of the day, what is best for patients will be embraced by physicians. But I think the huge opportunity clearly for tezepelumab is also to go to the low eosinophilic asthmatics, where there’s a high unmet medical need or the allergic asthmatics. So we have high expectations. But of course, it all depends on the outcome of the NAVIGATOR trial, which will read out in the second half of 2020.

Thanks, Ruud. I mean, you should also remember, James, that if necessary, we can have separate sales forces promoting the two agents separately, and it’s been done before. We’ve done it before with other - in other therapeutic crises. So it’s no issue, either that we find a way to position the two or we don’t, and we maximize both agents. So then we will be fully behind tezepelumab to make it a success with our partners at Amgen. So the next question was about Tagrisso. José, it’s for you, I think. José Baselga: Yes, absolutely. So the question is on LAURA. This is the Tagrisso study in locally advanced and resectable. So basically, the data on ADAURA clearly gives us and the world and the patient’s higher confidence that LAURA will be positive. Just the way I think about that is that LAURA is sandwiched in between the first-line meta study, which is highly positive, and now the early disease, very highly positive. So LAURA somehow represents the completion of this puzzle of Tagrisso positivity. So we’re very hopeful.

Thank you, José. That was very quick. Thank you so much for that. So the next question is Andrew Baum at Citi. Andrew, over to you.

Thank you. So just going back to the 104 new patients starting Calquence, which is perhaps a more impressive number than I may have expected. Could you just outline where these are coming from? Is this - you just see coming from community are positive? Is it driven by heavy sampling? Is it driven by belief in a lower adverse event? So anything you could reflect in terms of the commercial incentives, as well as the drivers of selection of this rather than a very well-established agent for a naive patient. And then second, on eGFR, you referenced the changes for testing and initiating therapy with Tagrisso in the adjuvant setting. On duration, how are you thinking about managing keeping patients on drug, because three years is a very long time, both from an adverse event perspective, but also from a reimbursement perspective? So perhaps you could help me understand whether the exposure to Medicare of the US patient population is identical for this earlier disease cohort compared to the metastatic setting. I’m assuming is, I’m obviously asking from a Medicare reimbursement friction point of view?

Thanks, Andrew. So Dave, two important questions for you.

So let me start first, Andrew, with Calquence’s question. In terms of where we’re seeing the share coming from and some of the commercial efforts on Calquence, I think that, first and foremost as I had mentioned, we are seeing good expansion of Calquence utilization happening outside of the MCL utilization base. And so that means that we’re getting increased penetration into the community. MCL treaters were more largely concentrated in your academic centers. We are certainly seeing for sure that we are getting utilization within those centers, but also in its expansion that’s happening into the community. And I think that there is a couple of reasons for that. I think one of them is that we’ve expanded our promotional efforts to really make sure that we’ve got the ability to be able to reach those physicians within the community in the way that we need to. I think secondly, in the community, finite treatments have had some greater challenges in being able to make inroads just given some of the challenges around administration. I think lastly, and most importantly, the profile of Calquence is one that has really resonated well with physicians. I think that the efficacy is seen as absolutely uncompromised, and I think that the tolerability and safety profile is seen as one that’s quite favorable. One of the things we hear a lot from physicians is if they tried it in two patients, that’s more than enough to convince them that this is a great drug. Turning on to the question around Tagrisso, we do see a similar - we do see a similar composition of patients in terms of mix within Medicare in the adjuvant settings as we do in the metastatic setting. Though, of course, obviously, you get some earlier diagnosis within this. That’s going to be part of this as well. José, I think that you had thought that maybe there was something you wanted to add on the duration of therapy component. José Baselga: Yes. Thank you very much. So I think the question is a very good one. And I think you’re coming from the point of view that classically, in the adjuvant setting in breast cancer, compliance has been poor. But although we don’t know what’s going to happen here, I think that the stakes are so high, the benefit is of such magnitude that, basically, I think physicians and patients will be aware of the need to stay on. So this is a very different situation. You are facing an adjuvant setting that is totally unheard of in which you can have dramatic benefit. So I think in my mind, we’ll have to see how it plays off. But once you have such a good benefit risk ratio, this will encourage patients to stay on. That’s my take.

Thanks, José. So the next question is Sam Fazeli at Bloomberg.

Who is asking, do we expect an uptick in US Farxiga in second half given by the new data? And also, when we have Calquence Farxiga COVID-19 data. So, maybe José, since you were talking, you could cover the Calquence time line for the question, and then we’ll ask Ruud to cover the US Farxiga question. José Baselga: Yes. So the time line is going to be short. As we mentioned, the studies in the US, in the UK and in other European countries will start any time now. So - and there’s unfortunately not a shortage of patients. So it ought to be very fast. Now I don’t - don’t know for sure what the unit of measure, I would say short, I would hope - we’re talking about a few months, two or three months, rather than longer than that.

Thank you. And Ruud, US Farxiga?

Yes, of course, Pascal. So first of all, we have seen very promising first results of Farxiga with the DECLARE indication, which is more the prevention part of heart failure. Of course, we are eagerly waiting for the end result of the registration or the approval for DAPA-HF. And then on top of that, recently, we were able to stop a study much earlier than expected of dapagliflozin in CKD. So, all in all, we are clearly expecting an uptick of Farxiga from a volume perspective. Equally, the SGLT2 class is growing very healthy as we speak in the United States. And based on all those new indications, we have also been able to secure a better access. So we have quite strong expectations for Farxiga moving forward in the United States. And as soon as the COVID-19 pandemic is a little bit behind us, of course, we will go full force with our field force and other tools in order to convince doctors about the added value of Farxiga for the cardiovascular patients, clearly, and in the future also for their chronic kidney disease patients.

Thanks, Ruud. So the next question is Sachin at Bank of America.

Hi. Sachin Jain from Bank of America. A couple of questions please. Firstly, just back to Tagrisso and adjuvants. I think the last time you gave sort of framework for Tagrisso was a couple of assays [ph] ago 4 billion. So consensus clearly ahead of that, already at six, and that was pre-adjuvant with upside being talk for management. So, wonder if you could just frame how you’re thinking about your prior peak sales opportunity and whether Tagrisso across all indications can now become in the high single-digit billion type asset? And if it is trending in that direction, how does having a high single-digit billion oral small molecule oncology product, which I would assume will be at a high-margin impact to your prior margin expectations in the 30s? Second question, if I could go back to José on the SERD and the data ACR [ph] obviously, there’s a lot of SERD out there. So, from your perspective, how do you see yours as differentiated any high-level points? And then a quick clarification question for Marc on inventory in the quarter. Thank you for the color on inventory from COVID being low to mid-single-digits. I just wanted to check whether that included the Symbicort stocking or the Symbicort stocking is in addition to that? And if you clarify what that Symbicort was? Thank you.

Thanks, Sachin. So, maybe the first question goes to Tagrisso - goes to Dave, sorry about Tagrisso. I’ll just say on the margin side that anything - any product like Tagrisso that is indeed profitable will help. And that’s all we can say on the margin side. In terms of peak sales, and how we see the potential of ADAURA, Dave, do you want to give us some color on this one?

Yes. Just very quickly, Sachin, what I would say is that the size of the patient population is about 75% today of the size of the metastatic patient population in frontline. We know that the duration is longer. And we expect that we will certainly, outside of the United States need to anticipate impact to price. So, that’s how I would think about the components. And so certainly, it becomes much larger than $4 billion to $5 billion, but we’re doing the same work you are and figuring out how those three dimensions will factor into the total number.

Thank you, Dave. Before we get to the last question, which is really for José, could I ask actually the inventory could ask Pam to jump in and then comment on our inventory management and also how we have been dealing with the surge in demand, especially in respiratory products. And then maybe Marc could add some color. Pam, go ahead.

Yes, absolutely. Thank you, Pascal. Thanks for the question. So, we have clear order management processes in place across our key markets to manage these situations. Indeed, in first quarter, we saw some increased demand in Q1, in particular, our portfolio in respiratory, as well as for Calquence. We monitor closely of the order patterns and take the appropriate measures to make sure that we balance our supply across our customers here. Just quickly on our respiratory portfolio. As we see the increased demand, we are absolutely now taking steps to ramp up our capacity. So, we then really well prepared to ensure supply in terms of anticipated demand, as well as any potential upside. Back to you, Pascal.

Thanks, Pam. Marc, any color on the financial aspects of this?

Yes. Sachin, just to answer your very precise question, is the Symbicort stocking included in the stocking of COVID-19? The answer is yes. There may be - I can bring another perspective. We also have launched an authorized generic in the United States, and this – there is obviously deliveries to the generic company. This is not included in the COVID-19 stocking because this is a different channel. But the Symbicort stocking is included in the COVID-19 stocking that we have described in our press release.

Thanks, Marc. And the last question, José? José Baselga: Thank you very much. So on surge, the question on how our surge is differentiated. That’s a difficult question because really, the only way to do that would be by head-to-head comparisons. What we have presented as the ACR this year is that our compound has superb inhibitory effects and the rain effects on the estrogen receptor. We have also shown fantastic bioavailability and the capacity to be able to dose once a day. And also, we have now finalized our Phase I study, and we are enrolling in our Phase II. So our commitment, and that’s what I said and I’ve been happy to provide updates in the future, is that we are going at full speed with a very comprehensive program, and we are very hopeful, and I think time will tell how the whole area of surge ships out.

Thanks, José. The next question is Michael at UBS. Go ahead.

Thank you. It’s Michael Leuchten from UBS. Just one left for me, please. Going back to Symbicort and China, I think, it’s Ruud and Leon. In the past, you’ve talked about how the product goes from the acute setting into the maintenance setting. So just going all the way back to the beginning of the Q&A session, when we think about the pressure that you saw with Pulmicort in China, how much of the Q1 performance with Symbicort is actually replacing that pressure? And how much of it is actually moving into the maintenance setting, which may be more sustainable in the longer run? Thank you.

Leon…

Yes, actually, Pulmicort business in China is actually focusing on age pediatric asthma patient exacerbation, age below six. So Symbicort is more focusing on age above six. So Symbicort has huge untapped potential on the COPD adult market. And also in the asthma maintenance market because people still use it as a reliever, using as needed kind of usage rather than the kind of maintenance. But of course, the Symbicort performance is also a good double-digit growth in the first quarter. I think it will continue to do so because we are now having more and more patients using Symbicort maintenance. And also, we launched Breztri [ph] in China during the epidemic. And it’s the initial response from the market, even self-pay from the patient. So we are getting a lot of new patients starting to use Breztri as well. So I think you can bet on our future – we can bet our future really on the uptake of inhaled Symbicort and the Breztri and the Bevespi franchise to mitigate the long-term risk for Pulmicort.

Yes. If I may add, Pascal. Very quickly, Pascal. If you look at the overall emerging markets, you already can see that Symbicort is already half of the Pulmicort sales growing very fast. So it’s a very clear signal that maintenance market is more embraced by physicians in the emerging markets.

Thanks for the very important point. So - and we are really here to answer all if we can, but at least most of your questions. So if you don’t mind, we’ll extend to 10 past to give more time to more people. So the next question is Matt Weston at Credit Suisse. Go ahead, Matt.

Thank you very much. Two for me, please. The one feature of Q1 was the impressive growth in EM ex-China, you’ve highlighted that. But given the reliance on oil income in countries like Russia and the Middle East and the severe economic slowdown that LatAm looks like it’s seeing, how should we think about the outlook for growth in those markets in the mid-term? Can we rely on it being a continued driver of growth? And then a second specific question for Marc, the gross margin saw a significant step-down in the quarter. There’s a reference to one-off adjustments to group inventory. Can you just walk us through those, give us some idea of how much that contributed to the 2 percentage point step-down and how we should think about gross margin for the rest of the year?

Thanks, Matt. The first question, it’s always hard to address one of - I mean, some of these questions. There’ll be lots of puts and takes in what’s going to happen, of course, downward economic pressure due to this economic changes - hold pressure, et cetera. On the other hand, governments will want to support economies and inject cash, as we know. And also, I suspect, health care will build priority coming out of this crisis. So what wins overall is hard to predict. But certainly, this will have an impact. Marc, do you want to add anything and cover the other question?

Yes, so very rapidly. So out of this 2% decline in gross margin, about 0.5% or 1% is caused by this onetime one-off adjustment in the inventory calculation. The other factor that we have signaled in our press release is the greater proportion of the Lynparza sale leading to bigger profit sharing with Merck. And there’s a third factor, which is smaller, it is basically a ForEx impact. But the three factors – three most important factors are these one-time off, and then the Lynparza gross margin and the third is ForEx. And this represents about the 2%. To come back to your conclusion for the gross margin on 2020, it will be broadly in line with what we saw in 2019. Despite the additional cost that we incur due to the increased safety that we need to provide to the manufacturing employees, but also to the increased logistic cost. Of course, they don’t represent an enormous amount of our value chain, but we have increased logistic cost due to COVID-19. But despite that, it will be in line with ‘19.

Let’s move to the next question, if we could. Seamus Fernandez at Guggenheim. Seamus, go ahead.

Great. Thanks so much for the question. So first off, I just want to applaud the team for self-saving us from too much time wasted listening to elevator music by going off-cycle on the hour. I only have one question, though. The key question for me is on Enhertu. It looks like the early uptake has been really impressive in the US in terms of the number of patients on treatment. Can you just give us a general sense on two things? Number one, how is the on-market tolerability of the product? I know it’s early stages, but I believe that the risk of ILD 10 emerge relatively early. So just wanted to see how the on-market experience has been. And then, maybe just José could update us a little bit on, the upcoming ASCO abstracts and what we really should be watching for? Thanks so much.

José, maybe you can cover both, the Enhertu and the second question? José Baselga: Yeah, absolutely. So, thank you for the question. So, when it comes to the ILD in the market, as I think Dave mentioned, we have it in the market already 1,000 patients. It’s still early days. I’ll say the same as the last time. We have indications that since we had the awareness campaign and the management campaign, we are getting less of the ILD numbers. However, I think we need to be careful. And we are going to be presenting in the near future, a follow-up detailed update on the effects of this awareness campaign and the effect of this management on ILD. But we are positive. When it comes to the Enhertu data sets that are going to be at ASCO, we did mention that we’re going to have data in non-small cell lung cancer. We’re going to have data in gastric. We’re going to have data in colorectal data - in colorectal. Thank you.

Thank you. Thank you, José. And last question, maybe Steve Scala at Cowen. Steve, go ahead.

Hi. Thank you. As opposed to COVID-19 uncertainty, what gives AstraZeneca the confidence to maintain 2021 outlooks for late-stage readouts? AstraZeneca is the only company so far to have mentioned 2021. And does the call out of late-stage readouts imply that early-stage readouts are at greater risk? Thank you very much.

Who wants to take this one? I mean, Mene, José, do you want to cover this? I don’t think you should believe - you should conclude that, Steve. But anybody who wants to comment on that? José Baselga: I’ll be happy to take the question. And Mene can add if he wants to. I think basically, we have looked at very seriously at our late portfolio, sorry, at our late clinical trials portfolio. And what we state is that we do not believe, as we have announced, that in 2020 and 2021, it will have an impact. In early, you’re right in early the effects are going to be greater because these are trials that are more complex. These are trials in which you look at safety. So we’re going to have more delays. But yet, I think that we are going to be able to recover because it is easier to recover on a delay - on an early clinical trial data late. So I think in overall, we stay pretty confident in what we have mentioned.

Thanks. Let’s take, if I may, two last questions. But please, one question per person. Andrew at Leerink. Go ahead.

As you guys prepare to launch Lynparza in prostate cancer, I was wondering if you could give us some color on how we should look at the opportunity. I guess, specifically, I was wondering if you think the OS benefit, can profound could likely make it to the label, given the proximity to the PDUFA. And what type of competition do you see in regards to the other PARP agents?

Thanks, Andrew, so Dave, over to you.

So in terms of the opportunity, we look at the marketplace. We see that HRRM represents based on tissue about 25% of patients in that metastatic prostate cancer space. So that gives a sense for the size of the marketplace that’s there. And I think that as we take a look at the competitive field, we are the only PARP inhibitor with a Phase III that is read out. I think also, to the point that you’re raising about OS, we’re the only PARP with overall survival as a result. Also, we know that, that overall survival benefit is going to be incredibly meaningful. It’s been incredibly elusive endpoint in the prostate cancer setting, and so the ability to be able to have that something that we can speak to will be important. Whether we get that included in the label, obviously, that’s something that we’ve immediately taken to FDA, and we’ll see how those discussions go with them.

Thanks. Then Eric at Bryan Garnier. Maybe the last question.

Thank you, Pascal. Across this crisis, pharma companies have seen less travel cost, less face-to-face interactions with physicians, et cetera, and raise in use of digital tools. In the context of still very high SG&A costs at AZ compared to peers, do you identify extra savings or change in practice that could stay longer than for the duration of the COVID? And maybe considering also impairments with Bydureon and also tough US market conditions for Farxiga in diabetes despite very strong data, are you thinking of resources shift from diabetes into other areas as more and more opportunities emerge with greater returns maybe? Thank you.

Marc, do you want to comment on this? Eric, we allocate resources as appropriate as the business develops. We still believe Farxiga in the US and elsewhere has a lot of potential in the heart failure and kidney disease, and we want to support this because it’s a very big unmet need and big upside there. In terms of the digital piece, et cetera, Marc, do you want to cover that?

Yeah. So just briefly, for sure, we have allocated more of our expenses, G&A expenses, in particular to Oncology and to the expansion in China and therefore, less to diabetes as you note. We obviously try to pivot to digital and to augment our digital presence in many countries, and we are getting more efficient at it every month. So this is certainly a trend that we will continue in the future, and this should give us an opportunity to further redeploy and allocate resources efficiently.

Thank you, Marc. Just, Eric, on closing, I just like to remind everybody of our progress in Q1 as far as earnings and cash flow. So we definitely are improving our profitability and showing leverage.

So let me conclude by, first of all, apologizing for pushing people along a little bit, but we were really trying to give everybody a chance to ask your question because we really do appreciate your interest in our company and your great support over time. So, I’d like to conclude by thanking everybody for, again, for your interest and your time, and I wish you a good day. Thank you. Bye-bye.