GSK PLC Q4 2022 Pre-Announcement Aide Memoire
Issued: Tuesday 10 January 2023
GSK has prepared this Q4 2022 pre-announcementaide-memoire per our standard prior practice. It includes statements made in previous public communications by GSK as extracted from their original source and, therefore, by definition, they should only be taken as speaking as at the date they were initially made, and they do not reflect subsequent or recent events, circumstances, or developments. Any updates to these and other previously made statements would only be included in further communications by GSK to the market and the inclusion of the extracted statements herein should not be taken to indicate that they will not be updated in the future.
As our Q3 2022 stock-exchange announcement indicated, the potential impact of the COVID-19 pandemic on GSK's trading performance and all its principal risks is continually assessed, with appropriate mitigation plans put in place. GSK is encouraged by the uptake in demand in the third quarter for its medicines and vaccines, particularly Shingrix. The Company remains confident in the underlying demand for its vaccines and medicines, given the number of COVID-19 vaccinations and boosters administered worldwide. However, the pandemic remains a significant ongoing risk with new variants constantly emerging. Current infections are predominantly driven by the circulation of the BA.5 subvariant of Omicron, while COVID-19 vaccines are being updated with Omicron variants to provide broader immunity against circulating and emerging variants. These subvariants and future variants of concern could potentially impact GSK's trading results, clinical trials, supply continuity and its employees materially.
Please read the assumptions and cautionary statements regarding forward-looking statements set out on pages 67 and 68 of the Q3 2022 stock-exchange announcement and the further circulars, reports, announcements, press releases issued by the Company, including the information in paragraph 19 of Part 7 of the Circular to shareholders relating to the proposed demerger of the Consumer Healthcare business to form Haleon published on 1 June 2022 (the "Demerger Circular"); and the "Basis of preparation, assumptions and cautionary statement" section of the announcement issued by the Company on 23 June 2021 in relation to its Investor Update. Please read the definitions and reconciliations for non-IFRS measures on pages 38 and 66 of the Q3 2022 results release and the annual report on Form 20-F for FY 2021.
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Full-year 2022 Guidance
Commentary from Q3 2022 stock-exchangeannouncement (page 2): reflecting the momentum of the business performance in the year to date, GSK now expects 2022 sales to increase between 8 to 10 per cent and adjusted operating profit to increase between 15 to 17 per cent, excluding any contributions from COVID-19 solutions. Adjusted Earnings Per Share is expected to grow around 1 per cent lower than Operating Profit. We have delivered a strong nine-month performance ahead of our full-year guidance. In the fourth quarter, we anticipate continued strong sales growth and a relatively higher rate of R&D spending, reflecting the dynamics of prior year comparisons, in-year phasing, and continued targeted commercial investment.
Key information for Q4 and Full Year 2022
Foreign exchange:
We expect that the positive impact of foreign exchange on 2022 sales will be around +6% (NB: This is lower than the previous expectation of +7% which was given at Q3).
As a result of the mix of currency movements relative to the combination of costs, we expect that the positive impact of foreign exchange on 2022 sterling adjusted operating profit will be more significant than the positive impact on sales.
Over the first nine months of 2022, the positive impact of currencies to adjusted operating profit was +11% compared with the +6% impact on sales.
Weighted average number of shares (WANS)
The basic WANS in 2022 was 4,026m (an increase of 0.6% relative to 2021).
Recent Stock Exchange Announcements impacting near-term modelling of GSK
On 15 November 2022, GlaxoSmithKline Capital plc announced that it had accepted for purchase outstanding sterling notes with a value of £1.6bn. These notes had maturity dates between 2027 and 2045 with a coupon ranging between 3.375% and 5.25%.
Following these purchases, we expect an additional interest charge in Q4 2022 of £50m to £60m. This will be included in our adjusted results.
At our Q3 2022 results, expectations on net interest payable for 2022 was changed to "between £700m and £750m". To reflect the additional interest charge expected from the notes purchase, we now expect net interest payable of between £750m and £800m in 2022
Final results of outstanding Notes Tender Offer (investis.com)
On 11 November 2022, GSK plc announced that at the request of the US FDA it will restrict the second- line maintenance indication for Zejula to only the patient population with deleterious or suspected deleterious germline BRCA mutations (gBRCAmut). The US first-line indication of Zejula remains unchanged.
Sales in the second-line maintenance setting represented around 25% of US sales of Zejula. GSK provides an update on Zejula (niraparib) US prescribing information | GSK
On 22 November 2022, GSK announced it has initiated the process for withdrawal of the US marketing authorisation for Blenrep following the request of the US FDA.
GSK provides an update on Blenrep (belantamab mafodotin-blmf) US marketing authorisation | GSK
The information below includes commentary from recent circulars, stock-exchange announcements, investor/analyst calls, and previously published outlook statements.
2022 COVID-19 solutions expectations
Commentary from Q3 2022 stock-exchangeannouncement: The majority of expected COVID-19 solutions sales for 2022 have been achieved in the year to date. Based on known binding agreements
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with governments, we anticipate that sales of COVID-19 solutions will be substantially lower going forward. Sales of COVID-19 solutions for 2022 are at a reduced profit contribution compared with 2021 due to the increased proportion of lower-marginXevudy sales; we anticipate this to reduce adjusted operating profit growth (including COVID-19 solutions in both years) by around 4%. We continue to discuss future opportunities to support governments, healthcare systems, and patients whereby our COVID-19 solutions can address the emergence of any new COVID-19 variant of concern.
Note that 9M 2022 COVID-19 sales totalled £2,190m (Xevudy £2,184m; pandemic vaccines £6m)
Impact of COVID-19 solutions
In £ millions | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | ||||||||||||||||
2021 | 2021 | 2021 | 2021 | 2021 | 2022 | 2022 | 2022 | |||||||||||||||||
Turnover (£m) | - | 276 | 209 | 920 | 1,405 | 1,307 | 466 | 417 | ||||||||||||||||
Adjusted Operating profit (£m) | (12) | 233 | 97 | 214 | 532 | 194 | 58 | 141 | ||||||||||||||||
Adjusted EPS (p) * | (0.2) | 4.8 | 1.9 | 4.7 | 11.2 | 4.1 | 1.2 | 2.9 |
Sales
2022 Full-yearguidance: Sales expected to grow between 8% and 10% at CER (excluding the commercial benefit of COVID-19 solutions). Note that on the same basis sales were up 10% over the first nine months of 2022.
Specialty Medicines
2022 Full-yearoutlook: Sales expected to increase by a low double-digit percentage for Specialty, excluding Xevudy. Note that on the same basis sales were up 13% over the first nine months of 2022. HIV is expected to grow at a high single-digit rate. Note that on the same basis sales were up 9% over the first nine months of 2022.
HIV
Commentary at Q3 2022: We delivered another good quarter of HIV sales, taking year-to-date growth to 9%. Performance benefited from strong patient demand for our innovation portfolio which comprises Dovato, Cabenuva, Juluca, Rukobia and Apretude, and now accounts for 44% of our sales.
Cabenuva - Commentary at Q3 2022: Sales for the quarter were £101m, reflecting strong patient demand. At AIDS 2022 we were pleased to present new data from the CARISEL study demonstrating successful implementation of Vocabria/Rekambys across a range of European healthcare settings. More than 80% of study participants reported that the complete long-acting regimen was less stigmatising than daily oral treatment. The outlook for this innovative medicine is compelling with strong brand recognition and high levels of market access and reimbursement across the US and Europe.
Apretude - Commentary at Q3 2022 Launched in the US in January, Apretude delivered 10 million pounds of sales in the quarter.
Commentary at Q4 2021: we remain confident that Apretude will deliver significant benefits to patients in the years ahead and significant commercial value beginning in 2023.
Vaccines
2022 Full-yearoutlook: Sales are expected to grow at a mid to high-teens percentage at CER (excluding pandemic adjuvant sales). Note that on the same basis sales were up 20% over the first nine months of 2022.
Meningitis - 2022 Full-year outlook: expected to increase around 10%.
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Flu - 2022 Full-yearoutlook: Sales are expected to be slightly down compared to 2021.
Seasonal Influenza activity in the US is tracked by the CDC. For the US Weekly Influenza Surveillance Report you can visit: Weekly U.S. Influenza Surveillance Report | CDC
Shingrix
2022 Full-yearoutlook: expected to deliver a record year for sales, with strong double-digit growth. Shingrix Q4 growth rate expected to be lower than prior quarters.
Commentary at Q3 2022 We continue to expect Shingrix to deliver a record year performance with strong double-digit sales growth this year. We now expect fourth-quartergrowth to be lower than in previous quarters due to expected inventory burn in the US, reflecting the drawdown on inventory channel build from earlier this year.
Established Vaccines Full-yearoutlook: sales are expected to be broadly flat to a slight decrease.
COVID immunisation progress in the US is tracked by the CDC. For US COVID vaccine demographics, including adoption by age, you can visit: https://covid.cdc.gov/covid-data-tracker/#vaccination-demographic
General Medicines
2022 Full-yearoutlook: sales expected to be broadly flat. Note that on the same basis sales were up 2% over the first nine months of 2022.
Financials (adjusted)
Operating profit
2022 Full-yearguidance: Adjusted operating profit is expected to grow between 15% and 17% at CER (excluding the commercial benefit of COVID-19 solutions). Please note that on the same basis, over the first nine months of 2022, adjusted operating profit grew 16%.
Commentary on impact of COVID-19solutions adjusted operating profit: Sales of COVID-19 solutions for 2022 are at a reduced profit contribution compared with 2021 due to the increased proportion of lower-marginXevudy sales; we anticipate this to reduce Adjusted Operating profit growth (including COVID-19 solutions in both years) by around 4%.
Cost of goods sold
2022 Full-yearoutlook: COGS (excluding impact of pandemic solutions) expected to increase at a rate below turnover.
2022 comment on the impact of pandemic solutions on COGS: 2021 Full year sales of £1,405m consisted of £958m of Xevudy (high COGS) and £447m of pandemic vaccines (low COGS). Over the first nine months of 2022 sales of £2,190m were predominantly Xevudy (£2,184m)
SG&A
2022 Full-yearoutlook: expected to increase at a rate above turnover.
R&D
2022 Full-yearoutlook: expected to increase at a rate below turnover.
Royalties
Between 1 February 2022 and 5 October 2027, Gilead will pay a 3% royalty on all future sales of Biktarvy (2021 US Biktarvy sales were $7,049m/ £5,108m). GSK announces settlement between ViiV Healthcare and Gilead Sciences, Inc., resolving litigation relating to Biktarvy and ViiV's dolutegravir patents and entry into a patent licence agreement | GSK
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Associates
2022 Full-yearoutlook: expected to be negligible.
Net Interest payable
2022 Full-yearoutlook: At our Q3 2022 results, expectations for net interest payable for 2022 were changed to between £700m and £750m. We now expect net interest payable of between £750m and £800m in 2022 as a result of the additional interest charge expected from the below notes purchase (also referenced on page 2 of this document).
Final results of outstanding Notes Tender Offer (investis.com)
Tax
2022 Full-yearoutlook: expected to be around 17%, expect slightly higher in Q4.
Adjusted EPS
2022 Full-yearoutlook (at Q3): expected to grow around 1% less than adjusted operating profit
Historic London Stock Exchange (LSE) announcements and press releases
Since the beginning of Q4 2022, we have issued several LSE announcements and press releases, each of which can be accessed using the following links: https://www.gsk.com/en-gb/media/press-releases/https://us.gsk.com/en-us/media/press-releases/
https://us.gsk.com/en-us/products/https://www.gsk.com/en-gb/investors/stock-exchange-announcements/london-rns/
Key updates during Q4
13 December:GSK and Wave Life Sciences announce collaboration to drive discovery and development of oligonucleotide therapeutics focusing on novel genetic targets | GSK
11 December:New data at ASH underscore the potential for durable, clinically important responses with momelotinib for myelofibrosis patients | GSK
07 December:PERLA phase II trial of Jemperli (dostarlimab) plus chemotherapy shows positive results infirst-linemetastaticnon-squamousnon-smallcell lung cancer | GSK
07 December:Statement: Zantac (ranitidine) litigation | GSK
02 December:Jemperli (dostarlimab) RUBY phase III trial met its primary endpoint in a planned interim analysis in patients with primary advanced or recurrent endometrial cancer | GSK
22 November:GSK provides an update on Blenrep (belantamabmafodotin-blmf)US marketing authorisation | GSK
15 November:Final results of outstanding Notes Tender Offer (investis.com)
11 November:GSK provides an update on Zejula (niraparib) US prescribing information | GSK
08 November:Positive data for bepirovirsen fromB-Clearphase IIb trial presented at American Association for the Study of Liver Diseases' Meeting with simultaneous publication in the New England Journal of Medicine | GSK
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GSK plc published this content on 10 January 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 January 2023 18:19:07 UTC.
