AstraZeneca PLC

LSE:AZN

Q1-2025 Earnings Call

[Operator]

Good morning to those joining from the U.K. and the U.S., good afternoon to those in Central Europe, and good evening to those listening in Asia. Welcome, ladies and gentlemen, to AstraZeneca's Q1 2025 Results Conference Call for investors and analysts.

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.

This meeting may contain 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 conference call.

[Operator Instructions] I must advise you, this presentation is being recorded today.

And with that, I will now hand you over to Andy Barnett, Head of Investor Relations.

[Andrew Barnett, executive]

A warm welcome to AstraZeneca's First Quarter 2025 Presentation Conference Call and webcast for investors and analysts. I'm Andy Barnett, Head of Investor Relations. And before I hand over to Pascal and other members of our executive team, I'd like to cover some housekeeping items.

Firstly, all of the materials presented today are available on AstraZeneca's Investor Relations website.

This slide contains our safe harbor statement, which I'd encourage you to take the time to read. We will be making comments on our performance using constant exchange rates, or CER; core financial numbers; and other non-GAAP measures. A non-GAAP to GAAP reconciliation is contained within the results announcement. All numbers quoted are in millions of U.S. dollars unless otherwise stated.

This slide shows our agenda for the call. And following our prepared remarks, we'll open the line for questions. As usual, we'll try to address as many questions as we can during the call, although please limit the number of questions you ask to allow others a fair chance to participate in the Q&A.

And with that, I'll hand over to Pascal.

[Pascal Soriot, executive]

Thank you, Andy, and welcome, everybody. We have made a strong start in the first quarter of the year, building on the momentum through 2024. Total revenue growth was 10% in the quarter, reflecting increasing demand for our innovative medicines.

Core operating profit increased by 12% and core EPS increased by 21% reflecting our continued focus on operating leverage. Although core EPS in the first quarter did benefit from a lower tax rate due to settlements in certain jurisdictions.

Since our full year results in February, we secured 13 approvals in key regions across our diverse portfolio, a clear illustration of the value our medicines bring to patients globally.

In addition, we continue to see strong delivery from our pipeline. And in the past few months announced 5 positive Phase III results including 2 NMEs, camizestrant and eneboparatide and multiple high-value indication expansion opportunities across gastric and breast cancers.

We're making excellent progress towards our ambition to deliver at least 20 NMEs by 2030, with the recent approval of Beyonttra, formerly known as acoramidis, marking the 9th novel medicine approval towards our goal.

We continue to benefit from our broad-based diverse business with a robust growth outlook for each of our therapy areas and across key geographies. We saw strong performances across key regions despite anticipated headwinds including Medicare Part D redesign in the U.S. Importantly, we continue to deliver impressive growth in the emerging markets with ex China revenues up 17% reflecting the benefit of our sustained presence in this market.

Our growth in China was also encouraging, up 5% or 9% when adjusting for the decline of Pulmicort sales. This growth is driven by increasing demand for innovative medicines with additional launches in China achieved in the first quarter. We are aiming to deliver sustained growth well beyond 2030, investing in transformative technologies. In the third quarter, we announced several business development transactions that strengthened our pipeline and our capabilities which we believe have potential to support our long-term growth ambitions.

Our proposed acquisition of EsoBiotec brings a potentially best-in-class in-vivo cell therapy platform in-house increasing accessibility of potentially curative cell therapies with applications across oncology and autoimmune diseases.

Next, we enhanced our portfolio of novel modalities accelerating the development of multi-specific biologics and macrocyclic peptides across a wide range of diseases. We also announced an exclusive license for ALT-B4 with Alteogen to deliver subcutaneous formulations of multiple oncology assets with the aim of making our treatments easier to administer and more convenient for patients.

Finally, we announced the recent investment in Beijing, China, where we will establish our 6th strategic R&D center. The pace of medical and scientific innovation in Beijing is impressive, and our new R&D center will enable us to foster and strengthen collaborations within the local ecosystem as well as attract world-class talent in China to discover and develop new transformative medicines.

To support our growth across the major geographies around the world, over the last few years, we have been building a broad manufacturing network covering the U.S., Europe and China. Our global presence makes our business highly resilient to regional disruptions, effectively providing a natural hedge.

We now have 31 manufacturing sites globally, and dual source supply for the vast majority of our medicines. Our supply chains for China and the U.S. are largely segregated, and we have very limited commercialized finished medicines imported from the U.S. to China, meaning that our exposure to the current China tariffs on pharmaceuticals is not material in the context of the group.

We have a substantial and growing manufacturing footprint in the U.S. We currently have 11 manufacturing sites in the country and the vast majority of our medicines sold in the U.S. are made domestically. We do import a minority of medicines sold in the U.S. from Europe. However, mitigations are already underway.

As a result, we believe that if tariffs were implemented in the range we've seen recently in other industries on medicines imported from Europe to the U.S., we would remain within the guidance range we indicated for 2025, in part due to our ongoing inventory management.

Beyond 2025, the impact on the minority of medicines imported from Europe would be time limited, as we are shifting manufacturing of these medicines to sites in the U.S. We will, of course, provide updates as appropriate.

And with that, I will hand over to Aradhana to take us through our financials. Please advance to the next slide.

[Aradhana Sarin, executive]

Thank you, Pascal, and good morning, everyone. As usual, I will start with our reported P&L. Next slide.

As Pascal highlighted, total revenue grew by 10% in the first quarter. Product sales grew by 9% with growth seen in all major regions. Alliance revenue, mainly consisting of Enhertu and test buyer profit shares increased by 42% to $639 million.

Starting this quarter, we are presenting a new line in our P&L called Product Revenue. This is the sum of product sales and alliance revenue, which better characterizes the performance of sustainable revenue both from products sold by AstraZeneca and revenue share from partnered products. Product revenue grew by 10% in the first quarter.

Next slide. Turning to our core P&L. We saw a total revenue gross margin of 84% in the first quarter, benefiting from product sales mix and some favorable FX movements. Please note that we will report gross margin based on total revenue going forward rather than product sales. The gross margin percentage based on total revenue reflects the totality of the cost associated with creating it including pay aways to our alliance partners of gross profit shares that are booked in the cost of sales relating to markets where AstraZeneca leads commercialization and books product sales.

As previously stated, in relation to product sales gross margin, we anticipate that total revenue gross margin will decline around 60 to 70 basis points in 2025. The decline is driven by the Part D redesign, anticipated VBP inclusions in China, Soliris biosimilar competition and increased profit share relating to partnered products.

We anticipate a lower gross margin in the second half of the year, driven by some of these such as VBP as well as the usual seasonal pattern for certain medicines, such as FluMist.

Total operating expenses increased by 9% in the first quarter, below top line growth of 10%. Core R&D costs increased by 16% and represented 23% of total revenue, driven by new trial starts and investments in transformative technologies such as cell therapy. We continue to anticipate core R&D cost to be in the low 20s percentage range for the full year.

Core SG&A costs increased by 4% and as anticipated, continued to grow at a slower rate than total revenue. The core operating profit margin was 35% supported by favorable cost phasing and a higher gross margin this quarter. Similar to prior years, we anticipate a lower margin in the following quarters, primarily relating to the gross margin effect I mentioned above.

The core tax rate was 16%, benefiting from a favorable settlement in the quarter and is anticipated to remain 18% to 22% for the full year. Core EPS of $2.49 represents a CER growth rate of 21%.

Next slide. Our cash flow continues to improve. Cash inflows from operating activities increased to $3.7 billion in the quarter. We saw CapEx of approximately $500 million, which will increase in future quarters and we continue to anticipate CapEx to increase by around 50% this year versus 2024.

Deal payments of around $800 million included $175 million milestone payable to Daiichi Sankyo for Enhertu DESTINY-Breast06 U.S. approval. Our net debt increased by $1.5 billion to $26.1 billion, with the increase driven by the dividend payment of $3.3 billion in the first quarter.

We remain comfortable with our level of debt and the current net debt to adjusted EBITDA ratio stands at 1.5x. Building on Pascal's comments earlier, we are reiterating our full year 2025 guidance, anticipating total revenue growth of high single-digit percentage and core EPS growth of low double-digit percentage at constant exchange rates.

Based on the March average FX rates, we continue to anticipate a low single-digit percentage adverse impact on total revenue and have updated our FX guidance for core EPS to low single-digit adverse impact previously mid-single digit.

With that, please advance to the next slide, and I will hand over to Dave, who will take you through the performance of our oncology and hematology business.

[David Fredrickson, executive]

Thank you, Aradhana. Next slide, please. Oncology total revenues grew 13% in the first quarter to $5.6 billion with strong double-digit growth across the U.S., Europe and emerging markets.

Turning now to quarterly performance for our key medicines. I'd like to talk first about our oral oncolytics performance in the U.S., which includes Tagrisso, Calquence, Lynparza and Truqap.

Across these medicines, we saw an increase in the proportion of Medicare Part D patients following implementation of the $2,000 co-pay cap, which led to fewer patients on free goods and increased adherence. These dynamics helped to partially offset the gross to net impact following Part D redesign.

Tagrisso delivered 8% growth in the first quarter, reflecting strong demand across all indications, including accelerating demand for FLAURA2 in the U.S. and Europe and strong launch uptake for LAURA in unresectable Stage III setting.

Strong underlying demand in Europe was partially impacted by pricing pressure in certain major markets, and we anticipate continued growth over the balance of the year across all indications.

Calquence total revenues increased 8% in the first quarter. Starting with the U.S., volumes increased over 20%, reflecting sustained BTK inhibitor leadership in frontline chronic lymphocytic leukemia and accelerating launch momentum for ECHO in mantle cell lymphoma. Following recent Medicare affordability improvements, the proportion of Medicare Part D Calquence patients has increased by 10 percentage points over the past year.

In Europe, Calquence continues to gain market share in an increasingly competitive environment. Looking ahead, we see potential for meaningful new growth opportunities, including the fixed duration AMPLIFY regimen in CLL and continued demand for ECHO and MCL.

Lynparza remains the leading PARP inhibitor globally with 5% growth in the first quarter. We anticipate further volume growth globally which will help offset pricing pressure in Europe and the potential impact of VBP inclusion in China, which we expect from the middle of the year.

Truqap delivered a $132 million in first quarter revenues and is now approved in all major markets. In the U.S., continued market leadership in the second line biomarker altered population was offset by destocking of the blister pack following the inventory buildup in the fourth quarter. Impressively, 1 year post launch, Truqap has achieved nearly 100% market share in the AKT PTEN biomarker altered population with additional opportunity for growth in the PIK3CA population.

Turning now to the rest of our portfolio. Imfinzi and Imjudo delivered 16% and 13% growth, respectively, reflecting continued demand in lung and liver cancers across major markets. We look forward to expanding Imfinzi adoption in bladder and lung cancers following recent approvals for NIAGARA, ADRIATIC and AEGEAN in the U.S. and Europe.

Enhertu total revenues grew 34% in the first quarter, reflecting continued market leadership for DESTINY-Breast03 and 04 as well as impressive growth in China following NRDL enlistment in January.

We continue to see encouraging launch momentum for DESTINY-Breast06 in the U.S. and are excited about the recent European approval, which will help move Enhertu into chemo-naive and HER2 ultra-low settings.

We're off to an encouraging start with the launch of Datroway in hormone receptor positive HER2-negative breast cancer. Feedback from the breast cancer community reinforces the improved convenience and favorable GI toxicity profile seen with Datroway in the TROPION-Breast01 trial. We're excited about the outlook for our oncology portfolio over the balance of the year as we continue to expand the reach of our transformative medicines.

With that, please advance to the next slide, and I'll hand over to Susan to cover key R&D highlights from the quarter.

[Susan Galbraith, executive]

Thank you, Dave. Over the past few months, we've had several key oncology data readouts that mark important steps towards achieving our 2030 ambition. In February, we were very excited to announce the positive high-level results for camizestrant, the first next-generation oral SERD to have a positive readout in the first-line setting in hormone receptor-positive metastatic breast cancer with emerging ESR1 mutations.

SERENA-6 demonstrated a highly statistically significant and clinically meaningful improvement in progression-free survival. And whilst time to second progression and overall survival remain immature, a trend to improvement in time to second progression was also observed.

This trial also demonstrated the combinability of camizestrant With 3 CDK4/6 inhibitors and show that the combinations are well tolerated. SERENA-6 is the first step to establishing camizestrant as the endocrine backbone of choice across ER-positive breast cancer setting and has the potential to redefine treatment for patients with HR-positive metastatic breast cancer and emerging ESR1 mutations.

Last month, we were delighted to share positive high-level results for MATTERHORN, a key indication expansion opportunity for Imfinzi. In MATTERHORN, perioperative Imfinzi in combination with FLOT chemotherapy demonstrated a statistically significant and clinically meaningful improvement in event-free survival as well as a strong trend in overall survival versus perioperative chemotherapy alone in patients with resectable early stage and locally advanced gastric and gastroesophageal junction cancers.

MATTERHORN is the third successful perioperative trial for Imfinzi following on from AEGEAN and NIAGARA and it underscores the value of this approach to treatment. This trial represents another blockbuster opportunity, expanding our presence in GI cancers and unlocking further potential for Imfinzi.

The practice-changing data from SERENA-6 and MATTERHORN will both feature as ASCO plenary this year, making this the seventh year in a row. AstraZeneca data has been included in the plenary sessions at ASCO.

Finally, just over a week ago, we were also excited to share the high-level results from the interim analysis of DESTINY-Breast09. This trial demonstrated the combination of Enhertu and pertuzumab resulted in a highly statistically significant and clinically meaningful improvement in progression-free survival versus standard of care 3-drug regimen, THP.

There were no new safety signals for the combination. And whilst not mature, Enhertu plus pertuzumab demonstrated an early trend to overall survival benefit. DESTINY-Breast09 is the only ongoing first-line trial in HER2-positive metastatic breast cancer population in which investigational therapy is initiated upfront at the onset of treatment and moves Enhertu align earlier in a broad HER2-positive population, with the opportunity to once again redefine management of this disease.

We continue to follow up in both the combination and monotherapy arms. In addition, we're delighted to share that our TROP2-NMR companion diagnostic codeveloped with Roche Tissue Diagnostics has now been granted breakthrough designation by the FDA for use in the TROPION-Lung17 trial which will investigate Datroway in the second-line TROP2-NMR-positive patient population. This underscores the potential of this practice-changing technology, both for Datroway and the broader AstraZeneca portfolio.

Next slide, please. We continue to progress our transformative technologies with the potential to disrupt treatment paradigms and deliver sustainable growth beyond 2030. At the Society of Gynecologic Oncology Annual Meeting this year, we shared Phase I/II data for puxitatug samrotecan, also known as P-Sam, in endometrial cancer. These data demonstrated an encouraging durable update of response rate of 35% to 38% and a promising median progression fee survival of 7 months in the B7-H4 IHC-positive population, alongside a manageable safety profile.

These data provide us with additional confidence in P-Sam and supports our decision to start the Phase III trial in endometrial cancer later this year. P-Sam is 1 of our 6 AstraZeneca ADCs, all of which continue to progress at pace in the clinic.

And with that, please advance to the next slide, and I'll pass over to Ruud to cover biopharmaceuticals performance.

[Ruud Dobber, executive]

Thank you so much, Susan. Please move to the next slide. Our Biopharmaceuticals medicines delivered a strong start to 2025 with total revenue reaching $5.6 billion in the first quarter, reflecting a growth of 12% compared to the first quarter of 2024.

Farxiga revenues exceeded $2 billion for the first time driven by continued demand across chronic kidney disease and heart failure. The strong foundation we have built with Farxiga will support the potential launch of 3 fixed dose dapagliflozin combinations already in Phase III development. Total revenue in the United States was down 90% versus last year, when revenues benefited from the launch of an authorized generic and the stocking impact is brought with it.

In China, we anticipate that Farxiga, along with roxadustat, will be included in the VBP program from the middle of the year. We're also expecting to see general competition for Brilinta enter the U.S. market in the coming months. Even so, we expect that the growth drivers in our biopharmaceutical's portfolio this year will clearly outpace the headwinds.

Lokelma remains the market leader in an expanding potassium binder class, delivering $153 million in the first quarter and growth of over 35% for the fourth consecutive quarter. R&I delivered another strong quarter, up 13% to $2.1 billion in revenue.

Fasenra, Tezspire, Saphnelo, Breztri and Airsupra now make up just over half of our R&I total revenue, and their combined revenue contribution grew by 40% in the first quarter. Fasenra and Tezspire, both benefited from their strong positions within the fast-growing market for respiratory biologics.

Fasenra increased its IL-5 class leadership for severe eosinophilic asthma patients supported by the recent launch in EGPA. Tezspire achieved leading new-to-brand share in key markets with strong launches across Europe.

Our other inhaled medicine, Pulmicort, saw a drop of 26%. The decline was driven by China, due predominantly to a milder winter and continued generic competition.

In V&I, Beyfortus revenues more than doubled, supported by the recent expansion of manufacturing capacity. This year, we are looking forward to several important readouts for biopharmaceutical medicines. Breztri in asthma, Fasenra in COPD and Saphnelo's subcutaneous formulation. We have completed regulatory submissions in all major markets for Tezspire in nasal polyps.

We will also have our first Phase III readout for baxdrostat, a new molecular entity with the potential to deliver over $5 billion in peak year revenue.

With that, I will now hand over to Sharon to share updates across our biopharmaceuticals pipeline in the quarter.

[Sharon Barr, executive]

Thank you, Ruud. I would like to take a moment to highlight our progress this quarter within the biopharmaceuticals pipeline. At the American College of Cardiology, we were excited to present the positive Phase IIb data for our novel oral small molecule PCSK9 inhibitor, AZD0780, demonstrating a significant LDL cholesterol reduction on top of standard of care and the potential best-in-class profile in patients with hypercholesterolemia.

The data from PURSUIT which were also simultaneously published in the Journal of the American College of Cardiology, found AZD0780 resulted in a 50.7% reduction in LDL-C versus placebo when dosed once daily on top of standard-of-care statins.

Similar efficacy was observed regardless of whether patients received moderate- or high-intensity statin doses at baseline and AZD0780 was well tolerated with a similar frequency of adverse events compared to placebo, consistent with the Phase I data we shared last year.

Importantly, as an oral small molecule, AZD0780 offers the advantage of favorable once-daily dosing with no food effect or need for fasting requirements. This convenient profile could enhance patient compliance and has the potential to expand access to this class of medicines beyond its reach today. Dyslipidaemia remains a substantial public health concern, placing patients at risk of severe cardiovascular outcomes, including stroke and death and results in approximately 4.4 million deaths per year.

Based on the data from PURSUIT, we are progressing AZD0780 into Phase III at pace, and we will simultaneously initiate 3 pivotal Phase III trials in the coming months. The first will investigate LDL-C reduction; the second will focus on heterozygous familial hypercholesterolemia; and the third is a cardiovascular outcomes trial.

The outcome study will target the prevention of cardiovascular events in patients with a history of atherosclerotic cardiovascular disease and those at high risk of experiencing an ASCVD event. We look forward to updating on future opportunities to use AZD0780 in combination with statins and other small molecules in our broad CVRM portfolio.

We believe that AZD0780 has the potential to be a $5 billion-plus asset and an important option for patients who urgently need novel approaches to improve their outcomes.

And with that, please go to the next slide, and I'll pass over to Marc to cover rare disease.

[Marc Dunoyer, executive]

Thank you, Sharon. Can I have the next slide. Rare Disease delivered total revenues of $2 billion in quarter 1, reflecting stable performance year-on-year. While patient numbers continue to grow across medicine and indication year-on-year, there are several factors impacting revenue growth in the first quarter.

Ultomiris grew 25%, driven by patient demand across indications, partially offset by competition in Generalised myasthenia gravis and paroxysmal nocturnal haemoglobinuria and to a lesser extent, from Part D redesign in neurology indications. We expect Soliris revenues to continue to decline due to a successful conversion to Ultomiris, which has launched in all four shared indications as well as biosimilar pressure in Europe and unfavorable order timing in certain tender markets.

As a reminder, biosimilars for Soliris have now launched in the United States for PNH, atypical HUS and myasthenia gravis. Beyond complement, Strensiq grew 14%, driven by continued patient demand, moderately offset by some impact from Part D redesign. Koselugo grew 8%, driven by patient demand, partially offset by unfavorable order timing in tender markets. Despite these headwinds, we continue to expect growth across the rare disease portfolio in 2025, but at a slower pace than was seen in 2024.

During the quarter, Beyonttra, formerly acoramidis, was approved in Japan for the treatment of adult with transthyretin-mediated amyloid cardiomyopathy. This is an exciting step forward in our progress to deliver an industry-leading amyloidosis portfolio.

Please advance to the next slide. During the quarter, we received positive news from single-arm pediatric study of Ultomiris in HSCT-TMA. HSCT-TMA is a rare type of thrombotic microangiopathy, a severe complication of hematopoietic stem cell or bone marrow transplant and is associated with significant morbidity and mortality.

In the Phase III study in pediatric patients, Ultomiris demonstrated improvements in the individual components of TMA response such as platelets, LDH, urinary protein creatinine ratio as well as overall survival. We wait high-level results from the placebo-controlled Phase III trial in adult and adolescent in the second half of the year and look forward to sharing data with regulatory authorities.

This is the first indication expansion opportunity for Ultomiris beyond the Soliris level, representing a potential blockbuster opportunity on a risk-adjusted basis. As outlined on our Investor Day last year, we continued to build out our rare renal pipeline, expanding into post-transplant diseases.

We are initiating the Phase III adult trial of Ultomiris in delayed graft function, or DGF. With Ultomiris immediate, sustained terminal complement inhibition, we believe it is uniquely positioned to help reduce inflammation in renal injury, ultimately extending kidney transplant organ longevity.

In the quarter, we also announced our Phase III CALYPSO trial, studying eneboparatide in chronic hypoparathyroidism patients which met the composite endpoint, showing a statistically significant normalization of serum calcium whilst simultaneously reducing dependence on daily calcium and vitamin D supplements. We have made changes to the trial protocol to allow patients to receive a higher dose based on patient response and additional efficacy analysis will be measured at 52 weeks.

This will help to further characterize eneboparatide's risk benefit profile. 2025 is a catalyst rich year for rare disease portfolio with 4 Phase III trials due to readout, 3 of which are NME opportunities.

And with that, please advance to the next slide, and I will hand back to Pascal.

[Pascal Soriot, executive]

Thank you, Marc. Next slide, please. We've made a strong start to the year with several important readouts already in hand. But this is only the beginning. As you can see on this slide, the number of high-value upcoming catalysts we have through the end of 2025 is quite remarkable. And together, they represent over $10 billion in potential peak risk-adjusted -- potential risk-adjusted peak year revenue, sorry.

Next slide, please. In closing, already this year, we are tracking well towards our 2030 ambition. We expect continued growth from all of our therapy areas over the balance of the year and across key geographies. Importantly, global demand for our medicines is expected to offset the known headwinds. As evident from our results in these and prior quarters, we remain focused on delivering operating leverage while continuing to invest in our pipeline and in transformative technologies to support our growth to 2030 and beyond. And lastly, we are on track to deliver at least 20 new medicines by 2030 with 9 delivered already, an accelerating pace of new approvals is anticipated across our portfolio.

Please advance to the next slide, and we will move to the Q&A. [Operator Instructions]. With that, let's move to the first question.

[Pascal Soriot, executive]

Sarita Kapila at Morgan Stanley. Sarita, over to you.

[Sarita Kapila, analyst]

It's Sarita at Morgan Stanley. So firstly, how should we think about the impact of the Medicare Part D redesign in the U.S. as we move through the year? Was it mostly Q1 weighted or do you expect further impact from here? And if you could help frame or quantify the overall impact for the full year and comment on the underlying outlook for '25 in oncology, that would also be useful?

And then just a quick one AVANZAR. Perhaps you could talk about the confidence around the QCS biomarker? And if there are any examples about a retro biomarker -- a retrospective, sorry, biomarker translating to the prospective setting? And talk about the rationale for using Imfinzi as the backbone versus Keytruda peers? And does that increase the risk of the trial?

[Pascal Soriot, executive]

Thanks, Sarita. Maybe, Dave, you could take the first question and Susan, the second one.

[David Fredrickson, executive]

Absolutely. Sarita, thanks for the question. In terms of your specific question, I would think of Part D as a rebasing that happens at the beginning of this year and then all volume growth that we're able to have from here is going to be against that rebased number.

And the reason for that is that catastrophic is triggered on the very first fill within our oral oncology products. So it will not grow from here. It's a rebased number from here. Obviously, it grows as our volumes grow within Part D. But I think to put this into some context and maybe I'll just talk specifically about Tagrisso, because I think it's a good example.

In the U.S., we saw a 20% increase in volumes from our ongoing launches of FLAURA2, ADAURA, LAURA, all going really, really well. Together with reduced free good utilization and some price increases that offset the gross to net impact from Part D redesign. So we saw revenue growth of 9% in the U.S., volume growth of 20%.

And I think that importantly, the new patient start and TRx data show that we're also really managing competition well with FLAURA and FLAURA2. And we expect continued revenue growth throughout 2025 within this. So I think full year outlook on our oral oncolytics remains strong. We've got good growth drivers that we're able to operate against. And as long as we continue to navigate against those key performance indicator as well. I'm confident that we will grow from this rebasing period.

[Pascal Soriot, executive]

Thanks, Dave. And maybe just to add, Sarita, is that they've said a 20% volume growth on Tagrisso, we have more than 20% volume growth on Calquence. And the important piece is that this year, we have this, of course, one-off Part D price resetting, if you want, but the volume growth further supported by new indications for both Calquence and Tagrisso will really support well our growth into '26 and beyond. So I think for those products, we can have a fairly optimistic outlook in the U.S. but also beyond the U.S.

Susan, do you want to take the second question?

[Susan Galbraith, executive]

Yes, sure. Thank you. So just as a reminder for AVANZAR, we have taken the learnings that we had from TROPION-Lung01 and made changes to AVANZAR, which should include focusing on the clinically meaningful benefit that we saw in TL01 in the non-squamous patient population and allowed us to enrich for that.

And then what we also have done is embed the QCS biomarker. So in terms of your question about that, the confidence that we have in QCS is based on our understanding of the mechanism that we have with Datroway, which is dependent not just on the surface expression of TROP2, but the amount that gets internalized and that's embedded into this NMR QCS positivity.

I also have said that the data that we have seen from the TROPION-Lung01, we have seen similar trends in other data. I'll point out that we have an update on the TROPION-Lung02 data set that we presented at ASCO, which will include an analysis of the QCS data and of course, that's important because it's in TROPION-Lung02, it's the combination also of Imfinzi and with an IO agent and with the combination with platinum.

So I think the confidence is built on seeing the similar effects in multiple data sets and embedded on the mechanism that we understand for why Datroway is active and differentiated.

And in terms of Imfinzi activity, I think that the number of positive Imfinzi trials in a number of different settings is further proof of the relevance of that mechanism of action. And again, we have data in TROPION-Lung04 and TROPION-Lung02, which are very consistent across different IO checkpoint inhibitors. So we remain confident in the combinability of Datroway with Imfinzi and the application of that into the important patient population in first-line non-small cell lung cancer.

[Pascal Soriot, executive]

Thank you, Susan. The next question is from James Gordon at JPMorgan. James, over to you.

[James Gordon, analyst]

James Gordon, JPMorgan. First question was on the oral PCSK9. So you had strong Phase II data, and you've announced the Phase III program today and flagged the $5 billion plus peak sales. But competitor injectable PCSK9 uptake has been slower than we've anticipated. So can you talk about how you're now thinking in terms of how much orals will expand the market? And how dominant share you think your product would have of the oral opportunity to get to your $5 billion-plus? What are you thinking there? And when this could potentially launch? So you said what the three programs would be, but when could you have the pivotal data? That's the first question, please.

Second question, U.S. manufacturing. So you source the majority of the U.S. product from the U.S. Are you considering any incremental U.S. manufacturing investments? And could that be accommodated within the existing circa $3 billion of CapEx per year or might you need to step it up? Or could it be about reallocation?

And then, if I could just find a clarification on IRA and Part D redesign. So should we assume you already had the full pricing mix hit in Q1, but we could see further volume expansion due to greater affordability through the year so you could actually see revenues accelerate for some of these impacted products through the year? Or is it more like the absolute Q1 performance is the new run rate. So you've got the pricing mix already and you've had the volume uplift already. So do things accelerate further through the year? Or this is just the new normal already in Q1?

[Pascal Soriot, executive]

Thank you, James. So that's not two, but three questions. Thank you. So the first one is oral, I guess, oral PCSK9. Ruud do you want to take this one? Aradhana, you could take the second and Dave, back to you for the third one.

[Ruud Dobber, executive]

Yes. First of all, James, we need to realize that 70% of the patient population eligible for cholesterol-lowering drugs are not at goal. So we firmly believe that a product like an oral PCSK9 will substantially unlock the opportunity in order to serve a very large population across the world.

The second part is that we all know that the injectables we're facing quite a bit of an issue from an access perspective and oral PCSK9 probably will be priced at a lower level and hence, also in the emerging markets where we have a very strong footprint, I think the oral PCSK9 will fulfill a huge medical need.

And last but not least, I think the uniqueness of our oral PCSK9 is, it's a true small molecule. And I think Sharon articulated it very well. So we are also looking for, let's say, combinations of our oral PCSK9s, for example, with our own Crestor or Ezetimibe, and that makes, I think, the proposition, a potentially very big one.

[Aradhana Sarin, executive]

So James, on -- in terms of your question on CapEx and tariff related and what incremental investments that may be required. So two different things. One is, as it relates to some of the minority of the products that we do import from Europe into the U.S. we're already starting to take action as it relates to tech transfers and building some of the capacity there. But also note that we do have always a dual-source supply and so forth and also capacity within our existing facilities. So the incremental investment required for that to happen will be manageable.

In terms of the overall CapEx, so last year, as you know, we also announced a $3.5 billion CapEx and investment in the U.S. We've said this year that our CapEx would be 50% higher than last year. But going forward, we need to look at how the portfolio develops. So for example, if the oral GLP-1 is successful in Phase II as the PCSK9 progresses, as cami progress as baxdrostat reads out, we will then start to plan for success for these molecules, and we'll build and manage supply accordingly.

Dave?

[David Fredrickson, executive]

James, on your clarification question. So let me break down into the components. The first part is that at the beginning of the plan year, as we move from a co-pay cap of 3,300 to 2,000, we saw an increase in the number of patients or reduced number of patients in free drug program, an increase in the number of patients that came off a free drug and into the commercial program.

I think that is a onetime effect that you won't see the volume grow over the course of the year. However, the reduced abandonment rate, I do think grows over the year. And very much the revenue growth and the volume growth that we're seeing from FLAURA2, ADAURA, LAURA on Tagrisso is growth that we'll continue to see moving forward from this new rebased level that we're at in terms of where the Part D impact came from reform.

I would also note that there is one other dimension on Calquence, and we've spoken about this or I spoke about it last quarter. There are some contracting decisions that we took to secure preferred formulary access. Those are onetime impacts in terms of -- to gross to net that we probably will see in the quarter, and we'll grow volume against that as we pull through those contracts and get opportunity to really make sure that, that preferred access is translating into continued leadership in CLO.

[Pascal Soriot, executive]

Thank you. Dave. James, maybe if I can come back very briefly to the -- your first question, oral PCSK9. I think, it's important to keep in mind, you have 24 million people -- patients, people in the U.S. who have cardiovascular disease. 70% of them are not a target. They have a cholesterol level above 70. So it's a huge number of people who have established cardiovascular disease are not a target.

And then, I'm not even speaking about the population that has elevated cholesterol above 100 in a general population and are not treated. So potential for an oral agent that is priced at the right level, as Ruud explained, is really very, very large. So if our studies deliver, of course, we have to have good results, but we have good reasons to believe the product will deliver the opportunity to help patients and grow the product is quite enormous in the U.S. but also beyond.

Remember, Injectable PCSK9 are great products, but in Europe, they are very limited in terms of access because, of course, mostly. So again, if we bring a product that is more affordable, the potential there is quite enormous.

So we move to Rajan Sharma at Goldman Sachs. Rajan, over to you.

[Rajan Sharma, analyst]

Firstly, on DB09, could you just talk to the potential filing strategy there? Do you think you'll file the combination on before the monotherapy arm data are available?

And then secondly, just on a follow-up, actually to a comment that Susan made on ASCO data. And just to clarify, will that be QCS biomarker analysis of OS from TROPION-Lung01 that's available at ASCO?

[Pascal Soriot, executive]

Thanks, Rajan. For you, Susan.

[Susan Galbraith, executive]

Okay. And so just for the second one, just to clarify, what I was talking about we're going to present within the TROPION-Lung02 data set biomarker day looking at the QCS biomarker within that study, which I think will be helpful in addition to the data that we had from TROPION-Lung01.

And in terms of DESTINY-Breast09, obviously, we're in discussions with regulatory authorities. As we said, I think the data show a highly clinically meaningful results, and I think that will influence regulators, but those discussions are ongoing. And we also, I would just say, optimistic in terms of the potential for presentation of DESTINY-Breast09 data at ASCO.

[Pascal Soriot, executive]

Thank you, Susan. Sachin Jain, Bank of America. Over to you, Sachin.

[Sachin Jain, analyst]

Two questions, please. So firstly, Pascal, if you could just high level on U.S. pricing. Any high-level perspectives on Trump executive order? How you're thinking about U.S. pricing has been a lot from yourself and others in the media, so wondering if you could just touch on that?

And then secondly, for onc, I guess this is more for Dave, but SERENA-6, congrats on the plenary, I wonder if you could just reappraise us how you're thinking about the commercial opportunity relative to the $5 billion you framed for the molecule as a whole. Obviously, seeing the majority is SERENA-4, but if you could just comment to how you're thinking about SERENA-6 size and factors that we should be thinking around adoption in terms of testing duration of therapy, et cetera?

[Pascal Soriot, executive]

So maybe let me quickly comment on the first question, Sachin. I mean, U.S. pricing, of course, lots of potential outcomes here, but it's not very easy to comment, because nobody really knows. But it is clear that this is an issue that will be on the radar screen of many people.

The reality, I think, is that there has to be a rebalancing. And in fact, the U.S. has been funding innovation for our industry for a long time. And we believe that Europe has to invest a greater share of their healthcare expenses and that share has been declining steadily over the last number of years down to 7% of healthcare budget being allocated to innovative medicines in the U.K.

What can you do with 7% of your health care cost allocated to innovating medicines, of course, not much. So the investment in innovation, in pharmaceuticals in Europe has to go up. And what that means is for some products, higher prices that are closer to higher, certainly than they are today, maybe closer to the U.S., but importantly, also faster access and better access for patients. So at the end of the day, what happens in the U.S., we'll have to see, of course, there are ongoing discussions, as you can imagine.

But I really think the key piece is that Europe, at least, richer countries in Europe have to contribute more to pharmaceutical innovation, just like they have to contribute more to their own defense. So it's a relocation of GDP, which actually in terms of pharmaceutical innovation would be relatively modest. But that would enable a lot of accelerated access and certainly a pricing level that would enable to rebalance in the funding of that innovation between the U.S. and Europe.

And second question, Dave, do you want to cover that?

[David Fredrickson, executive]

Yes. So cami, broadly and really talking about the SERENA-6 opportunities. So I mean, as we think about camizestrant, Sachin, obviously, the program comprises early adjuvant breast cancer trials as well as metastatic studies. I think that if we're able to unlock an opportunity within the adjuvant setting and within SERENA-4 to the point that you raised, that really is going to do the lion's share of the work to get us to that $5 billion plus.

But SERENA-6 is such an important study. And the reason it's important is that there's 85,000 patients with frontline drug-treated hormone receptor positive HER2-negative metastatic breast cancer in the G7. And 2/3 of those patients are considered endocrine therapy sensitive and they're treated today with the CDK4/6 and in ET in the frontline setting.

And we know that 30% of those, so this is a pretty significant number, developed the ESR1 mutation during the course of the frontline treatment. And that ESR1 mutation is something that can be today detected with NGS testing. And NGS, at least in the United States, is fairly common among this population. So there is going to be work that we're going to need to do to incorporate this testing as part of the regular blood work that's being done.

But the access to the test and the test itself is something that is already incorporated into the workflow and into the practice. And it allows for us to, in addition to moving earlier than the other next generation surge, which gives us an opportunity for early experiences. I think, the likelihood that those experiences are going to be good ones is high. And I also think that the fact that we can use this on a backbone of multiple CDK4/6s is also really important. So those are the elements of SERENA-6 that I think are most noteworthy.

[Pascal Soriot, executive]

And maybe to add back again to your earlier question, Sachin. I want to make sure that everybody understands this price difference between the U.S. and Europe is not true for every product. I mean, there are lots of products that have a similar net prices. I mean, in Europe, you have a single price.

In the U.S., you have commercial, you have Medicare, you Video DoD, you have also Medicaid. And then, in commercial and Part D, we provide large amount of rebates and those rebates can be very, very large for some products. So if you look at things on a net basis, net of rebates, incorporating Medicaid, Video DOD, and sort of calculate a net price for the United States, if you could compare to the price in Europe.

For many medicines, the difference is actually very small and sometimes zero, actually no difference or very little. So really, we're talking about a few products. And as I said, Europe has to fund this innovation in a better way.

Steve Scala at Cowen. Over to you, Steve.

[Steve Scala, analyst]

I have two questions. Pascal, to sum up your tariff commentary in the prepared remarks, is it fair to say that under all contemplated scenarios and in light of AstraZeneca's actions over the next 2 to 3 years, tariffs are not material at the group level. Is that a fair conclusion?

And then, the second question is for Dave. On DB09, the press release stated that safety was consistent with the known profile of Enhertu, but it could be argued that in first-line setting, it needs to be better, especially regarding ILD. So what should be our expectations for the full data set? And will DB09 contribute to sales in 2025?

[Pascal Soriot, executive]

Thanks, Steve. So quick -- the first question. I mean, I'm not able to forecast every potential scenario. In the world we live in, we have to, I assume, any scenario is possible, even scenarios, we can't even imagine today. So it's hard to answer your question.

But what I can say is that, yes, I mean, within a period of time, which may be 2 years, any impact we have would actually be managed. As I said, first of all, the impact is limited, but importantly, the impact we have is time limited, because we are redeploying manufacturing instead of globalizing the manufacturing of one product in the U.S. for the world or in Europe for the world, we can actually share and sort of manufacture one product for the U.S. in the U.S. and the rest in Europe and vice versa.

So we have -- because of our network, we have the ability to shift manufacturing around, so yes, within a relatively short period of time, I mean, basically, these issues could be managed and are suddenly not material long term as we -- based on what we can see today.

[David Fredrickson, executive]

Steve, on your DB09 question, I mean, you'll have to go to the presentation to get into the details on the specific data within it. But I do think that what I would point to is that, when we speak to the results being statistically significant and clinically meaningful, that is an overall assessment of the benefit risk.

And I think that the trend in overall survival that we commented to is also something that underscores the entire benefit risk within that population is a very important study, 25,000 G7 frontline drug-treated HER2-positive patients. This is a study in a broad population.

And on your question on use in 2025. Obviously, we won't promote to anything before it's approved. We certainly do know that guidelines and presentations can result in markets, particularly in the U.S., where it's allowed for spontaneous use, but we'll have to see what the reaction is to the data after it's presented.

[Pascal Soriot, executive]

Thanks, Dave. Mattias Häggblom at Handelsbanken. Mattias, over to you.

[Mattias Häggblom, analyst]

Two questions, please. Firstly, for Pascal, on tariffs and drug pricing, but perhaps a different angle. Over the last couple of years, a handful of members, including AstraZeneca has left different industry associations like pharma. In recent weeks, we've seen a number of individual pharma executives share that perspective on the best path forward.

My question goes to what extent do you anticipate the industry to come together more in the near future in order to perhaps better leverage its message to different stakeholders and up the odds of a favorable path forward for the industry?

And then secondly, for Aradhana. It's now almost a year since the company shared its $80 billion revenue target for 2030, an ambition sometimes described as conservative within the investment community. From your perspective, any particular areas you'd like to point as to what the company's internal modeling still deviates materially from company compiled consensus?

[Pascal Soriot, executive]

It's interesting to hear the $80 billion is conservative, it's first time I hear it as he described. It's conservative, Mattias, but it's still -- it's still nice to hear that you believe in our portfolio. So I'll leave that answer to Aradhana.

The tariffs. Yes, I think the industry is coming together. I mean, basically, we have a couple of issues to resolve as an industry. One is tariffs. And of course, there are ongoing discussions that are industry discussions. But the other piece is, I think what is really important long term, it's probably less relevant near term, but it's mid- to long-term relevant is addressing this imbalance that exists between Europe and the U.S. as it relates to funding, innovative medicines.

Again, as I said, it's a question for you. It's a question of sovereignty and sovereignty of the -- health sovereignty for their European citizens. It's not only a question of price. People think it's a question of price sometimes. No, it's also a question of delay.

I mean, in many countries in Europe, patients have to wait 2 years, 3 years to get access or it's a very restrictive. So I think, with a reasonably modest increase of the share of GDP allocated to innovative medicines, the -- a lot of these things could be addressed and disappear. And I think that's an issue the industry is addressing collectively. And I believe, I hope that we can continue working together to address those two issues.

Aradhana?

[Aradhana Sarin, executive]

So yes, thank you so much for your confidence in our $80 billion number. We are working hard to achieve that. I think as we've mentioned both this time and when we announced our full year results, 2025 will really be a very important year. And this time next year, we should have a very good sense of where we stand on the trajectory to that $80 billion ambition.

The $80 billion is a risk-adjusted number. So this year, we will be reading out several studies, multiple in the rare disease portfolio, several in the pharma portfolio and of course, in oncology as well as the oral GLP product, which is in Phase II. So again, not everything will work. But on a risk-adjusted basis, by this time next year, we'll have a very good idea and confidence as to where we are on that $80 billion ambition.

To your question on where we see variances versus our own plan, I think there are multiple products, particularly in the biopharma portfolio, I think some of the respiratory products, some of the CVRM products, the oral PCSK9, I think now people are starting to appreciate that opportunity, the amyloidosis.

So I think, there are several products in the biopharma and the rare disease portfolio as well as in the oncology portfolio, I think we're not really getting any credit for the investments we are making in our own ADC pipeline that Susan highlighted as well as other investments we're making in cell therapy. So there are several areas of variances, but those are the major ones. Thank you.

[Pascal Soriot, executive]

Thank you, Aradhana. Matthew Weston, UBS. Matthew, over to you.

[Matthew Weston, analyst]

Two questions, please. The first for Susan on AVANZAR. Based on our feedback, a lot of investors are nervous and would like to basically see this one out of the way so they can concentrate on the rest of the rich catalyst path that you and Pascal laid out. Now clearly, you might disagree. But I wonder if there's any color you can give us on how events are tracking and when we might see the data within the second half of the year?

And then, a second one for Aradhana, please. The 2024 annual report calls out $561 million of benefit of intellectual property incentive regimes in your tax paid, President Trump has called out low U.S. tax payment by pharma as a frustration alongside manufacturing locations. Pascal obviously has made the reassuring comments around manufacturing and tariffs, but have you had any interaction with U.S. authorities on how you use IP licenses to take profit out of the U.S.?

[Pascal Soriot, executive]

So AVANZAR, Susan, you could cover this; and of course, Aradhana, second one. I don't want to steal the Aradhana's thunder, but I think it's important maybe to signal that, of our distribution of taxes around the world, in the U.S., we have a fair amount of our proportion of taxes spread in the U.S.

So I don't think we are in a position where people could say we are optimizing tax to the extent we don't pay our fair share of taxes in the U.S. We do pay our fair share of taxes in the U.S. I'm sure Aradhana doesn't want to give the details, but I can tell you, we pay a fair share of taxes in the U.S. AVANZAR for Susan and the second question, Aradhana.

[Susan Galbraith, executive]

Yes. Thank you, Matthew. So in terms of AVANZAR, just a couple of things. AVANZAR could ahead of time, which shows the enthusiasm that the investigator population had for this study. We guide by half, and we expect -- we do expect the results in the second half of this year and I see no reason why that's going to be delayed beyond the end of the year.

[Aradhana Sarin, executive]

On your second question, as Pascal mentioned, we do pay our fair share of taxes in proportion to our revenues in the U.S. We do take advantage, obviously, of transfer prices. But I think the numbers you are mentioning that are mentioned in the annual report, relate much more to things like patent boxes and where governments do provide incentives for research and so forth in R&D funding. So we're always trying to optimize how we manage and plan our taxes globally. So that's all the detail we can provide at this time.

[Pascal Soriot, executive]

Matthew, I mean, I don't think I would disagree with you that AVANZAR, it's an important event for us this year, but we have many other events, but [ DB09 ] is another major event. We have major -- quite a number of major events throughout the year in the pipeline.

We've already derisked the major one with DB09 of course, so it's an important event, I don't disagree, and we all are waiting for that readout for sure, but we have many others.

So next question is from Justin Smith at Bernstein.

[Justin Smith, analyst]

Just a quick one for Marc. Ultomiris, just wondered if you could just provide a bit more color with regards to increased competition. Is that potentially due to price? Just asking because obviously, one of your competitors, particularly in the MG space is emphasizing that more innovation should be driving market expansion?

[Marc Dunoyer, executive]

So the -- first of all, thank you for the question. The competition that we have is obviously from Ultomiris, is mostly from novel medicines. The category of myasthenia gravis, as an example, has grown dramatically over the last 3 or 4 years, the branded part of the market is growing very strongly every year.

The Ultomiris has key position in this market, but obviously, other mechanisms have an attraction for people who are switching from the steroids or immunosuppressant as a first-line treatment. Ultomiris is also competing in that segment, but it's not the only mechanism available. So we have -- it's mostly a competition from novel medicine rather than biosimilars.

Biosimilars obviously competes against Soliris. But as we have now converted mostly Soliris to Ultomiris in the four indications, this -- the competition in the future will be coming from the novel medicines.

[Pascal Soriot, executive]

Thank you, Marc. Seamus Fernandez at Guggenheim. Over to us, Seamus.

[Seamus Fernandez, analyst]

So two quick questions. So Pascal, you commented on the pricing dynamics and concerns that have been raised. But you haven't commented on the opportunity for the HHS Secretary to work with Congress to align the incentives for small molecules with large molecules. Just wondering your thoughts on that as well as kind of a backward-looking dynamic with regard to already negotiated small molecules in the context, including Calquence?

And then separately, I just wanted to ask a little bit for directional predictions that you believe DB09 may have, as it relates to potential success of Enhertu in the adjuvant setting?

[Pascal Soriot, executive]

Thank you, Seamus. Yes, I mean, the first point, thank you for reminding us of this. I mean it is definitely -- I mean, Congress still has to vote on this, of course, and confirm it. But it is definitely something that goes in the right direction for the industry in general and for us in particular.

I mean, of course, our existing medicines, but I can't think of camizestrant, which will be a very major medicine, we believe, will certainly benefit from this. I think also we can take heart of what we could see as potential willingness to address this 340B issues. I mean, it is something that we, as an industry, but certainly we as a company, have been pushing back on, because we believe that a number of participants are abusing this -- have been abusing this 340B regulation.

And it was nice to see that there is a report now that has been provided to the Congress that confirms what we have been saying for a long time. So there's a couple of things that actually are going in the right direction, you're absolutely right. And I think the industry would benefit and we would benefit.

DB09, Susan, do you want to cover that?

[Susan Galbraith, executive]

Yes, sure. So just as a reminder, in the DB09 study, you're taking on a 3-drug regimen. I think, the fact that we've seen a highly statistically significant and clinically meaningful improvement with the combination of pertuzumab and Enhertu speaks to the power of Enhertu to address that and builds on the data that we have with DB03, DB04 and DB06.

If you look at the other early trials, DB11 is in patients that are in the neoadjuvant setting and again, aims to improve on the current standard of care in that neoadjuvant setting, which has multiple drugs, it's actually five drugs is the current standard of care with AC as well as the THP regimen.

And then DB05 is in patients who have residual disease after surgery. So post-neoadjuvant and around half of those are considered high risk, which is the node-positive patients. So that's a subgroup whether KATHERINE trial that with trastuzumab DM1 demonstrated less benefit. And given the DB03 data where we've already had a head-to-head comparison with that, we do believe that Enhertu can make a difference in both of those settings. So I hope that gives you context for the potential readouts for DB05 and DB11.

[Pascal Soriot, executive]

Thank you, Susan. Next question is from Simon Baker, Redburn. So over to you, Simon.

[Simon Baker, analyst]

Two questions, if I may, please. Firstly, one for Dave. You talked about the gradual impact on discontinuation rates from Part D redesign, I appreciate it's a bit early to start talking about what the impact is, but could you talk about the point from which we start in terms of where we are now in terms of financially motivated discontinuation rates?

And then secondly, one for Sharon. I noticed from the trial appendix that MEDI1814 in Alzheimer's and MEDI0618 in migraine have both been removed from the pipeline. As far as I can see, that removes all neuroscience assets from the biopharma pipeline. Is that just coincidence or does that mark a strategic shift in R&D priorities?

[Pascal Soriot, executive]

Dave?

[David Fredrickson, executive]

Simon, we have seen in the past, and we haven't given specific percentages on this, but we've seen, I would say, kind of an important minority of the total oral packs that we ship are historically free drug that we ship. And so those are things that, historically, we've seen as abandonment.

Now whether or not that's been abandoned at the first script or that's at a refill, because there's a discontinuation that happens down the road, that's much more difficult to parse out. But we've absolutely seen -- and we've put into place a number of measures as co-pay capping came down from uncapped to last year's 33 to this year's 2000, we have absolutely seen a reduction in that free goods utilization. I don't have a big expectation of seeing a lot of further improvement in free goods, because it's really come down pretty significantly.

I think that the best opportunities for us to grow coming from here is going to be, as always, new indications. Tagrisso continuing to drive FLAURA2, LAURA, ADAURA, AMPLIFY and ECHO on Calquence. That's our opportunities to really come from this rebaseline spot that we're at to now drive growth from here over the course of the period of the multiple quarters that sit in front of us.

[Pascal Soriot, executive]

Thank you, Dave. And just to repeat again, so that you don't forget these the messages. Tagrisso is growing by 20% in volume, Calquence by more than 20% in volume. So Tagrisso and this momentum, add what Dave just said in terms of new indications. And you can imagine that as we whether this Part D repricing, which is a one-off this year, that will take us into '26-'27 with a renewed momentum for these very important medicines. Sharon?

[Sharon Barr, executive]

Thanks for the question, Simon. In R&D, prioritization is always important. So as you noticed, we have closed our neuro programs and identified partners for some of them, this represents the closure of our neuroscience group at AstraZeneca. And importantly, it allows us to focus on our core therapeutic areas and fund our high-value programs.

You've heard our excitement about things like weight management, about dyslipidemia, about our very important respiratory portfolio and our growth in immunology. And so this prioritization helps us to reinvest in the programs that we think are important for AstraZeneca.

[Pascal Soriot, executive]

Thank you, Sharon. Yes, we have things that you haven't seen yet, because they are in early development, and we don't speak much about this. But things like inhaled biologics, the immune portfolio that has been really progressing and it's shaping up nicely. So there's a lot of things we can fund and we cannot be everywhere. So CNS really is probably better managed by other companies that have a focus on that.

Rajesh Kumar, HSBC. Rajesh, over to you.

[Rajesh Kumar, analyst]

Just on PCSK9, if you could give us some idea on the time lines of when are we expecting the trials and updates in terms of the development timelines, is similarly on SERENA-6 as well of filing timelines if we have, any clarity on that one?

And a second slightly broader question. I appreciate there is a lot of interest on AVANZAR, and we are all nervously waiting for the readout. But we can easily confuse the details for the bigger picture. So can you elucidate your broader strategy around that? What -- where do you think -- what is the total potential of the product across indications and how do you see that develop, I would appreciate that?

[Pascal Soriot, executive]

So the first question, maybe, Sharon, you can take; SERENA-6 for Susan; and the last one is for you, Dave, I guess.

[Sharon Barr, executive]

Sure. And thank you for your interest in PCSK9. You hear our excitement about this molecule. And as I mentioned today, we are launching 3 Phase III studies and moving at pace. We expect to have our pivotal study in LDL lowering initiated by the end of this year.

Now we won't comment broadly on the readout time lines for these pivotal studies. But you heard us tell you that we're moving forward with a sense of urgency that we are running a combined primary and secondary outcome study. And that we think that we'll be able to launch with our LDL-lowering study, while moving ahead in parallel with our outcome study that will help facilitate market uptake. So continue to watch this space.

[David Fredrickson, executive]

So Rajesh, on the bigger picture question on Datroway, and I appreciate you asking it. I mean, I think that understandably because AVANZAR is the first frontline lung cancer study to read out, there is a lot of interest within it. But I do think it's important to not look at it just within isolation.

There's multiple opportunities for Datro as a monotherapy, particularly as we take a look at size like TL17 that now look at prospective definition of a biomarker population. And Susan commented on this before, and we've quite a lot in the past. The work that we've done with the QCS biomarker, I think, is really evidence to how we're leveraging this convergence of science data and technology to be able to try to better and more precisely identify patients who can benefit potentially from Datroway.

Also though in combination, and there's multiple combinations that we look at. There's combinations with IL. There's also combinations with Tagrisso in EGFR-mutated and we're looking at combinations, not just with PD-1, PD-L1, but also with our bispecific portfolio.

So I think that that's the context within which I put data. We're underway already in the U.S. in breast cancer. I would note that we are seeing that over half of the accounts that have placed their first order for Datroway have also had repeat utilization, so that's a really encouraging sign.

And it also underscores the high unmet need and willingness to be able to bring a more precise chemotherapy with a profile like Datroway's to replace classical chemotherapy in settings where classical chemotherapy has long been relied upon.

And I guess, Pascal made the last point, which is, let's not look at it in isolation. There's an entire portfolio of many readouts that we've got an opportunity also, and you've already seen whether it's MATTERHORN, SERENA-6, DB09, AMPLIFY that also go alongside that.

[Pascal Soriot, executive]

Thanks, Dave. Luisa Hector, Berenberg. Luisa, over to you. Sorry, yes, SERENA-6, Susan, go ahead, yes.

[Susan Galbraith, executive]

So thank you for the question about SERENA-6. We're very excited to see the data come to the ASCO plenary. And I think selection of the ASCO plenary just reflects what they are seeing about the the overall benefit risk that's seen in that trial. So obviously, as we always do when we got a readout, we'll be in discussions with regulatory authorities, and I can't comment on that specifically because that's ongoing.

But what I would say is that when you see compelling data, first of all, we will work very diligently to get the submission happening rapidly. And then, we'll also get -- we've had other examples of when we see compelling data, we get opportunities for things like priority review. So let's wait and see how that progresses. And I'm very happy to talk about the SERENA-6 data once you've seen the data at ASCO.

And if I could just take one more opportunity, I just will say that as well the overall enthusiasm from investigators about the camizestrant program is substantial. The adjuvant studies are a really exciting opportunity, and I'm very pleased to share that we've actually achieved our target sample size in the CAMBRIA-1 study, just very recently, which is also ahead of plan. So I think it just reflects the enthusiasm that we're seeing about this overall program. Thanks.

[Pascal Soriot, executive]

I'm sure you've all heard that Susan loves camizestrant. So Luisa, over to you now.

[Luisa Hector, analyst]

I have two questions, please. On obesity, has your perspective on the market and AstraZeneca's potential role in that market evolved given recent competitor data?

And then on China, thank you for the update in the press release. Do you think we can draw a line here under all the investigations or is there anything else we should have in mind as we go through the year? And perhaps just a quick comment on your market share holding up in Q1 in China, is that all intact and your latest expectations on the timing of [indiscernible]

[Pascal Soriot, executive]

Ruud, do you want to take that first one?

[Ruud Dobber, executive]

Yes, absolutely. So Luisa, we are very excited about our weight management portfolio. Last time Sharon explained in quite a bit of detail why we are so excited. I think, we have -- first of all, a broad portfolio. I think our oral GLP-1 potentially is fit for purpose in order to combine it with other products in our portfolio, clearly, our SGLT2.

The market size in itself is very, very substantial. As you know, you saw very well analysts are forecasting anything between $50 billion and $150 billion. And I think our strategy is differentiated in such a way that, yes, we are looking in what we call the hardcore obesity market. So patients with a BMI of over 35, but equally, patients with a BMI between 27 and slightly above that, are going to benefit substantially from losing a certain amount of weight.

And if you combine that with other products in our portfolio, whether it is potentially in oral PCSK9, and SGLT-2, I think we have a very powerful combination, not only in order to reduce weight, but also to move to protection of different organs.

Now having said that, I think the other opportunity is, clearly, the footprint we are having in the emerging markets. The likelihood that an oral PCSK9 will be priced at a lower level versus the current available injectables is a reasonable assumption. And hence, we are also aiming for a very large population in the emerging markets. So all in all, very exciting. Of course, the ongoing Phase II trials are running as we speak, both in obesity and diabetes. So we need to wait for that. But we are ready in order to move with speed to start our Phase III trials if the data is successful.

[Pascal Soriot, executive]

Thank you, Ruud. Just maybe one additional point is that as Ruud said, we have a big footprint with [indiscernible] Our mission is always to try and bring our medicines to as many people as possible and if you look at the cholesterol market, the PCSK9 market, it's a good parallel. Injectable PCSK9 are great products, but outside the U.S., I mean, their penetration is more limited because of cost and injections.

So an oral agent will enable us to bring this type of medicines to a lot more patients around the world. The other benefit maybe to add is that an oral agent is probably a better option in term of compliance long term. I think the overweight or obesity are chronic conditions, you have to take those medicines for a long, long time, otherwise, you regain weight and we've seen this over and over again.

So an oral agent that you take in combination with your other medicines is more likely to enable patients to stay on treatment for a long period of time, especially if the price is affordable, of course.

[Iskra Reic, executive]

Yes, so thanks, Luisa, for the question. Let me first start with the comment on the update on the investigation. As you recognized, we announced two important updates in our results announcement. And from what we know, customer office and public security bureau have really concluded their respective investigation both related to the drug importation allegations as well as the personal information infringement allegation. And these cases are now -- have now been referred to the prosecutor.

Important update that we provided in our result announcement is that we have been informed that there was no illegal gain to the company from the personal information infringement allegations.

On your second question about the market share, as you saw in our quarter 1 announcement, we saw the strong performance in China -- strong quarter in China with 5% of the growth and our underlying business is basically performing even better because if you adjust for the -- a Pulmicort, which is declining due to the low infection season and the market decline, our underlying business in China is growing 9%.

And that is driven primarily by the continuous strong performance of Forxiga, and I would argue outstanding launch of it and here to followed by inclusion in NRDL in the January and our ability to basically achieve 800 hospital listings in the first quarter and clearly help a lot of patients with huge unmet needs in China in that space.

On top of that, we are seeing continuous improvement of the market share. We are still leading in the respiratory field both with Symbicort and Breztri. We see very encouraging data and the market share increase from Breztri as well as improvement in the usage of the triple therapy.

And given the huge unmet need in China related to the COPD, we do see that -- we do see a huge unmet need going forward. When we look on other important growth drivers, as you all know, Tagrisso is an important growth driver in China and we do see continuous growth of Tagrisso given by the new indication as well as improvement in the market share despite of fearless competition and six third-generation TKIs from the local companies that are available in the market.

So all in all, we feel very comfortable and confident in the performance in the first quarter. And as we always talked about, we see, we feel confident and comfortable with the opportunity going forward in China, given the unmet need and given our portfolio and pipeline that fits that need.

[Pascal Soriot, executive]

Maybe just to add something that Iskra will not tell you, because he is modest, but she's done an amazing job, and the team is very motivated locally. I was there not long ago. And it's important because that's really what is going to sustain our growth moving forward.

The team is -- has gone through a period of trauma, as you can imagine, we've all been sort of traumatized by this event. And -- but people have quickly recovered and they're very much focused on delivering on our goals and everybody is very committed and very energized today.

Maybe we'll take the last question, Peter Verdult at BNP.

[Peter Verdult, analyst]

Peter Verdult, BNP Exane. Three questions. Just firstly for you, we've seen the first PDUFA delay from FDA this week that wasn't due to the need for further clinical or manufacturing data. So just in light of all the personnel changes, are you not seeing any worrying disruptions or delays with respect to Astra's interaction with the agency?

And then look, I know you are called it out when we had the question lined up baxdrostat, ahead of the upcoming Phase III readout, does the sort of recent lorundrostat data from Mineralys, is that the right way of thinking about setting the bar? Or are you hoping to show something more? I just wanted to get a sense of your expectations going into that readout.

[Pascal Soriot, executive]

So can I propose maybe, Susan, you cover the first question in general. And then Sharon, if you have anything to add of FDA and you can also cover baxdrostat.

[Susan Galbraith, executive]

Yes. Thank you. So obviously, we continue to monitor the situation, but just based on the facts, we haven't seen any delays in the interactions that we've had with the FDA across our programs to date. Just to remind you that NIAGARA was approved ahead of the PDUFA date. We have multiple interactions with the FDA across our extensive portfolio. And all of those meetings are happening in the timelines that we would expect and with the level of interaction that we would expect.

[Sharon Barr, executive]

So with regards to the FDA and will echo Susan's comments that to date, we have had on time conversations with the regulatory authorities. And to date, we haven't seen any delays. That said, we continue to be very alert to this and continue to move forward with our programs with a sense of urgency.

To address your question about baxdrostat, in light of the Mineralys data that was revealed earlier this month, we first think it's very encouraging to see momentum in aldosterone targeted therapies. It validates the critical unmet medical need that we have been focused on for some time. We think that this is a valuable mechanism of action in which we are targeting aldosterone at its source, which we think is a very important mechanism for helping to control hypertension. We continue to believe that our molecule baxdrostat has the potential to be best-in-class and has a very competitive profile. We've shown data for this in Brighton, where we saw a placebo-corrected reduction of 11 millimeters of mercury and systolic blood pressure at the 2-milligram dose.

With this molecule, we think we are seeing impressive mercury lowering at a low dose. This sets us up well for treatment with both monotherapy and combinations. Our molecule has a half-life that is at least double that of competitors. And we think that's really important for 24-hour control of hypertension.

And we don't see clinically relevant drug-drug interactions with baxdrostat, which, again, we think highlighted potential to be a best-in-class molecule. So we think we're in a very competitive position. We look forward to reading out the Phase III pivotal data for BAX HTN later this year.

[Pascal Soriot, executive]

Thank you, Sharon. So I'd like to maybe go first of all, thanking you for all your interest and your great questions. And maybe in closing, I just like to say again -- we have started very well the 2025. We have a growth momentum that continues. We are on track to achieve our expectations and our guidance. And importantly, we are entering a catalyst-rich period as we said many times before, by the end of this year or the next year, we'll have a very good sense for the driving factors for our growth to 2030.

So far, so good. We have five positive Phase III studies in particular, important ones like SERENA-6, MATTERHORN and of course, more recently, DB09. We've had 13, 1-3, regulatory approvals across the major regions in the quarter. Our revenue is up 10% and very much on track with what we expect. Our expenses are well managed, and I know there's been a focus on SG&A.

So I'd like to attract your attention that SG&A grew by 5% even though we have many launches. So everybody is really working hard to manage those launches and control SG&A growth. And as a result, our operating profit is up -- sorry, 12% and our EPS 21%.

So that's really is a series of messages I wanted to leave you with because, again, we are very much on track. So with that, thank you so much again, and I wish you a good rest of the day.