Glaxosmithkline PLC at Jpmorgan Healthcare Conference

THOMSON REUTERS STREETEVENTS EDITED TRANSCRIPT GSK.L - GlaxoSmithKline PLC at JPMorgan Healthcare Conference

EVENT DATE/TIME: JANUARY 14, 2020 / 3:30PM GMT

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

CORPORATE PARTICIPANTS David Simon Redfern GlaxoSmithKline plc - Chief Strategy Officer Emma N. Walmsley GlaxoSmithKline plc - CEO & Director Hal V. Barron GlaxoSmithKline plc - Chief Scientific Officer, President of R&D and Director Iain James Mackay GlaxoSmithKline plc - CFO & Executive Director Luke V. Miels GlaxoSmithKline plc - President of Global Pharmaceuticals Roger G. Connor GlaxoSmithKline plc - President of Global Vaccines

CONFERENCE CALL PARTICIPANTS James Daniel Gordon JP Morgan Chase & Co, Research Division - Senior Analyst

PRESENTATION James Daniel Gordon - JP Morgan Chase & Co, Research Division - Senior Analyst Good morning. I'm James Gordon, JPMorgan European pharma and biotech analyst. And today, I've got the pleasure of introducing the GSK presentation. So you're going to hear from GSK CEO, Emma Walmsley, and we're going to have a breakout behind this room in the Borgia afterwards. So I hope you can join us for the Q&A. So with that said, thanks very much for joining us and look forward to the presentation.

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director Good morning, everybody, and thank you very much, James. Thanks to you all for joining us here early this morning. So first of all, let me just refer you to our cautionary statement.

When I became CEO of GSK in 2017, I laid out my 3 long-term priorities for the company: innovation, performance and trust, all to be powered by a necessary change in culture. Initially, it was simply a framework. And though there remains much more to do, we're now demonstrating good progress on these priorities.

Innovation is our first priority and the very heart of GSK's purpose, which is to use our science to develop better medicines, vaccines and consumer health care products for patients, so they can do more, feel better and live longer. It is our priority for investment. Our second priority is driving a company-wide focus on performance. And it must be sustainable, ethical and more competitive. And our third priority is trust. To be a high-performing company for the long term, we also need to run our business in the right way, building trust with all our stakeholders.

And lastly, for culture, which we all know can be an accelerator or a derailer, we're committed to building a culture with greater performance focus, more accountability and courage but without losing the values and long-term purpose that make our company special.

Since I laid out these priorities, we've made a great deal of progress. Under leadership of Dr. Hal Barron, we've made significant headway, especially in reshaping our pipeline. In 2018, Hal set out our new R&D approach with a focus on science related to the immune system, the use of genetics and advanced technologies, all to strengthen our pipeline for GSK's next wave of growth. Now that approach is now embedding. And we have in place new governance with increased commercial focus, increased prioritization and increased business development.

Last year, we closed transactions with TESARO and with Merck KGaA, strengthening our position in oncology. We also initiated alliances to build out our platform technologies in genomics with the University of California right here and in cell therapy with Lyell. We brought in some great new leaders, outstanding scientists in both functional genomics and AI to supplement these world-class partnerships. Our priority programs are progressing at pace. And I'm delighted that we had 3 pivotal oncology studies read out positively in the last 6 months.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

Last year, we also moved 4 new assets into pivotal studies, bringing the total to 11 and further strengthening our pipeline. We've taken a clear set of actions to improve our operating performance, too, and reshape the group's portfolio. With new leadership in place, we've strengthened our commercial performance. We're investing behind new launches and driving growth in respiratory with Trelegy and Nucala.

In HIV, we've been further driving the transition to 2-drug regimens with Dovato, which was approved for treatment-naïve patients in the U.S. last year. And in vaccines, we're pleased with our performance, most particularly the contributions to growth from our shingles vaccine, Shingrix, and also our meningitis B vaccine, Bexsero.

In pharma, we continue to build out our specialty capabilities, ready to support the oncology launches we anticipate later this year. We're hiring people with the right oncology experience in all key markets and doing so at pace, including and especially in key leadership roles in the U.S. And we also completed the transaction we announced at the end of 2018: a new joint venture with Pfizer to create the world's leading consumer health care business. Integration is well underway. And I'm pleased with the progress so far.

So altogether, we have made a great deal of progress in 2019. But we're very aware we have much more to do. We need to continue to invest in and grow our new product launches. We need to maximize the opportunity of our anticipated oncology approvals. We need to continue to strengthen and invest in our pipeline. We need to integrate our new consumer health care joint venture while delivering competitive growth. And importantly, we need to continue to hire the very best people and build on the outstanding quality of our teams.

So let me look at some of these in a bit more detail. Shingrix was an important driver of performance at GSK last year. Demand has been tremendous. Following on from the preferential recommendation we received from ASIP in 2017, the broad label and clear efficacy benefit of this vaccine have driven market expansion.

In the U.S., the uptake has been dramatic relative to other recent major launches in the biopharma space. In terms of the opportunity in this market though, we are just getting started. There are 115 million people over 50 in the U.S. As of September last year, we estimate we've vaccinated with at least 1 dose around 11 million of those people. So there's still some way to go.

And of course, globally and over the longer term, there is a far bigger opportunity. We've already launched in Canada and Germany. And in 2020, we are planning for the phased launches in China and Japan. We expect a moderate increase in our supply of Shingrix in 2020. But you shouldn't anticipate a major step-up until our new facility comes onstream, which is not before 2024.

Turning to respiratory. We see further opportunity for both Trelegy and Nucala. In the asthma biologics market, Nucala remains the market leader in total sales in major markets around the world and sales continue to grow quarter-over-quarter. The launch of the at-home administration, combined with improved execution, has increased our performance in the U.S. And we remain market leader despite the entrance of new competitors over the last 2 years.

Last year, we presented data from our real-world evidence study at ERS showing highly positive results on reduction in exacerbations and reduction in oral corticosteroid use. We are the first biologic agent to present data of this type. And we also announced positive headline results for hypereosinophilic syndrome, which shows Nucala as the first treatment to demonstrate a reduction in flares for this small yet important patient population. The opportunity within biologics remains significant with just over 1/4 of patients in the U.S. who are eligible for our biologic receiving one today. So we continue to see further potential for growth for Nucala.

Moving to HIV. Our mission is to leave no patient behind. And our ambition has been to make HIV a smaller part of people's lives, reducing their burden as they age. Today, a person living with HIV on daily oral triple therapy could be taking up to 57,000 doses of medicine over the course of their lifetime. As part of our ambition, we've been driving a transition for appropriate patients to 2-drug regimens with the launch of oral daily therapies Juluca in 2017 and Dovato in 2019. And our new regimes are now growing at a rate that's offsetting the decline in our 3 drug regimen.

Juluca and Dovato combined now account for 3.4% of TRx and over 7% of NBRx. And we're encouraged by the uptake of Dovato in particular with positive feedback from the early physician and patient adopters. Recent updates to both the U.S. and European treatment guidelines include

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

Dovato as recommended for most adult patients who are naïve to therapy as well as for stably suppressed patients who require a switch in their HIV treatment. As a reminder, Dovato is not currently approved though in the U.S. for switch population.

We believe this endorsement will help to further build the momentum behind the transition from 3-drug therapies to 2-drug therapies. And we're building on the innovation in 2-drug regimens and developing the first and only complete long-acting HIV regimen for virologically suppressed patients. This is a highly differentiated approach to HIV that has the potential to help patients who could benefit from less frequent dosing by helping alleviate them from their concerns with someone who doesn't know about their HIV status finding their medication or their concerns with missing a dose or simply being reminded of HIV every day.

Cabotegravir+rilpivirine received a complete response letter at the end of last year. The FDA's concerns are related to CMC matters, and they do not require the generation of new clinical data. There is no change to the safety profile of the products used in clinical trials, which continue as planned. We're working with the FDA to determine appropriate next steps.

We are very committed to leaving no patient with HIV behind and continue to innovate to meet unmet needs of these patients. In December last year, we filed for approval in both the U.S. and Europe for dispersible formulation of dolutegravir for babies and infants aged 4 weeks and older. There are 1.7 million children living with HIV worldwide, many of whom may have limited treatment options because they just struggle with the tablet formulation. So we see this as a critical submission to help those very young patients.

In addition, we filed for U.S. approval for fostemsavir, our first-in-class attachment inhibitor. There's a small subset of patients for whom resistance, safety or tolerability issues means they may be left with limited treatment options from which to construct effective regimens. And we've shown from the BRIGHTE study that fostemsavir as part of a treatment regimen achieved viral suppression in 60% of heavily treatment-experienced patients, helping to address this unmet need and provide an option for those who are running out of effective therapies. The FDA has granted us fast track and breakthrough designation here. And we hope to make it available to patients in the middle of the year.

Fostemsavir has also been submitted to European agents -- to the European agency last week and submissions in other markets are planned. GSK has such a long and proud history of leadership in HIV innovation from the first anti-retroviral medication with AZT to these exciting new medicines, which are differentiated treatment options for the patients that need them.

As well as launches we've planned in HIV, we've also filed for 3 new approvals in oncology and we're now preparing for their launch. We've made substantial progress over the last 12 months in strengthening our oncology capability and our commercial infrastructure. In addition to an important new medicine, the TESARO acquisition provides us with highly skilled employees with deep expertise in oncology R&D, including clinical, regulatory, medical and market access as well as talented and competitive salespeople, benefiting our whole portfolio. We've continued to build on this with some exceptional hires and with the changes we have made to our sales representatives and HCP engagement policies.

Last month, we had data on our BCMA-targeted immunoconjugate, belantamab mafodotin, published in Lancet Oncology. The DREAMM-2 study enrolled a heavily pretreated patient population, who'd had on average 7 lines of therapy and were refractory to an immunomodulatory drug and a proteasome inhibitor and were refractory or intolerant to an anti-CD38 antibody. With an overall response rate of 31% at the lower dose tested, we believe the study shows that belantamab has the potential to become an important medicine for this extremely sick patient population, who today have very limited treatment options. We filed the data with the FDA and plan to make a European submission shortly. Clearly, there is a larger potential in earlier lines of therapy. And we plan to start pivotal studies in second-line multiple myeloma later this year.

We also achieved a positive readout from the PRIMA study for our PARP inhibitor, Zejula, in first-line ovarian cancer maintenance therapy. These data showed that Zejula monotherapy benefited all comers in the study regardless of biomarker status, including the HRD negative patients. The data presented at ESMO last year on our PARP and on others underscored our belief that the PARP class is underutilized. However, only Zejula was shown to uniquely benefit both HRD positive and HRD negative patients.

Since Zejula demonstrated a benefit in all patients, we anticipate that doctors will be able to start patients on therapy without any need for HRD testing. And as an oral, once-daily monotherapy, it represents a convenient and cost-effective way to treat women in the maintenance setting. We look forward to adding these data to our label later this year. And Zejula has characteristics that suggest potential differentiation with preclinical

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

©2020 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JANUARY 14, 2020 / 3:30PM, GSK.L - GlaxoSmithKline PLC at JPMorgan Healthcare Conference data showing it achieves higher tumor concentrations. We're looking at expanding our studies into other cancers where HR deficiency is seen such as breast. And we're in the process of planning our next steps here.

And finally, I should mention dostarlimab, the PD-1 antibody that came through the TESARO transaction. The final data from the GARNET study in recurrent endometrial cancer have been submitted to the FDA. And we look forward to sharing them at an upcoming medical conference. With these 3 agents, further studies are ongoing in additional indications and importantly various combinations. And we anticipate more data in the months and years to come. So we are very focused on building the pipeline for our next wave of growth.

Since Hal laid out his R&D approach in 2018, we've made significant progress towards refocusing and strengthening our pipeline. We've reported positive data on Nucala, Trelegy, Benlysta, Juluca, Dovato, fostemsavir, cabotegravir+rilpivirine, Zejula, belantamab, dostarlimab and ICOS. Our existing growth drivers in HIV, respiratory and vaccines are being augmented by the recent new launches, most notably Shingrix. And from this year, we expect to see some early contributions from the first sales of our new oncology and HIV launches. And over time, we anticipate our earlier-stage pipeline starting to have an impact on our growth outlook. This will, of course, evolve with data and readouts and as we supplement our portfolio with business development.

I'd like just to highlight the 4 new agents we've moved into pivotal studies this year and which we expect in time, if data are positive, to become contributors to our growth outlook. In the summer, we initiated a Phase III program for our anti-GM-CSF antibody for rheumatoid arthritis. The clinical program includes patients who have failed methotrexate and targeted therapies and compares otilimab against both a JAK inhibitor and an anti-IL-6. Almost half of patients with rheumatoid arthritis continue to experience pain on a daily basis, driving them to switch therapies. Based on this unmet need and the Phase II data we have seen to date that shows a particular impact on the pain component of the disease, we think there is a commercial potential for this agent.

The novel antibiotic gepotidacin has a unique mechanism of action and an oral formulation, making it convenient for a community setting. And we're evaluating its use in uncomplicated urinary tract infections and gonorrhea. Uncomplicated UTIs are incredibly common with over 50% of women experiencing at least one incidence in their lifetime and around 1/4 experiencing recurrent attacks. Increasingly, antimicrobial resistance we know means that alternative treatment options are needed. And our research shows that around 40% of patients have antibiotic resistance with 8% showing resistance to 3 or more antibiotics. We can see a meaningful commercial opportunity for an agent that is efficacious in these patients and avoids having to resort to antibiotics necessarily reserved for a hospital setting.

Last year, we signed an alliance with Merck KGaA to co-develop the novel bispecific fusion protein, bintrafusp alfa, designed to simultaneously block the TGF-beta and PD-L1 pathways. Despite the impressive development of anti-PD-1 and PD-L1 agents, many patients still don't respond. And bintrafusp has the potential to provide further benefit. And we're developing it in pivotal studies for second-line biliary tract cancer but also studying it in first-line nonsmall cell lung cancer head-to-head versus pembro.

And finally, at the end of last year, we started a study with our novel ICOS agonist in combination with pembro in head and neck cancer. This study is in Phase II currently, but it has -- but if it progresses positively has the potential to become pivotal. ICOS has a unique mechanistic profile that offers potential for synergy with other anticancer agents.

In terms of the milestones we expect in 2020, clearly those with the greatest near-term impact are our anticipated approvals. We also expect pivotal data for Nucala in nasal polyposis and data from BLISS-BELIEVE study looking at the combination of Benlysta with a single priming co-administration of rituximab, which could enhance the treatment effect of Benlysta to provide sustained disease control and potentially remission in SLE.

And this is not an exhaustive list here of the proof-of-concept readouts obviously we anticipate this year. But it is some of the more potentially impactful programs in our pipeline. We expect more information on the potential of our various immuno-oncology agents in combinations, especially in a number of different tumor types. And importantly, considering our vaccines portfolio, we are looking forward to data on our 2 potential major vaccine opportunities in COPD and RSV.

And turning quickly and lastly to our consumer business. Through the combination of GSK Consumer Healthcare and Pfizer Consumer Health, we've brought together 2 highly complementary portfolios into a world-leading company with significant scale. And 2018 sales were approaching

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

GBP 10 billion. This business is driven by category-leading power brands and science-based innovation and has leadership positions in key categories and geographies, including the U.S. and China. The growth outlook is good. And we'll realize cost synergies of GBP 0.5 billion by 2022.

So in summary, 2020 will be a year of continued execution on our priorities of innovation, performance and trust. Our first priority remains innovation. We'll be focused on the execution of our recent and upcoming launches. We continue to drive sales in respiratory and expect to broaden the label of Trelegy for use in asthma this year as well as continue to grow sales of Nucala. We're focused on the 2-drug regimens in HIV, and we look forward to launching Fostemsavir as well as working with the FDA to bring our long-acting regimen to market.

We've made a lot of progress with oncology R&D in the past few years. And we are now poised to build on the commercial presence we acquired with TESARO with new products and indications. And of course, we continue to develop the supply for our highly successful vaccine, Shingrix. The work on strengthening our pipeline continues. As well as the 4 new assets we moved into pivotal studies last year, we hope to advance further programs this year and move multiple new assets into the clinic across a broad range of indications.

In performance, we will continue to drive growth and operating performance across the group and build our specialty capability to support our move into new product areas. We are very focused on delivering a seamless integration and synergies from the Pfizer Consumer Health business. And as we look forward to the creation of 2 new companies, we'll ensure our operating model infrastructure is optimized, so we have the right cost base in place post separation for both businesses.

And on trust, we want GSK to continue to lead with a broader contribution beyond financial returns. Our first contribution to society is to innovate. And we'll continue to give you regular and transparent updates on our pipeline progress. We remain very committed to leading in global health. And we are focused for impact on infectious diseases in the developing world. And because everything and anything that we achieve comes from the talent, energy and engagement of our people, we aim to be a modern employer to attract and retain the very best.

After a year of good progress in 2019, we are highly focused on execution in 2020. We have the right teams in place and a very clear pathway over the next few years to the creation of 2 exciting companies. We'll create a world-leading consumer health care company. And we will have a new, focused and competitive pharma and vaccines company. Across GSK worldwide, we are committed to this exceptional opportunity to create value for shareholders, patients and consumers. Thank you very much.

QUESTIONS AND ANSWERS James Daniel Gordon - JP Morgan Chase & Co, Research Division - Senior Analyst Great. This is the GSK breakout at the JPMorgan Healthcare Conference. And maybe for the benefit of anyone who's also listening in, we've got a great lineup of GSK management here. Maybe I'll just introduce who we've got.

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director Roger, why don't you start?

Roger G. Connor - GlaxoSmithKline plc - President of Global Vaccines I'm Roger Connor, Head of the Vaccines business.

Hal V. Barron - GlaxoSmithKline plc - Chief Scientific Officer, President of R&D and Director Hal Barron, Head of R&D.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director Emma Walmsley, CEO.

David Simon Redfern - GlaxoSmithKline plc - Chief Strategy Officer David Redfern, Chief Strategy Officer and Chairman of ViiV.

Iain James Mackay - GlaxoSmithKline plc - CFO & Executive Director Iain Mackay, CFO.

Luke V. Miels - GlaxoSmithKline plc - President of Global Pharmaceuticals And Luke Miels, Pharma and Vaccines, Commercial.

James Daniel Gordon - JP Morgan Chase & Co, Research Division - Senior Analyst We've got 25 minutes for questions, so maybe if I just kick one off to start with. So we just had a presentation. And 2 of the things mentioned were the TESARO acquisition and also the Pfizer consumer business that's been added in and the consumer spinoff. And we talked about those. They were announced just before the conference last year. But maybe to start with, could you just give a summary of what's happened over the last 12 months? Where are we with both of those?

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director Well, thank you, James. And it was exactly a year ago when I was explaining why we'd done both of them and what our goals were. And I have to say I'm very pleased with both the outcomes and readouts of data and the progress we've made. So you'll remember the acquisition of TESARO was about strengthening our pipeline but also bringing in a strong hub of oncology capability. And the bet, the smart risk, we thought that we were taking, the bet we were taking with a degree of expertise both on the R&D and commercial side was that we thought that the PARP inhibitors were undervalued and that potentially with the medicine Zejula, we were going to be able to take this treatment for ovarian cancer beyond women with the BRCA gene, that just 15%.

Our bet was we thought we could take it to 50%, potentially the HRD positive. And in fact, the data read out over the summer to our delight that irrelevant of biomarkers status, this was a medicine that could reduce the risk of recurrence, I think, on average, of about 40% for women -- all women regardless. So very much hoping to get on that label. And that was a great readout. But also looking at other medicines in that portfolio, potential medicines and opportunities for combos in medicine. So we're very pleased with how that's gone and looking forward and preparing for hopefully new labels later in the year.

In terms of the consumer deal, that was a very fundamentally strategic move for the group, not only because of the creation of the world's largest consumer health care business in this combination with Pfizer. And we're very confident in being able to lead that, having executed successfully a global integration with the Novartis portfolio previously. So tremendous value, GBP 0.5 billion of synergies in this portfolio of leading category brands, great geographic footprint and an opportunity to bring in talent from both companies. But it's also a really important deal for the declaration of intent we made that in around 3 years from close, we would then separate that into a new company and form 2 new companies, one leading in consumer and one, a focused and competitive pharma and vaccines business, focused on the science of immunology, genetics and new technologies.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

And I was very pleased to get that deal closed, pleased with the integration so far. You can imagine, there is a small group of us who are starting to prepare to think about the separation. There's no change in the time line around that, but we'll keep you updated. So good progress, lots to do.

James Daniel Gordon - JP Morgan Chase & Co, Research Division - Senior Analyst Following on, was there a questions here?

Unidentified Analyst Some more specifics on the TESARO deal. How did you get the PD-1…

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director Sorry, it's quite hard to hear you. Could you speak up?

Unidentified Analyst The PD-1 that you acquired from TESARO, (inaudible)

James Daniel Gordon - JP Morgan Chase & Co, Research Division - Senior Analyst Emma, if you could repeat the question, please?

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director Yes. So the question was what is the plan with the PD-1 from TESARO? And what's the plan to get that approved? And we have some data there. So Hal, perhaps you could update on dostarlimab.

Hal V. Barron - GlaxoSmithKline plc - Chief Scientific Officer, President of R&D and Director Yes. Thanks. So the approach for dostarlimab is actually a few-fold. First, we have the pivotal data in second-line endometrial cancer, where the predominant population was MSI high. And so we've submitted that data and hope to get that approved. We think there's opportunities to expand populations to beyond endometrial second-line MSI-high and tumor-agnostic MSI-high populations will be pursued as well. Reasonably high confidence that the drug will work, given the data that already exists with pembro. We also have the intent to move and have already started to frontline from endometrial.

The other opportunity that having your own PD-1 inhibitor has is that you can combine, then, with their own reagents in clinical trials. We have a very nice relationship with Merck for pembro in many of the trials. And in some instances, and we can get into specifics if you have questions, it's more advantageous to use pembro. And in other cases, it's more advantageous to use dostarlimab. And the third group of opportunities for dostarlimab are in programs where we think there's going to be a unique opportunity for dostarlimab to show benefit where pembro didn't. And we can get into situations where that might be the case. But one as an example is in combination with belantamab in myeloma, where we know that pembro doesn't seem to have much activity, if anything, and in fact isn't approved. And so we're in combination studies to show its unique features and unique trial design to show benefit.

The other area that is similar to that is where we see a uniform lack of activity of PD-1 inhibitors in ovarian cancer. And one of our strategies with Zejula is to be able to combine it with other reagents. And based on studies TOPACIO and now with MOONSTONE, we think there's an opportunity

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

James Daniel Gordon - JP Morgan Chase & Co, Research Division - Senior Analyst More on oncology, if I could ask the question, which would be the '916 or the BCMA ADC. The data wasn't at the ASH conference but was journal-published. And there was some debate in the market about whether we should be concerned about the side effect profile, how good an agent this looks to take for earlier treatment lines, how excited GSK are about that. Could you comment on that?

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director Do you want us to repeat the question? Well, maybe you go straight ahead.

Hal V. Barron - GlaxoSmithKline plc - Chief Scientific Officer, President of R&D and Director Okay. So the question is really how -- DREAMM-2 data and how excited we are. So the DREAMM-2 data, I think, was really quite impressive data on a lot of levels. The -- if you look at the DREAMM-1 study, which was in less refractory patients because they hadn't actually failed Darzalex or a CD38 inhibitor, we had a response rate of 60%. And in the subgroup of patients for whom we were enrolling for DREAMM-2, the response rates were in the 30s. Interesting from DREAMM-1 that the 2.5-milligram dose had no responses. And we took that dose forward into Phase III or the pivotal DREAMM-2 study as well as the high dose. And what we observed was a 31% response rate in the lower dose and a 34% response rate in the higher dose. So pretty excited about the ability to replicate the subgroup analysis from DREAMM-1 and very pleased that the lower dose actually looks similar in terms of efficacy and a better safety profile.

So overall, I think DREAMM-2 met or maybe even slightly exceeded expectations in terms of the risk benefit. The ocular toxicity, which I guess you're referring to, is a unique toxicity that is almost assuredly related to the MMAF conjugate, the antibody toxin that's actually responsible for a great deal of its efficacy. And we've learned a lot about this toxicity over the course of DREAMM-1 and DREAMM-2 and to some extant as we move more proximally. And essentially, it's a -- there are sort of deposits, if you will, of drug that -- on a cornea that seems to be very self-limited, very infrequently causing serious concerns for patients. I think physicians see this as a new safety signal, so one that needs to be monitored and addressed in a unique way. But I think the feedback we're getting and from the data we have is that this is going to be a very manageable side effect, particularly when one takes a little longer view, given the extreme efficacy that we're seeing.

I can ask Luke to comment on some of the work that we're doing with the investigators and practicing clinicians to both educate and prepare them for how to manage this. But we see this as a manageable side effect profile, particularly given the limited nature that we're seeing in the long term. We're very excited about the potential for the class, particularly for this molecule. We went aggressive with the -- when we saw the DREAMM-1 data back in the end of 2017, in around March or April of 2018, decided to make a big investment, not just in the DREAMM-2 pivotal study but in the series of DREAMM studies, DREAMM-2 through 10, essentially looking at various stages, moving from fourth line to -- or beyond to third to second to front line, doing the necessary dose ranging with the drug with the various combinations to be able to move aggressively. We have a number of pivotal studies that have already started and a number more that will start within the next 4 to 5 months so that we can aggressively move to front line.

This class -- this target, BCMA is, I think, uniformly seen by myeloma doctors as probably the most exciting target in myeloma today with both our ADC in the lead in terms of the potential targets but also, as you know, the BiTEs and the bispecifics and the B-cell -- sorry, the CAR-Ts, all advancing as well. But what we're very excited about is the convenience relative to CARs. The toxicity is actually less than the CARs. The cost will be less than the CARs. And most importantly, we'll be first in the class in terms of this giving us a substantial advantage. Lastly, and one of the things that I think is most exciting about the program in addition to being able to move so aggressively in the front and moving to front line is that we have a number of combination studies that have been designed, a platform trial, DREAMM-5, that's been initiated and enrolling patients to be able to look at some of the combinations that we think are very exciting.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

One I mentioned, which is with dostarlimab to see if we can actually create an environment. The MMAF toxin actually, we think, induces a very unique immunogenic cell death that might activate the immune system in a way that would allow us to have synergy with PD-1, where we see no activity of pembro. In myeloma, we're testing the hypothesis that the immunogenic cell death induced by MMAF can actually create an environment where now dostarlimab might show efficacy. And that's exciting and that will be tested. It's a hypothesis. We'll see what the data shows.

And the second combination, which is particularly exciting, is a collaboration that we in-licensed the molecule from SpringWorks, which is a gamma secretase inhibitor. And gamma secretase is the protease responsible for the clipping of the BCMA off the plasma cell. And of course, if the BCMA is no longer in the plasma cell, the antibody drug conjugate can't have activity. So by preventing the clipping of BCMA from the plasma cell, we think that we could have sort of synergy, if you will, because the gamma secretase by itself doesn't do anything. And we're studying that combination as well.

And there's been some both preclinical data showing very, very encouraging data as well as some recent clinical data at ASH with the CAR, where gamma secretase inhibitors actually seem to be active in increasing response rates. So that's 2 of them. We have other combinations, like ICOS, et cetera, that we're also excited about, and being able to move those aggressively as well as moving the molecule proximally. And given the strong safety efficacy data that we think we see, we're very, very encouraged and very excited about its potential.

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director I think this is an example of some of the significant changes that are going on at GSK, when you -- whether it be decisive choices, doubling down, moving at pace and indeed, the partnership between commercial and R&D. 2 years ago, BCMA was in a Phase I study. Now we have, I think it will be up to 10 running. And we're looking at -- we've got a filing. We're looking at an approval in fourth line. So it's a good indicator of the way we're trying to work.

Luke V. Miels - GlaxoSmithKline plc - President of Global Pharmaceuticals I mean I would just add to build on Hal's point and Emma's point. I mean it's -- the ocular tox is -- I mean toxicity is something that people treating multiple myeloma are very familiar with. I think the key thing is in, say, the first 12 months, where people are using this agent in their patients that they understand the profile of the agent and we have the support infrastructure in place, whether that's an academic center or whether it's a community-based treatment approach. And that's something we're being very thoughtful of.

I think it would also -- it would be quite valuable if you go and look at the transcript, which is on our website on the investor call that we had with one of the lead investigators for the study. And if you look at the Q&A, there's quite an extensive discussion around grade 1 and 2 toxicity and this investigator's view in terms of the impact on patients and the manageability of that. And I think that would be reassuring for you guys.

James Daniel Gordon - JP Morgan Chase & Co, Research Division - Senior Analyst Yes. A question here?

Unidentified Analyst You mentioned during the presentation about new hires in oncology. I'm hoping I might get some more detail there. And as you build up that force, is that additional resourcing for pharma business or it's more a reallocation of the overall [staff]?

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director So I'll ask Luke to comment on this question, which is to give a bit more content to our new hires. I think we'll focus on the comment structurally rather than give you a list of names of great talented people. But -- so one element is what we'll be doing to scale up our capability. And the second question is how much of that is incremental versus reallocation even if it's different people, but reallocation of cost structures.

Luke V. Miels - GlaxoSmithKline plc - President of Global Pharmaceuticals So I think the key thing is not to retread people. So we, right from the start, said we're not going to repurpose people who have a background in respiratory, for example, and overnight call them oncology or hematology people. So it's been a very deliberate approach. I think having been involved in these types of things in the past, the key thing is to have a compelling collection of assets. And we've found we've had no problem attracting very, very strong, capable people. Another one yesterday, we've just signed. And again, that flow continues.

So what we've tried to do is, from a strategic level right down to an operational level in the key markets, hire people who really know this area. Of course, there's a few mergers and things which are also disruptive, which put people into the marketplace who may not have naturally been out there looking, and we've taken advantage of that. So I feel very comfortable with the teams that we've built.

In terms of reallocation, I mean it is -- you have a number of products going through life cycles. So we've been able to reallocate resources. The beauty of oncology, of course, is you need a fraction of the infrastructure that you need in place for some primary care programs. So net-net, we've been very aggressive. People in oncology have not been short of funding and resources. But it's not been massively disruptive to our P&L.

James Daniel Gordon - JP Morgan Chase & Co, Research Division - Senior Analyst So HIV, so in 2019 in the U.S., there was some competitive pressures for the (inaudible) franchise. And you [haven't routinely] reported the full year 2019 results, but it's not going to be -- [it's not tracked to be a] high-growth year for HIV. Can 2020 be a year of significant growth? Because I know you've got 2 new therapies launching. Or could you also talk about the third product, cabo+rilpivirine, where we are on that product as well?

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director So the questions are on HIV and the growth profile, but particularly our transition in an increasingly competitive environment, to 2-drug regimens and any additional comments on cabo+rilpivirine. So obviously, I'll ask David to comment on all of that, except for any indication or guidance on our growth for 2020.

David Simon Redfern - GlaxoSmithKline plc - Chief Strategy Officer Yes. Thanks, James. Well, I think, overall, we're actually very pleased with the progress we're making on 2-drug regimens, recognize HIV is a pretty conservative disease area. There's very established paradigms around using 3 drugs in the new backbone. But we launched Juluca in 2018, which was the first of our 2 drugs, dolutegravir/rilpivirine, and then importantly, Dovato in the middle of last year, dolutegravir/ lamivudine initially in naïve patients. And as we said in the presentation, we've got just over about 7% of the way we define the market, of [core SD], our market here in the U.S. on NBRx. And actually, Dovato is tracking probably about 1.5 or 1.3x where Juluca was at the same time. So definitely good steady progress. And we're beginning to get a greater expansion of doctors. And we find that the physicians that actually use 2 drugs then tend to use them quite broadly.

And importantly, as Emma said in the presentation, we're now not just in the European guidelines, but just before Christmas, Dovato was put in the U.S. guidelines as A-1 preferred for both naïve patients, but actually based on the TANGO data, also switch patients, albeit that's not yet in the label, but that will hopefully come later this year. So I think a lot more to do. It's early days but certainly good progress. And as we keep saying, no patient needs to take more medicines than they need. There is more noise about things like weight gain on the new backbones and TAF, in particular. So we'll have to see how that plays through.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

Cabotegravir+rilpivirine, which we called Cabenuva in the U.S., we have a CRL from the FDA, that is all around CMC. So it's not on the clinical side, it's really around quality control processes. We're very confident we'll be able to resolve that. I'm not going to give you a time frame. And we know that there is a very passionate group of patients for all sorts of reasons, often because they haven't disclosed their status that want to move from having daily oral pills that they have to keep in their house or keep with them to once a month and what will ultimately, I think, given the data, will be once every 2 months. So it's not every patient, but it is a very passionate group of patients. So when we get to launch this medicine, we're confident there's a -- there will be significant demand for it, so -- and then finally, we have fostemsavir for -- which we hope to get approval for this year. So we're confident in our outlook in HIV. There's a lot more to do, but definitely going the right way.

James Daniel Gordon - JP Morgan Chase & Co, Research Division - Senior Analyst So we talked about HIV. Can we talk about other big pharma franchise, respiratory? So Ellipta, clearly the key growth driver. There was a reset on price in 2019 related, I think, to generic Advair. Should we think there could be another big round of price pressure for all your respiratory products in 2020? And is that going to be an ongoing thing for many years? Where we had to hit on our volume growth, is value growth in respiratory for GSK?

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director So the question will come to Luke. And it's around pricing pressure in respiratory in the context of what we've seen over the last few years. Obviously, we had the genericization of Advair, a long-awaited one, which we've digested reasonably smoothly with Ellipta. I would say the other growth driver, you mentioned Ellipta, there's obviously Nucala as well. So we have a strong innovative respiratory portfolio. And as I said earlier, we see plenty of room for growth there. But any comments on overall pricing environment and pressure?

Luke V. Miels - GlaxoSmithKline plc - President of Global Pharmaceuticals Sure. So I think it's just going to be an ongoing artifact of the respiratory market. But I mean so far, we've been able to grow and offset that. If you look at Trelegy now, it's about 1/3 of patients who would be eligible for a triple treatment are now being treated with Trelegy. And in contrast to when we initially launched it, where the bulk of those patients were being converted from 2 inhalers or an open triple combination, that's now around 10%. So the bulk of the growth is coming from people stepping up from ICS/LABA or LAMA. So I think that's just going to be the dynamics of the respiratory market for the next few years. That's separate from biologics, of course, which the challenge there is more to penetrate, as Emma showed in the main sessions, to penetrate biologic usage beyond the initial core group of patients who are treated today.

James Daniel Gordon - JP Morgan Chase & Co, Research Division - Senior Analyst JPMorgan, traditionally, we get a lot of deal-making. It's been a relatively quiet conference so far. You did mention business development in the presentation. Is GSK shopping? Does GSK have firepower left? Or is it now really more about execution about what you already have for 2020? Could we see some more interesting deals?

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director So the question is around BD in the context of a relatively quiet JPM. I mean I think most would say, we've been over the last couple of years, reasonably active compared to historically. And that was a declared intent when I started and certainly as part of Hal's strategic vision and outlay that he put out, which is our #1 priority is to innovate. And we see that has to come organically but also from some inorganic opportunities in terms of capital allocation. We are in the process, delighted with what we've done so far. We've talked about TESARO. There was also the kind of structured deal with Merck, German Merck KGaA with bintrafusp alfa, we'll see high risk, high-reward profile.

There's been a lot of activity. You will have seen in our technology platforms and partnerships, moving on from what we -- and building on what we did in with 23andMe. But also with the kind of partnership we've done with the LGR, so with the University of California right here in terms of

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

©2020 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JANUARY 14, 2020 / 3:30PM, GSK.L - GlaxoSmithKline PLC at JPMorgan Healthcare Conference with the pioneers of CRISPR, deals with the pioneers in cell therapy with Lyell. Because we look at those kind of platforms as accelerators of our pipeline and very much focused on the strategy of immunology and genetics and new technologies. So are we in -- we're always looking. You would expect us to be because innovation can come from anywhere. We will always look to be disciplined. And we wouldn't tell you before we were doing something about what we're doing.

James Daniel Gordon - JP Morgan Chase & Co, Research Division - Senior Analyst We have one more.

Unidentified Analyst Is it fair to say that your BD is in more on the pharmaceutical side than consumer side? Or where do you see the consumer business?

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director So the question is, is our BD focused on pharma? I would say pharma is -- when I started, we said our #1 priority was to strengthen the pipeline. And arguably, where some of the biggest questions have been historically was in the productivity of our pharma R&D. And I think that it has been where we've been prioritizing capital. Now that said, we spent multiple billions on buying out the Novartis portfolio in consumer. And obviously, we've been very active with our deal making. But we're happy to do so in a cash-free way with the joint venture.

The consumer business is extremely focused on the difficult job of integration and delivering competitive performance and in the not-too-distant future, preparing for separation. That doesn't mean as the world leader in consumer health that we aren't always scanning the horizon and seeing what may come up. But you shouldn't anticipate it. I don't think any kind of major moves there. Our #1 priority is to make sure we have 2 companies ready for an exciting, independent, right capital structures, good growth profiles, good pipelines of innovation. And so our focus is on pharma and vaccines.

James Daniel Gordon - JP Morgan Chase & Co, Research Division - Senior Analyst With that, I think we're out of time. So thank you very much, GSK. Thanks, everyone, for coming.

Emma N. Walmsley - GlaxoSmithKline plc - CEO & Director Thank you.

DISCLAIMER

Thomson Reuters reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes. In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more specifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized. THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us