GSK plc (GSK) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you for joining the session to the GSK fireside chat. For those of you who don't know me, I'm Theresa, European pharma equity analyst at Morgan Stanley. And I'm very pleased to have Hesham with us today, who heads up oncology at GSK. Thank you very much for joining us. Before we get started, just on housekeeping, which I'm sure you've all had, but please note that this presentation is for MS institutional clients and employees. For important disclosures, please see the Morgan Stanley research website, sorry, www.morganstanley.com/researchdisclosures.

Okay. So with that, let's get started. Perhaps we can start with the overall oncology strategy at the Accelerate Growth CMD, you laid out kind of a much broader opportunity across lung, prostate, GI, gynecological cancers and then significant late-stage investments. So when you think about oncology today, where do you still see the genuine gap? Are there areas of oncology that you've deliberately chosen not to go into? And where are the areas of interest moving forward?

We'll start, first of all, thank you very much for the kind in, but it's great to be with everyone today. It's great to be at this conference as well too. I know I was here last year as well, too. So fantastic. With that in mind, probably just kind of reflecting a little bit on the past 4 years of oncology at GSK. I think everyone is well aware, of course, that we had stepped away in 2014. We've come back -- but I think probably if you ask me what was the secret recipe in all this, it's focus. It's focus. It's being very methodical in terms of how we've approached the rebuild that's taken so far with GSK. It's not often that a big pharma company steps away from the field of oncology and then tries to we enter it. And then when it reenters it, it starts to have a lot of great success moving forward as well, too. But I think it was probably owing to a number of key variables. First, we really tried to your point, focus on disease areas where we feel like the unmet need continues to exist and where we can establish key capabilities across talent, disease knowledge and of course, better characterizing the biology of the disease as well, too, to help drive just over research efforts, but also a translational focus as well to. Let alone the fact that not only did we rebuild these capabilities in these key disease areas, but also we reestablished our medical -- presence and commercialization efforts as well as want to. We started first in key heme malignancies so across multiple myeloma and myelofibrosis. I think everyone's all aware, of course, Blenrep and momelotinib or Ojjaara has kind of been the key pillars in heme malignancies for us but also building on the success that we've had with Zejula and of course, dostarlimab as well Jemperli across ovarian and endometrial cancer, respectively, in gynecologic malignancies and from there we started to continue to add additional tumor types that we felt like, again, where our capabilities could be built and the depth of experience could be developed. And then where we felt like the unmet need continues to exist. And so now that has expanded to -- malignancies, lung and head and neck. GI malignancies will focus emphasis on colorectal cancer. Again, building on the success that we've had with Jemperli. And then finally now starting to move into prostate cancer as well, too. Certainly, we've just are starting to initiate 3 Phase III studies with our B7-H3 or Ris-Rez antibody drug conjugate. But we're also building a portfolio of assets that are giving us some good critical mass across different therapeutic modalities in prostate cancer as well, too. This has all been -- I would probably see a mixture of organic growth so in-house portfolio discovery research efforts, but also inorganic growth. A lot of [indiscernible] development. You've seen some of the recent BD deals that we've done, I think probably Nuvalent is the most notable. But then at the same point in time, just this morning, we announced other licensing for a trispecific immune cell engager in multiple myeloma as well.

Perfect. And you touched on BD M&A. So Nuvalent was perhaps a much larger later-stage transaction than we've seen recently in oncology for GSK. Should we think about Nuvalent as a one-off opportunity? Or has that changed the size that you would look at in oncology? And perhaps to intervention, you can touch on the T cell deal from this morning too.

Yes. I think it's a really key question. Probably over the past few years, if you asked me about what is the philosophy that we've had around our business development activities in oncology specifically. Well, I would say, first and foremost, there is a framework that we follow. And the framework goes along the lines of the following: One, the licensing or acquisition going to address a key unmet need that we feel like is very unique at this time. That's the first point. The second really is around the medicine or the medicines that are involved and specifically with regards to are they differentiated in the context of their minimal design in terms of their mechanism of action, in terms of the pharmacology and the properties that they offer? And do they provide what is the potential for a best-in-class profile. . The third, is there a preliminary clinical data that exists that gives us additional confidence in the probability of technical success of the assets? And then the fourth, of course, is aligned to key strategic disease areas of interest for GSK and where we have these capabilities that have been developed across R&D, medical and commercial. And when I think about new valent, I mean, certainly, it's not just a singular asset. I think we have to think about it. It's not a 1 asset deal. It's actually 2 key assets. And then there's also a discovery pipeline of programs as well, too. The 2 key assets, of course, are Neladalkib, which is a fourth generation ALK inhibitor with a best-in-class potential. And then, of course, also Zidesamtinib or Jideytro, which was just approved in July of this year. In ROS1 mutated patients as to ROS1 positive patients as well. Again, 2 assets. I think the deal size is quite, quite large, but we've also done deals across the board. So everything that is ranged from $1 billion to $2 billion. So for example, the Sierra Oncology acquisition for momelotinib was about maybe $2 billion, the acquisition for [indiscernible] was about maybe $2 billion. And we've done larger deals. I think that the bottom line really is, it depends on what type of synergy complementary and the profile of the deal itself. And how it adds to our existing portfolio. I think if you look at Nuvalent for example, I think it probably now gives us that piece that helps us kind of form what is a franchise in lung cancer. Two different assets, highly differentiated, best-in-cost potential. And then we have our Ris-Rez B7-H3, which we actually just presented certainly through our partners Phase III data for at World Lung. And we've got a lung franchise that's emerging as well for us in that context as well, too. So -- moving forward, what do I expect in terms of deals? I think probably across the range of everything that we've done from either licensing like this morning, of course, this trispecific T-cell engager in multiple myeloma. Two acquisitions that we've done like IDRx and certainly Sierra Oncology. And when it happens, and it depends, certainly, larger deals could exist in the present themselves as well too.

Okay. Very clear. And I do want to get into Nuvalent and B7-H3, as you mentioned. But before -- when we think about 2031 sales and the overall GSK target for over $40 billion of sales, and I appreciate you're not commercial, but maybe thinking about it in a different way. What are the 2 or 3 most important oncology assets to achieving that target? And where do you have the most action?

Yes. It's probably it's an interesting for me time to reflect on the progress that we've made, but also where the pipeline is at right now as well too. I think if you look at it, 4 years ago, we didn't have many medicines approved. We've got 5 medicines approved now, a 6 to be approved by the end of the year, which is, of course, now Dalcib has a PDUFA date in November of this year, but then also 3 additional assets, B7-H3, B7-H4 and vilzatinib that are likely to hopefully make it to the market by the 2029 time frame as well, too. Biggest opportunities. I think no doubt, B7-H3 is a key asset, just owing to its broad expression profile across a number of different solid tumors. So that includes, of course, thoracic malignancies, GI malignancies, GU malignancies like prostate cancer as well too. So we oftentimes refer to it as a pipeline and an asset, right? Just given how broad its applicability is. B7-H4, more [indiscernible], especially in gynecologic malignancies, velzatinib and GIST. And then probably they are like -- people might look at [indiscernible] at face value as a relatively more orphan patient segments. But I think duration of therapy is really important. And I think when we look at, for example, at [indiscernible] now and the fact that it delivers probably somewhere between 28 to 32 months or 33 months median PFS in frontline GIST. You're looking for a meaningful improvement over that. And so duration of therapy is a critical element, similar to probably how we look at the Nuvalent assets as well to Nella and Zita. If we're thinking about ROS1 positive patients, about 2% of lung cancer; ALK-positive patients, about 4% of lung cancer, but duration of therapy is very critical, especially if patients who are on treatment in several years. So I think these are all assets that are going to be contributing to those 2031 ambitions. And of course, along with Blenrep as we think about the future of newly diagnosed patients -- and frontline multiple myeloma as well.

What's going on. Maybe we can start with Nuvalent and [indiscernible] over the weekend -- apologies for my pronounciation in first-line . The data is still perhaps relatively early in a small number of patients, 94 patients. So help us understand where we are with filing for first line. What else do you need to see to kind of get comfortable with the regulatory path?

Yes. Well, the data was actually presented -- I was at the plenary session yesterday morning in Seoul -- and I just got interested night into New York. And quite a warm reception to the data, quite robust spectacular, I would say, certainly for ROS1 auto patients as well, too. in this first-line TKI naive non-small cell lung cancer patient population. 94 patients, 94% objective response rate. In terms of at least the durability, we're seeing a PS Landmark at 12 months of about maybe 90%, certainly a duration of response landmark at 12 months of 86%. So quite durable, quite strong treatment effect and very clinically relevant. And then, of course, the medicine was designed to have these brain penetrant properties and in that subset of patients that had brain metastases and typically in these [indiscernible] alkaline positive patients, but maybe 30% to 50% of patients typically develop brain metastases. We saw 100% response rate in terms of intrapanel response, which is probably, again, very important for patients. So overall, a lot of confidence, very strong support for how we feel about the drug at this stage. Especially when you think about comparisons as they're made to, for example, third innovation TKIs as well too, and we're still planning on filing in Q4 before the end of the year. Now 1 point to also highlight in that regard. Of course, I think it's well established, at least from a regulatory standpoint that given the orphan nature and the prevalence of the disease, of course, as well, too. We've seen single-arm studies and single-arm data sets serve as pivotal and certainly registrational data sets in this first-line TKI-naive ROS1-positive patient population. So we feel very comfortable with the approach that we're taking from a regulatory standpoint as well.

Perfect, very clear. And when we think about Nella in the first-line ALK lung cancer setting, lorlatinib has set a very high bar for efficacy and particularly for durability, brain control. Alka, the frontline trial is versus Alecensa. So is it meaningful enough to show superiority to Alecensa -- or would you need to show at least on a cross trial something lorlatinib like to change factors?

Well, I think we have to look at the where the uptake of these medicines is right now. And I think if you look at the most recent market data and the uptake in the usage and physician usage of these drugs, we're actually seeing about maybe 45% use of alectinib in the frontline setting with about maybe 35% of patients use of lorlatinib. So alectinib is quite still a relevant control arm in that frontline setting as well too, and that's why the study was actually designed that way. Now I think if we look at other third-generation TKIs and the comparisons that were made, they were actually made to first-generation TKIs to crizotinib. And so I think that's something that just kind of bear in mind and take into account as well 2 in their pivotal studies. But the data, at least certainly is at least in that second-line TKI pretreated patient population quite strong and probably also gets at the fact that [indiscernible], similar to [ Zeta ] was very much from a medicinal chemistry design designed to address not only the single ALK mutations, but also the compound alk resistance mutations as well to, along with, of course, its brain penetrate activity. So from that standpoint, I think we'll be able to see very clearly hopefully, the treatment effect over alectinib. And at the same point in time, probably something to highlight, of course, the data that's been generated and presented for Nella in this first-line TKI naive patient population as well, too. Looking at, of course, not only the objective response rate, which is quite high, but also the duration of response at 12 months being at 91% versus with the third-generation TKIs as well too. So we expect to see that separation hopefully happen early between certainly nela and alectinib into Phase III study. And by the way, the recruitment in that trial is going quite well.

Okay. And could you remind us when the to read out? And is there a potential for the trial to read out earlier at interim. Could you give some color on when that could happen?

Yes. I mean I think I'd probably say that it's difficult to tell when that they would read out because there are a number of different variables that go into that. First, of course, is the I would say, one, the recruitment rate is very critical. So I think that plays a key role. The second, of course, is the event rate and how quickly events actually occur. I think bear in mind, of course, that in this instance, we're going up against a second-generation TKI, not a first-generation TKI and then the third, of course, is when does that separation happen between the 2? I was just referring to the duration of response and already seeing at least based on cross-study comparisons. And of course, with all the caveats that they provide. But we're hoping to see that separation occur early. And of course, as is the case with any clinical trial, oftentimes, there are different levers to be able to incorporate into them, including, of course, looking at potentially interim analyses that hopefully can provide additional insight into overwhelming treatment effects as well.

Very clear. And you touched on duration of response. These patients stay on therapy for a long time. How should we think about the tolerability profile of Nela,particularly the liver piece versus some of the neurological mecoolic side effects that we see with other TKIs?

Yes. I mean the experience that we've had to date, at least looking at the, I would say, the liver transaminitis that's been observed with Nela is that these are oftentimes quite asymptomatic transient and quite reversible as well to, oftentimes reversing within a span of about maybe 2 weeks or so. Certainly from a TKI perspective, from a thoracic oncology standpoint and especially in this drive mutation segment of patients, physicians are oftentimes quite comfortable, of course, with how they manage these types of transaminitis case. Liver function tests are typically conducted for patients when they come in as part of their more standard or routine, I would say, battery of labs that are conducted with the visits that they have. And so generally, from that standpoint, we don't have much of a, I would say, probably concern in terms of having confidence in their reversibility, their monitoring and the transient nature that they have as well to and the fact that they are asymptomatic as well. Like I said, the majority of these events have manifested in that way.

Perfect. And perhaps we can move on to Ris-Rez,the B7-H3. You presented some exciting data over the weekend in relapsed small cell lung cancer, perhaps for the benefit of everyone in the room, it would be great to hear your thoughts on the data set.

Yes. I would say, again, quite robust data for the B7-H3 ADC Ris-Rez at World Lung from our partners Hanso, Phase III data in second line small cell lung cancer looking at [indiscernible] the data quite compelling and quite internally consistent, which I think is important. So a hazard ratio of 0.46 for overall survival hazard ratio of 0.33 for PFS and probably close to 5x improvement in objective response rate. And along with the durability, of course, as well to. And that's quite probably notable as well, too, including the median OS that was observed on the Ris-Rez arm, which was about maybe 18.5 months, which is quite, I would say, important -- as we look at the benchmarks that have been previously set in that second line space, including with immune cell engagers, where we see about maybe a 13.5 month median OS and with other B7-H3 ADCs, which ranged around between 12 to 13 months. So again, quite a robust data set and certainly an important inflection point for the rises development program moving forward as well. .