Roche Holding AG (ROG) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Roche Half Year Results 2020 Conference Call. I am Sandra, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Severin Schwan, Chief Executive Officer. Please go ahead, sir.

Thank you. Warm welcome to all of you joining us for our half year briefing. Let me get right into the summary. As you have seen, we had really a significant impact of COVID-19 in the month of May, which was really due to the lockdown, the fact that patients couldn't see their doctors anymore. And hospitals were really focusing in on COVID-19. As a result of that, treatments were delayed. Routine diagnostics was delayed, and it shows up in our results. The good news is that since June, sales have been strongly recovering, and we see this trend to continue into July. I should also point out that largely, we are on track for readouts and also pivotal trial starts. And we also are on track to launch 3 new molecular entities this year as planned. Very importantly, we see continued good growth momentum for our newly launched medicines, offsetting the biosimilar erosion, which, of course, as expected, has been particularly strong in the United States. So new products up by 37% in pharma. Shifting to Diagnostics. On the one hand, we had a similar impact like we have seen in pharmaceuticals, patients not visiting the doctor, not going to the hospital. As a consequence, of course, routine testing down. On the other hand, we have seen very strong demand for our molecular COVID-19 test, and that has been compensating for the decline in the routine testing. We continue to ramp up test manufacturing capacity. And we hope for good growth, actually, in the second half in Diagnostics because we see the routine business returning. And then, of course, we have this additional growth from the molecular testing side. We also have a number of additional COVID-19 tests to be launched in the coming months, and Thomas will touch on those. So if we go right into the numbers on a group level, for the first half, 1% up, Diagnostics with 3% and Pharmaceuticals with 1%. On the next slide, you see the quarterly growth, again, 4% for the second quarter. And let's look a bit deeper into the sales development during the second quarter. And what you can see is that the growth started to slow down in April, but it was still holding up, but then it really declined significantly by 15% in the month of May. And again, this is entirely driven by the lockdown of the health care system and also the fact that we, as Roche, have a special focus on specialized medicines, which are typically and very often administered in a professional setting where you would depend on infusion shares, for example, or where you would get an injection by the health care professional. You see then, and that is really comforting that health care systems have adapted whilst for a certain time, there was -- I mean, only a focus on COVID-19. In the meantime, there's a new equilibrium where health care systems are again ready for patients who suffer from other severe diseases, such as cancer, autoimmune diseases, et cetera. And we see this immediately reflected in the pickup of sales. And as I said before, this trend continues into July. Here on the left-hand side of the chart, you see the regional split, and that's pretty much in line with expectations. Insofar is that we are returning to growth in Europe and international where biosimilars entered earlier. A big portion of that is behind us, and now we benefit from the new products. And of course, in the U.S., it's just the other way around where biosimilars have only entered this year. And accordingly, sales are impacted. And then on top, of course, we see the COVID-19 effects. That is also reflected on the right-hand side. You can see an overall impact of the entry of biosimilars of CHF 2.1 billion decline in sales, and that is more than compensated by the newly launched products with about CHF 2.5 billion in the first half. That, of course, then also reflects in the share of the new products, which is now getting close to 40%, and that trend will certainly continue over the coming quarters. Here, again, a summary of the progress of our pipeline. Bill will certainly cover this in more detail. Just to say that we had an exceptionally strong progression of our pipeline in the first half 2020, which also continued into the second quarter. So that's really important for the long-term perspective because that would typically not show up in the numbers. So that's really good to see. As far as profitability is concerned, we can keep our margins. In fact, at constant exchange rates, profitability even increased slightly higher than sales development. And that brings me to the outlook. There is still a lot to come in terms of pipeline progression, both in terms of new molecular entities this year as well as important pivotal trial starts. And as I mentioned earlier, there is a number of new COVID-19 tests being launched for the remainder of this year. So based on the strong recovery we have seen in June and also based on what we have seen in July, we confirm our financial outlook, which we gave at the beginning of this year, that is low to mid-single-digit growth on the top line and EPS to grow in line with sales. And on that basis, we should be able to further increase the dividend in Swiss francs. And with this, I hand over to Bill.

Thanks, Severin. So it was a remarkable first half in many ways for us. I think we're very pleased that in the midst of everything else going on with COVID, biosimilar impacts that we were able to make tremendous advances in the pipeline. But at the same time, the fact that we were able to keep all our facilities running at full scale at full volume, and we actually had one of our highest halfs ever in terms of the percent of our medicines that were delivered on time and full. And so we're just so proud of everyone who's been working around the clock to make that happen and keep our patients in good supply. This slide just -- it sort of tells the picture as we started talking about this slide, I think, several years ago and the need to replace what would be lost in sales on [ AH&R ] with the pipeline. And you can see the core products in blue and sort of the newer franchises outside of oncology in sort of peach color. It's a long list, and it continues to grow. And we had a lot of great progress in Q2, including the U.S. approval of Tecentriq in liver cancer. We had a positive Phase III result for IPAT in prostate cancer, and we look forward to the triple-negative result with ipatasertib. Enspryng, we now have our first approvals in Canada, Japan and Switzerland in Neuromyelitis Optica spectrum disorder. Risdiplam, we have the part 2 results. This is the larger study, confirming the impact of risdiplam in Type 1 SMA. And again, we look forward to a very rapid approval there. And then Spark announced the longer-term follow-up data on their gene therapy for hemophilia A with a nice sustained results on factor VIII. So we also had Phesgo approved, and that's the fixed-dose combination of Perjeta plus Herceptin and made continued progress with a number of other molecules that I will mention in the presentation. If I was going to summarize the overall result, I mean, we did have quite a strong COVID-19 impact, as Severin mentioned, due to the fact that most of our products are administered by health care professionals. And especially the month of May, I mean, people just stayed home in Europe, in the U.S. In China, it began even earlier. And basically, new initiations, new therapy starts and a lot of existing patients delayed infusions. And so that was a really tough month, but we've seen a very good recovery beginning in early June and continuing through this day. And so we're really encouraged to see that. We've had strong results in immunology. I'll talk about more. The launches are on track. So we were concerned that we might have significant delays in filings or in reviews. But so far, that looks good. And in addition, we brought in via partnership with Blueprint, pralsetinib, which is also now on schedule to launch in 2020. So that's excellent to have a third new molecular entity to launch in the year. Our pivotal readouts have remained on track. And most of our studies are going. We've had a few delays in early trial starts, but it's been really remarkable how we've kept progress ongoing. And obviously, we're pleased at how we've weathered the storm so far. The ultimate impact will depend a lot on the length and severity of the pandemic. But we also see the health care system adapting. And we see hospitals and doctors, clinics figuring out how to make sure that patients do get treated. And so we're confident that we won't see another month like May, and that makes us quite optimistic for the rest of this year and going forward. This is the breakdown by geography. You can see the overall growth of 1%, U.S. at minus 4%. Obviously, that's our biggest market. But I'd say it's a pretty remarkable result when you consider that we had biosimilar launches in the last 12 months on all 3 of the biggest products. We had quite significant deterioration on those 3 products and the COVID impact, and we were able to basically deliver 96% of the sales of the prior half of 2019. So I think, actually, all in all, a pretty good result considering Europe at 5% despite COVID; Japan with biosimilar impacts at minus 2%; and then the rest of the world, delivering a strong 11% growth in the midst, again, of the pandemic. So overall, not what we were hoping for at the beginning of the year, but we hadn't heard of COVID yet. And so I think we're pretty pleased at where we landed and what it means for the quarters ahead. In terms of the P&L, I think this has really evolved consistently with what we've been saying, that our intentions are. In terms of royalties and other operating income, you see that down a bit due to Cabilly. We think this is pretty much the last of that, and it's a relatively small impact. On the other hand, cost of sales, down CHF 600 million. That's really an excellent result. And it reflects a couple of things, including the fewer write-downs versus the first half of 2019, but it also includes significant cost-savings measures that we've been taking over the last 3 or 4 years as part of our transformation, and we hope to see more positive trends like that in the years ahead. On M&D, we said we wanted to hold M&D flat, and that's exactly what we've done. And we've done that so that we can continue to invest in our world-leading R&D, which we also did at 7% increase. And then G&A, it's a relatively small number, a larger percentage, but this really is -- it's basically all Spark, FMI and Flatiron and some things that just with the acquisition of Spark that came in. So this is not a trend. So overall, we're able to deliver a 2% core operating profit on 1% sales growth and I think reflects a tight financial management. This is the outlook on the portfolio of sales. And essentially, what you can see is the large bars on the bottom, the biosimilar impacts and particularly in the U.S. with Europe and Japan also playing a role. We had a total biosimilar impact in U.S., Europe and Japan of about CHF 2.1 billion -- sorry, I should say that's biosimilar plus COVID impact of CHF 2.1 billion. We originally had predicted a biosimilar impact of about CHF 4 billion for the year. And we now think that the biosimilar plus COVID impact will be maybe around CHF 4.7 billion a year for those 3 geographies. But it's a bit of a moving target on the COVID part. But we've seen the biosimilars come in with, I'd say, pretty much in line with what we thought, a little maybe on the heavy side, but the COVID impact was an additional one. So oncology sales were down 6% with the COVID impact being offset -- or sorry, COVID impact and biosimilar impact offset by growth in a lot of areas. Venclexta growing in AML and CLL; Gazyva continuing to penetrate in CLL and first-line follicular; Polivy, continuing gains there; and then Tecentriq, which I'll come back to. If I look at it by franchise. So the HER2 franchise, you see down 12%. Again, that combination of biosimilar impact on Herceptin and some COVID impact. But what I think is interesting to see here is that you see now that Kadcyla and Perjeta sales are actually larger than Herceptin. The Herceptin, which was about 2/3 of sales just a couple of years ago, is now down to a little over 40% and really continued momentum there with Kadcyla penetrating in early breast cancer and Perjeta continuing to penetrate around the world. I mentioned the approval of the fixed-dose combination of Phesgo. And this is really what the impact of that is. So we demonstrated that the subcu fixed-dose combination is equivalent to the combination or the separate infusions of IV of Herceptin and Perjeta. And what you can see is we basically cut the infusion time, which range from 2.5 to 7.5 hours down to 20 to 40 minutes. So it's a pretty substantial benefit for women, especially on the early breast cancer regimens where they're only receiving -- for most of the period, they're only receiving H plus P, not chemo. So basically, it's a big change in what that experience looks like. We're now rolling that out in the U.S. and look forward to further approvals. Also in breast cancer. This is now in the HR-positive, HER2-negative space. We've got what we believe is potentially a best-in-class SERD, which is really important because this is an established MoA where the current products don't really allow adequate dosing. And so we know this plays a meaningful role in breast cancer, and we believe we've got a molecule that's both very potent and also very well tolerated. And this was on display at the ASCO Virtual Conference. But what you can see on these charts is on the left in monotherapy and on the right in combination with palbo, really nice responses shown. And these are women with metastatic breast cancer with 2 or less lines of previous therapy. So it's a significant impact in an area of high unmet need, and we're moving forward rapidly. We're already in Phase III testing of this compound. In hematology, what you see is a decline mostly driven by the biosimilar uptake on MabThera/Rituxan. The bars don't tell the whole story because with Venclexta, the revenues that we share with AbbVie, we get that through a different line in the P&L in the other income line. And so if you included that in, you'd be a lot closer to the CHF 1.5 billion bar, which was sort of the historical benchmark. And so I think we continue to demonstrate in hematology through a number of molecules that we're able to maintain our leading position. I want to mention a couple of those that are coming. And this is our 2 CD20, CD3 bispecific antibodies. I know it's a little complicated to keep track of because I think up until recently, we thought that we would be very happy to have 1 of these antibodies. But it turns out they have very different profiles. And what we find is with mosun, which we're developing in follicular lymphoma, I mean, this is a very efficacious and well-tolerated alternative for those patients that are -- that have exhausted the early line options. And we look forward to further development and bringing it into earlier line, but we think we've got the ability to file this data, and we're hopeful that we can achieve an accelerated approval. But you can see, I think maybe the statistic that's most impressive to me is that 83% of patients remain in complete remission for up to 26 months off of the therapy. So after coming off the therapy. And if you think about that for third-plus-line patients, that's a major benefit and also for a well-tolerated medicine. On glofit, we have also, I think, quite a remarkable result. If you look at the higher dose cohorts, the response rate of 50% and complete response rate of 34% in patients in second and third and later lines of DLBCL. So this is really excellent data we look forward to, hopefully, discussions, productive discussions with regulators about accelerating the approval of this one as well. Moving on to Tecentriq. So we've had a nice consistent sales curve. Again, unfortunately, a bit impacted and disrupted by COVID. In particular, there was a decrease in new patients coming in and seeking therapy. And so when you have a rapidly growing product, you're more affected by a disruption in the health care system. But what we see here is continued gains in areas like non-small cell lung cancer, which is the biggest indication, but also small cell lung cancer and TNBC where we're beginning to penetrate around the world. We've -- as I mentioned, we've received approval for the first-line liver cancer indication now in the U.S., and we filed in the EU and China, and we're working with regulators on -- in both China and in the EU to really speed that approval because it's an excellent benefit. And I'm pleased to say we're already seeing the sales curve in the U.S. coming up and the demand growing, both with the COVID recovery but also having that new liver cancer indication. So looking forward to continued growth of Tecentriq. Also, in the cancer immunotherapy and lung area, we announced the results at ASCO of a second -- sorry, a Phase II study of tiragolumab. We've usually been calling it anti-TIGIT, and -- but this is a novel cancer immunotherapy mechanism of action that is additive to the benefit of checkpoint inhibitor, which is a really exciting gain because I think many of us have been waiting now for 7 or 8 years for the thing that's going to really boost the checkpoint inhibitor in cancer immunotherapy to the next level. And we're pretty excited about the Phase II data that we've seen. We saw excellent results in Phase Ib. We ran this study. This is the result in the high PD-L1 expressors. You see a hazard ratio of 0.3, so a 70% reduction in progression of disease or death. And so we are super excited about this. We've already begun Phase III studies in non-small cell lung cancer, small cell lung cancer, and we are commencing Phase III studies in a number of other indications that are not yet named. But stay tuned for more on that very, very promising molecule. Moving over to immunology. So this was a mix of things. We had probably the -- the hardest thing was the biosimilar impact in Rituxan. So Rituxan was down about 34% year-over-year. But in a number of other areas, a really strong result. Esbriet and XOLAIR, despite considerable competition, maintaining growth. And Actemra, up significantly based on its continued sales in autoimmune conditions but also its use in treating patients with COVID-19 pneumonia. And we'll have results on the COVACTA Phase III study of Actemra in C-19 very soon. Neuroscience, starting with OCREVUS in MS. So OCREVUS was disrupted in 2 ways by COVID-19. First was the general disruption in the health care system but also because there were questions about immunomodulatory agents in autoimmune conditions like MS and potential complications with COVID-19. We're pleased that, so far, we've been looking at our pharmacovigilance work and a number of international registries. And so far, we don't see anything of particular concern there. And I think now physicians and the MS community is, I think, sort of getting through those concerns. But what we've seen since the month of May is a very strong recovery for OCREVUS. And we see good results in terms of patients getting infused, and we look forward to OCREVUS being back on the growth track in terms of quarter-over-quarter growth beginning with Q3. Still in neuroscience, really excited about the risdiplam, the part 2 results of the FIREFISH study. And so this is the larger study that confirms the earlier results seen in a small number of patients. And so keeping in mind that these are babies who would ordinarily either die or have to be put on ventilators by the age of about 13 months. And so we initiated these babies I think a median between 5 and 6 months of age. So they already had significant disability, significant accrual of damage. And with risdiplam, we were able to deliver really remarkable results with a convenient oral, once-a-day formulation. So 29% of these babies were able to sit up by the 12-month point. Very significantly, and this means a lot in this area, 95% of infants that were surviving were able to swallow after 12 months of treatment. And that's a big deal from a practical standpoint and their ability to thrive. And you can see a number of other endpoints here. But we are looking forward to approval. The PDUFA date is in late August, and the FDA has worked really great partners in terms of trying to speed this therapy for these babies and their families. Moving on to the hemophilia A franchise. So this is Hemlibra. We're now up to 23% total U.S. patient share. As you can see, the sales declined a bit quarter-over-quarter in Q2. However, what we see in terms of patient initiations and that dynamic is -- essentially, what's happened is that we're keeping the existing patients, but new patients, particularly in the U.S., that dynamic of patients going in to see the doctor and to get a change of therapy was really disrupted by COVID. And what happened was in March, when the patients saw the COVID-19 happening, in a lot of cases, they got extra doses because it's a self-administered product. And so some of what you see in Q1 is some stocking at the patient level, which that was then bled off over Q2. So we think what's actually happened is the number of patients has stayed relatively stable. And we think that with the sort of return to a more normal setting in health care anyway, not that the rest of the world will all be back on track, but health care professionals are figuring out how to see patients in the midst of COVID, and we're looking forward to resuming growth with Hemlibra as well. Oh, I should have mentioned also in the hemophilia A space. So Spark, as I said, they went to the ISTH Virtual Congress about a week ago and showed their updated data on patients with up to -- 2 to up to 3.3 years of treatment on the gene therapies on 8011, which is their lead candidate for hemophilia A. And again, the safety profile looked quite good, and we were really pleased to see a nice, stable expression of factor VIII. And so we were very optimistic moving forward with our partners at Spark and excited to welcome them to the Roche fold and see what we can do for patients with hemophilia A. This is late breaking. I think probably many of you saw last night, these results were released at the ASRS Virtual Congress. And it's a really exciting day because we've been working on alternative delivery systems for ranibizumab, LUCENTIS for at least 15 years. This was our latest and best effort, I think. It's a small compartment about the size of a grain of rice that's surgically implanted into the vitreous of the eye, and then it can be refilled. So it's a onetime surgery and then it's refilled once every 6 months. And the chart you see is the comparison of monthly injections of ranibizumab versus the 6 monthly refill of the port delivery system. And essentially, you see identical efficacy. And what this is really about is the ability for patients to get 2 doses a year and have really a full protection. Because what happens in the marketplace today is patients will get monthly or bimonthly injections, but then after 6 months, 12 months, a year, they start to fall off, and they're only getting 3 or 4 injections a year, and they're losing their vision. And so what we hope to do is deliver really long-term solution that's both convenient for patients but really maintains their vision. And so we're hoping to file this by around the end of the year, the beginning of next year and look forward to bringing this to patients very soon. And just a reminder, we have the rights to the ranibizumab port delivery system around the world. So we plan to launch it in major countries around the world very soon. So this is sort of the summary. And you can see, we hope to have 4 NMEs, counting Phesgo, the fixed-dose combination this year, which is a modern times record for us. In Q2, our sales of the new products was up to 39%. And I think it's just a testament of what we continue to do and deliver, and we're really proud of all our folks in product development and research and the folks that deliver the products and manufacture them, and that we've been able to keep this going in the midst of the pandemic. I want to make sure I invite all of you to our Roche Pharma Day. This will be our Virtual Pharma Day, and it's going to be on September 14. So you'll get to hear from a number of those people, the very people who are delivering this pipeline and get to ask more questions and learn more about the program. So I look forward to seeing you all there. And then finally, this is the late-stage news flow. I do want to mention the red Xs. We take risks. We're pioneering. I don't think there's any company that has more pioneering products than we have. And with that comes some failures along the way. So idasanutlin, we took straight from Phase Ib to Phase III. It didn't work out in AML. We hope we'll be able to yet deliver more good news for people with AML, but unfortunately, idasanutlin is not going to be it. Tecentriq plus Avastin in ovarian cancer, this was something that we really anticipated with a lot of hope. But we knew, again, it was a significant risk because ovarian cancer, thus far, had resisted attempts to tackle it with checkpoint inhibitors. We thought maybe the addition of Avastin would do it, but unfortunately, that wasn't the result. And balovaptan in autism, again, really pioneering the first of a real clinical trial of this sort in autism. But alas, we'll have to keep working on it. But overall, there were 11 significant progressions on the chart already this year, and we've got a number of more important ones to go for the rest of the year. So we're looking forward to that. And with that, I'm going to hand it over to someone who's maybe the busiest person in the world in the first half of 2020, our Head of Diagnostics, Thomas.

Thank you. Thank you very much, Bill. And yes, welcome, everyone, to today's conference call. Yes, the first half year growth has been pretty good with more than 3% growth. Actually, it's pretty much in line with what we had expected for the first half year, although the mix has been very different to what we would have expected in the beginning of the year. And you basically see 2 stories here. One is around more of our core business of Centralized and Point of Care but also in Tissue Diagnostics and Diabetes Care where we had significant impacts in Q2, but also, some of them were already in Q1. But mostly in April and May, with major lockdowns happening across the world, a lot of routine testing, checkups, all the surgeries, everything was postponed. And talking to a number of doctors, at least on the European side, they were told to postpone all the surgeries to make sure that they would be ready for COVID. But actually, the impact was not as high as they had thought. And so there was actually not that much going on in hospitals at that time. So the impact overall was really significant in that time period with 20% to 25%, but this was compensated by Molecular Diagnostics. And I'll show you more -- a bit more about the Molecular Diagnostics business in a second. But really, if you take just Q2 in Molecular Diagnostics, it grew more than 100%. So really driven by our COVID-19 PCR portfolio, which is needed to identify infections. Looking at the different regions, you see North America doing very well with 13% growth. EMEA, Latin America, where we would expect them, with 5% to 6% growth. Now in EMEA and LATAM, you can say that the impact in the second quarter due to COVID-19 that was negative kind of equaled out the effect that we had on the positive side with the PCR assay. In North America, the downturn of the routine business was not quite as severe, plus also the Diabetes Care business did better in North America than in EMEA and LATAM. Now what's a bit different of a story is Asia Pacific. And Asia Pacific was really hit much harder, much earlier, specifically in China. China had a negative growth in the first half year of minus 17%. And specifically in February and March, we had already early lockdowns in China. And in March itself, the decline of our core business was minus 50% just in 1 month. So really significant. And I remember, I was asked by a lot of people at that time, do I believe that the same effect will be in other parts of the world in terms of the magnitude? I said no. Because in China, you don't have a primary care segment, which means that if someone wants to go to the doctor, they don't have a GP that they can go to. They have to go directly to the hospital. And obviously, in China, during that time, all the hospitals were also focused on COVID solely. So really, that made the downturn that significant. And at that time, we still didn't have as many PCR tests as we have available right now. So this is a bit the story between the different regions. Now taking a closer look at the different business areas. Clearly, you can see Immunodiagnostics down 12%, Clinical Chemistry down 14%. Also in Diabetes Care and Tissue Diagnostics, you see those declined. And this is really the delay in checkups, in normal diagnostics that you would do, which is actually quite concerning because cancer doesn't stop just because of COVID. And obviously, there are a number of people that have not been diagnosed of cancer because they simply couldn't go to the hospitals and everyone was focused on COVID. Now looking at Molecular Diagnostics, you see the significant growth. In Molecular Diagnostics, you have a number of different businesses that are in this area. One is blood screening. Another is cervical cancer screening. But also other infectious diseases like HIV, hepatitis C, all of those saw a significant decline in the molecular business in the second quarter. Again, very concerning if cancer is not diagnosed early, and this could have potential negative impact also in the future for these patients. On the other hand, you see virology and the LightMix Systems growing 115% and 171%. Within virology, we book our high throughput assay, but there are also other assays like, for example, HIV and hepatitis C booked in there. Now if we look at Q2 alone, with approximately 200% growth in virology, despite the fact that we had a clear decline in the other parameters. Within the LightMix Systems, which is more the low throughput portfolio, just looking at Q2 alone, we had a growth of 250%. So you can see the significance of that effect. Now as mentioned earlier by Severin and Bill, April and May were definitely the harder months. But really, in June, we saw already extremely good growth on the Diagnostics side because you see the routine business slowly coming back. And also, for the first weeks of July, we see a very good growth. So I'm confident and optimistic that as the routine business is coming back and we have the continued upside on the COVID portfolio that we'll see a very good second half of the year. Now looking at our P&L, again, growing more than 3% on top line, we have really delivered, I would say, on the bottom line, with more than 9% growth on the core operating profit side. And this was done through good cost control measures. Now going down line by line, on the cost of sales, we had an increase of 5%. There were really 3 factors that were contributing to that. One is we had significantly more hardware sales in the first half year, actually twice as many as we would have normally in the molecular business. We had also more depreciation because of that. And the last point was really the distribution cost because we had to charter a number of flights during the time with the lockdown periods, normal flights would not leave. It was very hard to get products into the different countries. So we had to charter flights to make sure that we could get products there on time to help patients. M&D, a significant reduction, minus 6%, good control of our operating expenses. R&D, this is where we want to invest. We're investing in innovation. We have developed a lot of new products in the first half year. This really drove that. And G&A is only a very small number. So this has really contributed to the very good growth on the core operating profit side. Now so what have we launched in the first couple of months this year on the COVID-19 or SARS-CoV-2 Diagnostics portfolio. We've actually managed to launch 7 different products that support this global pandemic in fighting this pandemic. Importantly is our molecular solutions portfolio because this is needed to identify active infections. The TIB MOLBIOL LightMix Modular SARS-CoV-2 assay was launched already in January. And remember, I mean, the sequence of the virus was only known in January. So these are really records that are being broken in order to help patients and society out there. Plus on that platform, we actually enable a lot of tests also from other companies. On the high throughput platform, we were the first to get emergency use approval. And this is obviously the 6800 and 8800, and it's under huge demand globally because there's no system out there that can do as many tests in such a short period of time like these systems. We have in development and will soon launch a multiplex assay on the high throughput systems, which can then differentiate flu A and flu B and the SARS CoV-2 virus. This is obviously, important as we get into the flu season in the Northern Hemisphere to make sure we have a differential diagnostics between influenza and this new virus. We are also going to launch the same multiplex assay on our point-of-care system, the Liat. That's about size of an espresso machine. And you see the cartridges just left to the machine in which we then deliver these assays. And here, we are also very close to bringing that to the market. Antibody assays are also important to fight this pandemic for multiple reasons. One, to really understand the immunology and how the immune system responds to this virus. Also to understand are people really immune, for how long are they immune and also to really understand the prevalence. And early May, we launched our nucleocapsids, anti-SARS CoV-2 assay, and I'll talk about that in the next slide. It will soon launch a second assay, and I will also talk about that on the next slide. Elecsys IL-6 is used to identify the levels of interleukin-6 in the body. Interleukin-6 is an inflammatory marker looking at the potential of cytokine storm in increased inflammatory response. Do people need to get ventilated and moved into the intensive care unit. On the right-hand side, in point of care, you see that also, we will be launching a rapid antibody assay in the near future. We have a number of digital solutions that we have launched. Let me just pick 1 or 2. The Navify Symptom Tracker, this is a solution that helps health care professionals to stay in contact with patients that are not hospitalized but are infected with COVID-19 and to monitor their situation. And if the situation deteriorates, if the patient deteriorates, they can then act quickly and bring the patients to the hospital. The Roche v-TAC algo for blood gas I think is also extremely innovative and very important also in this setting. The patients that are hospitalized and ventilated, they need to have the blood gas taken quite often to see how the oxygen levels are doing in the patients. And normally, you would do that by puncturing the artery, which is below the muscles and has a very thick membrane. And so it's very painful for patients and also very difficult for physicians to take the blood gas and actually takes quite trained physicians to do that. With this algo, we can take venous bloods from the vein and actually convert that into blood gas values from the artery, which makes a huge benefit to patients exactly. So let's take a closer look at the antibody assays. As mentioned, we've launched Elecsys anti-SARS CoV-2 assay, which is targeting the nucleocapsid in early May. And this is really a sandwich assay. So it's not using an indirect method with some of the other tests they're using, which means that we are really selecting for mature antibodies because mature antibodies are corresponding to neutralizing antibodies. We've confirmed the excellent performance through internal as well as external studies, as shown on the slide. And also, we have done some print analysis, which kind of looks at the neutralizing effect of the antibodies in an in-vitro setting with live cells but it's an in-vitro setting and was a very good correlation to our antibody assay, which is important because, obviously, you don't want to infect -- reinfect patients and do kind of in-vivo experiments. So this is the goal standard on how to assess that. Now we are going to bring to market another assay, which is targeting the spike protein. And furthermore, this assay will be a quantitative assay. And today, there is no real quantitative assay on the market. This will be important in the context of vaccines because you will need to monitor the level of the antibody in the blood. And we also see that most likely, the 2 tests will be used in combination. And of course, if you have it on the same system, you can take it from the same blood sample. It's a huge benefit. But there will be a combination of the 2 because we see patients -- most of the patients develop antibodies against both proteins from the virus, but some only against nucleocapsids and others only against spike. So there will be likely a combination to give even better understanding. Now there has been some data, although very small numbers, that have shown that antibodies wade over time, so reduce over time. And a lot of times, there is discussions. So does that mean that people will not be immune after a couple of months? What we know from also the immune system is that we have memory cells. And these memory cells, once they're triggered again with another exposure to these viruses, they then trigger antibody reduction much faster and in a much more effective way, which means that these people then don't have such a severe reaction. But there's a lot still to be learned about this virus. And clearly, these antibody assays are very important to really understand that. In fact, we're in discussions with many of the leading vaccine companies who want to use both the nucleocapsid and the spike antibody assay from us. Within the Molecular Diagnostics area, we brought cobas prime to market in Q2. And cobas prime is really, really unique. Now if you look at the normal core labs, you have them completely automated. But this is still not the case within molecular labs. And that's why, in many cases, you see the turnaround times of the COVID tests not being the same that you would expect because there's still a lot of manual intervention. In fact, with the 6800 and 8800s, those systems are fully automated. That means you can put the samples onto the system in the evening. You can go home. The next morning, all the samples are done. There's no other system out there that can do that. In other systems, you always have manual interventions. But what you have always to do, depending on the vials that you get, the sample types is potentially unscrew and kind of treat the samples. Now with the pre-analytics that we have, you can handle all kinds of molecular sample types. Again, this is the first of its kind. No other company in the world has such a solution. This is a huge step forward to really automate the molecular lab. And this obviously reduces manual steps significantly but also errors and gives with that more confidence in results. Within the Tissue Diagnostics business, we've launched 2 CE-IVD algorithms with whole slide analysis. One is for PD-L1. The other one is for HER2 Dual ISH. This is important because -- and these algorithms were trained by leading pathologists and is using artificial intelligence. It's important because it gives really standardized and good answers in terms of expression of these different genes. You really need to use more modern technology. The eye alone cannot read it to the same level of accuracy. Specifically also, if you then to multiplexing, as we'll go into more in the future, visual pathology will play just a huge, huge role. Overall, we are on track in 2020 with all our launches. Obviously, the slide does not include any of our COVID portfolio where we've launched already 7 solutions, and we'll launch another 4 in the near future. So really, the team has done a fantastic job to manage through this very difficult, really once-in-a-lifetime pandemic in a really, really good way. And if someone would have told me that our core business would have been impacted in Q2 by 20% to 25% in April and May, I would not have thought that we would be able to compensate that with products that we didn't even know in January that we would develop. So this is a huge performance of the organization. And I have to say, I thank all the employees and their families because many of them have not seen their families for the last weeks and months. So overall, doing very well on the portfolio and going to launch a number of additional assays in oncology, infectious diseases and diabetes, and we'll continue to work on building out and making sure that we have the best pipeline in the industry. And with that, I hand over to Alan.

Thanks, Thomas. And I agree, by the way, with Bill that you're the busiest -- one of the busiest guys in the world, especially on the Diagnostics side. I totally agree with that. But I think really -- certainly, how should I say it, kidding, but on the other hand, I think we all have been very busy. I think when I look at Severin, when I look at Bill, I think we have been outstanding months. And not just for us, I think, for the company as a whole. And I would like to take the opportunity to thank everybody for the contributions that we have made to patients in that period. And Thomas keeps saying, this is perhaps the period where we have been even closer to our purpose, doing now what patients need next than ever before, and it's amazing to see that. So let me jump into it. And I think the highlights, I will tap basically on all of these points. You might have seen the point on cash flow. I will talk about that. Happy with the financial results. We'll talk about it. IFRS net income, up 3%. I know that's redundant, and Severin has talked about that slide. Nevertheless, I wanted to take it as kind of a hook as an intro into what I would like to say. And you see the momentum that we have had, but I think let's be honest here. I think it started really in March in China where we had the first impact on the Diagnostics side in the routine testing. And then in April, I think really, the U.S. and Europe came into play. And then Latin America followed. And therefore, I think we're all glad to see the rebound in June, which basically started end of May already but really got more pronounced in June, and it got even more pronounced when you look at July. When you look really at sales, I think, my colleagues did a great job in explaining the sales and how that looks like. Let me first refer to the Swiss franc impact that we have seen as the Swiss franc has strengthened basically against every currency. You see really we have a minus really before every figure that you see, and that changed 2% in Swiss francs. So let's look really at the constant exchange rates. You see the core operating profit up 2%. Margin relatively stable. I will talk about that good cost discipline. The core net income, really up 3%. Here really, the text comes into that. I will talk about this. Core EPS, and you see a slowing momentum and you might ask yourself, why is that? Well Chugai had a tremendous first half from a profit point of view. So I think when we take that out and that momentum, we get to the plus 2%. IFRS net income, we'll talk about this. And then you see we have the impact on the cash flow, which, at least, in my opinion, is not concerning, as we have invested quite well into our future business. Good. Let's go first, and here's the bridge about the core EPS development. And let me really refer to the point. First, we have grown the core EPS in constant rates by 1.9%. And you see that operations contributed over-proportionally with 3.6 percentage points. So a couple of things evidently went against us. And let me lead you through this. First point is the gains on product disposals, which went against us. And that's simply the fact that we have less product disposals done in the first half of 2020 compared to the first half 2019. The difference is CHF 305 million. Now you might ask yourself, okay, what's going to happen with that difference? Are there any further deals in the second half? And that's how it looks like. We see we can compensate around CHF 200 million in the second half to close that gap that we have seen in the first half. Royalties and other operating income is the next topic to talk about. And here, you see a positive contribution compared to last year. And this is, we had a couple of settlements. I think Venclexta plays into this quite nicely. So I think that helped us out quite a bit here with more than CHF 100 million. And then you see the gains on equity security, pretty balanced. And we have a couple of things here. And you know we have here a mark-to-market valuation. So that means when we have a participation in a company traded out there, I think we certainly follow the stock price. So very happy with that result. And then we have the taxes. We had a couple of resolution of tax disputes in the first half of 2019. And that also happened in the first half of 2020 relatively balanced there, and you see it here. So let's say both halves really benefited from a relatively special impact. Good. With that, let's go to the P&L. And I think the P&L is a testimony first to what we have promised at the end of the year 2019 that we would like to shift funds into R&D. And we have started to do so. And you see it already here. Sales, as you see, the royalties and other operating income here is really the switch between the gap on the product disposals and, let's say, the other impacts, positive impacts that we have had. The cost of sales, I think Bill explained it, I think, went down CHF 620 million in Pharma alone. So what you see here is really a saving of CHF 484 million compared to the first half 2019. M&D, CHF 80 million coming from Thomas and from Diagnostics positively, pretty flattish when it comes to Pharma. R&D, that's where we have invested in. But you see really with the savings, we even overcompensated that. And then we have G&A, which is a relatively small number admittedly compared to the others. Nevertheless, there is work to do. We have roughly CHF 80 million from the new acquisitions with Spark, FMI and Flatiron. Let me also emphasize that Spark is something we have consolidated new. So I see that's an add-on here of roughly CHF 50 million. And then we have really prepared our shared service centers to really contribute to further transformation in the future. So we're going to see that happening in the second half. Overall core cooperating profit up by 2%, and I'm very happy about this. When you look at royalties and other operating income, I think we -- you see really that the number went down from roughly CHF 1.3 billion to roughly CHF 1.1 billion, and that's the block on the right-hand side. And we had this topic of Cabilly, which is the first red bar, for quite a while. We lost last year on Cabilly alone on that line, CHF 700 million. I think now we're down to just minus CHF 75 million. The good news is that's basically the last substantial impact that we're going to see, or let's say, the last substantial negative impact that we're going to see from Cabilly. So I would say that story is behind us. Royalty income others, I've talked about that a couple of settlements. Out-licensing income and other operating income, very much driven by Venclexta and then once again, the point about the product disposals. I see very happy with the margins in constant rates, very stable, partially even increased. Let me outline here that the gross margin has improved from 80.5% to 81.8%. So I think we are really trending into the right direction here. The core net financial result. First, you see here an improvement of roughly CHF 25 million, which is a good thing. Equity securities, I've talked about already, pretty balanced with everything we have ongoing there. Net interest income, small, a couple of impacts from funding costs in the U.S. dollar on the FX line. And then you see the interest expenses with a significant improvement, certainly also due to the bond redemptions that we have done in the second half of 2019. So with all of that, I think really this is moving into the right direction. Yes, tax rate and the group core tax rate to be precise. We came from a low base in half year 2019 of 16.7%, and we even decreased that a little bit to 16.5% at half year 2020. And as said, in both half years, we had really resolutions of tax disputes, which contributed positively to the development of the group core tax rate. I think for the second half, what I expect is really a group core tax rate of about 18%. And when you look at the effective tax rate, you might have seen that this increased from 14% to 16.9%. The 16.9%, by the way, very near to the group core tax rate. And here, certainly, we had an impact last year from the revaluation of deferred tax assets based on the Swiss tax reform. Here are the noncore items very quickly through that. Core operating profit, up 2%. I've talked about that at the starting point. Global restructuring plans, a little less compared to last year. But let's say, it's not like that COVID has been a major slowdown for our transformation programs. They will go on. And as we've said, I think we will -- we want to contribute to the improvement of the P&L, putting more into R&D and saving on other cost lines. Amortization of intangible assets, stable. Impairment of intangible leases, let me outline here. We had a couple of impairments last year. We have this year an impact coming from Spark because of the delay of the heme A program. So we have a small impairment in here. We have M&A and alliance transactions, pretty stable. And then legal and environmental, here, we have a positive impact coming from a release of a provision of an old court case referring to a product called Accutane. That case is over, which is great, after a long period, so we could release a provision here of USD 350 million. So you see the IFRS profit going up 6% and the total financial result and taxes deteriorating by CHF 200 million, and that's the effect that I've explained before coming from the Swiss tax reform that we had last year. So the IFRS net come all in is increasing by 3%. So let me move to cash. You see really here how it looks like. Cash goes down. I think Diagnostics develop differently and has improved. They had less on spend on the intangible assets, but foremost, they improved operationally. When you really look at the bridge here, and you see, we have quite a deterioration from CHF 7.5 billion operating free cash flow to roughly CHF 5 billion at half year 2020. And it all starts with the operating profit net of cash adjustments. And here, really Accutane, once again, comes into play. Because certainly, there is no cash impact. We just released the provision. The other loan is CHF 350 million basically explains that. Then you see the net working capital increased by more than CHF 1 billion. And this is very, very much driven by inventories, which I think is basically a good message. Because, well we are preparing for the new launches on the Pharma side. So I think that's a good thing to have. And on the other hand, we have ramped up inventories on the Diagnostics side when it comes to instruments. And I think that's very healthy in the current environment, and we are very sure this will convert into cash. And then you see PP&E here. This is a little bit more investment coming from Chugai as they ramp up their new R&D side. And then you see the investments in intangible assets, which have increased by CHF 610 million. And I think that's really where we're putting the money where our mouth is, and this is foremost really investments that we have done in intangible assets on the Pharma side. So I would say, well okay, there's a deterioration, but I think we are very moving in the right direction with all the investments that we have done. And what that means to net debt is pretty clear. On the right-hand side, you see the net debt situation end of June 2020, minus CHF 8.8 billion. We deteriorated a little bit by CHF 400 million. I would say that was very much triggered by the investments in intangible assets. And you see where we're coming from year-end 2019, minus CHF 2.5 billion. Certainly, I talked about the operating free cash flow. We had a little bit on taxes and treasury, and I have to say we will have higher tax payments in the second half. And then we've paid the dividend, which is certainly the major impact here, and that led to the net debt position end of June 2020. Balance sheet, I don't want to go through everything here. Basically, we had a trade-off between cash and marketable securities. You see the reduction of roughly CHF 6 billion. And with that, we reduced liabilities. Very quick comments here on other current assets. What happened here, the accounts receivables went up. And don't forget, the balance sheet is really now compared to the end of the year 2019. That certainly looks different in the cash flow as the cash flow is a change-for-change comparison. But here, the accounts receivables went up CHF 800 million, and inventories went up, as mentioned already. Other noncurrent assets, the intangible assets went up by roughly CHF 600 million, as you've seen in the cash flow. And then really, when you go to the right-hand side and to the liabilities itself, certainly, provisions went down, as you can imagine, the current liabilities, as well as the accounts payable. The noncurrent liability is pretty stable, and you see a relatively stable equity development. With that, let's go to currency. And that's not a great picture, I admit. But as long as I think as we look at the P&L, I feel pretty okay. Certainly, cash is the major point I'm looking at, and we know -- you know we have a pretty good natural hedge all over the world. So I think I feel good with that. So this exposure is more for reporting purposes. You see really the impact at half year with minus 5 percentage points on sales, minus 7 percentage points on the core operating profit and minus 8 percentage points on the core EPS. And when we really keep the exchange rate stable at half year and then project the currency impact at full year, you see, basically, there is no change of the impact. But we all know this is a model and a very static model, and we're sure that the reality will look different at the end of the year and hopefully better. I think really, here's the outlook confirmed. You've heard from Bill that we have changed a little bit our view on the biosimilar impact, including the COVID impact, which I think is a very important point here. Nevertheless, I think we keep the guidance and confirm it and feel very comfortable with that. And with that, I think we're happy to take your questions. Thank you so much.

Yes. Thanks a lot -- I just want to thank all the speakers. It's Karl speaking. But just to give you a kind of an update, we have 800 people on the web. We have 120 people over the line. So it's over 900 people. So that's a great interest, which is good, but which also poses a bit of a problem because we have also a long list of questions. So I also can see it from the system. So if we maybe could kindly restrict the questions to 1 question per person. And if we could make sure that we give short answers and not too long ones, that will be also be good, so that we can have at least a bit of a chance to work through the questions we have received. And with this one, Severin, I can -- I would like to hand it over to you. And if there's an online question, I will just step in and read it then to all of us.

Excellent. Thank you, Karl. Can we have the first question, please?

The first question comes from Wimal Kapadia from Bernstein.

Wimal Kapadia from Bernstein. So you've currently given up the growth rate by month at a group level. But could you provide us the details for growth in Pharma and Diagnostics by month? And just tied to that will be in Diagnostics, you suggested some level number of return in due normality for routine testing. So is it fair to say that for the remainder of the year, growth rates could be significantly higher than the month of June when we consider the increased PCR and antibody testing?

Right. So perhaps, I can give a first shot at it. We don't disclose the growth rates now in a divisional level on a monthly basis. But what I should say is that Diagnostics typically is always a little bit ahead of the curve because, first, people get diagnosed, and then they get treated. And we have seen this also on the monthly sales development. So for example, the impact in China was a bit earlier on, and we see a similar pattern here for Diagnostics over the months. And actually, that gives me also confidence for the second half of the year because as Diagnostics is an early indicator that, that kind of is a positive signal on the Pharma side as well. But overall, a good trend actually for both divisions, Diagnostics and for Pharma. On the Diagnostics side, clearly, there is a certain upside potential because we see the routine business coming back. And as far as the Molecular Diagnostics business is concerned, there is no doubt that we will sell anything we can produce over the next half year. So we should actually see a very positive momentum on the Diagnostics side due to molecular testing.

The next question comes from Sachin Jain from BML.

It's Sachin Jain here from Bank of America. Just a quick follow-up from the last comment. Could you just remind us of where your testing capacity is for both molecular and serology? And how adoption is running relative to that capacity for the 2 separate tests? And then one quick one for Bill on the Pharma gross margin. You gave us some color on the improvement year-on-year. Can you talk to the sustainability of the existing levels?

Okay. So we are not communicating our detailed capacities. But I can say that really, the vast majority of the sales impact you have seen from COVID-19 is really for molecular testing. So there is a much lower effect from antibody testing. Part of it is also because those antibody tests are very cheap, and there is less of an adoption, less of a penetration due to the uncertainty around immunity, et cetera. Having said that, we do believe that antibody testing is very important. It helps you to follow the pandemic, the evolution of the pandemic, it's valuable information to take public measures. And actually, antibody tests will get more important as soon as vaccines will be available. So it remains an important contribution to the crisis. But if you look at the financials, both in the half year and what do you expect for the full year, it's really driven by Molecular Diagnostics.

And regarding the margin in Pharmaceuticals and how sustainable it is, we actually think, based on both the product mix and the continued productivity improvements that we're making in manufacturing, that it is sustainable. And we might even make some gains over the coming years.

The next question comes from Jo Walton from Crédit Suisse.

Jo, might it be that you're on mute? And perhaps we can go to the next question, please?

The next question comes from Emmanuel Papadakis from Barclays International.

Emmanuel from Barclays. Apologies, I missed the call instructions. I'm not sure how many questions would be, but I'll take 2, if that's okay. Tecentriq in liver, you don't -- I mean, you alluded to seeing initial signs of an uptick. It doesn't seem to be particularly visible in current U.S. weekly prescriptions trends. But perhaps you can just talk about your confidence and the size of commercial opportunity we should be thinking about there for the second half of the year in the U.S. And then maybe one, CD20, CD3 specifics. You talked about having 2 rather than as expected 1. It seems like mosunetuzumab has been positioned in FL, rituximab and DLBCL. Can you just talk about why you think those are particularly -- if that's true, those particularly were [indiscernible] those 2 indications? And then on glofitamab, it sounds like your confidence in accelerated approval is perhaps somewhat lower. Perhaps you could just talk about the degrees of opportunities in there and timing.

Bill, over to you.

Great. Yes. So with respect to Tecentriq in liver, liver cancer is more common in Asia, for sure, than in the West. But there's still a significant unmet need. We think that the range may be CHF 300 million to CHF 400 million peak sales in the U.S. And we have every reason to believe we'll achieve a good penetration in that based on the really high efficacy of Tecentriq plus Avastin. And so yes, we could be at the higher end of the range within 18 or 24 months. In terms of the question about the 2 anti-CD20, CD3 antibodies in -- oh, and sorry, let me just clarify my answer about Tecentriq. The -- I'm talking about U.S. sales, but we do plan to get approval in Europe and China even yet in 2020. So the total sales potential is, we think, well over CHF 1 billion in liver cancer. On the CD20, CD3 molecules, yes, they do have very different properties. Glofitamab can be dosed in combination with Rituxan because it's a 2-to-1 antibody receptor format. And so it allows it to compete with Rituxan. That gives it additional opportunities in terms of other lines of therapy. As monotherapy in late line where we are right now, it's very efficacious, which other therapies, including mosun, we haven't seen that level of efficacy in the DLBCL, relapsed DLBCL setting. But it is a little harder to manage because you have a little more of the cytokine release syndrome. It requires more careful management, which wouldn't be well suited to use in follicular lymphoma. Follicular lymphoma, you tend to have an older population, and patients are not able to tolerate the same level of adverse events. And there, you're really looking for something to extend life, extend progression-free survival. And mosun is very well tolerated of the T-cell bispecific antibodies. It's exceptionally well tolerated. So basically, that's the difference. You have sort of a really strong efficacy but a more potent medicine on the DLBCL side on follicular lymphoma. You've got something that gives you a really nice extension of life and disease-free life but also well tolerated.

And just in terms of timing?

Oh, sorry. Yes, on timing, we're in active discussions on both molecules. I don't wish to signal any diminished confidence in glofitamab. It's just we're a little further along in the discussions on mosun. And I think it'd be hard to speculate on timing, but we would hope to have sufficient data now to pursue accelerated approvals. So it's just a matter of the time it takes to kind of work through that with the regulators and file.

The next question comes from Andrew Baum from Citi.

First question on your serology COVID-19 SARS CoV-2 diagnostics. When should we expect to have validation in a clinical trial that ITT levels are a biomarker for COVID immunity? I assume such trials already underway in health care workers with high risk of exposure. And then second question, and forgive me if I've missed it, but I don't think Roche is prosecuting any therapeutic antibodies against SARS CoV-2. I find that, if correct, somewhat surprising given the bioengineering competence you have at both Roche and Genetech. Could you just perhaps help me understand why Roche isn't participating down that particular approach, if I haven't missed it?

Thomas?

Yes. So first, around the serology SARS CoV-2 assay, as mentioned, we have launched already the assay against the nucleocapsid protein of the virus. And here, we have some neutralizing studies that are in, in-vitro setting. Now you have also, of course, the patients that are being followed on a longitudinal way. And what appears to happen is that people do lose antibodies over time. And of course, that asks -- that then poses the question, will vaccines actually work if you lose antibodies in such a period of time? And there are -- the immune system is quite complex, and there are T-cells and there are B-cells. And basically, they have a certain memory of immunity. So even if antibodies wade over time, it could be that these antibodies then get reactivated or this development of antibodies gets reactivated because of this memory, and that people are protected then afterwards. So a lot of these studies are ongoing. But I mean, this is really a very novel virus. It's behaving very differently than, for example, also the first SARS virus that appeared in Asia in the early 2000s. And their antibody stayed for more than 2 years, yes. And so although the sequence is very similar, the behavior of the virus is very different. Maybe I just wanted to add to the question before on the routine testing. So I mean, we definitely see a good return of the routine testing, but we're still not back 100% to the level where we would have been before the COVID time. But it makes us very optimistic because we see the upside of the PCR assays, the antibody assays and all the things that we're launching, including also expansion activities. But it's clearly not back 100% to normal yet. And even in China, it's not back to the 100% normal.

Andrew, yes, regarding therapeutic antibodies for SARS 2, you're right, we've been very close to this field, and it's something that we're very interested in. Our commitment was that we would focus our energies on Actemra and a number of other immunomodulators, and we've got an anti-fibrotic. So we actually have Actemra studies but also studies 3 or 4 other molecules in the clinic, including a couple of experimental products. And then we've also discussed how we could partner with others that are making therapeutic antibodies. There's numerous companies doing that. And so we may yet do that. And basically, our goal with respect to COVID-19 is to use all of our capacities, research, development, manufacturing in whatever way we can maximize our impact on the crisis. So stay tuned for more.

[Operator Instructions]

The next question comes from Tim Anderson from Wolfe Research.

I have a question on a pipeline drug that you didn't mention but you paid tribute to in your slide deck, which is your Tau MAb. It's in a randomized, fairly large, placebo-controlled Phase II study, nearly 500 patients. Efficacy is the primary endpoint. In trial, says it should have completed in June. So I'm assuming that means we'll hear results on that in the second half. I know it's only Phase II, but it seems large enough and long enough such that you could potentially see an efficacy signal. Or is that unrealistic? And what do you need to see out of that trial to advance to Phase III? Could it just be biomarker engagement? Or do you need to see an efficacy signal?

Yes. Thanks for the question. It's something we are still hoping to see data this year on, and we're really excited about the program. As to what we would need to see to move it forward, I mean, it's a little hard to say because it is a Phase II and in Alzheimer's, but I think we would be looking for at least really some compelling biomarker evidence and hopefully, some hints about clinical efficacy.

The next question comes from Jo Walton from Crédit Suisse.

I apologize for being lost before. Jo Walton from Crédit Suisse. Just a quick one on clarification, please, on your comments on the COVID and biosimilar impact. It was going to be CHF 4 billion. It's now CHF 4.7 billion. Is that CHF 4.7 billion just within the biosimilars, i.e., a contraction of the market and loss of share? Or does that go more broadly across your whole portfolio? It's obviously a bigger number, and yet, I'm interested in whether that number -- what that number has gone to and also what the offset is. It's just presumably higher profitability. So lower sales, higher profitability gets you to the same number that you had as your idea at the beginning of the year.

Right. Welcome back, Jo. Bill?

Sure. So we've -- historically, we've given our guidance about biosimilar based on the 3 main areas: U.S., Europe and -- sorry, U.S., Europe and Japan, okay? So the original guidance on biosimilar impact was we said we would have about 4 billion of declines on [ AH&R ] in those 3 geographies: U.S., Europe and Japan. Of course, we didn't foresee COVID-19. And now that we see declines, it's difficult for us to allocate the reason for the decline to biosimilars versus COVID-19 with precision, okay? So now what we're saying is for those 3 geographies where we had expected CHF 4 billion -- approximately CHF 4 billion for the year, we now expect CHF 4.7 billion for the year. We saw CHF 2.1 billion for the year. And again, -- or sorry, for the first half, we saw CHF 2.1 billion, and that included the impacts -- the total impacts, so biosimilar plus COVID-19. So essentially, what we think will happen is that the impact of biosimilars will increase in the second half, but the impact of COVID will decrease in the second half. And our total estimate is about CHF 4.7 billion. Does that answer your question?

Yes, it does.

The next question comes from Luisa Hector from Berenberg.

So I wonder if you could comment on the write-down of Spark. What was the reason for the reduced sales expectation? Is this a competitor issue or perhaps a more positive sign that you expect higher sales for Hemlibra? And on the hemophilia A gene therapy, when do you expect to have the optimized dose and regimen data that you need to move into pivotal studies?

Bill?

Right. So on Spark, essentially, what's happened there is the goalpost has shifted a bit and largely because of Hemlibra. So what we've seen is that with Hemlibra, you have patients who are able to get therapy that's as infrequent as once-a-month subcutaneous, and the vast majority of patients have 0 bleeds. So with that kind of performance, the impetus for patients who are well controlled on a medicine that's as convenient as Hemlibra to go and try a gene therapy when there's still a number of questions remaining, questions like what percent of patients will benefit, and will the benefit last for years and years, because, obviously, with hemophilia, it's a lifetime condition. And there's also a sense at least today that if you get a gene therapy, it might be a onetime thing that you won't have an opportunity to get a gene therapy later in life. So as we sat down with the leadership at Spark, and they are considering the input from physicians and patients with hemophilia, they're basically saying, "Hey, we think the goalpost needs to be really high. We need to have a really well-tolerated immunosuppression regimen to go along with the gene therapy." And so they've got some good leads on that. They want to optimize that and really deliver something that they believe will be sort of that ultimate solution for patients. So I hope that answers your question. I think certainly, the prospects for Hemlibra have never looked better. And I think we are also very confident that Spark, with the nice duration data that they showed recently and their gene therapy for hemophilia with an opportunity to optimize the dosing regimen and the immunosuppression regime, that we would hope to have that launching Phase III studies next year and go from there. And then as to the other gene therapies, I think we'll have to wait and see what other competitor gene therapies in hemophilia A.